What to know about foreclosures in Colorado
In a perfect world, all mortgages and loans would be paid on time and paid off. Unfortunately, not everyone can meet the demand of their loan or keep up with home payments. That’s when the foreclosure process begins in Colorado.
The Colorado Foreclosure Process
To understand how the Colorado foreclosure process operates, it’s best to understand certain terms:
Defaulted Loans – A loan is considered in default when a payment is 30 days past its due date.
Foreclosure – The term foreclosure means the loan file has been transferred to an internal department. The department is tasked with deciding if and when the loan should be sent to attorneys to begin the foreclosure process.
Power of Sale – Language in a deed or trust that implies instructions for sale if the loan defaults.
Public Trustee – A county official that acts as an impartial agent during the foreclosure process.
Types of Foreclosures in Colorado
Non-judicial foreclosure – The most common type of mortgage foreclosure in Colorado. Non-judicial foreclosure does not require the courts but instead an election to foreclosure. In a non-judicial disclosure, a ‘power of sale’ clause, or a pre-authorized sale to pay off a loan in the event of defaulted payments, is included in the trust or deed.
Judicial Foreclosure– A type of mortgage or loan foreclosure which requires a court to issue a final judgment on the foreclosure. Judicial foreclosure is most often used when the deed of trust for the property doesn’t contain the power of sale language. If the court declares a foreclosure, the property is put to auction.
Colorado Redemption Period on Foreclosures
The state of Colorado has a post-sale statutory redemption period on foreclosures. The redemption period allows an owner whose property has been foreclosed on to reclaim their property 75 days after the property’s sale by paying in full the total of their unpaid loan plus interest, taxes, and any additional fees associated with the foreclosure process. If the full amount is paid within 75 days the owner can reclaim the property, but not their losses in fees.
A notice of election and demand in Colorado (NED in Colorado) is a document that:
• Indicates a lender is the beneficiary of a deed of trust encumbering a parcel of real property.
• Stipulates the borrower is in default on their obligation of payments.
• Requests the public trustee begin foreclosure proceedings to satisfy the debt.
Other Things to Know About Colorado Foreclosures
The owner of a property in foreclosure has 15 days prior to the foreclosure auction to file an ‘intent to cure,’ wherein the owner can attempt to reclaim the property before its auction. Foreclosure sales must take place between 45 and 60 days after the election and demand for sale is sent to the county clerk’s office.
Figuring Out Foreclosures in Colorado
Judicial, non-judicial, auction, default – there’s a lot of terminology when it comes to Colorado foreclosure but with a bit of reading above you can teach yourself some basics. If you’re ever worried about a foreclosure or need questions answered about the foreclosure process, reach out to The Storck Team before. A short-sale might be the right solution to avoid foreclosure. Foreclosures can be scary, but you’re better protected when you understand the process and your options.