FORECLOSURE DEFENSE NEWS AND INFORMATION - Colorado

Foreclosure filings surged in Colorado during 2009. However, the number of foreclosure sales actually decreased because of the increasing willingness of lenders to consider short sales and loan modifications.

The increased number of foreclosure filings was largely concentrated in the central and eastern parts of metro Denver, where foreclosure activity had been concentrated. On January 14, 2010, Business Week reported that Colorado ranked among the top ten states in the country for foreclosure rates in 2009.

The Colorado state government has been among the most active in the United States in its efforts to address the residential foreclosure crisis. In June, 2009, the Colorado legislature enacted the Foreclosure Deferment Bill, which was intended to give breathing room to homeowners facing foreclosure so that they can renegotiate their payments. The new law provides for 90-day deferments in foreclosures involving properties that are the primary residences of the borrowers.

Section 38-38-805 of the Colorado Revised Statutes sets forth the basic rules relating to the new 90-day deferments. The statute specifically requires the borrower and holder to negotiate the payment terms. The text of the law is as follows: 38-38-805. Foreclosure deferment.

(1) If a holder has received notice from an eligible borrower's foreclosure counselor that the eligible borrower qualifies for a foreclosure deferment, the holder and the eligible borrower shall negotiate the terms of the debt obligation secured by the deed of trust, subject to the terms of any agreement applicable to the debt obligation or any applicable government-supported enterprise servicing guidelines.

(2)(a) During the foreclosure deferment, the eligible borrower shall make monthly loan payments to the holder or the holder's designated representative that equal sixty-six and two-thirds percent of the monthly payment due prior to delinquency, less any portion of the monthly payment that represents taxes and insurance. If the eligible borrower has an obligation to make monthly payments for taxes and insurance to the holder, the eligible borrower shall pay the holder, on the same schedule, one-twelfth of the annual amount due for taxes and insurance prior to delinquency.

(b) The first payment shall be due to the address provided by the holder pursuant to section 38-38-803(4) by the fifth day following the foreclosure counselor's certificate of qualification for the foreclosure deferment. Subsequent payments shall be due every thirty calendar days thereafter until the conclusion of the foreclosure deferment.

(c) In order to preserve evidence of the date of the payment, the eligible borrower may make the payments electronically or by certified funds delivered by a method that provides evidence of the date of payment.

(3) Acceptance of payments made during the foreclosure deferment period shall not constitute a waiver of default or modification of any amounts due on the original debt or any other rights of the holder. The payments shall be applied by the holder pursuant to the applicable provisions of the note and deed of trust or, if there are no such applicable provisions, in the following order: Payment of the holder's costs and expenses incurred in the foreclosure, payment for preservation of the property, escrow advances or shortages, late charges and interest, and principal.

(4) The foreclosure deferment shall terminate early upon certification by the foreclosure counselor to the public trustee. If the holder seeks early termination, the holder shall demonstrate to the foreclosure counselor that adequate grounds for early termination exist. The foreclosure counselor shall make a determination within ten calendar days after a holder's request and issue a certification of early termination if he or she determines:

(a) That the eligible borrower has abandoned the property;

(b) That the eligible borrower has failed to comply with the conditions of foreclosure deferment, including failure to make payments on time and in accordance with this section;

(c) That the eligible borrower has conveyed, transferred, or further encumbered the property in violation of the deed of trust;

(d) That a foreclosure has been initiated by a different party on another lien encumbering the property; or

(e) That the eligible borrower has filed bankruptcy during the foreclosure deferment.

Source: L. 2009: Entire part added, (HB 09-1276), ch. 404, p. 2226, § 5, effective June 2.

As we all know, Colorado has not been immune from the foreclosure crisis sweeping our nation. Luckily, signs of recovery are beginning to emerge. According to RealtyTrac., a California-based company which tracks foreclosure statistics nationwide, Colorado foreclosure filings were down 27.4% in August 2012 as compared to August 2011.

This news may be an early sign of a strengthening economy, as more homeowners are able to make their monthly mortgage payments. But Colorado’s recovery is far from over. In fact, Colorado is currently ranked tenth out of fifty in number of foreclosures per capita. With one out of every 617 Colorado homes in some stage of the foreclosure process, many Coloradans still face the harrowing possibility of losing their homes to foreclosure.