Colorado Mortgage Foreclosure Auction Rules

Lenders in Colorado may use a non-judicial or a judicial foreclosure process.

In Colorado lenders are allowed to foreclose on homeowners if the owner is in default of the loan. A default occurs when the homeowner becomes one or more payment behind in their mortgage loan to the lender. Colorado lenders are able to foreclose on mortgage loans or deeds of trust using a non-judicial process or a judicial foreclosure process. Once the foreclosure is complete, the lender has the right to sell the home at auction.

Non-Judicial Foreclosure

Colorado lenders prefer a non-judicial foreclosure process because it does not require them to go through the court system. This type of foreclosure may be used if there is a power of sale clause written in the mortgage or deed of trust. According to Foreclosure Law.org, a power of sale clause is a type of written pre-authorization that gives the lender the right to sell the home at auction if the owner is in default of the loan. The sale of the home will help to pay off the balance of the loan and any other fees that may be incurred during the foreclosure process.

Judicial Foreclosure

A judicial foreclosure process may be used if there is no power of sale clause written into the deed of trust or mortgage documents. In a judicial foreclosure, the lender must file a lawsuit with the court to obtain an order allowing them to foreclose on the property. This must be done in the county in which the home is located. Once the foreclosure order has been obtained by the court, the lender is allowed to sell the home to the highest bidder at an auction.

Auction

The state of Colorado appoints a special public trustee for each county in the state that handles the foreclosure process. In a non-judicial foreclosure, an attorney for the lender files a Notice Of Election And Demand with the county clerk in the county where the home is located. Once this notice has been recorded with the court, the lender must publish the notice of sale in a public newspaper in the county where the home is located. This notice must be published for a period of five consecutive weeks. The public trustee will also mail the homeowner a copy of the notice within 10 days after the notice is published. The public trustee is also responsible for mailing the homeowner a notice within 21 days of the scheduled auction, instructions on how to redeem the property. The homeowner is allowed to redeem the property by filing an Intent To Cure with the public trustee. This document must be filed within 15 days before the scheduled auction. Once the Intent To Cure is filed with the trustee, the homeowner must bring the full amount due to bring the loan current--including any fees pertaining to the foreclosure--to the trustee's office by noon the day before the scheduled foreclosure auction. Foreclosure auctions in Colorado must take place between 45 and 60 days after recording the notice with the clerk of the court. The public trustee will hold the auction at the entrance to the courthouse or on the courthouse steps. The home is sold to the highest bidder. Lenders in Colorado may file a lawsuit for any deficiencies after the sale of the home, which would require the homeowner to pay any deficiencies. Homeowners have up to 75 days after the foreclosure auction to redeem the foreclosure amount plus interest.

References

• ForeClosure Law: Colorado Foreclosure
• Foreclosed Dreams: Colorado Foreclosure