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From RealEstateColorado.net Resources & Links As Colorado continues to be one of the States hit hard with home foreclosures the public needs to be aware of the scammers and their tricks. Freddie Mac the governmental organization that purchases mortgages from the banks has produced an informational video to get the word out. The Colorado Foreclosure Process When a property goes into foreclosure in Colorado, the property owner is basically compelled to take action within 120 days, or lose the property. During those 120 days of the foreclosure process, some owners bring the loan current through a refinance or a 2nd or 3rd mortgage, while others list the property with a Colorado Realtor and still others sell it to an investor. If you understand the foreclosure process, you can offer help at several junctures along the way. Public Trustee The state of Colorado uses a "Public Trustee" system to handle a foreclosure for a debt secured by a deed of trust and recorded in the County where the property is located. When the property owner defaults on the payments and/or terms of the deed of trust, the person or company holding the debt usually hires an attorney to submit documentation to the Public Trustee to begin a foreclosure action.
* a Notice of Election and Demand (NED), * the original promissory note, * the original or certified copy of the deed of trust, * a certificate executed by the owner of the debt certifying the name of the grantor (debtor) and the address of the property as stated in the NED, * an affidavit stating the principal balance of the debt, * a list of all parties having a recorded interest in the property recorded after the foreclosing deed of trust, * the required filing fees and costs. Once the required documentation has been submitted, the NED is recorded with the county clerk and recorder. Within 10 days after recording the NED, the Public Trustee must send a combined notice of right to cure and right to redeem to the grantor on the deed of trust, any subsequent owners, the current owner of the property and any other parties having a right to cure or redeem. Often, when the official notice of the foreclosure arrives in the mail, the property owners realize that they need to take action. Some start calling finance companies and/or mortgage brokers for a loan to bring the payments current. Others look for a Realtor to list the property; others find an investor to bail them out for a quick sale. Notice of the Coming Sale, and the Owner's Chance to Cure the Default The Public Trustee sets the sale date of the property. The initial sale date cannot be set less than 45 days, nor more than 60 days, from the recording of the NED. The Public Trustee must also publish notice of the foreclosure. Within 20 days of the first publication, a copy of the notice must be sent to the grantor on the deed of trust, and to all persons who acquired a recorded interest in the property after the deed of trust was recorded, but before the recording of the NED. The notice is sent to the address given on the recorded instrument — if no address is given, no notice is required. Also, a Court Order (the Rule 120 Proceeding) is issued to establish that there is reasonable probability that the debt is in default and authorize the sale. Before the sale takes place, the owner has the right to cure the default. But to do so, he must file an intent to cure with the Public Trustee at least 15 days before the scheduled sale date. A cure consists of delivering all delinquent payments due, all costs, expenses, attorney fees, etc., to the Public Trustee's office by 12:00 noon on the day before the scheduled sale date. Many times this amount can be $5,000 to $20,000, or even more, and the owner who wants to save the property might take out a 2nd mortgage to bring the loan current. An owner wanting to get out from under the debt might turn to a Realtor specializing in working short sales with the bank. The Foreclosure Sale If the owner doesn't cure the default, the Public Trustee sells the property at a public auction. On the day before the sale, the lender submits its written bid for the property, which includes the unpaid balance, costs, fees, expenses, etc., NOT including taxes and senior liens. At the auction, the property is sold to the highest bidder. The highest bidder might be the bank holding the defaulted deed of trust, or it might be an investor. In either case, the Public Trustee issues a Certificate of Purchase awarding him title to the property subject to the rights of redemption by specified parties within certain deadlines. Private investors sometimes overbid the bank's bid by a dollar or more. Yield investors do this in order to earn the interest due on the deed of trust which can be substantial if there is a high default interest rate. Other investors overbid in hopes of getting the property, and occasionally, they wind up with a property that can provide a windfall. Once the property has been sold, the owner loses the ability to bring the loan current. Then, he must redeem the property by paying the bid plus costs, expenses and fees accrued as of the date of redemption. At this point, an owner hoping to stay in the house must completely refinance the foreclosing deed of trust. Redemption After Sale The owner may redeem during the 75 days after the sale. (Agricultural land has a redemption period of 6 months.) However, he must file an intent to redeem at least 15 days prior to the owner's redemption period in order to get the full 75 days. If the owner doesn't redeem, other people holding a recorded interest in the property after the foreclosing deed of trust may redeem. They also have to file their intent to redeem 15 days before the end of the owner's redemption period. The first junior lien holder has 10 days following the expiration of the owner's redemption period to redeem, with each subsequent junior lien holder getting an additional 5 days to redeem after the expiration of the preceding lien holder. The I.R.S. has 120 days to redeem. With the 75th day looming large, many owners search for a Realtor with knowledge of the foreclosure timetable and a list of buyers who can step in and redeem the property. Other owners turn to investors with money to pay them something for their equity. Still others who have equity and a desire to stay in the property turn to lenders who can make an equity-based loan. All of these transactions are driven by the urgency of the end of the redemption period. Public Trustee Deed If an owner redeems the property, the public sale of the property is annulled, and the owner retains title to the property subject to all liens and encumbrances of record except for the foreclosed deed of trust, which has been paid off. If a junior lien holder redeems, he gets a Public Trustee Deed. If no owner or lien holder redeems, title to the property vests in the holder of the Certificate of Purchase, which could be the lender at the time of sale or the over bidder. The Public Trustee Deed vests title free and clear of all encumbrances after the foreclosed deed to trust. (Encumbrances prior to it are still outstanding.) Upon being recorded, title is legally vested in the grantee named on the Public Trustee Deed and the foreclosure process is finished. But even a property going back to the bank can offer opportunities. Bank-owned properties are often listed on the market at a discount suitable for a rehabber or rental investor. Or perhaps a family will finally get the chance to buy a dream house at a discount. The moral of the foreclosure story: while a house in foreclosure can be a nightmare for one person, it can offer a dream come true for another. Important Notice It is important to note that Colorado recently passed legislation, such as the Colorado Foreclosure Protection Act signed by Governor Owens on May 31, 2006, which relate to and regulate "foreclosure consultants" and "equity purchasers." You must comply with these new laws or face civil and criminal sanctions. You are encouraged to consult with your attorney and review the statutes, which can also be viewed on the internet Legal Disclaimer: The information provided on this Site is for preliminary informational purposes only and is not intended as a substitute for advice from your attorney, accountant, Realtor or any other professional advisor. Information and law which may be contained at this web site is for general informational purposes only, and may, or may not, reflect the most current legal developments. You are urged to consult an experienced lawyer, financial advisor, or real estate professional concerning your particular factual situation and any specific questions you may have. DFR also urges you to seek legal counsel before entering into any lease, purchase, or real estate agreement. It is your responsibility to independently verify any statement made within any listing and to consult with engineering, architectural or other professionals as may be appropriate to determine the condition and suitability of any particular property for the purpose for which you intend to use it. REAL ESTATE If you would like additional information about the Denver Real Estate area in Denver Colorado as well as anywhere in Denver Metro Area contact us at 1-800-791-3990 ext 232.
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