If Countrywide has foreclosed on your neighbors, the loan is now owned by Bank Of America. The eviction process for these lenders is astronomical, in some cases they are 2 years out in the legal process. If the land records shows a resale to Countrywide, then the foreclosure process has been completed, no need to do any more research. A much easier way then to travel to city hall is to visit http://civilinquiry.jud.ct.gov/ which lists all foreclosure proceedings, this is all public information
There are several options that banks offer to foreclosed owners, one is called a DFR (or deed for rent). The lender takes the deed and rents back to the former owner until they can move the property into their active real estate owned portfolio. The former owner must pay rent and ensure the property is cared for during this period. This is a fairly new process (as of August 2010) and there are stringent financial guidelines the previous owners must have adhered to at the time of foreclosure.
The big question ... was the house previously listed with a realtor? If it was, then your neighbors may quite possibly be living in the property with a DFR. If not, then the bank just has not had a chance to evict the former owners.
Hope this helps and good luck!
John Proto, Calcagni Associates
Licensed in CT