Robert Megna plans to rally his fellow state legislators to pressure New Haven’s sewer authority to stop filing foreclosure suits against property owners who owe as little as $793 on their bills.
“It starts to make my blood boil,” said Megna (pictured), a state representative whose East Shore district includes the Greater New Haven Water Pollution Control Authority (WPCA).
He was referring to the authority’s stepped-up efforts to improve a 93 percent collection rate and cut down on $1 million in unpaid bills, the cost of which gets passed along to ratepayers. The WPCA has filed foreclosure suits on over 130 city property owners since the authority became a regional entity independent of city government in 2005.
None of the suits has led to actual sale of a house yet. But critics from a state judge to legal-aid lawyers argue that the suits are piling debt on already financially stressed property owners, pushing them closer to foreclosure at a time when the city is bracing for foreclosure crisis. (Click here, here and here to read about that.) The targets of the WPCA’s suits range from local homeowners to out-of-state lenders and speculators.
Megna said he will ask colleagues from the region to sign a letter pressing the WPCA to ease up on its tactics, as a first step in pushing for a policy change.
Megna said he recognizes the need for the WPCA to protect ratepayers by collecting back debt. But he suggested that the only people profiting from the WPCA’s aggressive policy are the lawyers hired to handle the cases. Targets of the lawsuits typically begin with about $1,500 in unpaid sewer bills; by their cases’ conclusion, their debts climb as much as 100 percent in legal and marshal’s fees plus interest (18 percent a year, thanks to a state legislative decision).
“Consider an alternative,” Megna said in a phone conversation this week from Costa Rica, where he’s vacationing prior to the start of the legislative session.
He pointed to the regional water authority’s practice of never filing lawsuits, but rather stopping at placing liens on properties. (The WPCA’s chief, Dominick DiGangi, notes that the sewer authority, unlike the water authority, can’t shut off service to collect debts.) Megna also echoed comments by Judge Anthony DeMayo and legal aid attorneys that these debts belong in small-claims court, not foreclosure suits.
Another New Haven state representative, Pat Dillon, joined Megna in exploring action by the state government to pressure the WPCA. She noted that local government, if it wants to help address the foreclosure crisis, should address its own role in the problem, the creation of a regionally controlled independent WPCA.
“It’s hypocritical to talk about helping victims of subprimes [mortgage lending] when we are implicated in foreclosures ourselves,” Dillon said.
Dillon commissioned a report from the Office of Legislative Research (OLR) to gather background on the WPCA and the foreclosure process. (Click here to read it.) “The report itself tells us that the state does have authority,” she said. “The WPCA is a creature of the state. we can impose restrictions just as we restricted the interest charged on medical debt because of Yale-New Haven Hospital abuses.”
Dillon was referring to legislation sponsored by New Haven State Sen. Martin Looney when Yale-New Haven employed similar aggressive tactics to collect back debt. Looney said this week that he felt his legislation succeeded both in “shedding light” on the hospital’s practices and curbing “abusive practices.” He said he was unsure whether the state legislature would get to the WPCA issue this coming session.
Dillon and Megna both stressed the need to obtain more information about both the WPCA’s approach and the cases it has filed. While New Haven Mayor John DeStefano has repeatedly said he sees no reason to look into the issue, Board of Aldermen President Carl Goldfield and Westville Alderwoman Ina Silverman are calling for a fact-finding hearing.
“Any remedy in my view would be guided by the facts of all the actual cases so we can frame the questions properly,” Dillon said. “Are some people being irresponsible? Did some people get caught by the real estate bubble? Did they have an illness or job loss that exposed them to foreclosure? Is the WPCA giving them adequate opportunity to work out their debt? Should the
WPCA have sole discretion?”
Click here to review the spreadsheet provided by the WPCA’s counsel detailing some of the debt-colelction cases hired by outside attorneys hired by the authority. Lawrence C. Sgrignari of the law firm Gesmonde, Pietrosimone & Sgrignari, who put together the spreadsheet, said to count any line with a date entered in the “Date Complaint Filed” as representing a foreclosure suit. The same holds true for lines without a date listed but with the phrase “In Suit” or “Suit Instituted” in the “Status Code” column. He said he didn’t know which of the other “Paid In Full” cases involved court filings. (The information was collected from a variety of firms, so it arrived in different ways, he explained.)
Read previous Independent coverage of New Haven’s foreclosure crisis:
• Goldfield Wants WPCA Answers
• 2 Days, 8 Foreclosure Suits
• WPCA Goes On Foreclosure Binge
• A Guru Weighs In
• WPCA Targets Church
• Subprime Mess Targeted
‚Ä¢ Renters Caught In Foreclosure King’s Fall
‚Ä¢ She’s One Of 1,150 In The Foreclosure Mill
‚Ä¢ Foreclosures Threaten Perrotti’s Empire
‚Ä¢“I’m Not Going To Lay Down And Let Them Take My House”
The following links are to various materials and brochures designed to help homeowners avoid foreclosure.
How to prepare a complaint to the Department of Banking; Department of Banking Online Assistance Form; Connecticut Department of Banking, Avoiding Foreclosure; FDIC Consumer News; Statewide Legal Services of Connecticut, Inc; Connecticut Bar Association Lawyer Referral Service.
For lawyer referral services in New Haven, call 562‑5750 or visit this website. For the Department of Social Services (DSS) Eviction Foreclosure Prevention Program (EFPP), call 211 to see which community-based organization in the state serves your town.
Click here for information on foreclosure prevention efforts from Empower New Haven.
god, it is nice to know that at least one elected leader is doing something. it's too bad that i have heard nothing about anyone from new haven doing something. oh yeah--that's right. i forgot that the reason for that is because we are irresponsible and don't pay our bills. guess i will go back to lounging and eating bon-bons now.