The Colorado Foreclosure Process
The foreclosure process in Colorado can easily become overwhelming. When you realize that you are behind on your mortgage payments, you may feel a sense of panic. The Colorado foreclosure process works quickly, and in less than three months you could lose your home.
Before it gets out of control, make sure you understand the foreclosure process and what your options are to avoid it.
Homeowner Rights During Colorado Foreclosures
Non-profit HUD-certified counseling agencies can assist during the foreclosure process. However, it is important to note that turning to HUD or another agency does not guarantee that the foreclosure process will be delayed or stopped.
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The Colorado Foreclosure Procedure in a Nutshell
Notice of Election & Demand
Colorado’s primary method of foreclosure is a “non-judicial foreclosure.” This type of foreclosure involves a Public Trustee and a Notice of Election & Demand from the lender. The Public Trustee has 10 days to file the Notice of Election & Demand with the county.
Notice of Foreclosure and Sale
The Public Trustee publishes the Notice of Foreclosure and Sale five times over 4 consecutive weeks in a local newspaper 45-60 days prior to the sale date. The sale date must be between 110-125 days after the Notice of Election & Demand was recorded.
Order Authorizing Sale & Auction
The lender must obtain an Order Authorizing Sales 16 days or more before the sale date and submit it to the Public Trustee two business days before the sale. The Public Trustee conducts the foreclosure auction, which occurs every Wednesday at 10 a.m. The trustee will also record the Certificate of Purchase five days after the sale.
Confirmation Deed & Vacate the Property
The purchaser of a foreclosed property must make an official demand for possession. If a demand for possession is issued, then you must vacate the property or face an eviction lawsuit. You could have anywhere from 3 to 30 days eviction process begins or as little as 24 hours. The time frame for this is situational.
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Colorado Foreclosure Facts
Colorado prohibits dual tracking, which is when a mortgagor pursues loan modification at the same time as pursuing foreclosure.
If a deed of trust does not have the power of sale language, then a lender can initiate a judicial foreclosure process.
If you do not pay property taxes in Colorado, then a tax lien can exist on your home. If you do not pay the tax lien, then your home could enter the foreclosure process.
Colorado has a post-sale statutory right of redemption, allowing you to reclaim your foreclosed property 75 days after the sale by making a payment for all debts.
Your credit score can drop anywhere from 85 to 160 points or more in the event of a foreclosure. If you fail to pay the deficiency, then your credit can be lowered, too.
Colorado is a recourse state, so the lender can legally come back to you for any deficiency. Additionally, the deficiency can negatively impact your ability to obtain future loans.
Alternatives to Foreclosure in Colorado
Deed in lien is when you voluntarily hand over the deed to the house to the lender in order to cancel the debt. In this scenario, you still lose your home, but you are proactive with the lender and able to negotiate.
A short sale is selling your home for less than what is owed in the mortgage. In Colorado, it can often be beneficial to sell your property in a short sale to avoid foreclosure. Colorado is a recourse state, which means that the lender can legally ask for you to pay the deficiency in the event of a short sale.
Filing for bankruptcy can stall or even halt foreclosure proceedings and collections action. Depending on the type of bankruptcy, you receive an automatic stay or work out a repayment plan with your lender.
Loan modification is an agreement between you and your lender to modify your mortgage payments. A temporary reduction in your payment gives you an opportunity to get back on track.
Colorado homeowners can sell their property in as is condition to escape foreclosure. This option is often the fastest and easiest way to move on to a debt free life.
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