Foreclosure is a scary process. Navigating the waters and understanding the process is daunting. There are significant benefits to individuals and the community in the preservation and growth of home ownership. Included in the laws designed to protect consumers, Colorado has adopted the Foreclosure Protection Act (the “Act”) to help ease the burden on consumers faced with foreclosure.
If you are facing the possibility of being displaced from your home, your first step should be to contact the Colorado Foreclosure Hotline at 1-877-601-HOPE (4673). Making this call will connect you to a housing counselor who can help offer free assistance. On their website (www.coloradoforeclosurehotline.org), the Hotline points out that, “There were 19,622 foreclosures in Colorado in 2011…but four out of five that met with a Colorado Foreclosure Hotline housing counselor successfully avoided foreclosure.” Many factors go into whether or not you can avoid foreclosure, but knowing the right questions to ask could be the difference between staying in your home or rushing to find alternative housing opportunities. Things you should discuss with a housing counselor include setting up alternative payment arrangements, and the timelines that lenders must follow before initiating, and during, the foreclosure process.
Often times the most appropriate action will be to engage an attorney familiar with foreclosure and consumer protection laws. An attorney will be able to help you consider warnings that the Act and the Colorado Attorney General have identified with regard to consumer foreclosures.
In order to initiate the foreclosure process, your lender is required to send you a thirty (30) day notice to allow you the opportunity to speak with a housing counselor and your lender’s loss mitigation department. Only after the expiration of this notice period can your lender proceed with the formal foreclosure process. If you do receive one of these notices, do not ignore it. As indicated, four out of five people who call the Hotline have the opportunity to stay in their home.
If the foreclosure process proceeds past the notice stage, you will receive a series of additional notices setting forth, among other things, information related to the date of sale. Initially, the sale is set to take place in 3-4 months, but delays and postponements could push the actual sale date farther down the road. Depending on where you live—and even if you have vacated the property—you may have continuing obligations with regard to the property, such as HOA assessments, until the property is actually sold. This is one of the most critical reasons to consult a knowledgeable attorney in order to understand what responsibilities you may carry until the property transfers.
Do not forget that you have the right to cure the default on your loan up to fifteen (15) days before the date of foreclosure sale. In order to cure the default you are required to file certain notices with your lender and public officials. An attorney can help you make sure your notices are properly drafted and sent to all the necessary parties.
Foreclosure Consulting Contracts
The Act specifically addresses the engagement of a foreclosure consultant. Generally speaking, a foreclosure consultant is an individual you hire in a non-attorney relationship to assist you through the foreclosure process, and who is not affiliated with your lender. The Colorado Attorney General warns that various individuals may contact you to help you avoid foreclosure after you are in default on your mortgage. By law, these individuals are required to follow certain rules in the Act, which you should ensure are followed before agreeing to pay a foreclosure consultant a fee. A consultant is not allowed to charge or collect any fee from you until the consultant has fully performed his or her services.
A consultant is also required to provide you with a written contract for you to keep at least twenty-four hours before you sign it. The contract must contain the following notices:
- The consultant cannot ask you to sign any document that transfer your ownership to the consultant or his or her associates.
- The consultant cannot guarantee that they will be able to refinance or arrange for you to keep your home.
- You have the right to cancel the contract at any time by written notice. The consultant is required to provide you with a “Notice of Cancellation” form. If you are unsure about how to properly complete this form, call the Hotline!
- If you cancel, you must repay certain expenses plus interest spent by the consultant on your behalf.
The Attorney General also warns against individuals and scams that offer short-term loans that allow you to cure the current default, but leave you unable to pay off the short-term loan. You should also be extremely cautious of any individual who wants you to transfer title to your property with an option to repurchase at a later date. Before you make any decision related to a current or foreseeable foreclosure, call the Hotline and speak to an attorney.