Connecticut Bill Creates Restrictions for Nonprime Home Loans, High Cost Home Loans; Establishes Residential Mortgage Fraud as Criminal Offense
On July 7, Connecticut Governor M. Jodi Rell signed SB 949, “An Act Concerning Mortgage Practices.” The bill, among other things, establishes residential mortgage fraud as a criminal offense in Connecticut. The bill also amends the definition of “nonprime home loans” and prohibits or restricts a lender from offering nonprime home loans with certain terms and conditions (i.e., negative amortization, default rate increases, excessive late fees and acceleration clauses). Finally, under the bill, a high cost home loan cannot provide for an increase in the interest rate after default or provide for default charges in excess of five per cent of the amount in default. The bill becomes effective October 1, 2009.