3 Types of Judicial Foreclosure in Connecticut

If you are falling behind on your mortgage or other secured loan, you may be worried about what will happen if the property goes into foreclosure. Here is an explanation of the different types of judicial foreclosure in Connecticut. By understanding the options, you and your Connecticut bankruptcy attorney can make decisions about how to respond to the notice, or whether to elect mediation, to give you as much control over the process as possible.

What is Judicial Foreclosure?

Judicial foreclosure occurs when a mortgage company, banker, or other lender with a secured interest in real property files a lawsuit in Connecticut civil courts, seeking to reclaim the property. Often, this happens when the homeowner misses their third consecutive mortgage payment or goes 90 days past due on their loan. When a judicial foreclosure begins, the borrower will receive a letter warning them that a foreclosure will begin if they fail to pay the mortgage to current within 30 days.

Types of Foreclosure in Connecticut

There are several types of foreclosure in Connecticut. While there are some similarities, the different processes can affect your rights and the choices you can make to resolve the matter on your own terms.

Voluntary Foreclosure Mediation

At the beginning of any foreclosure action, you have the right to transfer your judicial foreclosure case into Connecticut’s mandatory foreclosure mediation process. This process allows you to negotiate with your lender and explore options that avoid surrendering your property. It pauses the various other types of foreclosure, giving you time to catch up on your debt and keep your property. However, participation in this process can only be claimed “as of right” within 15 days after the “return date” set forth in the summons. So it is important that you act quickly.

Strict Foreclosure

When a foreclosure case proceeds to judgment the court must make a finding as to the fair market value of your property. If the court then finds that there is no or very little equity over and above the debt owed to the foreclosing bank it will usually enter a judgment of “strict foreclosure.” If the court enters a strict foreclosure judgment, it will assign a “law day” for each lender or party defendant with an interest and then you, in order. That “law day” represents the deadline by which you must “redeem” the property by paying the debt in full. If you (or a junior encumbrancer like a judgment creditor) fail to pay the amount in full by “law day,” you will lose your interest in the property, and the title will “vest” or be transferred to the lender after all the law days expire without further ado. The strict foreclosure process is intended to give the borrower time to locate alternative funds to pay off the total balance of the mortgage and keep the property, if they can. How much time usually depends on the amount of equity. While the statutory minimum is 21 days, which would usually not be enough time to complete a refinance, courts have discretion to set the law day several months out or more if there is a great deal of equity. But don’t sleep on your rights or be lulled into a false sense of security, as the court has discretion one way or the other. Under a strict foreclosure judgment, there is no sale of the property – it simply transfers to the lender after the expiration of the last law day.

Foreclosure by Sale

However, in a foreclosure by sale, any party to the judicial foreclosure (including the mortgage lender, junior encumbrancers, or you, the borrower) can file a motion asking for a foreclosure by sale. If the Court determines there is equity in the property, the Court can order the property be sold at auction and appoint a “committee” – a Connecticut attorney – to obtain an appraisal and arrange the sale. After the auction, the committee will file a motion to approve the sale and schedule a closing with the winning bidder. The net proceeds of the sale are then paid to the foreclosing lender.

When Can You Exercise Redemption for Different Types of Foreclosure

Connecticut is a “title theory” state. Technically speaking, the mortgage holder owns the legal title to the property, and the owner really owns the “equity of redemption”, that is, the right to own the property outright by paying off the mortgage. Whenever a Connecticut property goes into foreclosure, as the property owner, you have the ability to “redeem” the property until the foreclosure process is complete. To redeem the property, you must pay the full judgment amount along with any other costs, attorney fees, or interest ordered by the court.

• In a strict foreclosure case, the Connecticut court will set the redemption period – the length of time between the judgment and the Law Day. It could be as little as 21 days, but is more often 45 to 90 days after the judgment.
• In a foreclosure by sale, the equity of redemption is extinguished when the court confirms the sale, making it final. The longer one waits to redeem, however, the more expensive, and potentially complicated, the redemption will be.

In deciding whether to engage in voluntary mediation, strict foreclosure, or a foreclosure by sale, you should speak frankly with your Connecticut foreclosure attorney to make realistic plans about whether, and how soon, you will be able to redeem the property.

Get Help Facing Judicial Foreclosure in Connecticut

At Lawrence & Jurkiewicz, we can help you through any of the types of judicial foreclosure. Through preparation, advocacy, and diligence, we help clients in Hartford and Litchfield Counties find resolutions to their unpaid mortgage balances and avoid unwanted foreclosure. We will work with you to reach an outcome that aligns with your priorities and protects your property. Please call 860-264-1551 or contact us for a consultation.