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The laws governing foreclosure in Colorado are complex, with strict adherence to the statutes, regulations, and court rules required at all times, to ensure that the borrower’s rights are not impaired as well as to ensure that the lender rights are fully protected. The laws governing foreclosure in Colorado are undergoing revision and are slated to be implemented in July, 2007. Currently, the laws governing foreclosure are as outlined below.
The day after a payment is due, technically, a loan is considered delinquent even if there are no other unpaid payments. A loan is in default as soon as any payment has been due and unpaid for more than 30 days. Default usually triggers a lender to send a letter a letter to the borrower requesting payment. If a number of defaults occur, the lender has the option of commencing foreclosure. Having three defaults (3 months’ of unpaid mortgage payments), the Lender most likely shall begin the foreclosure process.
In Colorado, the lender, through the public trustee, is foreclosing on a deed of trust, which document is securing the promissory note, i.e., the evidence of indebtedness. Based on the restrictions of the length of this article, the deed of trust is assumed to contain a power of sale and that the process for foreclosure is a nonjudicial process.
Two Notices of Election and Demand for Sale and other documents are filed with parties of interest, including the Public Trustee of the county in which the real property is located. Upon receipt, the Public Trustee shall commence the foreclosure process by filing with the Clerk and Recorder and fulfilling its publication obligations. The borrower has the right to cure if such written notice of the intent to cure, and other additional documentation, is properly and timely filed with the Public Trustee 15 days before the date of the public auction.
Upon filing the right to cure, the Public Trustee shall provide the sum necessary to cure the default.
By paying all sums outstanding, including attorney’s fees, late fees, default interest, unpaid mortgage payments, etc., the borrower is able to reinstate the loan as if no foreclosure process were initiated. The “cure” amount must be paid by cashier’s check before noon one day prior to the public auction.
Assuming no cure, a Rule 120 hearing (order authorizing sale) shall be scheduled to take place before the auction date. This hearing is an expedited hearing where the borrower is able to legally present certain limited defenses if the lender is legally entitled to foreclose on the property. The judge may cancel/vacate this hearing if the borrower does not respond when given notice. The lender must provide the signed Rule 120 Order to the Public Trustee two days before the sale, or the public auction sale is void.
Seldom is the home is sold at the public auction, and when it is, generally the only bidder is the first lender. That notwithstanding, the borrower still retains rights in the property for 75 days following the auction. This redemption period allows the borrower to obtain alternative financing or to sell the property. At this point, the borrower must pay all additional default fees, attorney’s fees, unpaid payments, Public Trustee charges, etc.
To exercise the right to redeem, the borrower must file a written notice of intent to redeem with Public Trustee's office at least 15 calendar days prior to the end of the redemption period. Within eight days, the redemption amount is received from the Public Trustee, leaving the borrower one week to provide a cashier’s check to the Public Trustee for the sums as provided by the Public Trustee.
In Colorado’s present residential real estate market, with rapidly declining market values, it is not surprising to have the loan exceed the value of the home. If the debt on the home exceeds what the lender thinks the home is worth, a homeowner could still owe the lender money even after the loss of the home (a "deficiency").
Call Schunk & Dunn, LLC for an initial 30 minute free consultation.