Summary CO HB 1276

Summary of CO HB 1276

Synopsis: A foreclosure deferment of up to 90-days is available for eligible borrowers.

First liens only
Must reside at he property subject to a notice of election and demand
Occupy the property as primary residence as of the date when the notice of election and demand was filed
Have occupied the property as primary residence within 90-days after the date of the deed of trust
Intend to continue to reside at the property, and
Be personally obligated on the debt, which was incurred primarily for personal, family, or household purposes, had an original principal amount of $500,000 or less, and is secured by the deed of trust in the notice

“Foreclosure counselor” a housing counselor employed by an agency approved by the US HUD; includes counselors affiliated with the Colorado Foreclosure Hotline and the Hope Now Alliance (or its successor organization)
Foreclosure deferment: a period not to exceed 90-days or not to extend past the next scheduled sale date after 90 days, except as may be extended by law, during which the public trustee of the county in which the property is located continues the scheduled sale of a property subject to a notice of election and demand.

The holder (or attorney thereof) must cause a notice to be posted in a conspicuous place on the property, no later than 15-days following the filing (and confirmation that it is complete) of the notice of election and demand, containing:

A description of the foreclosure deferment opportunity described in this section and the procedures an eligible borrower may follow to seek a deferment
The number of the Colorado foreclosure hotline and web address of the US HUD listing of approved housing counselor agencies in Colorado
The date that the notice was posted and the deadline by which an eligible borrower must contact a foreclosure counselor (20-days after posting of the notice)
Must be in both English and Spanish on a single piece of paper in 14-point, bold-faced type.
The Division of Housing in the department of local government will make available a standard form in English and Spanish that meets the requirements of this section (released no later than 30 days after this part is enacted).
No later than 20-days after the filing of the notice of the notice of election and demand, the holder will provide an affidavit to the public trustee that this posting was made (if the affidavit is not filed the sale

An eligible borrower must contact (by phone, electronically, or in person) a foreclosure counselor within 20 days after the posting of the notice to qualify for foreclosure deferment.
Foreclosure Counselor duties:

The foreclosure counselor shall promptly notify the holder that counselor has been contacted by an eligible borrower and specify the date of the contact.
The foreclosure counselor shall provide the borrower with information regarding the federal “making home affordable” program and advise the borrower whether it would be beneficial.
No later than 30-days after initial contact of the borrower, the counselor:

The holder must provide in writing the address (and information on how to do send electronically) to which payments may be sent if the borrower qualifies for deferment. Must be sent within 10-days of notice from the counselor.
Upon notice from counselor, the public trustee will immediately cancel any remaining publications of the combined notice and shall not end the sale of the property until

Public trustee will collect a fee of $75 and then begin publication of the new notice of election and demand (published within 20-days of deferment completion)
Borrowers ineligible for deferment:

Loan is ineligible if mutually acceptable modification is unlikely, as measured by whether the holder is likely to receive greater revenue from modification than from the foreclosure sale
An eligible borrower will not qualify for foreclosure deferment if:

The borrower has abandoned the property
The borrower provided materially false information to obtain credit
The borrower has engaged in gross waste of the property; cited for major code violation, or has used the property illegally.
The borrower is in bankruptcy proceedings, or has been in chapter-8 bankruptcy within the last 24-months
The borrower has been discharged from chapter-13 bankruptcy with a modified loan agreement for which the property is the security.
If the borrower has received deferment or modification on the same debt obligation in the past

The holder and eligible borrower shall negotiate the terms of the debt obligation
The borrower shall continue to make monthly loan payments to the holder equal to two-thirds of the monthly payments (excluding taxes and insurance costs) prior to delinquency.

If the borrower was obligated to make monthly payments for taxes and insurance, the borrower shall pay the holder one-twelfth of the annual amount previously due.
First payment is due to the holder by the fifth day following the certificate of qualification for the foreclosure deferment and every 30-days thereafter.
Borrower should make the payments by a method that provides evidence of the date of payment
These payments will be applied by the holder pursuant to the applicable provisions of the note and deed of trust.
Early termination of the deferment: a holder may request early termination to the counselor showing adequate grounds for early termination exists. The counselor must make a determination on the request within 10-days, and issue a certification of early termination if the request is approved. “Adequate grounds”:

Borrower has abandoned the property
Borrower has failed to comply with the conditions of deferment
Borrower has conveyed, transferred, or further encumbered the property in violation of the deed of trust.
That foreclosure has been initiated by a different party on another lien; or
The borrower has filed bankruptcy during the deferment

Foreclosure counselor acting in good faith is not liable for any action required under this act.
This act is effective on passage and applies to all foreclosures commenced by the filing of a notice of election and demand 60-days on or after passage. The act expires June 30, 2011.