Murphy briefly faced foreclosure in 2007

CHESHIRE, Conn. (AP) — U.S. Rep. Chris Murphy, the Democratic nominee for the state's open U.S. Senate seat, was sued in 2007 for defaulting on a $180,000 mortgage on his home, public records show.

Murphy's campaign spokesman, Ben Marter, said Thursday that Murphy missed a few mortgage payments on the home by mistake when he was merging his finances with those of his then-future wife, Cathy Holahan.

"When they found out about it (the mistake), they got in contact with their bank and paid it in full," Marter said.

Chase Home Finance sued Murphy in New Haven Superior Court in March 2007, two months after Murphy began his first term in the House of Representatives, saying he defaulted on the mortgage on the home in Cheshire, a wealthy New Haven suburb. Chase, which had acquired the mortgage from Webster Bank, dropped the lawsuit two months later.

More than a year later, in July 2008, Murphy took out a $43,000, 25-year home equity line of credit with a 4.99 percent rate from Webster Bank, according to Cheshire land records. Murphy had done work for Webster as a private attorney before serving in Congress, and he has received contributions from Webster's political action committee, campaign finance records show.

Murphy also was a member of the House Committee on Financial Services, which regulates banks, when he got the line of credit.

The foreclosure lawsuit and home equity line of credit were first reported Wednesday by Hartford Courant columnist Kevin Rennie, a former Republican state lawmaker.

Murphy and Republican Linda McMahon are vying for the Senate seat being vacated by retiring independent Joe Lieberman.

McMahon's campaign issued a statement Thursday saying "this story raises several disturbing facts and Chris Murphy owes it to the citizens of Connecticut to provide a full detailed and honest disclosure."

McMahon, former chief executive of WWE, previously known as World Wrestling Entertainment, has highlighted her own financial problems in campaign ads. She and her husband, Vince McMahon, WWE's current chairman and CEO, filed for bankruptcy and lost their home in the 1970s.

Sparked by McMahon's campaign, the Democratic Senatorial Campaign Committee weighed in Thursday.

"How can Linda McMahon ... hypocritically attack anyone?" it said in a statement.

Marter, of Murphy's campaign, said the difference between Murphy's foreclosure and McMahon's financial woes was that "instead of paying her debts, she filed for bankruptcy."

Marter insisted that Murphy didn't receive any special treatment when he got the home equity line of credit, and he denied Murphy's relationship with Webster Bank played any role.

McMahon's campaign manager, Corry Bliss, suggested that Murphy's spot on the Financial Services Committee played a role in him being able to get a home equity loan at a good rate a year after facing a foreclosure lawsuit.

Murphy took out mortgages of $180,000 and $22,500 in January 2005, when he bought the home. The foreclosure lawsuit said he defaulted on the $180,000 loan. He bought the home for $225,000, according to Cheshire land records. He sold the home for $246,000 in March 2010 and moved into another Cheshire home, which he bought for $477,500.

Records show he has a $382,000 mortgage on his current home from USAA Federal Savings Bank.