Duff Blasts Rell On Connecticut Housing Finance Authority

Governor Rell took a step in Friday towards fixing what is becoming a looming problem in Connecticut. With adjustable-rate mortgages resetting at higher interest rates, tens of thousands in Connecticut face the threat of foreclosure. Naturally government has stepped in to being part of the solution after years of being part of the problem.

Rell ordered changes to the plan and a series of informational hearings throughout the state for the tens of thousands of people caught up in the subprime crisis.
The governor said the changes to the program will allow more homeowners to get help from CHFA in avoiding foreclosure.

But Sen. Bob Duff, D-Norwalk, co-chairman of the legislative Banks Committee, said the proposal doesn’t go far enough in protecting homeowners, particularly the 21,000 who will soon see their adjustable-rate mortgages go up.

Duff said Rell’s preliminary plan to help families facing foreclosure was an “utter disaster.” The Connecticut Housing Finance Authority “has fallen down on the job” and is “a bureaucratic dinosaur,” he said.

Coincidentally, the Connecticut Housing Finance Authority’s board of directors on Friday announced the retirement of Gary King after 16 years as the agency’s president and executive director.

Last November, Rell announced the formation of the Connecticut Fair Alternative Mortgage Lending Initiative and Education Services, a $50 million financing program.

Speaking during an interview Friday, Rell admitted that the effort hasn’t helped as many homeowners as she had hoped. She said that the expanded plan would be open to people behind in their mortgages, even if they have credit card debt.

“We expect we will be able to get hundreds more to qualify,” Rell said. “We’re talking about 71,000 people, roughly, that have adjustable rate mortgages. Roughly a third of that population are the ones that are having difficulty with the reset mortgages, et cetera.”

Participants in the CT FAMILIES program would be eligible for 6-percent mortgage rates.
Duff, however, was skeptical of the governor and critical of both she and CHFA.

“It just seems that the governor and CHFA are finally conceding the point that their plan has been an utter disaster,” Duff said in a phone interview. “I’m glad to see some flexibility, but it will still fall short of the mark.”
Duff noted that in testimony before his committee on Thursday, CHFA officials admitted that no one has received mortgage relief.

“They said in the hearing they haven’t closed any loans yet, four are waiting to close and there are 30 referrals,” Duff said. “There are going to be 21,000 families with mortgages reset, and at the end of the day this will help maybe 450.”

He criticized CHFA for failing to notice the potential crisis last year.

“CHFA has fallen down on the job,” Duff said. “They have not shown one ounce of being pro-active.”
He said Rell’s announcement proves that CT FAMILIES failed and the governor is now merely responding to pressure from lawmakers and the public. He said many strapped homeowners called the CT FAMILIES hot line only to not have their calls returned or their requests for aid denied.

“CHFA is a bureaucratic dinosaur,” said Duff, whose committee on Tuesday will debate and vote on legislation to protect homeowners with subprime mortgages.

“We’re trying to impress upon people that subprime mortgages can affect all of our neighborhoods,” Duff said.
Rell said that, starting in March, CHFA will sponsor two-day housing fairs in Hartford, New Haven, Bridgeport, Waterbury and Norwich to give homeowners financial and credit counseling.

The Bridgeport event will be held in the Holiday Inn on May 16-17.

The CHFA call center is (860) 571-3500 to provide information for homeowners about the CT FAMILIES program.

Naturally, I have somewhat a different view of this problem. As long as homes are thought to be investments instead of places to live, nothing will change the dynamics of less financially astute people making bad decisions about financing and investing. Needless to point out, this happens also routinely with decisions about credit and decisions about employment and investments.

As long as financial companies are able to lend at interest rates that can rise to usurious levels of 25%, 29% and even 35% interest rates, this problem will not go away.

source: Connecticut Post, Governor revamps mortgage program, KEN DIXON, 02/29/2008