PA 10-181—sHB 5270

Banks Committee

Appropriations Committee

Judiciary Committee

AN ACT CONCERNING FORECLOSURE MEDIATION

SUMMARY: This act makes changes to the judicial foreclosure mediation program, the “cash for keys” law for tenants of foreclosed homes, and the homestead exemption.

The act extends the judicial foreclosure mediation program established under PA 08-176 until July 1, 2012. Under prior law, the program was set to terminate on July 1, 2010.

The act narrows the circumstances in which a mortgagee represented by counsel may be absent from a foreclosure mediation session. It provides that the mortgagee must be available by telephone, whereas prior law permitted the mortgagee to be absent if available by telephone or electronic means.

The act modifies the “cash for keys” provisions regarding the minimum amount that mortgagees or other successors in interest may offer to tenants to vacate a foreclosed residential property, establishing that the amount must be at least $2,000, regardless of whether there is evidence of the amount of the tenant's security deposit.

The act specifies that for purposes of the homestead exemption for judgment debtors, “homestead” includes co-op properties.

EFFECTIVE DATE: October 1, 2010, except for the provisions concerning the foreclosure mediation program, which are effective upon passage.

TENANTS OF FORECLOSED HOMES—“CASH FOR KEYS”

Under the act, the minimum incentive that a mortgagee or other successor in interest may offer a tenant to vacate a foreclosed residential property must equal the greater of (1) double the security deposit and interest that would be legally due the tenant upon termination of the tenancy, (2) two months' rent, or (3) $2,000.

Under prior law, the minimum incentive varied depending on whether there was evidence of the amount of the tenant's security deposit. If there was evidence, option (1) above applied. If there was no such evidence or if the tenant did not pay a security deposit, options (2) and (3) applied.

BACKGROUND

Homestead Exemption

By law, following a money judgment, certain property of the judgment debtor is exempt from execution or foreclosure. The homestead of a natural person is exempt to the value of $75,000 or, in the case of a money judgment arising out of services provided at a hospital, to the value of $125,000. The property's value is its fair market value minus the amount of any statutory or consensual lien that encumbers it.

OLR Tracking: JO: SC: PF: ts