Gov. M. Jodi Rell today said she is drafting a legislative plan to distribute $25 million in federal funds to help communities around the state deal with the foreclosure crisis.
The state plans to distribute much of the funds from the federal Housing and Economic Recovery Act of 2008 to the largest municipalities – Hartford, New Haven, Waterbury, Bridgeport, Meriden and New Britain – while about $2.1 million is being made available to assist smaller communities, including many hard-hit towns in eastern Connecticut.
Rell has also asked that rules for the federal Small Cities Community Development Block Grant Program be modified for the next two federal fiscal years so that additional funding can be diverted to smaller communities needing to cope with foreclosures.
“Connecticut has so far been relatively fortunate – we have not seen the disastrous decline in real estate prices the communities in places like New York and California have faced,” Rell said. “But we will take no chances.”
Rell’s proposal includes a six-month moratorium on all foreclosures – during which homeowners would be required to continue paying interest and taxes – and a mandatory, 60-day mediation period on all contested foreclosures, according to a statement issued today from her office. Under current law, mediation is optional.
As a safeguard for renters, owners of properties with five or fewer rental units will be required to notify tenants within seven days of receiving a notice of foreclosure or filing for protection from creditors under bankruptcy laws.
