Only the states of Connecticut and Vermont have rules that allow for a strict foreclosures. If you reside in one of these states, you should educate yourself on how this form of foreclosure operates. A stringent foreclosure, in general, permits the lender to avoid the foreclosure sale that happens in a judicial or non-judicial foreclosure. Simply put, the lender requests the court to declare the homeowner in default on the loan. If the court rules in favor of the lender and authorizes the foreclosure, the court can instantly transfer title to the lender.
Connecticut’s Strict Foreclosure
Connecticut’s stringent foreclosure legislation is contained in Title 49, Chapter 846, Section 49-24 of the Connecticut General Statutes. A summons and the complaint that the lender filed with the court must be served on the homeowner. The homeowner is given the chance to react. If they do not answer or the court determines that they are in default, the lender will be given possession of the house. You should be aware that under Section 49-31e, certain categories of homeowners are protected from this sort of foreclosure. You could also be able to obtain help through the Connecticut Housing Finance Authority or use the state’s foreclosure mediation program to settle the matter.
Even if the court rules in favor of the lender, the homeowner has a deadline to pay off the loan obligation and redeem their house, known as the Law Day. Failure to redeem the house by the deadline will result in the loss of title to the property, as well as the possibility of a deficiency judgment being issued against you. Because there is no foreclosure sale in a strict foreclosure, the shortfall is defined as any amount owed on the loan that is greater than the property’s fair market value.
Vermont’s Strict Foreclosure
Vermont’s stringent foreclosures are quite comparable to Connecticut’s strict foreclosures. The severe foreclosure legislation in Vermont may be found in Vermont Statutes, Title 12, Chapter 172, Section 4941. When the lender files the case, the homeowner will receive a summons and complaint, and they will have a set amount of time to reply, much like in Connecticut. If they don’t reply, or if the court doesn’t find their defense convincing, the lender will be given title.
Within the redemption period, which is generally six months, you can pay off the mortgage and avoid foreclosure. In rare instances, the court has the authority to provide a shorter redemption time. If you don’t take advantage of the redemption period, the lender will immediately seize possession of your house. Stringent foreclosures in Vermont, like strict foreclosures in Connecticut, can result in a deficiency judgment. The deficit is defined as the gap between the loan’s debt and the home’s fair market value.
Vermont, on the other hand, offers homeowners with extra safeguards beyond those provided by Connecticut. You can ask the court to order a foreclosure sale instead of a strict foreclosure under the same provision of the Vermont Statutes. The use of stringent foreclosure is also limited to cases where a house is “underwater.” This implies that the amount you owe on your mortgage exceeds the home’s worth in the eyes of the court. As a result, in Vermont, a stringent foreclosure almost always gives the lender the authority to pursue a deficiency judgment.