Crumbling Foundation Update




November 6, 2019

Given the prevalence of crumbling foundations in your region, I wanted to provide you with an update on what I am doing to help secure assistance for victims of crumbling foundations due to pyrrhotite.

New Gap Financing Program

Last week, I joined Governor Lamont in announcing that a new statewide loan program for crumbling foundations victims was up and running. At present, this program only applies to homeowners with crumbling foundations, but will soon be open to condominium owners as well. This loan program allows those who have received assistance from the Connecticut Foundation Solutions Indemnity Company (CFSIC) to receive “gap financing” from participating banks in Connecticut to cover repairs that CFSIC cannot cover. 
I have been working since June of 2018 with federal financial regulators, including the Federal Housing Finance Authority, requesting that regulators issue flexibility guidance to financial institutions who may wish to provide affected homeowners with a line of credit or a loan to fix their foundations. In the following months I continued to work with regulators and stakeholders in Connecticut on securing gap financing for homeowners and now, almost 17 months later, homeowners with crumbling foundations who still have a gap between what CFSIC can provide and what is needed to repair their home can utilize this low-interest loan program. It’s especially important to note that the federal casualty loss deduction – a tax deduction that I worked to secure for crumbling foundations victims back in 2017 – can be used to help homeowners recoup the cost of repairing the foundation and repay the loan. For more information on the casualty loss deduction and crumbling foundations, please visit my website. For more information about the crumbling foundations loan program, please visit the Connecticut Housing Finance Authority’s website.

Progress on Federal Research Funding

Additionally, I wanted to provide you with an update about federal research dollars going to the crumbling foundations issue. As I continue to work with federal, state, and local partners to respond to the crumbling foundations crisis, one persisting gap in addressing this problem has been the lack of reliable standards for evaluating what quantity of pyrrhotite must be present in concrete in order to pose a danger to the foundation’s structural integrity. Many homeowners have come to me with questions about their home’s condition, as they live in the affected region, have detected pyrrhotite in their foundation, but don’t yet have any cracking. This becomes a major problem for the real estate market, as these homeowners do not know if or when a foundation containing pyrrhotite may degrade.

The University of Connecticut and other institutions have worked to explore this issue, but more work is need to create a federal standard for pyrrhotite. To this end, I worked with my colleagues in the House in passing an amendment to secure $4 million for the National Institute of Standards and Technology to develop a cost-effective and standard testing method for pyrrhotite. Right now, many testing methods result in false negatives or false positives, so it is essential that NIST develop a standardized testing method. In addition, our amendment would require NIST to create a risk-rating scale for structures, helping homeowners, businesses owners, and municipal leaders understand what quantity of pyrrhotite poses a threat to their foundation. The Senate’s spending bill included $1.5 million for NIST to conduct this research, and now – as the House and Senate are preparing to bring a final spending package to conference – I am working with my colleagues to ensure that any final bill includes the full $4 million for NIST to conduct this work. 

Federal Research at the U.S. Government Accountability Office (GAO)

Back in July of 2018, during the House’s consideration of the 2019 fiscal year spending package, I joined Rep. John Larson (CT-01) in introducing a crumbling foundations amendment which would direct the GAO to conduct a study on the financial impact of crumbling foundations due to pyrrhotite, including recommendations for the actions needed to mitigate the economic issues from this crisis. The GAO is a non-partisan agency which provides the federal government and the public with fact-based information on a number of topics. Our GAO amendment passed the House with bipartisan support and became law in February of 2019.

As a result of this legislation, GAO researchers have been working for months to understand the scope of the scope of the crumbling foundations issue and to publish a public report on their findings, which may include proposals for additional legislative or regulatory actions needed. The GAO has already interviewed numerous stakeholders, including local universities conducting pyrrhotite research, banks, elected officials, and homeowners, and GAO researchers will be visiting Connecticut for a site visit this fall to see first-hand the effect this problem has had on communities in this region. As GAO completes this work in the months ahead, I will be sure to update you on the results of their study.

As always, if you have questions or concerns about crumbling foundations or other issues, please do not hesitate to contact my office.


Joe Courtney
Member of Congress  


Governor Lamont Announces Launch of Loan Program Providing Supplementary Assistance to Homeowners with Crumbling Foundations

Posted on November 1, 2019


(HARTFORD, CT) – Governor Ned Lamont today announced that a new loan program administered by the Connecticut Housing Finance Authority (CHFA) assisting homeowners with the associated costs of replacing their pyrrhotite-damaged foundations has launched and can now be obtained through participating financial institutions.

Created by a new law Governor Lamont signed this summer (Public Act 19-192), the Supplemental Collapsing Foundation Loan Program will provide supplemental assistance to homeowners who have already been approved to receive financial assistance by the Connecticut Foundation Solutions Indemnity Company Inc. (CFSIC), the captive insurance company that was created and is funded by the state. While CFSIC funding can only be used for the costs of replacing the actual concrete foundations, this loan program is intended to cover those repairs that might otherwise not be funded in whole or in part through that assistance, such as the replacement of decking, heating, and plumbing.

The governor explained that while funding distributed by CFSIC is a significant help for those homeowners in the northeastern area of the state who are facing the problematic situation, these fixed-rate of interest loans will serve to supplement that aid.

“We created this loan program to fill the gap in necessary costs needed by families who are literally watching as the foundations of their homes crumble before their eyes,” Governor Lamont said. “While the state continues to do what we can to provide assistance to those homeowners who are facing this problem, we are grateful for the partnership of these participating financial institutions, the Connecticut Bankers Association, the Connecticut Housing Finance Authority, and others who helped make this program a reality. We remain committed to working with our federal partners to address the repercussions of this natural disaster so that these homeowners can get some help rebuilding their homes and their lives.”

To apply, interested homeowners who have already been approved to receive financial assistance by CFSIC should contact one of the participating financial institutions that are listed on CHFA’s website. Participating financial institutions may loan up to $75,000 to each eligible borrower. The total amount of loans available under the program is capped at $20 million.

“This is a great example of collaboration between state government and the banking industry to come together to help our homeowners rebuild their homes, and continue on with their lives without having to fear that their prime asset will depreciate in value,” Department of Housing Commissioner and CHFA Board Chair Seila Mosquera-Bruno said. “The bond dollars administered by CFSIC, through DOH, is the first course of action to repair the affected foundations, while our new loan program will provide the gap financing for all other repairs at a lower interest rate than the homeowners would see otherwise”.

“Today’s announcement is more positive assistance for this difficult, persistent issue of crumbling foundations in eastern Connecticut, and it builds on efforts that began in in June of 2018, when the problem of homeowner eligibility for bank financing of home repairs first emerged,” Congressman Joe Courtney said. “Along with state officials, I engaged with the Federal Housing Finance Agency about homes with crumbling foundations whose mortgages are held by Fannie Mae and Freddie Mac, requesting that federal housing regulators issue flexibility guidelines to financial institutions working with affected homeowners. Now, almost 17 months later, homeowners with crumbling foundations who still have a gap between what CFSIC can provide and what is needed to repair their home can find the additional cash they need to finish those repairs. Lastly, it’s important to note that my office received confirmation from the IRS to ensure that homeowners who take a loan from this new program for crumbling foundations repairs will be able to take the federal casualty loss tax deduction for eligible repairs, helping them to re-pay the loan. This program is an essential piece to the puzzle, and I encourage all homeowners in need of gap financing to take the loan and apply for the federal tax deduction so that they can be made whole again.”

“We’re delighted that the CHFA loan program has officially launched, and our participating banks look forward to helping homeowners impacted by crumbling foundations,” Tom Mongellow, President and CEO of the Connecticut Bankers Association, said. “By having this below-market gap financing vehicle available, homeowners can achieve an affordable solution for the complete repair of their foundation and house. We sincerely appreciate the efforts of all the stakeholders to make this program a reality.”

Last month, Governor Lamont in his position as chairman of the State Bond Commission approved the next $20 million allocation for CFSIC. He has pledged to release the remaining $40 million in future meetings under the schedule authorized by state statute.

**On the Web: CHFA Supplemental Collapsing Foundation Loan Program


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