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I frequently hear this question from homeowners – mostly from folks who feel they have no other options, or are simply exhausted from unsuccessful attempts at working things out with the lender. These folks mistakenly believe that simply “letting the home foreclose” is the end of their problems with their mortgage.
Unfortunately, letting any CT home foreclose is simply the beginning of a new and larger set of problems.
- Foreclosure in CT can take several years right now to complete – during which your credit will be completely ruined by multiple missed payments, and you will spend years dodging collection calls and workout efforts from your lender. As Connecticut’s leading short sale expert, I frequently have clients come to me after they have spent years waiting for a foreclosure to happen and it simply has not, and they are exhausted and just want to get rid of the property. Foreclosure provides no quick solutions.
- Connecticut is a recourse state. This means that once a foreclosure is complete, you still owe the money anyway! The lender has the right to pursue you for their losses – making the foreclosure simply the beginning of your next set of debt problems. Deficiency judgments are very much legal in Connecticut.
Laws regarding foreclosure deficiency judgments vary by state…making a Connecticut homeowners options much different from one in say Arizona. It is generally best to seek alternatives to simply walking away.
Another common mistake is assuming you can just “send your keys into the bank” and call it a day. While a deed-in-lieu may or may not be an option, you don’t qualify just by “sending the keys in”. There is a process involved, just as with any workout.
Most of the time after a thorough discussion with myself and/or a lawyer, most of my clients decide that attempting a short sale is the single most favorable option to get rid of the home, avoid foreclosure and settle the remaining mortgage debt.