When a homebuyer fails to keep up with their mortgage payments for whatever reason, the lender may foreclose on the property. A foreclosure happens when the mortgage lender takes over and sells the property to recover their money.
If you are dealing with a potential foreclosure situation, you might have questions regarding your options, such as what amounts to mortgage default and how Connecticut foreclosure laws work.
So what is a mortgage default?
A buyer defaults on their mortgage if they violate one or several provisions of the mortgage contract. The most obvious default happens when the homeowner fails to make monthly mortgage payments. However, other failures can lead to mortgage default. These are:
- Failure to pay property taxes
- Failure to sufficiently insure the property
- Putting another mortgage on the home
- Selling the home without the creditor’s consent
The lender’s foreclosure options
When the home is facing a foreclosure, the creditor may have two options: judicial and non-judicial foreclosures. As the name suggests, a judicial foreclosure requires the creditor to obtain a court order before the property can be foreclosed. This type of foreclosure is court-supervised, and it happens when the property has no “power of sale” clause.
A non-judicial foreclosure, on the other hand, happens when the property in question has a “power of sale” clause in the mortgage contract. In this type of foreclosure, the creditor is required to notify the homeowner about the default. This default notice should also be deposited at the deed’s office. After this, the homeowner is given time to catch up with missed payments. The creditor may foreclose the home if the homeowner fails to make payments.
Defaulting on mortgage payments can lead to a foreclosure. Find out how you can foreclose a home without jeopardizing your rights.