Tuesday, October 11, 2016

Power of Sale Foreclosure

Generally, mortgage lenders holding a claim against a defaulting mortgage borrower will go to court to enforce their rights. Under the watchful eye of a court, the lender will start the foreclosure process, which is regulated under Colorado law. This is known as a judicial foreclosure, the most common form of foreclosure.

Under Colorado law, there is also non-judicial foreclosure, better known as power of sale foreclosure. Like judicial foreclosure, power of sale foreclosure is regulated by state law. Being non-judicial, it needs not be administered by a judge.

The Power of Sale Provision

A power of sale provision is a clause in the deed of trust or mortgage wherein the borrower, upon default of a mortgage payment, authorizes a sale of the property to pay off the balance of the loan. This provision must be contractual, or else the lender must utilize judicial foreclosure.

To administer power of sale foreclosure in Colorado, the governor appoints a "Public Trustee" for each county in the state. The Public Trustee’s charge is to act as an impartial party when handling a power of sale foreclosure.

Here is the process:

1.     The lender or an attorney representing the lender files the required documents regarding the power of sale foreclosure with the Office of the Public Trustee of the county where the property is located.
2.     The Public Trustee files a "Notice of Election and Demand" document with the county clerk and recorder of the county.
3.     Once recorded, the notice must be published for five consecutive weeks in a newspaper that circulates within the county.
4.     The Public Trustee must mail, within ten days after the publication of the notice of election and demand for sale, a copy of the notice of sale, as published in the newspaper, to the borrower and any owner or claimant of record, at the address given in the recorded instrument. The Public Trustee must also mail, at least 21 days before the foreclosure sale, a notice to the borrower describing how to redeem the property.
5.     The borrower/property owner of the property may stop the foreclosure proceedings by filing an "Intent to Cure" document with the Public Trustee's office at least 15 days prior to the foreclosure sale and then, before noon the following day, pay the necessary amount to bring the loan current.
6.     The foreclosure sale must occur between 45 and 60 days after the recording of the election and demand for sale with the county clerk and recorder. The Public Trustee may hold the sale at any entrance to the courthouse, unless otherwise stipulated in the deed of trust or other mortgage document.

Provided that the process is followed, a foreclosure sale will occur. After the sale, the lender has the option to file for a deficiency suit to recoup any deficient amount not covered by the sale of the property. Concurrently, the borrower has 75 days after the foreclosure sale to redeem the property by paying the foreclosure sale amount, plus interest.

If you are facing foreclosure, do not do it alone. Contact the law office of Eric Nesbitt, a seasoned Colorado foreclosure and real estate attorney.

Eric L. Nesbitt, Esq.
Law Offices of Eric L. Nesbitt, PC
Phone 303-741-2354
Email Us
Nesbitt Law Offices Website

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