Foreclosure Questions and Answers...

[800xtreme]

I have debated over and over whether or not to start a thread about this topic and where to post this thread. As I meet more and more fellow "sledders," I continually find a common kinship is instantly formed. We share a common love for this sport and we all take great pride in sharing that with others. Fellow sledders are some of the most genuine, down to earth people I know - a tremendous brotherhood. That is why I have decided to take a risk and begin this thread - I hope to offend no one, and to help many.

That being said, I feel a responsibility to this community to help in ways that may not have anything to do with sleds. As we are all aware, this economy has taken a toll on all of us; virtually regardless of your line of work. I am a licensed real estate agent in Northern Colorado. I too have felt the impact of this economy. However, in addition to our general real estate practice we are one of the leading real estate companies fully dedicated to helping people with distressed properties.

My intent for this thread, is to simply create a place where questions can be asked and answers can be given...PERIOD. I have found the majority of people in this situation simply do not understand their rights and the laws that govern the foreclosure process in Colorado. I want this to be a place where you can get educated so you can make an informed decision.

You may not be in this type of situation yourself, but all of probably know someone who is. This can be the place where you can help them by asking questions on their behalf.

I know there are other real estate professionals on this forum and I would gladly invite your input as well. I only ask that before you give advice, you make sure you are giving facts as this is a matter that we do not want to misinform people about.

Feel free to pm me if you are uncomfortable posting something in this thread. If people feel I should remove this thread all together, or move it to a different area on the forum just let me know and I would be glad to respect your wishes.

I hope this can be helpful to many....

Here are some ideas to start:

What is the timeline for the foreclosure process in Colorado?
When do you have to leave your property?
How do you stop a foreclosure?
How does a foreclosure affect your credit?
How do you get a loan modification?
What is a short-sale?
How do you qualify for a short-sale?
How is a short-sale different from a foreclosure?
What opportunities does this market present to invest?
How does the foreclosure sale work?

Regards,

Jesse Laner, CDPE
Kapital Real Estate, LLC
970-672-7212
Jesselaner@gmail.com

 

[PJ-Hunter]

You have any experience with those lying pricks at Wells Fargo Home Mortgage? If so, I have a pile of questions for you.

And no, my house is not being foreclosed on, I am not losing it or anything like that. But, WF did fark me!

 

[Ex-Member]

You have any experience with those lying pricks at Wells Fargo Home Mortgage? If so, I have a pile of questions for you.

And no, my house is not being foreclosed on, I am not losing it or anything like that. But, WF did fark me!

hahaha, yea.... i had my share of problems with them during my little foreclosure adventure.

Basically some guy went into foreclosure, bank sold his house. Older couple in town bought it to fix-n-flip. I bought the house from them, but the bank's lien on the guy that went into foreclosure was never cleared up. The timeline of my title co's inspection and closing was such that the week after I closed, the foreclosure went through and I had law firms asking for $60k.

Fortunately title insurance covered that, but it was still quite a pain in the asss to have to deal with, on top of all the new-house stuff. WF didn't want to service the loan since it had those title problems, and the loan originator didn't want any part of the $60k either.

 

[800xtreme]

PJ - yes, we have had experience with Wells Fargo. They are very proud and are one of the banks that have been the most difficult to work with. If you want to shoot me a pm with some specifics, I would be glad to see if I can help or at least steer you in the right direction.

Mule - well isn't that a messed up deal...thank goodness for title insurance huh? Dealing with properties that were sold at a Public Trustee sale can be some what of a risk. I am not sure exactly what happened with your situation simply from your post. Once a property is sold at a foreclosure sale by a Public Trustee, there is an 8 business day redemption period granted to any junior lien holders (2nd postion mortgage holders, HOA liens, judgements, mechanics liens, etc.) for them to have the right to file their "intent to redeem." If they redeem the property, they are required to pay the full amount that the property sold for PLUS interest and fees. All junior lien holders who do not redeem during those 8 days simply go away except some tax liens and 6 months of unpaid HOA dues. In your situation, what most likely happened (and I am simply speculating) is the letters you were getting from the attorneys were letters asking the original guy in foreclosure to pay on the deficency. If your house is sold at foreclosure and it sells for $60K less than what you owe, the bank still has the right to collect on that $60K. However, they can only collect it from the guy who got foreclosed on...not the new owner.

 

[800xtreme]

The following is some general information in regards to the foreclosure process here in Colorado. Below is an article written by Oliver E. Frascona - one of the foremost real estate attorneys in Colorado. More information can be found at: www.frascona.com



"DELINQUENCY: The day after a payment is due, a loan is DELINQUENT. If the grace period runs until the 16th of each month (as it does for all FHA loans) and payments are posted each month on the 10th, then the loan becomes DELINQUENT for a short period each month.

DEFAULT: A loan is IN DEFAULT as soon as any payment has been due and unpaid for more than 30 days. Lenders often have subdivided collection departments dealing with loans that are in different stages of default.

FORECLOSURE: When a lender says a loan is in FORECLOSURE, they usually mean that the loan file has been transferred to an internal department whose job is to decide if and when to send the loan to the lawyers who handle the lender's foreclosures in Colorado. Most lenders use an outside law firm.

FHA loans cannot be put into foreclosure status until at least three payments are due and unpaid. However, a foreclosure on an FHA loan CAN begin before the grace period expires for the third payment. Conventional (non-government insured) loans can be put in foreclosure AS SOON AS THE LOAN IS IN DEFAULT, which may be only 15-20 days after the grace period ends. However, most lenders will choose not to begin foreclosure until three payments are due and unpaid.

LEGAL WORK: After the lender transfers a loan file to their foreclosure attorneys, the borrower will become responsible for the lender's legal costs, the total of which can be up to $2500 or more. Foreclosure costs and fees including all legal fees incurred must be paid in addition to back payments and late fees in order to CURE the loan and stop the foreclosure. The attorneys usually spend two to four weeks preparing documents, which, assuming the lender is foreclosing on a Deed of Trust, will be sent to the Public Trustee's Office for the county where the property is located.

PUBLIC AUCTION:

When the Public Trustee receives the foreclosure documents from the lender's attorneys, the Public Trustee will record a Notice of Election and Demand ("NED") and will schedule a public auction of the property 110-125 days in the future. The borrower's RIGHT TO CURE the loan is dependent upon borrower filing an INTENT TO CURE form with the Public Trustee's office for the appropriate county at least 15 days before the public auction of the property. Borrower will then receive the CURE FIGURES, i.e. the amount of money needed to reinstate their loan, within one week before the sale. The Public Trustee's Office must receive a cashier's check or other certified funds of the total amount due before 12 Noon, one day prior to the public auction.

The lender's attorneys must schedule a RULE 120 HEARING to take place before the auction date. The purpose of the hearing is to legally establish whether the lender has the right to foreclose on the property and have it sold at the public auction. The judge may cancel this hearing and simply sign the order allowing the sale, if the borrower does not officially respond when given notice.

REDEMPTION PERIOD FOR JUNIOR LIENORS:

If a home is sold at the public auction, it is followed by a short REDEMPTION PERIOD during which time junior lienholders may pay off the amount bid at auction plus "allowable fees" i.e. taxes, insurance, and any interest accrued per day, made payable to the county Public Trustee's Office.

To receive the REDEMPTION FIGURES the INTENT TO REDEEM must be filed at the county Public Trustee's office within 8 business days after the sale. Only junior lienholders whose liens were of record prior to the recording of the NED will be allowed to redeem.

DEFICIENCY JUDGMENT: If the debt on the home exceeds what the lender thinks the home is worth, a homeowner could still owe the lender money even after the loss of the home. If a court can be convinced that the lender bid less than a good faith estimate of the property's value (minus holding expenses) at the public auction, then a DEFICIENCY JUDGMENT for additional debt may be avoided. Otherwise the owner of the property will be held responsible for the deficient amount.

Disclaimer -- Content is general information only. Information is not provided as advice for a specific matter, nor does its publication create an attorney-client relationship. Laws vary from one state to another. For legal advice on a specific matter, consult an attorney."