What is a Foreclosure?
Mansfield CT Area Real Estate
What is Foreclosure?
Foreclosures and short sales are distinct real estate transactions that can have varying effects on your credit score:
A foreclosure occurs when a lender initiates in order to take back the title of a home that has defaulted on its mortgage.
A short sale occurs when a buyer initiates the sale of their home for less than what is still owed on the home.
Continue reading to learn more about foreclosures specifically. And be sure to check out our Foreclosure Resources Home page for more information on short sales and why its preferable to foreclosures.
Mansfield, CT Area Foreclosures
During a foreclosure, a homeowner’s rights that were covered by a mortgage are terminated. The lender becomes the absolute owner of the home.
Lenders typically start the foreclosure process when homeowners fall behind on their mortgage payments.
When that happens, the lender files suit. They may send out a Notice of Delinquency to the homeowner.
If homeowners still do not pay their delinquent payments after this notice – as well as any legal fees that the lender spent to prepare the notice – in a specified amount of time, then the lender starts foreclosure proceedings.
In some cases, the lender will file a Lis Pendes in order to start the foreclosure process. This requires the homeowner to appear in court to address allegations that the lender has made.
During this court appointment, the homeowner may ask for an extension, which is sometimes granted.
In the event that an extension is not granted, then the last face of the foreclosure phase starts. This is called the Auction Phase.
During this phase, the foreclosing trustee prepares the notice of foreclosure, which details the legal description of the home as well as event information for the upcoming auction.
The foreclosure process concludes when:
- The lender receives the title to the property
- The Sheriff or Trustee’s deed is recorded
- Status code 46 is given to the Single Family Default Monitoring System.
Typically foreclosures take about 120 days or more from the first missed payment date.
CT Short Sales: A Better Alternative to Foreclosures
Although short sales can be as lengthy as the foreclosure process, it’s much less detrimental to your credit score and less traumatic in general than a foreclosure.
And the good news is that if you get started on the short sale process as quickly as possible after a default payment, you stand a good chance of completing a short sale before a foreclosure ever becomes an option.