As Congress and the president confront a struggling economy and a subprime mortgage crisis, New Haven politicians are also feeling the strain from a rise in home foreclosures, following a spate of suits in a recent two-day period.
The Water Pollution Control Authority, a sewage-services provider for the greater New Haven area, filed eight new foreclosure suits Jan. 14 and 15, bringing the agency’s total since 2005 to 130, the New Haven Independent reported last week. The defendants’ debts range from approximately $1,200 to $3,200.
The move elicited mixed responses and calls to action from New Haven politicians, who proposed steps the city could take to protect homeowners against future foreclosures.
Board of Aldermen President Carl Goldfield said that in addition to working with the mayor’s task force that is looking into the subprime mortgage crisis, the Board plans to hold public hearings within the next few weeks to investigate why residents are not paying their sewage bills and whether the WPCA’s actions are appropriate given the relatively small amount of money on which they defaulted.
For homeowners who are in debt as the result of unanticipated personal problems, such as illness or unemployment, Goldfield said the Board would look into government payment plans and the use of liens to avoid foreclosure suits. But he said he thinks it is fair to allow the WPCA to file suits against people such as out-of-town landlords who neglect to pay their bills in order to take financial advantage of the fact that the WPCA cannot turn off its sewage services.
“We prefer not to have foreclosures of people’s homes unless it’s justified,” Goldfield said. “We want to make sure that foreclosure, which is a heavy hammer, is used sparingly.”
The WPCA did not respond to requests for comment on Tuesday.
Meanwhile, Mayor John DeStefano Jr., who converted the WPCA from a government-controlled agency into an independent entity in 2005 — although he said he still appoints some of its members — formed a task force in December to study New Haven’s subprime mortgage crisis and measure its impact on the city.
“One [of the committee’s recommendations] was the creation of an adjustable mortgage counseling center and the creation of a fund to purchase properties subject to foreclosure,” DeStefano said. “Then the state could get [the properties] back in the hands of people as soon as possible.”
DeStefano said he and the committee are currently trying to find money to pay for the recommended programs. He said he intends to use “outside funds” rather than city funds.
But Darnell Goldson, who announced last week his intention to challenge DeStefano in the 2009 mayoral election, criticized both the WPCA’s decision to file suits and DeStefano’s handling of the foreclosure crisis.
Goldson said the city is focusing on keeping its debt collection rates high rather than acknowledging countrywide symptoms of a weakening economy. He said the agency is ignoring the fact that the reason people are not paying their bills is that energy and gasoline prices are currently on the rise.
Noting what he called an insufficient response from DeStefano, Goldson proposed his own solution.
“I believe that the mayor should immediately convene with the WPCA board and ask them to adopt a six-month moratorium on all foreclosures while they develop … a more equitable way to collect this debt,” the electoral upstart explained.
For example, he said, individual suits could be taken to small claims courts, which he said would be a “cheaper proposition” than the current lawsuits, which pile legal fees on debtors. He also suggested that the WPCA delegate staff members to work with indebted families to help them pay their bills.
The defendants affected by the WPCA’s suits include out-of-town lenders, absentee landlords and residents of the New Haven area.