In the recent foreclosure report, Colorado is now the fifth overall of all states in foreclosure. The latest report showed that Colorado has 5,374 properties in foreclosure in September, or one in every 390 households. This is equivalent to a 23 percent increase from the previous month.
In the state of Colorado, the foreclosure process is quite different from other states. Colorado foreclosures occur through both in-court and out-of-court proceedings. The most common process is managed by a public trustee out of court and takes about six months.
The public trustee is either appointed by the governor or elected by the people in each county. When the lender files the needed documents in request for a sale of the property, this starts the out-of-court foreclosure process. The foreclosure sale can be scheduled after the public trustee officially records the foreclosure action.
The lender still has to obtain a separate court order that will allow the sale even after the sale is already scheduled. If no one contests that the borrower is in default, the sale could be allowed without a hearing after all concerned parties are notified.
The homeowner has 15 days to stop the foreclosure from taking effect. This is done by submitting a letter of intent to the public trustee stating his plan to pay off the default. The deadline for this to be done is noon the day before the foreclosure.
After about 110-125 days after the recording of the initial foreclosure action, the public trustee schedules the sale. Within 12 weeks the notice of sale is published in a local newspaper and a copy of the notice shall be sent to the borrower.
Given the chance that a homeowner has before the foreclosure take effect, many defaulted homeowners had been able to save their properties from foreclosure using different foreclosure workouts. The most commonly preferred method is a loan modification where the homeowner requests the lender to modify the loan terms on their existing loan to make it more affordable.
With the recent increase in the foreclosure rate in Colorado, lenders are now more interested in cooperating with the borrowers requesting for loan modification agreements. Making the loan more affordable for the borrower gives them a better chance of collecting payments rather than foreclosing on the property. Aside from being an expensive process as outlined above, foreclosure puts the lender on a losing side since real estate prices are low and buyers are scarce.
©2008 Tom Brady
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