Colorado Legislative Update

Colorado Legislative Update

The Colorado legislature recently amended its laws governing foreclosures, including costs paid in connection with a foreclosure, single points of contact, dual tracking, and the legislature extended the Foreclosure Deferment Program.  All of the legislation was effective May 9, 2014.

 

COLORADO HOUSE BILL 14-1130

 

The following provisions apply to foreclosure proceedings in which the notice of election and demand is filed on or after May 9, 2014.

 

The attorney for the holder or servicer, or if none, the holder or servicer, must file the cure statement with the public trustee or sheriff conducting the foreclosure (“officer”), and the cure statement must set forth the amounts necessary to cure.

 

Upon receipt of the statement of the amounts needed to cure, the officer must transmit in writing to the person filing the notice of intent to cure the default:

  • The cure statement; and
  • A statement that the person filing the notice of intent to cure is entitled to receive from the attorney for the holder or servicer or, if not represented, from the holder or servicer, upon written request mailed to the attorney for the holder or servicer or, if not represented, to the holder or servicer at the address stated on the cure statement, copies of receipts or other credible evidence to support the costs claimed on the cure statement.  This request may be sent only after payment to the officer of the amount shown on the cure statement and must be sent within 90 days after payment of the cure amount.

 

The cure statement is a representation of fact made upon the current information and belief of the person signing it.  If the holder or servicer determines that there is an inaccurate amount contained in the cure statement, the holder or servicer, or the attorney for the holder or servicer, must inform the officer immediately and provide a cure statement with updated figures.  Any additional or increased amounts must be added at least 10 calendar days before the effective date of the original cure statement.  If an inaccurate amount is reported and a corrected cure statement is not provided within the time specified above, the officer may continue the sale for one week.  An estimate is not an inaccurate amount for such purposes.

 

Within 7 business days after the officer’s notification to the holder or servicer, or to the attorney for the holder or servicer, that the officer has received the funds necessary to cure the default as reflected on the initial or updated cure statement, the holder or servicer or the attorney for the holder or servicer must deliver to the officer a final statement, reconciled for estimated amounts that were not or would not be incurred as of the date the cure proceeds were received by the officer, along with receipts or invoices for all Rule 120 docket costs and statutorily mandated posting costs claimed on the cure statement.  All amounts of cure proceeds received by the officer in excess of the amounts reflected on the final statement must be given back by the officer to the person who paid the cure amount.

 

The holder or servicer must give back to the person who paid the cure amount any portion of the cure amount that represents a fee or cost listed on the cure statement that exceeds the amount actually incurred and that was not given back by the officer.

 

The officer must give back to the person who paid the cure amount any portion of the cure amount that represents a fee or cost of the officer that exceeds the amount actually incurred by the officer.

 

The holder or servicer is responsible for retaining receipts or other credible evidence to support all costs claimed on the cure statement, including Rule 120 docket fees and posting costs.  The person who paid the cure amount is entitled to receive copies upon written request mailed to the attorney for the holder or servicer or, if not represented, to the holder or servicer at the address stated on the cure statement.  The request may be made at any time after payment to the officer of the amount shown on the cure statement, but must be made within 90 days after payment of the cure amount.

 

The attorney for the holder or servicer or, if not represented, the holder or servicer must provide copies of all receipts or other credible evidence within 30 days after receiving the request, and may provide the copies electronically.

 

Upon receipt of the cure amount and conditioned upon the withdrawal or dismissal of the foreclosure from the holder or servicer or the attorney for the holder or servicer, the officer must:

  • Deliver the cure amount, less the fees and costs of the officer and any adjustments required above to the attorney for the holder or servicer or to the holder or servicer; and
  • Obtain and retain in the officer’s records the name and mailing address of the person who paid the cure amount.

 

COLORADO HOUSE BILL 14-1295

 

“Residential mortgage loan” means a loan that is primarily for personal, family, or household use and that is secured by a mortgage, deed of trust, or other equivalent, consensual security interest on a dwelling or residential real estate upon which is constructed, or intended to be constructed, a single-family dwelling or multiple-family dwelling of 4 or fewer units, that is or will be used by the borrower as the borrower’s primary residence.

 

“Residential real estate” means any real property upon which a dwelling is or will be constructed.

 

“Servicer” or “mortgage servicer” means an entity that directly services a loan or that is responsible for interacting with the borrower, managing the loan account on a daily basis, including collecting and crediting periodic loan payments, managing any escrow account, or enforcing the note and security instrument, either as the current holder of the evidence of debt or as the current holder’s authorized agent.

 

“Servicer” includes an entity providing services according to designation as a subservicing agent or by contract with a master servicer.  The term does not include a trustee, public trustee, or a trustee’s authorized agent acting under a power of sale according to a deed of trust.

 

“Single point of contact” means an individual or team of personnel, each of whom has the ability and authority to perform responsibilities on behalf of the servicer.  The servicer must ensure that each member of the team is knowledgeable about the borrower’s situation and current status.

 

At least 30 days before filing a notice of election and demand and at least 30 days after default, the holder must 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 and, if different, at the last address shown in the holder’s records, containing, in addition to the current requirements, a statement that, under section 6-1-1107, C.R.S., it is illegal for any person acting as a foreclosure consultant to charge to the borrower an up-front fee or deposit for services related to the foreclosure.

 

A combined notice sent after the recording of a notice of election and demand must contain, in addition to the current requirements, a statement that, if the borrower believes that a lender or servicer has violated the requirements for a single point of contact or the prohibitions on dual tracking, both discussed below, the borrower may file a complaint with the Colorado Attorney General, the Consumer Financial Protection Bureau (“CFPB”), or both, but the filing of a complaint will not stop the foreclosure process.  The notice must include contact information for both the Colorado Attorney General’s Office and the CFPB.  If the public trustee or sheriff conducting the foreclosure (“officer”) maintains a website, the officer must also post this information on the website for viewing by all borrowers.

 

No later than the 45th day of a borrower’s delinquency, a servicer must promptly establish a single point of contact for communications with the borrower.  The servicer must 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 must 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 must:

  • 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 or the provisions below;
  • 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, if available, to prior servicers in connection with a loss mitigation application;
  • Provide the two retrieved items above to other persons required to evaluate a borrower for loss mitigation options made available by the servicer, if applicable; and
  • Provide a delinquent borrower with information about the procedures for submitting a notice of error or an information request.

 

A servicer who complies with the continuity of contact CFPB regulations, or is exempt from compliance with such regulations under federal law or CFPB rules, regulations, or orders, is considered in compliance with the provisions above.

 

A servicer is subject to the time limits and other requirements of federal law and CFPB rules in connection with a foreclosure.

 

The servicer must:

  • 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 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, 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 14 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 37 days prior to the sale date or acceptance of a loss mitigation option.  If the borrower does so, as soon as possible, but no later than 3 business days after receipt of the notification, the officer must contact the attorney for the servicer or holder or the servicer or holder, if not represented by an attorney, by telephone, email, or first-class mail and inquire as to the status of the loss mitigation option.  The officer will document this inquiry.  Until the servicer or its attorney responds to the inquiry, the officer will continue the sale.

 

If the attorney for the servicer or holder or the servicer or holder, if not represented by an attorney, fails to respond within 7 calendar days to an inquiry, then, as soon as possible but no later than the 14th day after the date of the inquiry, the officer will send a certified letter to the attorney for the servicer or holder or to the servicer or holder, if not represented by an attorney, as listed on the notice of election and demand, inquiring as to the status of the loss mitigation option.  The servicer or holder must reimburse the officer for the cost of mailing the letter.

 

If, after being contacted, the attorney for the servicer or holder or the servicer or holder, if not represented by an attorney, gives the officer a written statement via email or first-class mail disputing that a loss mitigation option has been offered and accepted or that the borrower is complying with its terms, the officer will proceed with the sale.

 

If the attorney for the servicer or holder or the servicer or holder, if not represented by an attorney, acknowledges that a loss mitigation option has been offered and accepted and that the borrower is complying with its terms, the officer will continue the sale, and the holder must withdraw the notice of election and demand within 180 calendar days after the date of the acknowledgment if the borrower continues to comply with the terms of the loss mitigation option.

 

If, within 180 calendar days after the date of the acknowledgment, the attorney for the servicer or holder or the servicer or holder, if not represented by an attorney, has not withdrawn the notice of election and demand and neither the attorney for the servicer or holder nor the servicer or holder, if not represented by an attorney, has notified the officer that the borrower is not complying with the terms of the loss mitigation option, the officer may administratively withdraw the notice of election and demand.

 

If, within 180 calendar days after the date of the acknowledgment, the borrower fails to comply with the terms of the loss mitigation option, 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 10 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, or on an updated mailing list if provided by the holder or the holder’s attorney.

 

The rescheduled sale date must not be fewer than 7 calendar days after the date the amended combined notice is mailed.  All fees and costs of providing the amended combined notice may be included as part of the foreclosure costs.

 

If a foreclosure sale is continued as a result of compliance with the requirements above, the period for which the sale may be continued is in addition to the 12-month period of continuance.

 

A servicer is exempt from the provisions above if the servicer services 5,000 or fewer mortgage loans for all of which the servicer, or an affiliate of the servicer, is the lender or assignee.  In determining whether a servicer services 5,000 or fewer mortgages, the servicer is evaluated based on the number of mortgage loans serviced by the servicer and any affiliates as of January 1 for the remainder of the calendar year.  A servicer that crosses the threshold has 6 months after crossing the threshold or until the next January 1, whichever is later, to comply.

 

A servicer who complies with the CFPB’s loss mitigation regulations, or is exempt from compliance with those regulations under federal law or CFPB rules, regulations, or orders, is considered in compliance with the provisions above.

 

For servicers who are not exempt, the notice of hearing for residential properties 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.

 

The provisions of this memorandum apply to foreclosure proceedings in which the notice of election and demand is filed on or after May 9, 2014.

 

COLORADO HOUSE BILL 14-1312

 

The Colorado legislature recently amended its laws to continue the Foreclosure Deferment Program (“Program”), which came into effect on June 2, 2009.  The Program has been extended until September 1, 2015 (previously June 30, 2014).