CT HB06738

No deficiency judgment may be sought against individual mortgagors, borrowers, or guarantors when the deficiency results from impaired property value due to failed or failing residential foundations with pyrrhotite, provided the lender is named in the homeowner's insurance policy.

Mortgage lenders must report foreclosures or compromises on affected properties as casualty-related with pending insured recovery rather than as deficiency-related defaults to credit reporting agencies.

Mortgage lenders cannot deny first mortgage credit for primary residences based on prior defaults, foreclosures, or compromises related to pyrrhotite foundation issues.

Lenders who improperly deny credit under these circumstances are subject to penalties up to $10,000 per violation by the Department of Banking.