FORECLOSURES

Foreclosures

The State of Connecticut has created a number of conditions precedent and first-of-its-kind laws relating to foreclosure actions. A firm well versed in all procedures, protocols and laws is necessary to be successful when prosecuting a foreclosure.
CONNECTICUT IS A JUDICIAL FORECLOSURE STATE
A judicial foreclosure is a court proceeding that begins when the lender files a complaint and records a notice in the public land records announcing a claim on the property to potential buyers, creditors and other interested parties.
FORECLOSURE BY MARKET SALE
Foreclosure by market sale is meant to provide a pre-foreclosure sales solution that will provide homeowners with no equity in their properties the ability to quickly and efficiently sell their properties without the stigma of foreclosure. It is believed that the process will reduce the borrower’s deficiency versus the existing foreclosure process which can be expensive. It has also been widely speculated that this procedure will reduce blight and curb the crisis of “zombie foreclosures” while producing better sales prices for homeowners using this new approach.
CONNECTICUT IS A TITLE STATE
“Both by common-law rule and by statute, a mortgagee [creditor] in Connecticut is deemed to have taken legal title under the execution of a mortgage on real property. Conference Center, Ltd. v. TRC, 189 Conn. 212, 218, 455 A.2d 857 (1983); State v. Stonybrook, Inc., 149 Conn. 492, 496, 181 A.2d 601, cert. denied, 371 U.S. 185, 83 S.Ct. 265, 9 L.Ed.2d 227 (1962). Nonetheless, the mortgagee’s legal title is a defeasible fee ‘subject to [an equitable] right of redemption which persists until it is extinguished by an action of foreclosure.’ State v.Stonybrook, Inc., supra, 496. Even after the initiation of a foreclosure action, the mortgagee’s title does not become absolute until all eligible parties have failed to exercise their rights to redeem the property. City Lumber Co. of Bridgeport, Inc. v. Murphy, 120 Conn. 16, 19, 179 A. 339 (1935).” New Milford Savings Bank v. Jajer, 244 Conn. 251, 256 fn. 11, 708 A.2d 1378, 1382 (1998).
STRICT FORECLOSURE
“Generally, foreclosure means to cut off the equity of redemption, the equitable owner’s right to redeem the property. See Barclays Bank of New York v. Ivler, 20 Conn. App. 163, 166, 565 A.2d 252… ‘Under our law, an action for strict foreclosure is brought by a mortgagee who, holding legal title, seeks . . . to foreclose an equity of redemption unless the mortgagor satisfies the debt on or before his law day. Cook v. Bartholomew, 60 Conn. 24, 27, 22 A. 444 (1891).’ Barclays Bank of New York v. Ivler, supra, 166. The holder of the equity of redemption has until the passing of his law day to redeem the premises. Law days are set for subsequent encumbrancers in the inverse order of their priorities thereafter. The effect of the passing of the law day is that such right to redeem the premises is cut off and title to the property becomes [***12] unconditional in the [*22] encumbrancer.” JP Morgan Chase Bank v. Gianopoulos et al., 131 Conn. App. 15, 21-22, 30 A.3d 697, 701 (2011).
LAW DAY
“”Where a foreclosure decree has become absolute by the passing of the law days, the outstanding rights of redemption have been cut off and the title has become unconditional in the [redeeming encumbrancer] . . . The mortgagor has no remaining title or interest which he can convey.” City Lumber Co. of Bridgeport, Inc. v. Murphy, 120 Conn. 16, 25, 179 A. 339, 342 (1935)
FORECLOSURE MEDIATION
Program Description
“The Chief Court Administrator shall establish in each judicial district a foreclosure mediation program in actions to foreclose mortgages on residential real property or real property owned by a religious organization. Such foreclosure mediation shall (1) address all issues of foreclosure, including, but not limited to, reinstatement of the mortgage, assignment oflaw days, assignment of sale date, restructuring of the mortgage debt and foreclosure by decree of sale, and (2) be conducted by foreclosure mediators who (A) are employed by the Judicial Branch, (B) are trained in mediation and all relevant aspects of the law, as determined by the Chief Court Administrator, (C) have knowledge of the community-based resources that are available in the judicial district in which they serve, and (D) have knowledge of the mortgage assistance programs. Such mediators may refer mortgagors who participate in the foreclosure mediation program to community-based resources when appropriate and to the mortgage assistance programs.” Conn. Gen. Stat. § 49- 31m (2013).
Stay of Litigation
“…no mortgagee or mortgagor shall make any motion, request or demand with respect to the other, except those motions, requests or demands that relate to the mediation program described in section 49-31m and the mediation sessions held pursuant to such program… and (B) no judgment of strict foreclosure nor any judgment ordering a foreclosure sale shall be entered in any action subject to the provisions of this subsection and instituted by the mortgagee to foreclose a mortgage on residential real property or real property owned by a religious organization unless: (i) The mediation period set forth in subsection (c) of section 49-31n has expired or has otherwise terminated, whichever is earlier, and, if fewer than eight months has elapsed from the return date at the time of termination, fifteen days have elapsed since such termination, or (ii) the mediation program is not otherwise required or available.” Conn. Gen. Stat. § 49-31l(c)(6) (2013).
FORECLOSURE AND BANKRUPTCY
Program Description
“Upon the filing of a bankruptcy petition by a mortgagor under Title 11 of the United States Code, any judgment against the mortgagor foreclosing the title to real estate by strict foreclosure shall be opened automatically without action by any party or the court, provided, the provisions of such judgment, other than the establishment of law days, shall not be set aside under this subsection, provided no such judgment shall be opened after the title has become absolute in any encumbrancer or the mortgagee, or any person claiming under such encumbrancer or mortgagee. The mortgagor shall file a copy of the bankruptcy petition, or an affidavit setting forth the date the bankruptcy petition was filed, with the clerk of the court in which the foreclosure matter is pending. Upon the termination of the automatic stay authorized pursuant to 11 USC 362, the mortgagor shall file with such clerk an affidavit setting forth the date the stay was terminated.” Conn. Gen. Stat. § 49-15(b) (2013).
Automatic stay
“is one of the fundamental debtor protections provided by the bankruptcy laws. It gives the debtor a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions.” H.R. Rep. No. 595, 95th Cong., 2d Sess. 340-42 (1977), 1978 U.S. Code Cong. & Admin. News 5787, 5963, 6296-97, (emphasis added).

“The filing of a petition under any chapter of the Bankruptcy Code automatically stays all actions against the debtor, including foreclosure actions. 11 U.S.C § 362 (a) (5).” Roy v. Beilin, Superior Court, Judicial District of Danbury, No. 31 50 57 (Sep. 8, 1997) (1997 WL 583838).
Stay continues:
“The stay of any other act under subsection (a) of this section continues until the earliest of —
(A) the time the case is closed
(B) the time the case is dismissed; or
(C) if the case is a case under chapter 7 of this title concerning an individual or a case under chapter 9, 11, 12, or 13 of this title, the time a discharge is granted or denied.” 11 U.S.C § 362 (c) (2).
TENANT ISSUES IN FORECLOSURES FOR LENDERS AND SERVICES
The Protecting Tenants from Foreclosure Act (PTFA) is a remedial statute which is intended to protect only those person who meet its definition of a bona fide tenant. Courts have held that the PTFA is remedial and intended to allow bona fide tenants an opportunity to find alternative housing before being evicted from their residences. “…bona fide tenants facing eviction from foreclosed property avoid the immediate and abrupt displacement that comes with facing eviction with little notice…PTFA is designed to allow bona fide tenants adequate time to find alternative housing.

Sachdev Plaza LLC v. McDonald, HDSP 164755, 2012 Conn.Super. LEXIS 1647 [54 Conn.L.Rptr. 229].
Referenced from: “Foreclosure of Mortgages in Connecticut, A Guide to Resources in the Law Library, 2013 Edition”
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