From left: Lourdes Castillo, NHS staffer Bridgette Russell, and U.S. Rep. Rosa DeLauro
Connecticut has seen 41,000 home foreclosures in just the last two years. An infusion of $33 million from Washington is aimed at helping a new round of families from avoiding that fate.
New Haven U.S. Rep. Rosa DeLauro and a federal housing official came to New Haven Wednesday to announce the effort.
They chose to do it at the headquarters of Neighborhood Housing Services (NHS), a not-for-profit builder that has also emerged as a primary source of help for families hit by the current foreclosure crisis.
NHS chief Jim Paley said at Wednesday’s event that, with a combination of public and private money, NHS has been able to help 50 local homeowners avoid foreclosure, like Lourdes Castillo (pictured above, on the left). Now the $33 million in the form of forgivable loans will help a lot more people, he predicted.
Joining Paley and DeLauro was Richard Walega, New England regional administrator for the U.S. Department of Housing and Urban Development (HUD).
Speakers touted the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is providing the funds for the loan program: $1 billion to 32 states and Puerto Rico, of which the $33 million is coming to Connecticut. (The other 18 states, even harder hit by the housing crash, received help earlier this year.)
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In conclusion, Paley (pictured) said, “This new initiative has the potential for really helping a lot of people in the state save their homes, help stabilize neighborhoods, bring back values, and be able to work with the people who have in many cases, through no fault of their own, fallen into this perilous situation. We’re really looking forward to being an active partner in its implementation.”
Connecticut has seen 41,000 home foreclosures in the past two years. The Emergency Homeowner Loan Program will slow that rate considerably. “It will provide limited and targeted assistance to working families,” Walega said, “bridge loans at no interest of up to $50,000 that help families get back on their feet and keep their home while they look for work.”
He said HUD would work closely with state agencies, and he praised the work of the Connecticut Housing Finance Authority in trying to prevent foreclosures.
“Let’s be clear,” Walega (pictured) continued. “Where bad loans were driving foreclosures when this crisis started three years ago, today it’s the damage that those bad loans have made to the economy that’s causing all our problems.” He claimed the Dodd-Frank Act established the strongest consumer protections in U.S. history. And he added, in a reference to recent revelations of wholesale foreclosure fraud as bank employees signed off on thousands of foreclosures without even reading the documents, “You know, the financial institutions tell you to read the fine print and follow the fine print, and we’re finding out that they didn’t follow their own fine print.”
Eligible families must make 120 percent or less of the area median income; have lost at least 15 percent of their income due to unemployment, underemployment or illness; have received some indication from the lender to foreclose; and have a “reasonable likelihood of being able to resume repayment of the first mortgage obligations with two years,” according to an FAQ sheet handed out at the event.
DeLauro said banks and other mortgage lenders rushed to cash in on the housing bubble. “And now in many cases they’re trying to close the books as quickly as possible to cover up bad behavior and predatory lending practices in order to maintain their bottom line at the expense of American families.”
Eligible families must have a reasonable likelihood of resuming their mortgage payments within two years. Applications will be available by the end of this year.