What Does The Term “Foreclosure” Mean?
When someone has a mortgage, that mortgage is secured by the house itself. Once you’re three months or so behind on your mortgage payments, the bank will want to try to recover their money by taking back your house and reselling it. That process is the only way the bank has to take back the asset, and it starts with a court proceeding called a foreclosure.
Basically, once you’ve fallen three months behind on your mortgage payments, the bank will ask a marshal to leave papers at your door, and the foreclosure process starts. A foreclosure can take months or it can take years; it depends on the situation.
Will a Foreclosure Ruin My Credit Forever?
Your credit will definitely be affected in a foreclosure. If you reinstate by repaying the arrearage, it will rehabilitate itself as you continue to pay the mortgage in the future.
What is a Foreclosure Sale?
In Connecticut, when there is equity in the property after the foreclosing party’s lien, or if there is an Internal Revenue Service lien on the house, the property will be auctioned. To accomplish that, the court will appoint an attorney, to put ads in the paper three weeks prior to the auction, to have an appraisal of the property done and to conduct the auction of the house on a Saturday.
Keep in mind, once the bank has taken title, there is nothing you can do to get the property back. Also, once the foreclosure is over and title has passed to the lender, the bank can file for an ejectment and a marshal can have you removed from the property and move all your things from the property very quickly.
Is a Foreclosure Public, and is There Any Way to Stop the Process?
All foreclosures are public, so anyone who looks it up on the Connecticut Judicial website will be able to find it.
The way to delay or stop a foreclosure in Connecticut is, when you are served with foreclosure papers at your principal place of residence, to file for foreclosure mediation, which automatically stops the foreclosure from proceeding to judgment for seven months. For that seven months, the bank won’t be able to go to judgment and, during the foreclosure mediation, the bank’s attorney and your attorney will be there, as well as a mediator who works for the State of Connecticut; your goal will be to try to put the arrearage on the back of the mortgage, reduce the interest rate to 3% and possibly even reduce the principal amount owed to the value of the property, if you qualify to apply for the Obama mortgage modification plan for certain types of mortgages.
What Can Someone Do To Prepare for a Foreclosure?
If you have had difficulty paying, you should contact the lender and apply for a mortgage modification, to keep it from getting to the foreclosure point. As long as you’re talking to the bank, they will usually try to work with you; they may put together a forbearance agreement if you’ve lost your job or are underemployed, which means you either won’t have to pay or pay a reduced amount for a certain number of months or to pay a reduced amount for a certain amount of months. They may also reduce your payment by doing a mortgage modification.
Usually, they will want to see your paystubs, bank statements and tax returns and you’ll have to fill out a lot of paperwork, but once they receive everything they need, they will tell you whether or not they will modify or give you a forbearance. If you have a reason – like you’re unemployed or underemployed, you have a hardship, health issue or divorce – you will usually qualify for a forbearance or a mortgage modification.
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