Buying a home is a momentous achievement for which many people in Connecticut strive. Upon reaching the level of home ownership, few people ever expect to leave their homes. Unfortunately, financial troubles can complicate even the best-laid plans. Foreclosure is a legal tool that mortgage holders can use to kick out property owners who are behind on their payments, and to subsequently sell the property to recover financial losses.
When foreclosure was initially put into law, any default on a mortgage automatically caused ownership of the property to fall back to the mortgage holder. Now, borrowers have better opportunities to stay in their homes. The law generally requires that lenders give borrowers the opportunity to catch up on payments before losing their property. An understanding of how foreclosure works can be helpful to those who are seeking ways to avoid the process and catch up on payments.
Foreclosure by judicial sale is perhaps the most frequently used process. In this process, the home is sold under court supervision, and the resulting funds are used to first pay off the debtor’s remaining mortgage. Any remaining money may be used secondly to satisfy other lien holders, while the rest may go to the person who initially borrowed the mortgage. As this is a legal action, all parties will receive proper notification of the impending foreclosure and a short trial may be involved.
Depending on their goals, Connecticut homeowners have several options for avoiding foreclosure. In some cases, a short sale, in which a home is quickly sold for less than it is worth, may be appropriate. In others, contacting the lender directly and negotiating smaller or deferred payments might be a better option. However, for those who are struggling with debt, filing for bankruptcy may stop the process of foreclosure and set them on a path towards improved financial health.