Foreclosures are emotional for people loosing a home. They are business transactions for investors and entrepreneurs who fix and resell them. And, they can be opportunities for folks looking to buy a home. Everyone of these people needs to know how foreclosures work in Colorado.
The Colorado foreclosure time-line was created to walk participants through the transaction process with both a visual and literal interpretation. There are many pitfalls and tight turns in the process. It is not something to be taken lightly, and it can have lasting effects on one’s credit score for years and even eliminate the ability to buy another home for many years.
Foreclosure is a complicated process. There is nothing simple about it, and it can be further complicated by bankruptcy, mortgage modification and short sale procedures that we will talk about later.
In Colorado, the foreclosure process starts after the lender has files a Notice of Election and Demand for proceeds due. The NED is literally delivered to the borrower’s front door, and the foreclosure timeline commences. This process is generally preceded by a period of “missed payments” by the borrower. The borrower’s Note and Deed of Trust would be a good place to investigate the lender’s and borrowers rights.
Subsequent to the lender’s NED filing at the Public Trustee’s office, there is a 110-125 day window for the borrower to redeem the note and begin regular payments once again. This is an opportunity for the borrower to have a second chance.
Additionally, during this window of “foreclosure” proceedings, the public is notified by the public trustee as to the amounts owed to the lender which often include redemption costs and miscellaneous expenses. With the lender’s permission, this note can actually be purchased from the lender or bid for at the time of the Public Trustee’s sale on the “Courthouse Steps”. At the courthouse steps, the property then goes to sale and is open to all qualified bidders. In a rapidly declining market, the only bidder may be the lender. If the public perceives there to be no “upside” to a property, the lender may take title and expose the property to the market as a bank owned or REO property.
Last, but not least, even though the sale has taken place, there may still be residents with substantiated rights living in the property. This would necessitate the eviction process to begin. Like the loan modification and short sale processes, the eviction process will be addressed in future posts. If an individual has won the bid on the courthouse steps for an occupied property, the responsibility of vacating the property from all occupants now falls upon them; once again, a very complicated process.
Finally, liens play a significant roll in obtaining clear title to a property with bidding at the courthouse steps. State, Local and Federal Tax Liens, HOA Liens and mechanics leans can cause havoc on the unsuspecting. Attached is a link to a complete explanation of the Colorado Foreclosure Timeline. If you have any question relating to this process, don’t hesitate to pick up the phone and contact our team of experts ready to assist your family in this time worry and concern.