If you’re behind on your mortgage payments and you live in Connecticut, you might be wondering what happens during a foreclosure in your state. A Connecticut foreclosure is either a “foreclosure by sale” (basically a judicial foreclosure) or a “strict foreclosure."
Below you can learn more about how these different kinds of foreclosure work, including what type of notice you’ll receive about an impending foreclosure and whether you might face a deficiency judgment. You’ll also learn about significant protections for homeowners under both federal and state law.
Under federal law, in most cases, a loan servicer must wait until you're over 120 days' delinquent before officially starting the foreclosure process. (12 C.F.R. § 1024.41). This preforeclosure period is an excellent time to submit an application to your servicer asking for an alternative to foreclosure. You might be able to stay in your home by working out a repayment plan or modification, for example, or give it up without going through a foreclosure in a short sale or deed in lieu of foreclosure.
Federal law also provides other protections to homeowners facing a foreclosure, like the following:
Connecticut foreclosures are either by sale (the court orders the home sold and the proceeds paid to the foreclosing bank to satisfy the outstanding debt) or strict foreclosure (the home's title transfers directly to the bank without a foreclosure sale). (Conn. Gen. Stat. § 49-24).
In both a foreclosure by sale and a strict foreclosure, the foreclosing bank starts the foreclosure by filing a complaint with the court and serving it to the borrower along with a summons. The bank must also provide notice to the homeowner about:
In a foreclosure by sale, if the borrower doesn’t respond to the complaint, the bank automatically wins the suit. But if the borrower responds, the court will move the case through the litigation process. Either way, if the bank prevails, the court will then enter a judgment against the borrower and set a sale date. The home is then sold at a foreclosure sale.
In a strict foreclosure, instead of setting a sale date, the court sets a “Law Day” for the borrower and the other defendants in the case. If the borrower doesn’t redeem the home (discussed below) by this deadline, he or she loses the legal right to the property. When all assigned Law Days pass, the bank files a Certificate of Foreclosure in the land records, which serves as evidence that the foreclosure has been completed and the bank then owns the property. A foreclosure sale isn’t held.
Under Connecticut law, eligible unemployed or underemployed homeowners can apply for certain protections from foreclosure, namely restructuring the mortgage debt and postponing the foreclosure during the restructuring period. (Conn. Gen. Stat. §§ 49-31f, 49-31g).
But be aware that you can’t raise a defense to the foreclosure and file for protection. (Conn. Gen. Stat. § 49-31f).
Borrowers who have suffered a financial hardship due to circumstances beyond their control may apply for help from the Connecticut Housing Finance Authority. The Emergency Mortgage Assistance Program (EMAP) provides money to help homeowners catch up or stay current with mortgage payments. EMAP assistance is in the form of a loan secured by a fixed-rate mortgage that’s subordinate to the first mortgage on the homeowner’s residence. (Conn. Gen. Stat. §§ 8-265cc to 8-265kk).
“Reinstating” is when a borrower catches up on a defaulted mortgage's missed payments, plus fees and costs, to stop a foreclosure. In Connecticut, the borrower doesn’t get the right to reinstate unless the mortgage contract provides it. Or the foreclosing bank might permit a reinstatement.
Some states allow the borrower to redeem the home within a specific period.
When the borrower can redeem in a foreclosure by sale. The borrower can redeem the home up until the court confirms the sale.
When the borrower can redeem in a strict foreclosure. In a strict foreclosure, the court will set a specific date, known as a Law Day, which is the last date that the borrower can redeem the home. You may file a motion asking the court to extend the Law Day, but the motion must be filed and heard before the Law Day. If you aren’t sure when your Law Day is scheduled to happen, call the court clerk or talk to a foreclosure attorney. (To get details on redemption rights in Connecticut, see Nolo’s article If I lose my home to foreclosure in Connecticut, can I get it back?)
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a deficiency. Some states allow the foreclosing bank to seek a personal judgment—called a deficiency judgment—against the borrower for this amount. Other states prohibit deficiency judgments with anti-deficiency laws.
The foreclosing bank can get a deficiency judgment against the borrower in a foreclosure by sale. But if the property sells for less than the appraised value, the bank must credit the borrower with one-half the difference between the selling price and the appraised value. (Conn Gen. Stat. § 49-28).
The foreclosing bank can also get a deficiency judgment in a strict foreclosure. In a strict foreclosure, the bank may seek a deficiency judgment against the borrower within 30 days after the expiration of the redemption period (that is, 30 days after the Law Day). The deficiency judgment will be limited to the difference between the total outstanding debt and the property’s fair market value, as determined by the judge. (Conn. Gen. Stat. § 49-14).
In Connecticut, the eviction is part of the foreclosure action whether it is a foreclosure by sale or strict foreclosure. If the foreclosed homeowners don’t vacate the property after the sale or the Law Day, the foreclosing bank (which is generally the new owner of the property following the foreclosure) can ask the court for an order of ejectment. The order allows a state marshal to remove the homeowners and their possessions from the premises. (Conn. Gen. Stat. §§ 49-26, 49-22).
If you want to learn more about the foreclosure process in Connecticut—or you want to find out if you have any potential defenses to a foreclosure—consider talking to a lawyer. It’s also a good idea to make an appointment to speak to a HUD-approved housing counselor, especially if you want to learn about different loss mitigation options.