Mortgage Laws
Prevailing laws relating to mortgages in the state of Connecticut have been
taken into consideration here alongside the state's mortgage market updates. These
will definitely help one gain a complete understanding and take conclusive decision
on whether to go for a mortgage loan in the state.
In Connecticut the laws relating to mortgage are governed mainly by the common
law. The conduct of mortgages is regulated by the legal division of Connecticut.
- In the state Judicial Foreclosure is only available i.e. the lenders
can foreclose on a mortgage in case of default using only the judicial process. The
Judicial Foreclosure process can be carried out by
i) strict foreclosure, or,
ii) decree of sale.
The characteristics of the two are explained below:
- No actual foreclosure sale is held with strict foreclosure. The lender
approaches the court and strives to get a court order showing that the
borrower is at default regarding repayment of the mortgage. The title
is transferred to the lender if the lender is successful in this attempt.
The court, however, provides a certain specified time period within which
the borrower can redeem the property. But, upon failing to do so the property
title becomes absolute to the lender. The borrower loses any claim to
the property in such case. Also in such case the lender will have 30 days
to record a certificate of foreclosure. This must contain the following
-
- a description of the property,
- the proceedings of the foreclosure,
- the mortgage and
- the date
when the title has become absolute to the lender.
- If the process is carried out with a decree of sale then,
a) the court
specifies the time and manner of the sale,
b) it appoints a committee for selling
the property and
c) it appoints 3 appraisers who will determine the property
value.
The borrower can stop the foreclosure proceedings at any time prior to the sale.
This can be done by paying off the balance which is due on the mortgage. In
case no payment is made then the committee will proceed with the sale.
- Certain new sections have been contained in 2003-2004 Public Acts which
are awaiting codification in the Connecticut General Statutes and amendments
to new sections adopted in 2003. Those related to mortgage are: Public Act Sections
04-67: An Act which concerns validation of mortgage releases has been effective
since July1, 2004 Public Act Sections 09-105: An Act which concerns mortgage
rate lock-ins has become effective since May 21, 2004 Public Act Sections 04-132:
An Act which concerns conveyance of real property has come into effect from
October 1, 2004.
- The Connecticut Home Mortgage Disclosure Act prohibits discrimination
against mortgage loan applicants because of the location of the property (which
is to be used as security). The Department of Banking is the agency which looks
after this. If one feels that one has been unfairly discriminated against in
this regard then one can file a written complaint with the Commissioner of Banking.
- Advances under a mortgage for a ''consumer revolving loan''
(which is quite often known as a Home Equity Line Of Credit or HELOC) is permitted
by the law of Connecticut. A lender is permitted to grant HELOCs for consumer
purposes but lenders are prohibited from allowing borrowers to draw on the loan
through credit card etc.
- The Connecticut Abusive Home Loan Lending Practices Act has excluded
reverse mortgage transactions from the definition of high cost loans. Connecticut
law which is consistent with the regulations implementing the federal Truth
in Lending law while setting out disclosure requirements for high cost loans
excludes reverse mortgages. It may be pointed out that reverse mortgages are
not typical high cost mortgage loans. However, most of the reverse mortgages
prevalent in Connecticut would have been considered as high cost loans because
of the associated fees. Therefore, they have been specifically exempted.
- The Connecticut Department of Banking (DOB) is of the opinion that
protections do exist for the reverse mortgage borrowers. Federal and state agencies
and some organizations are together working to raise consumer awareness about
reverse mortgages.
- The 2005 banking business is being stimulated by metamorphoses, mergers
and passion for mortgages. This can be considered as a follow-up of last year's
powerful growth of loans which had sharply driven up the earnings for the commercial
and savings banks.
