Loan Modification

Foreclosure Defense Limited in Connecticut

By Eugene S. Melchionne, Connecticut Consumer Attorne

Connecticut is a Judicial foreclosure state meaning that a foreclosure must take place in the context of a court proceeding.  It is also one of only two states that recognizes the old English rule of Strict Foreclosure.  Despite the setting of a court proceeding, Connecticut Rules of Practice (civil procedure rules) limit defenses in a foreclosure solely to the making, validity or enforcement of the note and mortgage. Historically, defenses to a foreclosure action have been limited to payment, discharge, release or satisfaction of the mortgage obligation or that there had never been a valid lien on the property.  There is little room in the law to present defenses of bad behavior by the lenders or servicers in mortgage foreclosures.

In a recent decision in the Superior Court for Waterbury, Connecticut, the narrow reading of that principle has been continued.  A  homeowner had complained that the  mortgage lender or servicer had engaged in an unfair practice of bait and switch in offering a mortgage modification thus preventing a proper reinstatement of the mortgage.  The Court refused to hear any claims of the lender’s post-default behavior based on this policy as recently reinforced by the Connecticut Appellate Court.

Until the Courts in Connecticut recognize that lenders and servicers engage in improper acts after a loan falls into default, there is little hope of stopping the wave of foreclosures that is overtaking the state.

Full post as published by Mortgage Law Network on May 28, 2009 (boomark / email).