Foreclosure & Alternatives Law
Like most other states, some areas in Connecticut were hit hard by the 2008 real estate crisis. This means many homeowners have already lost their homes while others are still struggling to keep their residences safe from foreclosure. Mortgage foreclosures in Connecticut typically land in one of two categories; Foreclosure by Sale or Strict Foreclosure, both of which are judicial foreclosures. Learning the differences between the two categories as well as how both processes work can give Connecticut residents a better idea of how to hold on to the homes they have worked hard to acquire. Connecticut law says foreclosures in the state are equitable actions giving courts significant power in creating a fair solution, but the party foreclosing on a property is typically entitled to a judgment assuming no mistakes are present. At this time, Connecticut does not offer non-judicial foreclosures.
Strict Foreclosures: Connecticut is one of only two American states that still practice strict foreclosures, a process that originated in Great Britain. Courts turn to strict foreclosure when the borrower will gain little or no value from an auction on the property in default. Instead of spending the necessary time and money associated with auctioning a foreclosed property, courts create a deadline, generally known as a “law day,” when the homeowner must either pay off the debt or lose ownership of the property altogether. The law day is established after the lender has obtained a court order that demonstrates the borrower has defaulted on the loan.
Connecticut courts use a couple of factors to determine the value of the property in a strict foreclosure, including an appraisal that establishes the property’s value and an affidavit stating the amount of money still owed on the property. Once the value is established, courts will subtract the amount of the liens against the property to determine whether or not the property contains any value for the homeowner. In most cases, with the recent falling property values, the debt equals more than the property’s value, eliminating the need for an auction.
Foreclosure By Sale: This type of foreclosure occurs at the discretion of the presiding judge. Judges typically order a foreclosure by sale if the property still holds equity of when an IRS lien exists on the property. Usually, Connecticut courts set a date for the sale which will occur about 60 after the judgment date. The sale will occur on the property, usually on a Saturday. The judge will designate a Committee of Sale, typically a local attorney, to coordinate the sale and post information about the property in the newspaper and at the site. The committee is also responsible for obtaining liability insurance for the sale date and making sure the property appraisals are up-to-date on the day of the sale.
As in other states, foreclosure laws in Connecticut can be complex and it is often difficult for laymen to grasp all of the terminology and the various elements of the event. If you or someone close to you is feeling baffled by the legal elements of an imminent foreclosure, it is crucial to seek assistance from an attorney with knowledge of the practice area. In some cases, seeking help may even open a pathway for homeowners to keep their property and settle their debts without leaving their homes.