Connecticut Establishes Alternative Foreclosure Method

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On June 3, Connecticut Governor Dannel Malloy signed HB 5514, which establishes an alternative to the state’s current foreclosure methods. Under current law, a court may issue a judgment of foreclosure by sale or strict foreclosure. Under the new law, which takes effect October 1, 2014, a court will be permitted to approve a foreclosure sale on the open market provided the lender requests such a sale and the borrower consents. The new method is available only for a first mortgage on a one-to-four family residential property that is the borrower’s principal residence. The bill establishes industry procedures for such sales (including requirements for the foreclosure notice, property appraisal, listing agreement, and purchase and sale contract, and requires foreclosure notices to advise borrowers of the market sale option), as well as judicial procedures. The new law prohibits a borrower who consents to foreclosure by market sale from participating in the state’s foreclosure mediation program, but grants such a borrower the right to petition the court to participate under certain circumstances.

 

Topics:  Foreclosure, New Legislation

Published In: Finance & Banking Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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