I took a class last week from an attorney who reviewed for us the legislative changes that pertain to home ownership in Colorado, and life between Denver and Boulder. I've summarized them for you, with the bill numbers so you can look them up for more info.
There were a lot of them, so I'm going to divide this into 3 posts. This is part 1, which will include laws affecting the 'equity purchaser' (aka 'third party investors' who are involved in buying short sales then immediately re-selling them) and foreclosure law changes.
Read part 2 of Legislative Changes Pertaining to Colorado Homes.
I'm glad the State of Colorado is recognizing that some of these 'equity purchasers' are preying on frightened and confused home owners in a vulnerable position, and clamping down with some laws. I expect we'll start seeing some criminal action, because a lot of the time these 'investors' play 'fast and loose' with the law, if they even know what the law is.
I am neither an attorney nor a politician, so please don't base any conclusions or decisions on my short summaries in this post. Consult an attorney. You can see the bills in their entirety at www.LEG.State.CO.US Colorado General Assembly.
- Part of Colorado's Foreclosure Protection Act specified that if an equity purchaser was involved, and the seller was a non-English speaker, all documents were to be translated into the seller's first language. The State has found that this simply made it more difficult for these sellers to sell their home. This bill changed that to require that only one paragraph need be translated, which is the statement about the right to cancel the contract. However, note that it's not in effect yet so for now, translating all docs is still required if the Foreclosure Protection Act applies. H.B. 10-1133 Effective 1/1/10
- From the same bill, in a short sale transaction where the equity purchaser intends to 'flip' the property within 14 days, the seller and the seller's lender, as well as any subsequent purchaser and their lenders, be notified of the terms of the subsequent intended sale and the amount to be paid. H.B. 10-1133 Effective 1/1/11
- Note: a person who acquires title to a residence in foreclosure as a result of a short sale where they use an appropriate addendum (SSA) and rquired disclosures is exempted from the definition of equity purchaser. And, from the same bill, 'homeowner' is redefined to mean the owner of a dwelling who occupies it as a principal place of residence, rather than the owner of a residence in foreclosure.
- AND from the same bill - for equity purchaser provisions, a residence in foreclosure is one that is occupied as the home owner's principal residence, is encumbered by a residential mortgage, and which the equity purchaser knows or should know that the loan is at least 30 days in default. I suppose now equity purchasers will start requiring sellers to move out, which negates the option of getting a HAFA short sale, BTW. Will that be disclosed? Hmmmm ...
- There is now an option for lenders to expedite the foreclosure process if the property has been abandoned, among other things. This requires a court order, so it will cost the lenders more and most people feel the lenders won't take advantage of it for that reason. Still, if you abandon your house, keep in mind the rules of the game change in a number of ways! H.B. 10-1249 Effective 8/1/10 Amended to make this a 3-year program, not permanent.
- This one's already been in effect for over a year. The definition of 'residence in foreclosure' has been changed to include a residence that is subject to a mortgage that is 30 days delinquent or in default but against which a foreclosure action, while authorized, may not yet have been commenced. It's my understanding that formerly 'residence in foreclosure' didn't apply until the NED had been filed. Agents, equity purchasers, investors all need to be careful about these changes. H.B. 09-1109 Effective 7/1/09
- There's now a foreclosure deferment process for eligible borrowers. A 'Notice of Opportunity for Foreclosure Deferment' is required to be posted. However, if the borrower has transferred title to another party - as happens in equity purchases - they are ineligible for foreclosure deferment. I wonder if the equity purchasers and their agents will be disclosing this to home owners in distress? H.B. 10-1240 effective 8/8/10
Read part 2 of Legislative Changes Pertaining to Colorado Homes.
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I write posts on real estate issues and local events in the Denver metro area, especially those *communities between Denver and Boulder, as a public service. My hope is to give people an idea of the 'flavor' of our community, in case they're new or moving to the Denver area.
I am a residential real estate agent, happily helping folks buy a house or sell a house in the beautiful and friendly *suburbs northwest of Denver.
*Arvada, Broomfield, Lafayette, Louisville, Superior, Westminster; also Thornton, Golden, Wheat Ridge, Northglen, Lakewood
Read more about Arvada Colorado, a historic small town between Denver and Boulder.
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Copyright © 2011 Joetta Fort
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