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Murphy works on housing recovery act
Sep 6, 11:42 AM
Meriden Record Journal
By George Moore
Record-Journal staff
MERIDEN — As some homeowners struggle to pay their mortgages and as the cost of living increases, residents are going to hear more about the new federal housing legislation signed into law in July.
While the Housing and Economic Recovery Act did not get much press, it is probably “the most significant housing reform to pass Congress in the last 50 years,” said U.S. Rep. Christopher Murphy, D-5th District, at a meeting Friday with local officials at the Greater Meriden Chamber of Commerce.
Murphy, who helped write the new law, has been holding community meetings in the district while Congress is in recess to outline each of its components.
The biggest part of the new law, the Hope for Homeowners Program, is a rescue plan for those who are starting to miss mortgage payments and are at risk of foreclosure, he said. The program allows eligible homeowners to refinance their mortgages into affordable fixed-rate loans insured by the Federal Housing Administration.
“We think this could reach upwards of half a million homeowners across the country,” Murphy told a roundtable, which included Meriden Housing Authority officials, City Councilor George Mc Goldrick and Deputy Mayor Matthew C. Dominello, Sr.
Aside from helping a segment of struggling homeowners, the plan will increase economic stability overall, Murphy said, since so many financial markets are tied to the mortgage market.
Struggling homeowners are not guaranteed access to the program. The lender who provided the mortgage, for instance, must agree to a 15 percent write down. Still, for many lenders, Murphy said, it is a good deal compared to the cost of foreclosure.
The new law also provides $100 million for housing counseling, a new affordable housing trust fund based on the profits of Fannie Mae and Freddie Mac and $4 billion in block grant funding to allow municipalities to buy foreclosed homes.
Juliet Burdelski, Meriden’s grants administrator, said she is hopeful the city could obtain some of the money. She noted there have been 73 foreclosures in Meriden since January.
“We’d like to definitely get our foot in the door to get some of the funds to Meriden,” she said.
Block grants, she said, could enable the city to purchase foreclosed homes and then sell them at a reduced rate as affordable housing, rather than allowing them to become potential blight cases. Murphy said it is unclear how much access Connecticut municipalities have to the $4 billion. The money will be disbursed based on a formula devised by the U.S. Department of Housing and Urban Development. Much of it, he said, could go to areas that have been devastated by the foreclosure crisis.
With new money and effort being spent on the mortgage problem, it is important that people are informed about the new programs, said Terence Floyd, vice president of affordable lending at People’s United Bank.
“Until we figure that out, we’re going to be spinning our wheels with these great programs going underutilized,” he said.
Murphy said he will look into whether some of the counseling funding could be used for public relations to get the word out.
Now that Congress has addressed basic problems, Murphy said, it is going to look at improving regulatory control over the mortgage market in the next session.
Murphy, who is running for re-election against Danbury Republican David Cappiello, said subprime lenders should follow the same rule that community banks follow: Only lend money to those who can demonstrate an ability to repay the loan.
