Being foreclosed on is stressful. In today’s economy, banks are foreclosing on large numbers of homes every day. It’s important to remember that you’re not alone. More than that, the banks don’t like doing it. If they (or you) can come up with a profitable (or loss-mitigating) alternative to foreclosure, they’ll jump at it. But what you may think is a good alternative may not be the same as what they think.
Anytime you’re facing foreclosure, you should contact an attorney immediately. There’s enough stress in your life without trying to handle the bank, and the law, alone. If you can’t afford an attorney, there are programs out there to assist you. If you can, or if you know someone who can pay for you, you can find an attorney dedicated to your interests, willing and able to represent you.
In Connecticut, the security instrument usually used to secure a loan is called a mortgage (or “mortgage deed”). This mortgage is recorded in the land records of your town, unlike in many states, where the mortgage or alternative security instrument may be recorded at the county level. Recording this document alerts others that your home is not owned only by you, but also by the bank – and that the bank has certain interests in it. The mortgage spells out these rights, and allows the bank to take the home (foreclose) if the requirements of the loan are not met.
All foreclosures in Connecticut go through a judicial process. This is not necessarily true in all states in which Penner Law Firm does business, but in Connecticut, there is no alternative process. This is both a benefit and a burden. It tends to slow the process down, as the banks are forced into overcrowded courts and face clients with attorneys able to delay the process further. But it also means additional cost to you, in order to appropriately protect your interests.
The process in Connecticut can be carried out through either a strict foreclosure, or a decree of sale. “[T]he determination of value is a major factor in the decision whether to allow a foreclosure by sale rather than a strict foreclosure.” Farmers & Mechanics Bank v. Arbucci, 24 Conn.App. 486, 487, 589 A.2d 14, cert. denied, 219 Conn. 907, 593 A.2d 133 (1991). In the case of strict foreclosure, the process does not actually end in an immediate foreclosure auction or sale. Rather, title to the property is transferred directly from you to the lender. The court will give you a certain amount of time to make payments on the loan current, in order to protect your interest in the home. If you fail to do so, the lender will (and must) record a certificate of foreclosure listing certain information. If a decree of sale is used instead, the court will establish certain guidelines for holding a foreclosure sale.
Throughout this process, the borrower may usually pay off the loan and retain title to the property – right up until the process is completed in full. This is also known as a borrowers equity of redemption. There are also many opportunities a skilled attorney can take advantage of to delay the process.
Due to the fact that most lenders lose money in the foreclosure process, a lender is often open to alternative processes to avoid foreclosure. Talk to an attorney immediately upon receiving notice of foreclosure to learn about short sales, deeds-in-lieu of foreclosures, and other alternatives. In fact, do not wait until you receive notice. The moment you start to fall behind on your mortgage, contact an attorney. The earlier you start, the more you can be helped. Attorneys’ fees can be more reasonable than you think. More importantly, the earlier you contact an attorney, the more money they can save you in the long run.