Post on 04-Jan-2017
transcript
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Colorado Foreclosure 101 Deanne R. Stodden
Rogers & Stodden, LLC
Agenda
Pre-Foreclosure Topics
Loan Documents
Recording Documents
Alternatives to Foreclosure
The CFPB
The Colorado PT Foreclosure Process
The Foreclosure Deferment Program
Pre-Foreclosure Topics
Loan Documents
Promissory Note / Evidence of Debt
Deed of Trust / Security Instrument
Deeds of Trust v. Mortgages
Deeds vs. Deeds of Trust
Recorded Documents and Title
Servicers/Holders/Lenders
Alternatives to Foreclosure
Repayment Plans
Loan Modifications
Deeds in Lieu of Foreclosure
Short Sales
The Evidence of Debt
Promissory Note is a promise to pay – it is a binding contract.
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It generally defines the amount of the debt, the interest rate, the maturity date of the
loan, late charges, payment due dates.
Often called the Evidence of Debt (EOD), but EOD can come in other forms such as
lines of credit and monetary judgments entered by a court of competent jurisdiction.
Security Instruments
Deed of Trust secures the repayment of the debt with collateral, usually the property that
is being purchased with the loan proceeds.
Deed of Trust is a form of Security Instrument.
Mortgage is a 2 party instrument.
Deed of Trust is a 3 party instrument.
Borrower grants the trustee an interest in the property until the debt is repaid. Borrower
grants the trustee the power of sale.
Deed of Trust
Deed of Trust contains many other provisions mostly designed to protect the lender’s
interest such as the borrower must maintain the property, the borrower must maintain
insurance on the property, the borrower cannot transfer his or her interest in the property
without the lender’s consent.
Failure to pay the amounts owed under the note is a monetary default.
Failure to comply with other provisions of the promissory note or the deed of trust is a
non-monetary default.
Deeds vs. Deeds of Trust
Deeds convey title or ownership in property.
A deed of trust is a security instrument, conveying an interest in trust for the benefit of
the lender.
Grantor grants interest.
Beneficiary is the lender or its nominee.
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Deeds can be bargain and sale deeds, warranty deeds, special warranty deeds,
confirmation deeds, PR deeds, etc.
Recorded Documents and Title Records
Documents affecting title to a property should be recorded in the county records to put
the public on notice.
Deeds, Deeds of Trust, Liens, Judgments, Easements are recorded.
When a party takes an action that will affect the property, they can learn the other parties
that have a recorded interest in the property by searching the public records.
Failure to record a document does not affect the validity of the document but will result
in lack of notice or actions affecting the property.
Servicers/Lenders/Holders
Lenders often enter into servicing agreements to have another entity service loans,
handle daily interactions with borrowers, send out statements, take payments, and handle
defaulted loans.
In Colorado, the proper party to foreclose is the Holder of the Evidence of Debt which
means the person in actual possession of or entitled to enforce an evidence of debt
(except Holder does not include a person acting as a nominee solely for the purpose of
holding the evidence of debt as an electronic registry without any authority to enforce
the evidence of debt).
Alternatives to Foreclosure
Repayment Plan – repaying the amounts owed over an agreed upon period of time.
Loan Modification – modifying a term of the loan – interest rate, term of the loan.
Deed in Lieu of Foreclosure – deeding the property to the lender in lieu of the lender
foreclosing.
Short Sale – allowing the borrower to sell the property for less than the total amount due
to the lender. Generally, a short sale is in full satisfaction of the debt, but not always.
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The Consumer Financial Protection Bureau
The CFPB was created by Title X of the Dodd-Frank Act and became operational on
July 21, 2011.
The CFPB has supervisory and enforcement authority over very large depository
institutions and credit unions with over $10 billion in assets, non-bank financial
institutions and has limited authority over smaller institutions & credit unions
The CFPB Mortgage Servicing Rules became effective in January 2014.
There is a small servicer exception to some of the Rules.
At its inception, the CFPB was given the authority to enforce over 19 consumer
protection laws.
The CFPB can issue subpoenas, cease and desist orders and investigative demands.
The CFPB can commence civil actions and administrative proceedings.
There is little oversight over the CFPB.
The CFPB can enforce disgorgement of profits, refunds of profits, return of real
property, fines, penalties, public censure.
Civil penalties can be:
• Up to $5,000/day (any violation)
• Up to $25,000/day (reckless)
• Up to $1 million/day (knowing)
The CFPB Mortgage Servicing Rules
The rules set forth minimum requirements for:
• Error resolution and information requests (Timeframes and requirements for
responses, prohibitions on fees)
• Limits on Force-placed insurance
• General servicing policies, procedures and requirements including:
Accessing and providing timely and accurate information
Properly evaluating loss mitigation applications
Facilitation oversight of and compliance by, service providers
Facilitating transfer of information during servicing transfers
Record retention requirements
Servicing file maintenance and production requirements
The CFPB Mortgage Servicing Rules
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Early intervention with delinquent consumers
• Live customer contact requirements and timeframes
• Requirements to provide loss mitigation options
Continuity of contact with delinquent consumers (Single point of contact)
• Requirements for continuity of contact personnel
• Timeframes for assignment of personnel to delinquent consumer account
• Scope of capabilities of continuity of contact personnel
Loss mitigation
• Requirements and Timeframes for acknowledging and evaluating Loss Mitigation
Options
• Requirements for responding to consumers on incomplete loss mitigation
applications
• Requirements for Appeals process
• Prohibitions and limitations on dual tracking
• Limitations on beginning or completing the foreclosure process
Interest rate adjustment notices for ARMs
Prompt crediting of mortgage payments and responses to requests for payoff amounts
Periodic statement requirements for mortgage loans
The servicing rules contain an exemption for small servicers (servicing under 5,000
loans) from certain portions of the servicing rules.
Colorado’s PT Foreclosure Process
Colorado is the only state to have a PT foreclosure system.
Other states have judicial foreclosures (mortgages) or private trustee foreclosures.
If a Holder cannot foreclose through the PT, they can foreclose judicially.
Generally speaking, the PT process is less expensive and more efficient than judicial
foreclosure.
Pre-Foreclosure Notice
On residential mortgage loans, at least 30 days before the filing of an NED and at least
30 days after the default, the Holder, or Servicer shall mail a notice to the debtor’s
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address containing the Colorado Foreclosure Prevention Hotline number and a direct
number to the Holder’s loss mitigation department.
Applies only to monetary defaults.
Initiating the Foreclosure
A foreclosure in Colorado is initiated by filing with the PT in the county where the
property is located, an initial foreclosure package which includes:
• A Notice of Election and Demand for Sale (“NED”);
• A Mailing List;
• A Combined Notice of Sale and Notice of Rights to Cure and Redeem;
• Originals or copies of the Evidence of Debt and the Deed of Trust being
foreclosed;
• Any loan modifications;
• A statement of the name and address of the current owner of the property;
• A statement identifying the servicer of the loan, if different from the Holder;
• A deposit check or authorization to use an ACH account;
• A notification of eligibility if the property that is being foreclosed is eligible for
the foreclosure deferment program; (More on this later.)
• If the Evidence of Debt is lost, a Lost Instrument Bond for 1.5 times the original
face amount of the debt;
The Notice of Election and Demand for Sale
The NED must be signed and acknowledged by the Holder or signed by the Holder’s
attorney. The NED must contain the following:
• Names of the original grantor and beneficiary of deed of trust;
• Name of the Holder of the evidence of debt;
• Date of the deed of trust being foreclosed;
• Recording date, county and reception number or book and page of recording of
the deed of trust.
• Original principal balance of the secured indebtedness;
• Principal balance of that secured debt as of the date of the NED (note that an
error in this amount does not affect the foreclosure);
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• The legal description of the property as contained in the documents filed with the
PT to commence the foreclosure (generally the deed of trust and any
amendments and partial releases);
• A statement whether the property described is all or part of the property then
encumbered by the deed of trust
• A statement of the violation of the evidence of debt or deed of trust upon which
the foreclosure is based;
• The name, address, business telephone number and Colorado bar registration
number of the attorney for the Holder; and
• A description of any change to the deed of trust described in the NED based on
an affidavit filed with the PT, together with the recording date and reception
number or book and page numbers of the recording of that affidavit in the
records.
Qualified Holders
A Qualified Holder can submit a copy of the Evidence of Debt and a recorded copy of
the Deed of Trust rather than originals.
In most instances, a qualified Holder is an FHA approved mortgagee, a bank, an agency
of the federal government, a federally chartered savings and loan association, a credit
union, an entity created or sponsored by the federal or state government that originates,
insures, guarantees, or purchases loans or a person acting on behalf of such an entity or
an entity acting in the capacity of agent, nominee or trustee for another person who falls
within one of these categories. (For the full definition see C.R.S. 38-38-100.3 (20).)
If a Qualified Holder wishes to use a copy of the Evidence of Debt and/or a copy of the
Deed of Trust, the attorney for the Holder or the Holder must sign a Statement of
Qualified Holder that indemnifies the PT.
Recording the NED and Setting the Sale
No later than ten business days following the receipt of the NED, the PT shall review
the documents filed and, if the filing is complete, cause the notice to be recorded in the
office of the county clerk and recorder.
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Sales for residential properties will be set between 110-125 days from the recording of
the NED.
Sales for agricultural properties will be set between 215-230 days from the recording of
the NED.
Agricultural vs. Non-Agricultural Property
The PT makes the determination of whether property is agricultural.
This determination must be made by the PT between 10 and 20 calendar days after the
recording of the NED, except that the PT may make this determination earlier upon
presentation of acceptable evidence that the property is not agricultural property.
This determination is binding on all parties.
Agricultural Property
If it is not evident from the legal description contained in the deed of trust whether or
not the property is agricultural property as of the relevant date, the PT must accept the
following as evidence the property is not agricultural property:
• A certified copy of a subdivision plat containing all or any part of the property
recorded with the clerk and recorder of the county where some or all of the
property is located; or
• A written statement of the clerk of a city, town, or city and county dated no more
than six months prior to filing with the NED that all or part of the property is
located within the incorporated limits of that municipality on either the date of
recording of the deed of trust or other lien being foreclosed or the date of the
statement; or
• The written statement of the assessor of the county the property is located, dated
no more than six months prior to the date of the filing with the PT of the NED
that any portion of the property was valued and assessed as other than
agricultural property after the date of recording of the deed of trust or as of the
date of the statement.
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The information is to be obtained and furnished at the expense of the person seeking the
determination whether the property is or is not agricultural property, and the expense of
obtaining and furnishing the plat or statement is to be included as part of the fees and
costs of foreclosure.
Mailing Notices
No more than twenty calendar days after the recording of the NED, the PT shall mail a
combined notice to the persons set forth in the mailing list.
No more than sixty calendar days nor less than forty-five calendar days prior to the first
scheduled date of sale, the PT shall mail a combined notice to the persons as set forth in
the most recent amended mailing list.
If there is no amended mailing list, the PT shall mail a combined notice to the persons as
set forth in the mailing list. Thus, it is not required that an amended mailing list be
provided.
Mailing Lists
The Mailing List (ML) must include: the grantor(s) at the property address, the
grantor(s) at any mailing address or the last known address shown in the Holder’s
records, any person known or believed to be liable on the debt, the occupant at the
property addressed to “occupant.”
The Amended Mailing List (AML) will include those parties on the Mailing List plus
each person who appears to have an interest in the property described in the NED whose
instrument was recorded prior to the date and time of the recording of the NED if the
person’s interest in the property may be extinguished by the foreclosure (also known as a
“junior lienor”).
Combined Notice
The combined notices required to be mailed must contain the following:
• The information required by C.R.S. § 38-38-101 (4);
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• The statement: A notice of intent to cure filed pursuant to section 38-38-104 shall
be filed with the PT at least 15 calendar days prior to the first scheduled sale date
or any date to which the sale is continued;
• The statement, which must be in bold: If the sale date is continued to a later
date, the deadline to file a notice of intent to cure by those parties entitled to
cure may also be extended;
• The statement: A notice of intent to redeem filed pursuant to section 38-38-302
shall be filed with the PT no later than eight business days after the sale;
• The date to which the sale has been continued;
The date of sale determined pursuant to section 38-38-108;
The place of sale determined pursuant to section 38-38-110;
The statement as required by section 24-70-109, C.R.S.: The lien being foreclosed may
not be a first lien; and
A statement that, if the borrower believes that a lender or servicer has violated the
requirements for a single point of contact in section 38-38-103.1 or the prohibition on
dual tracking in section 38-38-103.2, the borrower may file a complaint with the
Colorado attorney general, the CFPB, or both, but the filing of a complaint will not stop
the foreclosure process. The notice must include contact information for both the
Colorado attorney general's office and the CFPB. If the PT maintains a web site, the PT
shall also post this information on the web site available for viewing by all borrowers.
A legible copy of this sections 38-38-103, 38-37-108, 38-38-104, 38-38-301, 38-38-302,
38-38-304, 38-38-305, and 38-38-306 shall be sent with all notices.
Single Point of Contact
By legislative changes effective January 1, 2015, Colorado law now requires that no
later than the forty-fifth day of a borrower's delinquency, a servicer shall promptly
establish a single point of contact (SPOC) for communications with the borrower. The
servicer shall do so within the time periods prescribed in, and subject to the other
requirements imposed by, federal law and CFPB rules and orders. Once the SPOC is
established, the servicer shall promptly provide to the borrower, in writing, one or more
direct means of communication with the SPOC.
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C.R.S. 38-38-103.1 describes the requirements for Colorado but they track the CFPB
Rules.
A SPOC shall provide the borrower with accurate information about:
• Loss mitigation options available to the borrower from the owner or assignee of
the borrower's mortgage loan;
• Actions the borrower must take to be evaluated for loss mitigation options,
including actions the borrower must take to submit a complete loss mitigation
application and, if applicable, actions the borrower must take to appeal the
servicer's determination to deny a borrower's loss mitigation application for any
trial or permanent loan modification program offered by the servicer;
• The status of any loss mitigation application that the borrower has submitted to
the servicer;
• The circumstances under which the servicer may make a referral to foreclosure;
and
• Applicable loss mitigation deadlines established by an owner or assignee of the
borrower's mortgage loan or by section 38-38-103.2;
A SPOC must also retrieve, in a timely manner:
• A complete record of the borrower's payment history; and
• All written information the borrower has provided to the servicer and, if
available, to prior servicers in connection with a loss mitigation application;
Provide the documents and information to other persons required to evaluate a borrower
for loss mitigation options made available by the servicer, if applicable; and;
Provide a delinquent borrower with information about the procedures for submitting a
notice of error or an information request.
Single Point of Contact Exceptions
A servicer is exempt from the Colorado SPOC requirement if the servicer services 5,000
or fewer mortgage loans for all of which the servicer, or an affiliate of the servicer, is the
creditor or assignee. In determining whether a servicer services 5,000 or fewer
mortgages, the servicer is evaluated based on the number of mortgage loans serviced by
the servicer and any affiliates as of January 1 for the remainder of the calendar year.
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A servicer who complies with 12 CFR 1024.40, as promulgated by the CFPB, or is
exempt from compliance with that regulation under federal law or CFPB rules,
regulations, or orders, is deemed in compliance with this section.
Prohibition on Dual Tracking
Other new legislative changes effective January 1, 2015 state:
A servicer is subject to the time limits and other requirements of federal law and CFPB
rules in connection with a foreclosure under this article.
The servicer shall:
• Notify the borrower in writing when it receives a complete loss mitigation
application from the borrower; and
• Exercise reasonable diligence in obtaining documents and information to
complete a loss mitigation application
If the borrower has received confirmation from the servicer that the borrower has
submitted a complete loss mitigation application or has been offered and has accepted a
loss mitigation option and is complying with its provisions, and yet an NED has been
filed or action is being taken pursuant to section 38-38-105 or 38-38-106 with regard to
the borrower, then, in order to stop the foreclosure sale, no later than fourteen calendar
days before the sale date, the borrower must present to the PT the borrower's written
notification from the servicer indicating receipt of a complete loss mitigation application
dated at least thirty-seven days prior to the sale date or acceptance of a loss mitigation
option, and, if the borrower does so:
PT and Dual Tracking
As soon as possible, but no later than three business days after receipt of the notification,
the PT shall contact the attorney for the servicer or Holder or the servicer or Holder, if
not represented by an attorney, by telephone, electronic mail, or first-class mail and
inquire as to the status of the loss mitigation option. The PT shall document this inquiry.
Until the servicer or its attorney responds to the inquiry, the PT shall continue the sale in
accordance with section 38-38-109 (1) (a).
If the Holder or its attorney fails to respond within seven calendar days to an inquiry
then, as soon as possible but no later than the fourteenth day after the date of the inquiry,
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the PT shall send a certified letter to the attorney for the servicer or Holder or to the
servicer or Holder, if not represented by an attorney, as listed on the NED, inquiring as
to the status of the loss mitigation option. The servicer or Holder shall reimburse the PT
for the cost of mailing the letter.
If, after being contacted, the attorney for the servicer or Holder or the servicer or Holder,
if not represented by an attorney, gives the PT a written statement via electronic mail or
first-class mail disputing that a loss mitigation option has been offered and accepted or
that the borrower is complying with its terms, the PT shall proceed with the sale.
If the attorney for the Holder or the Holder acknowledges that a loss mitigation option
has been offered and accepted and that the borrower is complying with its terms, the PT
shall continue the sale in accordance with section 38-38-109 (1) (a), and the Holder shall
withdraw the NED within 180 calendar days after the date of the acknowledgment if the
borrower continues to comply with the terms of the loss mitigation option.
If, within 180 calendar days after the date of the acknowledgment, the attorney for the
Holder or the Holder, has not withdrawn the NED and neither the attorney for the Holder
nor the Holder has notified the PT that the borrower is not complying with the terms of
the loss mitigation option, the PT may administratively withdraw the NED.
If, within 180 calendar days after the date of the acknowledgment, the borrower fails to
comply with the terms of the loss mitigation option, the Holder or the attorney for the
Holder may give written notice to the PT that the loss mitigation option has been
breached, and, no later than ten business days after receiving the notice, the PT shall
mail an amended combined notice containing the date of the rescheduled sale to each
person appearing on the most recent mailing list, or on an updated mailing list if
provided by the Holder or the Holder's attorney. The rescheduled sale date must not be
fewer than seven calendar days after the date the amended combined notice is mailed.
All fees and costs of providing the amended combined notice may be included as part of
the foreclosure costs.
If a foreclosure sale is continued as a result of compliance with the prohibition on dual
tracking, the periods for which the sale may be continued are in addition to the twelve-
month period of continuance provided by C.R.S.§ 38-38-109 (1).
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A servicer is exempt from this section if the servicer services 5,000 or fewer mortgage
loans for all of which the servicer, or an affiliate of the servicer, is the creditor or
assignee.
A servicer who complies with 12 CFR 1024.41, as promulgated by the CFPB, or is
exempt from compliance with that regulation under federal law or CFPB rules,
regulations, or orders, is deemed in compliance with this section.
Publications
No more than 60 and no less than 45 days prior to sale, the PT shall begin 4 weeks of
consecutive publications, which is actually 5 publications.
The PT shall review the publication of the combined notice for accuracy.
The Rule 120 Order Authorizing Sale
In order to not violate due process, at least 16 days prior to sale, the Holder must obtain
an Order Authorizing Sale (“C.R.C.P. Rule 120 Order” or “OAS”).
An OAS is obtained by filing a Rule 120 Motion for OAS with the District Court in the
county where the property is located.
A notice of hearing on the motion must be mailed to interested parties (similar
requirements to the mailing list for the foreclosure).
The notice of hearing must also be posted on the property if the property is residential.
If nobody responds to the motion, the OAS will enter.
If a response is filed, in most cases, a hearing will be held on the motion.
The OAS must be tendered to the PT along with the bid. The Order must be from the
district court in the county where the property is located.
The motion must have come before the judge for review at least 16 days prior to sale and
the OAS must recite that it came for review at least 16 days prior to the actual sale date.
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Right to Cure When Default is Non-Payment
Foreclosures based upon a monetary default can be cured prior to sale by paying the
arrearages.
Other types of defaults may or may not be cured, depending upon the default and the
loan documents, but regardless of whether it can be cured, the default cannot be cured
through the PT.
In order to cure a monetary default, an Intent to Cure must be filed with the PT at least
15 days prior to the sale.
Cure funds must be tendered by noon the day before sale.
Parties eligible to cure: obligors, grantors, junior lienHolders, transferees of the property.
(See C.R.S. § 38-38-104 for a detailed list of those who can cure.)
If an Intent to Cure is filed more than 30 days prior to sale, a cure amount must be
tendered to the PT within 10 days of the PT’s request for a cure amount. If the Holder
does not timely provide the cure amount, the sale shall be postponed for one week.
If an Intent to Cure is filed less than 30 days prior to sale, a cure amount must be
tendered to the PT by noon on the seventh day prior to the sale. If the Holder does not
timely provide the cure amount, the sale shall be postponed for one week.
Cure Statement
The cure statement provided by the Holder or its attorney must be signed and
acknowledged by the Holder or signed by the attorney for the Holder.
The cure statement must substantially follow the form provided at C.R.S. §38-38-104
(2)(B)(II).
The cure statement must contain the advisement that “IT MAY TAKE SEVERAL DAYS
BEFORE THE CURE IS PROCESSED AND ENTERED INTO THE HOLDER’S
RECORDS,” and an advisement that “THE TOTAL TO CURE DOES NOT INCLUDE
ANY FUTURE MONTHLY MORTGAGE PAYMENTS THAT MAY BE DUE.”
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New Cure Requirements
Recent legislative changes added the following language: “The cure statement is a
“representation of fact, made upon the current information and belief of the person
signing it. If the Holder or servicer determines that there is an inaccurate amount
contained in the cure statement, the Holder or servicer or the attorney for the Holder or
servicer, shall inform the PT immediately and provide a cure statement with updated
figures; except that any additional or increased amounts must be added at least ten
calendar days before the effective date of the original cure statement.
If an inaccurate amount is reported and a corrected cure statement is not provided
within the time specified, the PT may continue the sale for one week in accordance with
section 38-38-109 (1). An estimate as allowed under subsection 5 of this section is not
an inaccurate amount for purposes of this subparagraph (III). C.R.S. §38-38-
204(2)(a)(III).
Within seven business days after the PT’s notification to the Holder of servicer or the
attorney for the Holder or servicer that the PT has received the funds necessary to cure
the default as reflected on the initial or updated cure statement, the Holder or servicer or
the attorney for the Holder or servicer shall deliver to the PT, a “final statement,
reconciled for estimated amounts that were not or would not be incurred as of the date
the cure proceeds were received by the PT, along with receipts or invoices for all Rule
120 docket costs and all statutorily mandated posting costs claimed on the cure
statement.”
All amounts of cure proceeds received by the PT in excess of the amounts reflected on
the final statement shall be remitted by PT to the person who paid the cure amount.
(This is also a new provision added in 2014.)
The Holder or servicer is responsible for retaining receipts or other credible evidence to
support all costs claimed on the cure statement including Rule 120 docket fees and
posting costs and the person who paid the cure amount is entitled to receive copies upon
written request mailed to the attorney for the Holder or servicer or, if not represented, to
the Holder or servicer at the address stated on the cure statement. The request may be
made at any time after payment to the PT of the amount shown on the cure statement but
must be made within ninety days after payment of the cure amount. The attorney for the
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Holder or the Holder shall provide copies of all receipts or other credible evidence
within thirty days after receiving the request and may provide the copies electronically.
The Holder or servicer shall remit to the person who paid the cure amount any portion of
the cure amount that represents a fee or cost listed on the cure statement that exceeds the
amount actually incurred that was not remitted by the PT.
The PT shall remit to the person who paid the cure amount any portion of the cure
amount that represents a fee or cost of the PT that exceeds the amount actually incurred
by the PT.
Upon receipt of the cure amount, the PT must obtain and retain in his or her records, the
name and mailing address of the person who paid the cure amount.
Withdrawal
The Holder or its attorney may withdraw a PT foreclosure prior to sale by filing a
written withdrawal notice of the NED with the PT and paying the PT’s fees and costs of
the foreclosure.
Administrative Withdrawal
The PT also may withdraw a foreclosure (referred to as an “administrative withdrawal”)
if there has been no sale, and a withdrawal has not been filed with the PT, within 45
calendar days after the last date of sale permitted by law.
The mechanism for an administrative withdrawal is for the PT to provide notice by mail
or electronically to the Holder’s attorney (or the Holder, if none) that the PT may record
a withdrawal unless a response requesting that such withdrawal be delayed for 90 days is
received by the PT within 30 calendar days after transmission of the PT’s notice.
If no such timely response is received, the PT may record a withdrawal of NED at any
time thereafter. If such response is timely received by the PT and there is no sale or filed
withdrawal within the 90-day period, then the PT may record a withdrawal of the NED.
The statute also authorizes the PT to hold all documentation and withhold all services
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with respect to the deed of trust being foreclosed until payment for the fees and costs
owed to the PT have been received.
A withdrawal recorded by the PT during the pendency of an automatic bankruptcy stay
or injunction is void. In that case, the PT is required to mail a notice to all persons on
the mailing list that the notice of the withdrawal was void for that reason and to record
that notice.
A withdrawal by the Holder or its attorney would not be a violation to the automatic stay
because it does not “commence” or “continue” an action against the debtor or debtor’s
property. 11 USC 362.
Continuance of Sale
A sale can be continued upon the written request of the Holder or the Holder’s attorney
prior to commencement of sale, or for any reason deemed by the PT to be good cause.
However, the sale must be held within 12 months after the originally scheduled sale date
designated in the combined notice, subject to the exceptions for bankruptcy stay,
injunction and sale set aside.
The Holder’s Bid
Bids must be submitted to the PT by noon the second business day prior to sale. If a bid
is not submitted timely, the sale will be postponed for one week.
Bids must break down the total debt in great specificity. There is a bid form provided in
the statutes. (C.R.S. 38-38-106.)
Failure to timely submit the bid will result in the PT allowing automatic continuance of
the sale from week to week until the 12-month limit on continuances expires.
Bidding and the Foreclosure Sale
The bid by the Holder should be the lesser of the total amount due to Holder (total debt)
or the Holder’s estimate of the fair market value less holding expenses.
The Holder or Holder’s attorney need not attend the sale.
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The PT may establish written policies relating to all aspects of the foreclosure sale that
are consistent with the foreclosure statutes.
Any written policies are required to be made available to the public.
Bids by Others
Every bid by any bidder other than the Holder and any bid by that Holder in excess of
the total due to the Holder as shown by the Holder’s written bid, requires that the bid
amount be received by the PT no later than the date and time of sale, or at a later time on
the date of sale specified in writing by the PT.
If the PT does not receive full payment of the bid amount from the highest bidder in
accordance with its policy, the next highest bidder who timely tenders the full amount of
that bidder’s bid is deemed the successful bidder.
The Certificate of Purchase
The PT shall issue a Certificate of Purchase (“CP”) at sale to the highest bidder.
The CP is recorded along with a copy of the OAS and a copy of the Amended Mailing
List.
Excess Proceeds
The proceeds of sale are first paid to satisfy the written or amended bid of the Holder.
Any remaining proceeds are paid first to satisfy any deficiency stated in the Holder’s
bid.
Any remaining excess proceeds are held by the PT until the expiration of all redemption
periods and then paid “in order of recording priority” in the following manner:
• First to junior lienors “determined as of the recording date of the NED” who duly
filed notice of intent to redeem and whose liens have not been redeemed, up to
the unpaid amount of each such lienor’s lien plus any permissible fees and costs
of that lienor, and
• Any remaining excess sales proceeds are paid to the owner of the property as of
the date and time of the recording of the NED.
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• Unclaimed excess proceeds are required to be transferred by the PT to the county
treasurer within 90 days after the expiration of all redemption periods.
The Right to Redeem
There is no Post-Sale Redemption Period for the borrower or owner.
Post-Sale redemption by junior lienors is permitted in order to allow junior lienors to
realize full or partial satisfaction of their secured debts.
Parties entitled to redeem include: junior lienors whose lien is of record PRIOR to the
recording of the NED.
Junior lienors wishing to redeem must file an Intent to Redeem within 8 business days
after the sale date.
The most senior lienor entitled to redeem can redeem between 15 and 19 business days
after sale.
Each subsequent lienor that properly filed an Intent to Redeem has an additional 5
business days to redeem.
The redemption amount should be the amount bid at sale plus interest and advances
since the date of sale.
If the Holder of the CP does not provide redemption figures in time, the PT must
calculate their own redemption figures and provide the figures to the party that filed the
Intent to Redeem.
Redemption funds must be tendered to PT by noon on the last day of applicable
redemption period.
If no redemption is made, title vests in Holder of the CP at the close of business on the
8th
business day after the foreclosure sale.
The Confirmation Deed
No earlier than ten business days nor later than fifteen business days after both the title
vests and the PT has received all statutory fees and costs, the PT shall execute and
record a confirmation deed.
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The CP can be assigned or sold to another party but if an assignment of the certificate of
purchase (“ACP”) is not delivered to the PT prior to the 8th
business day after the sale,
the PT will issue the confirmation deed to the successful bidder at sale.
Rescission of Sale
There is a procedure for rescission of sale. In order to rescind a sale without a court
order: 1) the successful bidder at sale must be the Holder; 2) a notice of rescission must
be submitted to the PT within 8 business days after sale.
If those two requirements are not met, the party wishing to set aside the sale must obtain
a court order to set aside or rescind the sale.
Foreclosure of a Portion of Encumbered Property
A Holder may foreclose a deed of trust against a portion of the encumbered property if
that portion is encumbered as a separate and distinct parcel or lot in the deed of trust. A
sale of a portion of the encumbered property does not affect the deed of trust as to the
remaining property unless the bid at sale fully satisfies the secured debt.
Multiple Instruments
If the debt secured by the deed of trust being foreclosed consists of more than one
instrument or document, the Holder can foreclose the trust deed as to fewer than all of
them by specifying in the NED and in the combined notice only those documents or
instruments as to which the foreclosure is being undertaken.
Transfer of Debt During Foreclosure
The Holder may transfer the secured debt during the foreclosure. Upon the PT receiving
written notice signed by the Holder who commenced the foreclosure or its attorney
stating that the debt has been transferred and identifying the transferee, the transferee
may complete the foreclosure.
No other notice of the transfer is required.
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If the assignment is made from a qualified Holder to other than a qualified Holder, the
original evidence of debt, originals of any indorsements or assignments and the original
recorded deed of trust (or the alternative documents) must be filed with the PT.
Partial Release During Foreclosure
There can be a partial release from a deed of trust while the foreclosure is in progress
under certain circumstances.
The release must occur after recording of the NED and prior to the foreclosure sale.
It must also occur pursuant to C.R.S. § 38-39-102 or pursuant to a proper court order
recorded in the county where the property is located.
At the time of the recording of the partial release, the Holder must pay an additional fee
of $100.00 to the PT and amend the combined notice and NED to describe the property
that remains encumbered by the deed of trust.
The Colorado Foreclosure Deferment Program
Applies to PT foreclosures commenced after August 1, 2009.
The Program is set to sunset in September 2015.
The Deferment Program allows an “eligible” borrower who “qualifies” for the program
the opportunity to defer a foreclosure sale which has been commenced on a residential
property for up to 90 days.
The Deferment Program provides only an opportunity for a deferment of the foreclosure
if all of the requirements and deadlines are met. There is not a guaranty of deferment for
anybody.
To be “eligible” a borrower must meet the first threshold of requirements related to the
property, the loan and the borrower’s intentions.
A borrower can be “qualified” only if certified by a HUD-approved Housing Counselor.
After the foreclosure filing is accepted, if the borrower appears to be eligible for the
Deferment Program, a Notice of the Opportunity for Foreclosure Deferment must be
posted on the property in a “conspicuous place.”
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Eligibility Requirements
All of the following must be met in order for a borrower to be eligible for the Deferment
Program:
• The Deed of Trust being foreclosed must be a first lien on the property;
• The borrower must reside at the property as of the date the NED is recorded;
• The borrower must occupy the property as his or her primary principal residence
at the time the NED is recorded;
• The borrower must have occupied the property as his or her primary principal
residence within 90 days of the date of the deed of trust being foreclosed;
All of the following must be met in order for a borrower to be eligible for the Deferment
Program (continued):
• The borrower must intend to continue to occupy the property;
• The borrower must be personally obligated on the debt which must have been
incurred for personal, family or household purposes; and
• The original principal balance of the loan must have been for $500,000 or less.
The Notice
The posting of the Notice MUST be done no later than 15 calendar days following the
PT’s acceptance of the filing of “complete and accurate” foreclosure documents.
The Notice must contain the phone number of the Colorado Foreclosure Prevention
Hotline and the website address to HUD which identifies HUD approved housing
counseling agencies in Colorado, the date on which the Notice was posted and the
deadline by which the borrower must contact a counselor.
Qualification
No later than 20 calendar days after the PT’s acceptance of complete and accurate
documents, the Holder must provide the PT with an affidavit stating that the posting has
been completed.
No later than 30 calendar days after the borrower’s initial contact with a housing
counselor, the counselor shall determine if the borrower qualifies for foreclosure
deferment.
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Qualification is determined by calculating whether there is a reasonable likelihood that
the Holder and the borrower can negotiate a mutually acceptable agreement to avoid
foreclosure given the borrower’s expenses and gross household income.
Disqualification
The borrower shall not qualify if the borrower has abandoned the property, provided
materially false information to obtain credit, has engaged in gross waste of the property,
has been cited for major code violations, or has used the property for illegal purposes,
the borrower is currently in bankruptcy proceeding in which subject property is part of
the bankruptcy estate or within the preceding 24 months has been discharged from a
bankruptcy in which subject property was part of bankruptcy estate, the borrower has
already had a foreclosure deferment on the same debt obligation, including any
modification of the debt.
The Foreclosure Deferment Program
If the PT does not receive a timely notification of qualification from a housing
counselor, the foreclosure will no longer be tracked for the deferment program and the
foreclosure process proceeds through publication, mailing of notices and sale as usual.
If the borrower is qualified, during the deferment, the borrower must make monthly loan
payments equal to 66.667% of their monthly payment due prior to the delinquency.
The deferment shall terminate early upon the certification of a housing counselor.
Early Termination
Early termination shall be granted if the foreclosure counselor determines the borrower
has abandoned the property, the borrower has failed to comply with conditions of the
deferment, including failure to make payments on time, the borrower has conveyed,
transferred or further encumbered the property in violation of the Deed of Trust, a
foreclosure has been initiated by a different party on another lien encumbering the
property; or the borrower has filed for bankruptcy during the foreclosure deferment.