A Connecticut court has granted a strict foreclosure judgment on a property worth $180,000 with an outstanding mortgage debt of $220,000. The law day passes and the lender takes title. The lender then applies for a deficiency judgment against the borrower. Under CGS § 49-14, which of the following BEST describes how the deficiency amount is calculated in Connecticut?
Correct Answer
D) The deficiency is the difference between the outstanding debt and the fair market value of the property at the time of the strict foreclosure judgment.
Under CGS § 49-14, when a lender seeks a deficiency judgment after strict foreclosure in Connecticut, the deficiency is calculated as the difference between the outstanding mortgage debt and the fair market value of the property at the time the strict foreclosure judgment was entered — not the price the lender later sells the property for. This protects borrowers from lenders who might deliberately sell the property below market value to maximize the deficiency claim. In this scenario, the deficiency would be $220,000 - $180,000 = $40,000 (assuming $180,000 is the fair market value).
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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