Colorado Foreclosure Laws
Foreclosure is the process that a lender undertakes to reclaim property when the borrower has not fulfilled his obligations under the mortgage contract. In Colorado, the foreclosure process typically takes approximately 60 to 70 days to complete once the lender has initiated the foreclosure process.
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Foreclosure Types
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Two types of foreclosure procedures are typically available to lenders, the judicial foreclosure and the non-judicial foreclosure. A judicial foreclosure requires the lender to file a lawsuit and receive a court-issued foreclosure order. Once this order is received, the home may be auctioned to the highest bidder. A non-judicial foreclosure allows the lender to bypass the legal system by adding a power of sale clause to the mortgage contract. This provides the lender with the option to sell the home once the borrower has defaulted on the loan without obtaining a court order.
Power of Sale
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The power of sale process in Colorado is somewhat different than in other states. The governor of Colorado appoints a public trustee in each county whose role is to act impartially to complete the foreclosure process. Once a foreclosure is filed with the trustee, he files a "Notice of Election and Demand" with the court recorder. Once this is filed, an advertisement must be placed in the local newspaper for a minimum of five consecutive weeks. The borrower must be mailed a copy of the Notice of Election and Demand within 10 days of it being filed with the county recorder. A second notice, containing information regarding how to stop the foreclosure proceeding, must be mailed to the borrower within 21 days of the foreclosure notice being filed.
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Right of Redemption
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Colorado offers a right of redemption on foreclosed properties. This allows a borrower to reclaim the property by paying the balance of the unpaid loan, plus, taxes, costs and interest. The state of Colorado offers a window of 75 days after the sale is completed to file an intent to redeem. Once this is filed, the borrower will receive a payoff amount within eight days and may make arrangements to pay the debt and recover the property.
Deficiency Judgments
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A deficiency happens if the property sells for less than the balance due on the outstanding loan. The state of Colorado allows the lender to hold the borrower accountable for this difference.
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