Law Day and underwater foreclosure

[Stephen R.]

I'm looking at a property in foreclosure, or pre-foreclosure. The "law day" is set for January 31. (I'm in CT.) The property is upside down with the debt exceeding the FMV by about $48k. It will need somewhere in the area of $25-$30k in repairs. Debt of $138K. Recent appraisal of $90k, before repairs. (The appraisal was a "drive by.")

It seems that, with my limited knowledge of tax laws and the foreclosure process, that waiting until after the law day would be the best route. I have put in a few calls to the attorney's office handling the case but, to my surprise, haven't heard back yet. 

Does anyone have experience with this? Is my assumption correct? Do I really push it to get in before the deadline or relax and wait until after?

[Christopher Phillips]

@Stephen R.

Connecticut has two types of foreclosures. Strict foreclosure, no actual sale is held and the title transfers directly to the lender. There is a set time for the owner to try and redeem the property before it becomes permanent. Decree of sale is the public sale of the property. The owner has a certain amount of time to try and stop the sale by again trying to pay the balance due. 

In Connecticut, the redemption law day can be as soon as 21 days, but is usually between 45 to 90. If the mortgage is underwater, there's no point in trying to buy it. Might as wait until auction or regular REO sale on the MLS.

If the house has equity, the owner probably would have just sold it before hand. However, there are some cases where a person loses their home due to a rather modest debt they could no longer afford and they still have equity. In that scenario with equity, it might be worth trying to use the redemption period to purchase a home.