Connecticut Real Estate Attorney Law Blog

Overview of Mortgage Foreclosure Process in Connecticut

Overview of Basic Mortgage Foreclosure Process in Connecticut

 I thought it would be useful to give a basic foreclosure overview for a CT mortgage foreclosure.  Connecticut has some unusual foreclosure provisions that make it different from many states.  It is especially important for anyone considering a short sale to have a basic understanding of the foreclosure process as they proceed through the short sale process.

  • Connecticut Foreclosures are Judicial With extremely limited exceptions all foreclosures in CT require suing the borrower and the court entering a judgment of foreclosure.  There are really no non-judicial foreclosures in CT such as there are in some states, where the lender can perform the foreclosure without court supervision.  There are no 'trustee sales' either since Deeds of Trust are not used in Connecticut.
  •  Foreclosure sales are the exception rather than the norm.  Even though the process is judicial, in the vast majority of foreclosure cases in CT there is NO auction!  Connecticut follows a procedure called 'strict foreclosure' in cases where there is no or little equity in the property after the debt of the foreclosing lender is considered.  In a strict foreclosure the judge assigns a 'law day' (which is usually 30 - 60 days after the court enters judgment).  On that day the plaintiff lender will become the owner of the property unless the owner or a second lien holder pays to the plaintiff the amount of its debt.  There is no auction or opportunity for third parties to bid on the property.
  • How Foreclosure Sales Work in CT.  The court will only order a foreclosure by sale with an auction if it appears that the borrower has equity in the property.  If a foreclosure by sale is ordered, the court appoints what is called a "Committee," which is actually one lawyer, to over see the sale process and hold the auction.  The auction will be held at the property being foreclosed on the date ordered by the court.  There are no 'courthouse steps' auctions in Connecticut.
  • Lenders in Connecticut can Obtain a Deficiency Judgment.  If the results of the auction do not pay the lender in full, or if a strict foreclosure was ordered, the plaintiff lender can seek a deficiency judgment against the borrower(s).  A deficiency judgment is a money judgment against the borrowers for the amount remaining due the lender after the foreclosure.  If there was a strict foreclosure, the deficiency will be the difference between the value of the property as determined by the court (based on an appraisal) and the amount of the debt.  If there was a foreclosure by sale, the deficiency is the difference between what the plaintiff obtained from the auction and the amount of the debt.  In either case, the deficiency judgment can be obtained by the plaintiff by it making a motion after the foreclosure itself is completed (within the period required by law).
  • Protections for Owners.  Connecticut is one of the few states requiring that lenders submit their foreclosures to a court supervised mediation process, although this is only applicable to foreclosures on principal residences.  The mediation process occurs after the lender has commenced suit.  The foreclosing lender is required to give notice of the mediation program when it commences the foreclosure suit, and the borrower can make a request that a court appointed mediator meet with the lender and the borrower to see if a resolution of the foreclosure can be worked out.  The borrower must request the mediation, it is not automatic.
  • Timing.  Depending on how aggressively the lender pursues the foreclosure and if the owner opposes it or seeks mediation, the process takes about 90 to 120 days from commencement of the suit to the lender owning the property in a strict foreclosure; a foreclosure by sale takes about 30 days longer.

UPDATE:  The CT legislature has recently passed legislation expanding the voluntary Foreclosure Mediation program which provides for court supervised mediation between borrowers and lenders and made it mandatory.  The details of this program are still being put in place, but it will provide the opportunity for all homeowners to have court mediation to try to allow a reinstatement or mortgage modification.  As far as I know, it is the only program of its type in the country.

Please be advised that this is a basic summary of the Connecticut foreclosure process and is no substitute for consulting with an attorney for legal advice.  Due to its brevity, this summary does not include specific time frames or specific requirements for a foreclosure.  It is simply an overview.  Please consult an attorney for further information, and this blog posting does not constitute and is not a substitute for legal advice.

Please feel free to contact me for further information.

Paul H. Begemann, Esq.
http://www.attybegemann.com

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About the author:  Attorney Begemann is a member of the Connecticut Bar and practices real estate and business law in Connecticut.  As an experienced real estate attorney he represents individuals and lenders in residential and commercial loan closings across Connecticut, including the purchase, sale and refinance of real estate.

Attorney Paul H. Begemann, 2764 Whitney Avenue, Hamden, CT  06518

Phone 203-230-8739                                       Fax 800-483-1904

email

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5 commentsPaul Begemann • August 31 2009 02:06PM

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