Not really. In Connecticut we have two types of foreclosure. Strict foreclosure in which there is no owner equity in the property, and title is conveyed to the lender by a foreclosure certificate.

The second type is a foreclosure by sale in the event that there is owner equity in the property or if the federal government is a party to the foreclosure (i.e. IRS tax lien, etc.). In a foreclosure by sale a committee is is formed to sell the property at auction. A forsale sign is placed on the property, and a legal notice is placed in the local news paper. Prospective bidders are required to show up with a certified check in the amount specified in the legal notice. The successful bidder must produce the balance of the purchase price within 30 days. The unsuccessful bidders get their certified checks back. It is not unusual for the bank to wind up with title either in a strict foreclosure or a foreclosure by sale.


If there is significant owner equity in the property... the owner has some options. There are very few defenses to a mortgage foreclosure. However, the owner may request either a foreclosure by sale to see if he can get more than the mortgage amount and foreclosure expenses at the auction...or he can request a long law date (date of redemption) so that he can either refi the property or sell it on his own. I have been successful in doing this for clients several times with good results. Hopefully, a lawyer can get the property owner a one to two year extension on the law date which date requires the property owner to redeem or be stripped of title.
 

Of the two options the long law date is the better. At a foreclosure by sale
all the vultures show up hell bent on getting the property at the lowest possible price. If the bank is not happy with the bids...it can outbid them and take title to the property for a future sale.

The main problem at trial is establishing sufficient owner equity to justify the long law date. Most foreclosures do not go to a full trial in Connecticut, but rather through a hearing in damages after the Defendant is defaulted for failure to appear, failure to please or failure to disclose a defense. The lender is required to have an appraisal done to establish the value of the property for the court. Generally the lender tries to have as low an appraisal as possible in order not to delay the foreclosure. Normally the defense attorney has to take the appraiser apart on the witness stand to prove that his appraisal is no good. This is generally not difficult. Invariably the appraisers use the sales comparison approach to arrive at a valuation. Usually their comparable properties are not all that great. Next the Defendant has to put his own appraiser on the stand to show that there is more value in the property. The court will usually average the two appraisals, and split the difference. The result is that usually the Defendant can show that he has equity in the property , and he can request the long law date...really seems to piss off the lenders.

With the long law date option the owner can seek a new mortgage to pay off the expense of the foreclosing mortgage. However, his credit is bad, and in the current climate...refi may not be an option available to him. If he tries to sell, the title search will disclose the foreclosure, and prospective buyers will lowball the purchase price because they know he is a motivated seller. However, he probably will wind up better off than at a foreclosure by sale.to post a reply: login - or - register