Colorado Adds Provisions Regarding Residential Mortgage Foreclosures
The state of Colorado recently added provisions regarding residential mortgage foreclosures in House Bill 1295. The new legislation takes effect January 1, 2015, and applies to foreclosure proceedings in which the notice of election and demand is filed on or after said date.
The new law includes the following additions:
• At least thirty days before filing a notice of election and demand and at least thirty days after default, the holder shall mail a notice addressed to the original grantor of the deed of trust at the address in the recorded deed of trust or other lien being foreclosed containing a statement that, under Section 6-1-1107, C.R.S., it is illegal for any person acting as a foreclosure consultant to charge an up-front fee or deposit to the borrower for services related to the foreclosure.
• The combined notices of right to cure and right to redeem required to be mailed must include the place of sale; the statement that the lien being foreclosed may not be a first lien; and a statement that, if the borrower believes that a lender or servicer has violated the requirements for a single point of contact or the prohibition on dual tracking, the borrower may file a complaint with the Colorado Attorney General, the CFPB, or both, but the filing of a complaint will not stop the foreclosure process. The notice must also include contact information for both the Colorado Attorney General’s office and the CFPB. If the officer maintains a web site, the officer shall post this information on the web site for viewing by all borrowers.
• No later than the forty-fifth day of a borrower’s delinquency, a servicer shall promptly establish a single point of contact for communications with the borrower. The servicer shall do so within the time periods prescribed in, and subject to the other requirements imposed by, federal law and CFPB rules and orders. Once the single point of contact is established, the servicer shall promptly provide to the borrower, in writing, one or more direct means of communication with the single point of contact. A single point of contact is required to provide the borrower with accurate information about loss mitigation options available to the borrower from the owner or assignee of the borrower’s mortgage loan; actions the borrower must take to be evaluated for loss mitigation options, including actions the borrower must take to submit a complete loss mitigation application and, if applicable, actions the borrower must take to appeal the servicer’s determination to deny a borrower’s loss mitigation application for any trial or permanent loan modification program offered by the servicer; the status of any loss mitigation application that the borrower has submitted to the servicer; the circumstances under which the servicer may make a referral to foreclosure; and applicable loss mitigation deadlines established by an owner or assignee of the borrower’s mortgage loan. In addition, a single point of contact is required to retrieve, in a timely manner, a complete record of the borrower’s payment history and all written information the borrower has provided to the servicer and to prior servicers in connection with a loss mitigation application. A single point of contact must provide the aforementioned documents and information to other persons required to evaluate a borrower for loss mitigation options made available by the servicer. Lastly, the single point of contact must provide a delinquent borrower with information about the procedures for submitting a notice of error or an information request.
• A servicer is required to notify the borrower in writing when it receives a complete loss mitigation application from the borrower; and exercise reasonable diligence in obtaining documents and information to complete a loss mitigation application. If the borrower has received a confirmation from the servicer that the borrower has submitted a complete loss mitigation application or has been offered and has accepted a loss mitigation option and is complying with its provisions, and yet a notice of election and demand has been filed or action is being taken with regard to the borrower, then, in order to stop the foreclosure sale, no later than fourteen calendar days before the sale date, the borrower must present to the officer the borrower’s written notification from the servicer indicating receipt of a complete loss mitigation application dated at least thirty-seven days prior to the sale date or acceptance of a loss mitigation option, and if the borrower does so: the officer shall contact the attorney for the servicer or holder or the servicer or holder, if not represented by an attorney, and inquire as to the status of the loss mitigation option. Until the servicer or its attorney responds to the inquiry, the officer shall continue the sale. If the attorney for the servicer fails to respond within seven calendar days, then the officer shall send a certified letter to the attorney for the servicer or holder inquiring as to the status of the loss mitigation option. If the attorney for the servicer or holder gives the officer a written statement disputing that a loss mitigation option has been offered and accepted or that the borrower is complying with its terms, the officer shall proceed with the sale. If the attorney for the servicer or holder acknowledges that a loss mitigation option has been offered and accepted and that the borrower is complying with its terms, the officer shall continue the sale, and the holder shall withdraw the notice of election and demand within one hundred and eighty calendar days after the date of the acknowledgment if the borrower continues to comply with the terms of the loss mitigation option. If the borrower fails to comply with the terms of the loss mitigation option, within one hundred and eighty calendar days after the date of acknowledgement, the holder or the attorney for the holder may give written notice to the officer that the loss mitigation option has been breached, and, no later than ten business days after receiving the notice, the officer must mail an amended combined notice containing the date of the rescheduled sale to each person appearing on the most recent mailing list.
• Not less than fourteen days before the date set for hearing, the holder or the attorney for the holder seeking an order authorizing sale of a residential property shall cause a notice of hearing to be posted in a conspicuous place on the property that is subject to the sale. The notice must contain or be accompanied by a conspicuous statement, substantially as follows, together with contact information for both the Colorado Attorney General’s office and the CFPB: “If you believe that the lender or servicer of this mortgage has violated the requirements for a single point of contact in section 38-38-103.1, Colorado Revised Statutes, or the prohibition on dual tracking in section 38-38-103.2, Colorado Revised Statutes, you may file a complaint with the Colorado Attorney General, the Federal Consumer Financial Protection Bureau, or both at ______________ [Insert Contact Information for Both]. The filing of a complaint will not stop the foreclosure process.”
About the Author
Lee Greenberg, J.D. is Vice President and Regulatory Compliance Director at Bankers Advisory. Lee is a graduate of the University of Colorado at Boulder and earned his J.D. at the New England School of Law. He is admitted to the bar in Massachusetts. He can be reached at lee@bankersadvisory.com
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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