Foreclosure Law in Connecticut

In East Lyme, Connecticut, foreclosure is a legal process through which an entity which has issued a mortgage takes possession and/or ownership of the property that secured the mortgage, because the individual who took out the mortgage has consistently failed to make payments on it. The property in question is usually a house.

When consumers have to deal with foreclosure, it almost always involves a home. The bank will usually take possession of the house, and then sell it at auction, to try to encompass the balance of the mortgage. Banks normally want sell the property quickly, for as much money as possible.

In all states in the U.S., including Connecticut, borrowers have the option of foreclosure by judicial sale. This permits a court to oversee the sale of the property by the bank. The purpose of this is to get the house to sell for the highest price possible. While this might seem like something that would only benefit the bank, it is also a great benefit to the borrower, since it increases the likelihood that the sale will encompass the full balance of the mortgage, preventing them from having to pay it.

Some states treat mortgages as "non-recourse loans." A non-recourse loan is one that is secured by the borrower's property, but for which the borrower is not personally liable. Essentially, this means that a lender in a foreclosure can take the house that was mortgaged, but nothing else. If the house sells for less than the lender is owed, it cannot go after the borrower.

How to Possibly Avoid Foreclosure in East Lyme, Connecticut

It is absolutely necessary that you maintain a line of communication with your lender. Your can't expect your lender to accommodate your altered financial situation if they don't know about it. Ignoring the issue and hoping it will go away is the worst possible solution.

Bear in mind that banks aren't in the business of real estate speculation - they're in the business of lending money, and making profits through interest on their loans. In short, the bank doesn't really want your house - they'd much rather have you continue making your mortgage payments. For banks, foreclosing on a home is a last resort. Essentially, nobody likes foreclosures, and everyone wants to prevent them.

If your financial situation suddenly changes, your lender may be willing to change the terms of your loan, at least temporarily, permitting for lower monthly payments. If this means that they will be able to get some money from you, with default as the alternative, it can become an attractive option for everyone involved.

As a last resort, you might consider a "short sale," which results in loss of the home, but it normally leads to a great deal of the debt on the mortgage being forgiven. Basically, a short sale in Connecticut involves selling the house for whatever price it can fetch. The proceeds from the sale go to the lender, and if it sells for less than what's left on the mortgage, the balance of the debt is forgiven.

Can a East Lyme, Connecticut real estate attorney help?

In East Lyme, Connecticut, dealing with a possible foreclosure is never easy. However, the assistance of a seasoned real estate lawyer can make the whole process much more bearable, and possibly delay or even prevent the foreclosure altogether.