Defense Programs to Stop Foreclosures in CT

In an inventory done by the largest provider of public records data in the country, CoreLogic, foreclosures in CT or Connecticut rise by 1.2% every year. The banks do not want to repossess these properties and lenders are not in the business of owning real estate. As a homeowner, knowing the foreclosure defense programs is important so you can take the necessary steps.

Foreclosure defense programs are formed to address foreclosures in CT

Photo Courtesy of Steve Rhodes via Flickr

What Are The Types of Foreclosures in CT?

There are two types of foreclosure procedures followed in Connecticut: (1) Strict foreclosure; and (2) Foreclosure by sale

Strict foreclosure does not involve actual selling of the property. The lender has to go to court and secure a court order saying that the borrower is in default. If the lender succeeds, transfer of ownership of the property to him is automatic. The court, fair as it is, also gives the borrower some time to settle the debt. If he fails, the property automatically goes to the lender. After which, the lender records a certificate of foreclosure together with a description of the property, the foreclosure proceedings, the mortgage, date and the title become absolute .

In foreclosure by sale, the court decides the time and manner of the sale. A sale can be rightfully stopped anytime by the borrower by paying the balance. The court appoints three appraisers to determine the property value, and another committee for the sale. The sale generally occurs on the property itself on a Saturday. The winning bidder is required a 10 percent deposit, unless the lender is the winning bidder.

Foreclosure Prevention Programs Against Foreclosures in CT

There are a number of foreclosure prevention programs for homeowners in Connecticut.

Among them is Public Law 110-289, known as the Housing and Economic Recovery Act of 2008 which the President of the United States signed into law on July 30, 2008. The program is administered by the Federal Housing Administration or FHA. The program which was implemented on October 1, 2008, allows certain borrowers experiencing difficulties with their payments to refinance into FHA-insured mortgages that are suited to their financial situation. This law also provides establishment of a counseling program, interest rate caps, and delays on foreclosure actions, including additional mortgage protection for service members.

The Connecticut legislature also passed Public Act 08-176, authorizing several foreclosure prevention programs namely:

1. The Connecticut Fair Alternative Mortgage Lending Initiative and Education Services (CT FAMLIES) Program

In this program, eligible homeowners may qualify for a fixed-rate 30-year CT FAMLIES loan provided: they have an adjustable rate mortgage or ARM (current or delinquent), or a fixed rate mortgage that is current, however, their financial situation is no longer suitable to their mortgage.

2. Homeowner’s Equity Recovery Opportunity (HERO) program

Under the program, CHFA must buy mortgages straight from lenders, using available funds, and place borrowers who are eligible, on an affordable repayment plan. Borrowers who are eligible for this program should: have a HERO loan which is in the first lien position; have tried their best to meet their financial obligations; have sufficient and stable income to support repayment of a HERO loan on time; have legal title to the mortgaged property which is their permanent residence. If they have stopped making monthly payments, they should be able to account for cash flow and show how the funds were escrowed, saved, or redirected.

Borrowers must fully disclose all assets and liabilities to CHFA, whether singly or jointly held, and all household income regardless of source, with assets as specified by the Act. Upon receiving the borrower’s application, CHFA must make an eligibility determination within 30 days. All approved borrowers must attend in-person financial counseling at a CHFA-approved agency.

3. The Emergency Mortgage Assistance Program (EMAP)

This program provides that starting July 1, 2008, lenders must comply with the EMAP statute if it wants to foreclose on a mortgage on a one-to-four family owner-occupied residence where the property is not FHA insured. This means that lenders must send a notice to the borrower stating that he or she has 60 days to meet with the lender with a credit counseling agency to attempt to resolve the default and get in touch with CHFA about EMAP if they are unsuccessful in doing so.

The foreclosure proceeding can continue should the borrower fail to comply with the deadlines, or if CHFA fails to approve the EMAP application within 30 days of its filing. EMAP participants can still exercise their rights under the foreclosure mediation program, however, the concurrent exercise of those rights cannot delay the EMAP eligibility determination.

Foreclosures in CT continue, thankfully, foreclosure defense programs give a glimmer of light to homeowners.

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