Opinion
No. FST CV 07 6000652
February 6, 2008
MEMORANDUM OF DECISION ON DEFENDANT'S APPLICATION FOR PROTECTION FROM FORECLOSURE
This case explores and, sadly, bears witness to the difficulties a homeowner may encounter qualifying for relief from foreclosure pursuant to C.G.S. § 49-31d through 49-31j.
On August 14, 2007, the plaintiff, US Bank National Assn., filed this foreclosure action against the defendant, David Bozzi. The action concerns residential property in Norwalk. Plaintiff alleges that, on or about May 3, 2006, the defendant "executed and delivered to Wachovia Mortgage Corporation, a note . . . for a loan in the original principal amount of $475,000." Additionally, plaintiff claims that, in order to secure the note, defendant "did execute and deliver to Mortgage Electronic Registration Systems, Inc., as nominee for Wachovia Mortgage Corporation, a mortgage on the property." Further, plaintiff alleges that it became the holder of the note and mortgage by way of an assignment. Finally, plaintiff claims that the note is in default and "as the holder of said mortgage and note [the plaintiff] has elected to accelerate the balance due on said note, to declare said note to be due in full and to foreclose the mortgage securing said note."
On September 14, 2007, defendant, pursuant to General Statutes §§ 49-31d through 49-31j, filed an application for protection from foreclosure. Therein, defendant alleges that, because he has "owned and occupied the subject property as his principal residence for . . . thirty two years," he qualifies as a "homeowner" pursuant to § 49-31d. Additionally, he claims that "the mortgage sought to be foreclosed is a first mortgage and the plaintiff is a lender as defined in [§ 49-31d]." Further, defendant alleges that he "has not had a foreclosure action commenced against him within the past seven years." Moreover, the defendant claims that "he is an unemployed person as defined in [§ 49-31d]." Thereafter, on October 3, 2007, plaintiff filed an objection to defendant's application along with several supporting documents. Finally, on October 15, 2007, defendant filed a response to plaintiff's objection along with his own supporting documents.
Plaintiff objects to defendant's application on the following grounds: (1) Defendant does not qualify as "unemployed" for purposes of § 49-31f(a); (2) the defendant cannot prove that he will be able to make timely payments on the restructured mortgage as required under § 49-31f(d)(1); (3) the amount of the mortgage debt at the end of any potential restructuring period will be in excess of ninety percent of the fair market value of the subject property in violation of § 49-31i(b); and (4) the defendant has failed to allege that he has not "received an emergency mortgage assistance loan [or] applied for emergency mortgage assistance in the two year period prior to the commencement" of this action in violation of § 49-31f(a)(3).
Section 49-31f(a) provides, in relevant part, that "a homeowner who is underemployed or unemployed against whom a foreclosure action is brought may make application, together with a financial affidavit, for protection from foreclosure . . ." Additionally, § 49-31d(1) provides: "`Unemployed person' means a person who is unemployed for purposes of [the unemployment act]." Although § 49-31d(1) directs us to the unemployment act, the unemployment act "does not contain a definition of the term `unemployed,' nor does it define `unemployment.'" Shawmut Mortgage Co. v. Wheat, 245 Conn. 744, 749 (1998).
Nevertheless, in Shawmut Mortgage, 245 Conn. 751, the court held that "in enacting the unemployment act, [the legislature] intended to aid only persons experiencing temporary employment-related losses of earned income." (Emphasis added.) Additionally, the court held that "the mortgage act contains a requirement that the court consider, prior to affording an applicant protection against foreclosure under the mortgage act, whether the homeowner will likely be able to resume making timely payments after the six month period of protection ends . . . This requirement indicates that the mortgage act intends only to help persons who are experiencing temporary economic difficulties. Considered in combination with the mortgage act's references to earned income and the unemployment act, this requirement lends additional support to our conclusion that the legislature had in mind only persons who are experiencing temporary employment-related losses or decreases in earned income as beneficiaries when it enacted the mortgage act." (Citation omitted; emphasis added.) Id., 752-53.
In the present case, it is difficult to conclude that the defendant is "experiencing temporary employment-related losses or decreases in earned income." To begin, in a 2007 bankruptcy petition, defendant indicates that he is retired and that Social Security is his only source of income. Although defendant maintains here that he is not retired, but instead works as "an independent contractor that designs websites for small companies and . . . offer[s] consulting services for sales management and sales productivity tools," he has provided no documentary evidence that these endeavors have ever provided him with earned income. Instead, all of the financial records before the court indicate that the defendant no longer works and is not actively seeking employment. In fact, apart from the defendant's assertions, nothing in the record indicates his prior employment. As such, defendant has failed to produce sufficient documentation to establish that he is unemployed within the meaning of § 49-31f(a).
Moreover, even assuming that the defendant qualifies as "unemployed" for purposes of § 49-31f(a), the defendant would be hard pressed to demonstrate that he is able to satisfy the requirements of § 49-31f(d)(1). Section 49-31f(d)(1) provides: "In determining the eligibility of a homeowner for protection from foreclosure under the provisions of sections 49-31d to 49-31i, inclusive, the court may consider any relevant facts and shall consider . . . [t]he likelihood that the homeowner will be able to make timely payments on the restructured mortgage commencing at the end of the restructuring period." (Emphasis added.) Section 49-31i(a) provides: "In determining the restructured mortgage debt, the court shall add the following to the existing principal balance of the mortgage debt: (1) All interest then due the lender and any interest that will be earned to the end of any restructuring period, including interest on any payments advanced by the lender during the restructuring period, such interest to be computed at the rate provided in the mortgage note, (2) real property taxes . . . (4) court costs, legal fees and any other sums the court determines to be due under the terms of the mortgage indebtedness by the court. The court shall then apply the composite interest rate as provided in subsection (c) of this section to such total restructured debt over the remaining term of the loan." In Citicorp Mortgage, Inc. v. Conant, 54 Conn.App. 529, 533-34, cert. denied, 251 Conn. 909 (1999), the court noted that, as a result of the costs set forth in § 49-31i(a), "[t]he payments that the defendants would be required to make as a result of the mortgage restructure would necessarily be higher than the original payments." Finally, "[w]hen the trial court decides whether a homeowner can make the required payments of a restructured mortgage, it is a question of fact not one of law." Citicorp Mortgage, Inc. v. Conant, supra, 54 Conn.App. 532.
The court must note that defendant's only documented source of income consists of social security benefits, and that those benefits are inadequate to meet his financial needs. Additionally, even if the court were to accept defendant's assertion that he has, within the past several years, earned income through website design, defendant acknowledges that the market for his trade is saturated. Indeed, the defendant states that "revenue has been [his] problem" and that he "need[s] work to make this happen." Yet, defendant fails to articulate how he will secure employment or income in the saturated market. Further, apart from having submitted his resume to the court, defendant has not asserted that he is currently seeking employment. Again, although this issue presents a question of fact for a court, it would appear certain that defendant's contention regarding his future earnings is, at best, speculative. See Citicorp Mortgage, Inc. v. Conant, supra, 54 Conn.App. 534 (court upheld denial of defendants' application when "visions of their future earnings were speculative").
Finally, plaintiff also maintains that the application should be denied for the following reasons: (1) Defendant failed to allege that, pursuant to § 49-31f(a)(3), he has not received an emergency mortgage assistance loan or applied for such a loan within the two-year period prior to the commencement of this action; and (2) Defendant's debt at the end of any restructuring period would be in excess of ninety percent of the property's fair market value in violation of § 49-31i(b).
Simply put, as sympathetic as the situation would make anyone feel, no one could come to conclude that defendant, six months hence, would be able to manage the new, larger mortgage burden.
For the foregoing reasons, the court is sadly compelled to deny the defendant's application for protection from foreclosure, but without prejudice to a new filing by close of business February 25, 2008. Such submission would have to address all of the failures referenced herein.
It is within the court's discretion to deny the defendant's application without prejudice so that the defendant may refile his application with proper evidence. See, e.g., Accubanc Mortgage v. Conerly, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 97 0162933 (July 29, 1998, Hickey, J.) (limiting time to refile to thirty days from date of decision); State Street Bank v. Pirro, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 97 0160227 (October 10, 1997, Hickey, J.) (limiting time to refile to fifteen days from date of order); and Bank of New York v. McKinnon, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 96 0154169S (September 19, 1997, Hickey, J.) (stating no limitation on time to refile). That it is within the court's discretion to deny the defendant's motion without prejudice is underscored by the notion that a foreclosure action is an equitable proceeding. See Deutsche Bank National Trust Co. v. Angle, 284 Conn. 322, 326 (2007) (foreclosure action is equitable proceeding and determination of what equity requires is within discretion of trial court).