Today’s struggling homeowners have more options than ever before, and those facing foreclosure should understand the Colorado foreclosure process as soon as possible. Knowing the process will allow you to plan for each phase of foreclosure and effectively work toward avoiding it.
Delinquent Mortgage
Most lenders will report derogatory items to the credit reporting agencies once a mortgage payment becomes late. Typically there are three negative reports to your credit prior to foreclosure, e.g., 30 days late, 60 days late, and 90 days late. Once the mortgage payment is 90 days late, the lender may decide to foreclose on the home.
Preforeclosure
Once the lender decides to foreclose, they will use the services of the public trustee. Each county in Colorado has its own public trustee, but they all follow the same state foreclosure laws. Typically, the lender will retain an attorney who will prepare all the necessary documentation for the foreclosure and will work with the public trustee to auction the home. As the homeowner, you must cure the loan or complete a workout before the foreclosure sale date or the home will be lost to foreclosure.
Cure Period
Homeowners are notified once the Notice of Election and Demand (NED) is recorded and a foreclosure sale date has been scheduled. Once the NED has been recorded the foreclosure is now public information. Residential homes in default are scheduled to foreclose within 110-125 days from the date the NED is recorded. A combined notice of the foreclosure is mailed to you (the homeowner), guarantor on the note, and any occupants.
The cure period has four important dates:
- Date the NED is recorded. This is the date the foreclosure process officially begins.
- Intent to Cure Deadline. If a homeowner wishes to cure the loan, a Notice of Intent to Cure must be filed 15 days prior to the foreclosure sale date. This must be filed with the public trustee in the county where the property resides.
- Cure deadline. Once the intent to cure has been filed with the public trustee the cost to cure will be calculated and provided to you, the homeowner. The loan may be cured any time prior to the sale, but it must occur no later than one day prior to the scheduled foreclosure sale date.
- Foreclosure sale date. This is the date that the home goes to foreclosure auction at the public trustee and you lose your home to foreclosure.
Foreclosure Auction
Once the cure period of 110-125 days has expired, the public trustee will auction the property on the scheduled sale date. Typically the lender will place the highest bid on the property so they are able to retain possession of the home. In some cases a third party will be the highest bidder, which makes them the new owner of the home. Once the home is auctioned to the highest bidder, a Certificate of Purchase will be recorded by the public trustee. At this point, you no longer own the property.
What to Expect?
If you are delinquent on your mortgage for more than 90 days, the lender may foreclose at any time. Once a Notice of Election and Demand (NED) is recorded, the NED and Combined Notice will arrive in your mailbox. At this time the foreclosure also becomes public information.
Initial Foreclosure Filing
Within one week from the NED filing, a legal-sized notice will be placed on your front door or placed in a visible location. This is a state required, legal-sized document printed double sided in English and Spanish. This document encourages homeowners to contact the Colorado Foreclosure Hotline and to meet with a HUD-Approved Home Counseling Agency. The legal notice also discusses the 90-Day Foreclosure Deferment as outlined on the website. View a sample of this document on The Colorado Department of Local Affairs website.
Rule 120 Hearing
The foreclosure sale requires a Rule 120 Hearing to take place before the auction date. The lender’s attorney must schedule this hearing prior to the sale date, which legally justifies the foreclosure. A judge may choose to cancel the hearing if you, the homeowner, don’t respond to the Notice of Hearing. Homeowners are advised to not attend the hearing unless the foreclosure was filed incorrectly or if the foreclosure is barred under the Service Member Civil Relief Act.
Approximately 30-60 days from the NED, a Notice of Hearing document will be posted on your front door or mailed to you. While this is an optional hearing, it will provide you with an opportunity to be heard in front of a judge and address discrepancies or errors that may have led to an incorrect foreclosure filing. An example of this would be if payments were made, but not credited to the correct account. Each county has court fees that must be paid if you, the homeowner, chooses to attend the hearing. You must file a response at least five days prior to the date of the hearing or it will be cancelled.
Final Notice
Thirty to sixty days prior to the foreclosure sale another NED and Combined Notice are sent to all parties on the mailing list. This is the same documentation previously delivered in the foreclosure process, and it is sent to the homeowner, guarantor on the Note, and any occupants.
Public Notice via Newspaper
Five consecutive weeks prior to the foreclosure sale, the foreclosure information must be published via a media source. This is Colorado state law and most attorneys will tell you where the information is being printed and distributed. The publishing of this information is a key part of how a foreclosure is treated during bankruptcy. For more information on bankruptcy visit the bankruptcy page.
Be Prepared. Don’t Get Upset!
Mailers, solicitors, and phone calls will occur immediately after the foreclosure becomes public information. Expect all industries that offer goods or services to homeowners facing foreclosure to contact you. Beware of scams and NEVER pay for services. Foreclosure help is free and available to all homeowners.
