Anthony Musto

Regulatory Changes Would Help Prevent Fraudulent Foreclosures

Senator Musto: Bill targets practices that contributed to housing market meltdown

State Senator Anthony Musto (D-Trumbull) testified before the General Assembly’s Banks Committee on Tuesday in favor of legislation that would prevent banks from seeking a home mortgage foreclosure unless they also possess the title to that property.

He also proposed an expansion of the bill to restore the practice of requiring changes in the assignment of a mortgage to be recorded on municipal land use records.

"This is an issue of simple fairness," Senator Musto told the Committee. "You and I and all of our neighbors who own homes have to record our deeds on municipal land records. If the state or the federal government has a lien, it too goes on the land records. For some reason, banks have been exempted from the rules that all of the rest of us live by. We should be able to find out who owns an interest in our homes or has a lien on it.”

Senate Bill 159 would help to reduce the number of fraudulent foreclosures in Connecticut by repealing a section of current state law which enables the owner of a debt (usually a bank) to enforce a mortgage or foreclose on a property, even if the debt owner does not physically possess the title to that property.

Senator Musto would also like to see the bill expanded to require that new assignments of a mortgage be recorded in local public registries, known as municipal land use records. This practice was required all across the United States until the mid 1990’s, when Mortgage Electronic Registration Systems (MERS) were introduced.

MERS allowed mortgages to be bought and sold much more quickly than before, without the need to pay municipal recording fees. This paved the way for securitization of home mortgages—a practice that was a central cause of the 2008 collapse of the financial system and housing markets.

“In light of all of the foreclosure abuses and other financial abuses we have seen around the country, the need for this kind of change in the law is more pressing than ever,” said Senator Musto.

State Senator Anthony Musto represents the 22nd District towns of Trumbull, Bridgeport and Monroe. He is Senate Chair of the Human Services Committee.