The foreclosure process can be a daunting and overwhelming experience for homeowners facing financial difficulties in Connecticut. When a homeowner fails to meet their mortgage obligations, the lender may initiate foreclosure proceedings to recover the outstanding loan balance. It is crucial for homeowners to have a comprehensive understanding of the foreclosure process, as well as the legal rights and options available to them.
This guide aims to provide clarity and insight into the foreclosure process in Connecticut, outlining the key steps involved, legal requirements, and potential alternatives. By gaining a solid understanding of this process, homeowners can make informed decisions and take appropriate actions to protect their rights and potentially find a way to prevent or navigate through foreclosure.
Understanding the Foreclosure Process in Connecticut
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments.
Foreclosure is no fun. But just know that it’s not the end of the world.
When you know how foreclosure in Connecticut works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.
The Basic Stages of A Foreclosure
The foreclosure process typically consists of several key stages, each with its own set of requirements and implications. While the exact details may vary depending on the jurisdiction and specific circumstances, the following are the basic stages commonly involved in a foreclosure:
- Pre-Foreclosure/Default Stage: This stage begins when a homeowner falls behind on their mortgage payments. Generally, a homeowner becomes delinquent after missing three to six consecutive payments. At this point, the lender may issue a notice of default, informing the homeowner of their breach of the loan agreement and the amount owed. The notice typically provides a specified period, known as a reinstatement period, during which the homeowner can bring the loan current by paying the overdue amount.
- Foreclosure Filing: If the homeowner fails to cure the default within the specified reinstatement period, the lender may proceed with filing a foreclosure lawsuit. The lender files a complaint with the appropriate court, initiating the legal action. The homeowner is served with a copy of the complaint, and they have an opportunity to respond within a designated timeframe.
- Legal Proceedings: During this stage, the foreclosure case moves through the court system. The homeowner has the right to present a defense and raise any applicable legal issues. If the court finds in favor of the lender, a judgment of foreclosure is issued, affirming the lender’s right to proceed with the foreclosure sale.
- Foreclosure Auction/Sale: Once a judgment of foreclosure is obtained, the property is typically scheduled for a foreclosure auction or sale. The auction is usually conducted by a court-appointed officer or sheriff, and the property is sold to the highest bidder. In some cases, the lender may acquire the property if there are no other bidders.
- Post-Foreclosure/Redemption Period: Following the foreclosure sale, there may be a redemption period during which the homeowner has the opportunity to reclaim the property by paying off the outstanding debt, plus any additional costs and fees incurred during the foreclosure process. The length of the redemption period varies by jurisdiction.
- Eviction: If the homeowner fails to redeem the property within the specified redemption period, the new owner (often the lender) can initiate eviction proceedings to remove the former homeowner from the property. The eviction process involves obtaining a court order for possession and may require the assistance of law enforcement to enforce the eviction.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property to the lender at a public auction (notice must be given).
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at The Property Warehouse to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
If you need to sell a property near New Britain, we can help you.
We buy houses in New Britain Connecticut like yours from people who need to sell fast.
Give us a call anytime (203) 626-4282 or
fill out the form on this website today! >>
Another Foreclosure Resource For New Britain Connecticut HomeOwners: