In 2008, as the foreclosure crisis was getting underway, Connecticut initiated a foreclosure mediation program. Under the state's mediation law, lenders have to participate in premediation and mediation efforts with homeowners who're behind in mortgage payments.
The mediation program was scheduled to sunset (expire) on July 1, 2019, but the governor of Connecticut recently signed a law (HB 6996) extending the program for four more years.
In general terms, mediation is a form of alternative dispute resolution. Foreclosure mediation, specifically, is a process in which a homeowner, the lender, and a neutral mediator get together to try work out a loss mitigation option—like a loan modification—and avoid a foreclosure.
If you decide to participate in Connecticut's mediation program, you'll go through a "premediation" process. In premediation, you'll meet with the mediator, without a lender representative being present, before the mediation takes place.
Then, at the mediation, you, the mediator, and the lender's representative will meet to try to resolve your mortgage delinquency.
To be eligible for foreclosure mediation in Connecticut, the person seeking mediation has to own the property and occupy it as his or her primary residence. Also, the property must be a one- to four-family family residence located in Connecticut. And, generally, the homeowner must be listed a borrower on the promissory note secured by the mortgage that's being foreclosed. Though, some successors in interest can participate in the program if they meet all other eligibility requirements. (To learn more about how Connecticut's meditation program works, see How to Stop a Connecticut Foreclosure With Mediation.)
Connecticut's law requiring lenders to offer mediation was set to sunset (expire) July 1, 2019, but the new law extends the expiration date to July 1, 2023. The program will end when all mediation cases started prior to that date have been completed.
According to a 2019 report, from July 1, 2013 to December 31, 2018, 12,888 mediation cases were completed in Connecticut. In 73% of those cases, the parties reached agreements in which the borrower was able to keep the home. In another 17% of cases, the homeowners reached agreements that allowed them to gracefully exit from the home through a sale, short sale, deed in lieu of foreclosure, or negotiated departure date. Altogether, the program's settlement rate was 90%. These results mean you've got a decent chance of avoiding foreclosure if you participate in the program.
Even if mediation doesn't help you avoid a foreclosure, it doesn't hurt to participate, and you might be able to buy yourself some extra time to remain in the home.
Effective date: July 1, 2019