Colorado Foreclosure Prevention

For 2009, Colorado ranked 10th among all states in foreclosure rate, an increase of only 0.23% from the year before. Nationally, 2009 was the worse year for foreclosures in US history, with 2.8 million property owners receiving a foreclosure notice.

Much of the drop in foreclosures can be attributed to changes in Colorado’s laws after the state’s foreclosure rate took the top spot in the nation from March through October in 2006. Key changes include:

• A law that requires the state to prosecute mortgage fraud, imposing a fine equal to the harm caused to the victim.
• The Mortgage Brokers Registration Act that mandates a criminal background check and registration with the state for loan originators.
• The Colorado Foreclosure Prevention Act, which requires a written agreement for foreclosure prevention services specifying what is to be done, stopping fee charges until the contracted action is completed, prohibiting consultants from taking an equity share in the property and putting an interest cap on any temporary loans intended to cure the current condition. In addition, the act mandates a minimum of one year in jail time and a fine of $25,000 for any violation.

Most home foreclosures in Colorado are non-judicial where the lender does not have to go to court. The state’s process is different than most, because the governor appoints a Public Trustee in each county to act as an impartial party for foreclosure sales. The trustee receives the lender’s required documents then files a “Notice of Election and Demand” with the county clerk and recorder and schedules the intended sale within 45-60 days. These notices are published in a local paper for five consecutive weeks in the county where the property is located and sent to the borrower within 10 days .

Three weeks before the scheduled sale the borrower must be notified about how to redeem the property. Borrowers can forestall a foreclosure by filing an intent to cure at least 15 days before the scheduled foreclosure sale and then paying the amount needed to bring the loan current by noon before the day of the scheduled sale.

In 2006, the Colorado Foreclosure Prevention Task Force established the Colorado Foreclosure Hotline: 1-877-601-HOPE (4673) to provide assistance to homeowners free of charge. It’s intended for homeowners concerned about missing payments, borrowers already behind and those who have received foreclosure notices or those who have had trouble reaching their lenders.

The hotline hosts foreclosure assistance fairs around the state bringing borrowers and lenders together for face-to-face meetings.

One of the best places to turn to for foreclosure prevention help is the Colorado Housing Counseling Coalition, a non-profit organization founded in 1980. If you’re having trouble making your mortgage payment, it urges you to:

• attempt to negotiate with your lender, opening and reading all its mail;
• tap all your financial resources to meet your obligations; and
• reach out to an HUD-approved counseling agency to discuss your options. Here’s the list of those approved in Colorado.

Additionally, the Colorado’s Attorney General Office urges borrowers approached by a loan modification service to research them with the Better Business Bureau.

If you are unable to reach your servicer or local state program, or if you would like additional assistance in this process contact Mortgage Outreach at 1-866-408-0420. Mortgage Outreach works directly with many servicers to help find solutions for borrowers that are struggling to keep up with their payments.