A bank that’s foreclosing a Connecticut home has to follow specific foreclosure procedures set out by state law. This article covers each step in a Connecticut foreclosure, as well as homeowner rights during the process, so you’ll know what to expect.
If the bank doesn’t handle the process properly, you can challenge the foreclosure. If the problem is serious, the court might dismiss the case and force the bank to start over.
Under federal law, the servicer normally has to wait until you’re over 120 days delinquent on the loan obligation before officially starting a foreclosure. This 120-day period is supposed to give you sufficient time to explore loss mitigation (foreclosure avoidance) opportunities, like a loan modification, forbearance, or repayment plan.
Foreclosures in Connecticut are judicial, which means they must go through the court. Connecticut is a little different than other states that use a judicial process, though. In Connecticut, the foreclosure may be a decree of sale foreclosure, which is basically a typical judicial foreclosure, or a strict foreclosure, which is a slightly different process.
A foreclosure by sale, also known as a decree of sale foreclosure, is basically the same as a judicial foreclosure in other states. The foreclosure officially begins when the foreclosing bank files a lawsuit (a “complaint”) in court and serves a copy to the borrower. If the borrower doesn’t respond, the bank automatically wins the case. If the borrower responds to the suit, the court will move the case through the litigation process. Either way, if the bank wins, the court enters a judgment against the borrower and sets a sale date. The home is then sold at a foreclosure sale.
A strict foreclosure and foreclosure by sale involve the same process up until the setting of the sale date, at which point the process differs. In a strict foreclosure, rather than 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 now owns the property. A foreclosure sale is not held.
Along with the complaint, the bank also has to provide notice to the borrower about Connecticut's foreclosure mediation program. (Conn Gen. Stat. § 49-31l).
Connecticut's foreclosure mediation law was set to expire on June 30, 2019; but the governor signed a law (HB 6996) to extend it. The mediation program now applies to foreclosure actions that have a return date up to June 30, 2023.
The Connecticut Housing Finance Authority (CHFA) helps homeowners in Connecticut avoid foreclosure by providing financial counseling, mortgage assistance loans, and job training. To learn more about programs the CHFA offers to homeowners trying to avoid a foreclosure, get information about eligibility requirements, and find out how the programs might be able to help you, see Avoid a Connecticut Foreclosure: Getting Help From CHFA.
In a foreclosure by sale, the property is sold to the highest bidder at the sale. Often, the bank buys the home at the foreclosure sale by making a credit bid. (At a foreclosure sale, the bank doesn't have to bid cash. Instead, the bank normally bids on the property using what’s called a “credit bid,” which means it bids the total amount the borrower owes—or sometimes less.)
If the bank buys the home at the sale, the property becomes known as REO (real estate owned).
Some states provide foreclosed borrowers with a redemption period after the foreclosure sale during which they can buy the home back (called "redeeming" the home). Connecticut law, however, does not provide a redemption period after a foreclosure by sale or a strict foreclosure.
In Connecticut, you have up until the court confirms the foreclosure sale in a decree of sale foreclosure, or up until Law Day in a strict foreclosure, if you want to pay off the debt and redeem the home. (To learn more, see If I lose my home to foreclosure in Connecticut, can I get it back?)
If a borrower’s total mortgage debt is more than the foreclosure sale price, the difference is called a “deficiency.” Some states, including Connecticut, allow the bank to seek a personal judgment—called a “deficiency judgment”—against the borrower for this amount. (To learn more, see Deficiency Judgments After Foreclosure in Connecticut.)
If you don’t leave the property after the foreclosure sale or after title transfers to the new owner in a strict foreclosure, the new owner will probably offer you a cash-for-keys deal or evict you.
Cash for keys. With a cash-for-keys deal, the new owner offers you a lump sum of money and, in exchange, you agree to move out by a specific date and leave the home in decent condition.
Eviction. If the bank is the new owner, the eviction will be part of the foreclosure action. To evict you, the bank will ask the court for an order of ejectment. (Conn Gen. Stat. § 49-26). An ejectment is faster than an eviction (an eviction requires a new lawsuit in court) and you might get only 24 hours' notice before the marshal forcibly moves you out. (Read more about evictions after foreclosure.)
This article contains details on foreclosure laws in Connecticut, with citations to statutes so you can learn more. Statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting an attorney if you’re facing a foreclosure.
If you need help understanding Connecticut's foreclosure laws, want to file a response to the foreclosure suit, or have questions about your particular circumstances, consider contacting a local foreclosure attorney. Homeowners facing foreclosure are also encouraged to contact a HUD-approved housing counselor to discuss various ways to avoid a foreclosure, like by completing a modification, short sale, or deed in lieu of foreclosure.