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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.