Connecticut may soon become part of another revolution, at least as far as foreclosure law is concerned! Under recently signed legislation, a new foreclosure option could allow homeowners to recoup more of the money they’ve invested in their homes.
Strict Foreclosure and Foreclosure by Sale
Connecticut’s judicial foreclosure process has traditionally allowed for either strict foreclosure or foreclosure by sale. Under strict foreclosure, courts allow lenders to foreclose on underwater mortgages and receive title to property automatically. A foreclosure by sale is only slightly better; setting the property up for public auction with the hope that the borrower recovers whatever is left over after the debt is paid. Hint: typically not very much.
Not satisfied by such meager offerings, both homeowners and real estate professionals have been calling for something a bit less antiquated. Foreclosure by sale, they argue, shuts them out of the process, leaving borrowers to watch as their home is sold off to the highest bidder, often for far less than it may be worth. Foreclosure by market sale, as the new measure is known, aims to change all that.