Judicial and Non-Judicial Foreclosures
A judicial foreclosure may take place in Colorado if there is no "power of sale" clause listed in the home's mortgage agreement. If this is the case, the lender will file a lawsuit to grant it the power to foreclose on the home if the mortgage payments are not paid. It will then be sold at a public auction. A non-judicial foreclosure is granted when a "power of sale" clause does exist in the mortgage agreement. This clause means that the homeowner, or borrower, previously authorized the home to be foreclosed on and sold if he defaults on his mortgage, with the idea being that the money from the home's sale will go to pay off the incurred debt. Most foreclosures in Colorado are non-judicial.
Appointing a Public Trustee
When a homeowner fails to pay his mortgage payments on time and late notices go unanswered, a lawyer for that lender will file a notice with the Office of the Public Trustee, which resides within the home's county. Once this is filed and the payment requests still go unanswered, the Public Trustee will file a "Notice of Election and Demand" with the county records department and county clerk. This notice will be published in the city's or county's newspaper for five weeks straight, which basically advertises that the property may be coming on the market within a few weeks. According to Colorado law, a foreclosure sale must happen between 45 and 60 days after the lender's attorney has filed the "Notice of Election and Demand" with the county recorder and county clerk.
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Reversing the Foreclosure Process
Within 10 days of the notice being published in the newspaper, the Public Trustee must mail a copy of the "Notice of Election and Demand" and a letter stating that the notice has appeared in the newspaper to the homeowner. Before the home can be formally foreclosed on, the Public Trustee must contact the homeowner 21 days before it plans to hold the foreclosure sale to inform him of how he can stop the foreclosure proceedings. The homeowner can then respond to the Public Trustee with an "Intent to Cure" notice, which states that the homeowner plans to make the loan current the day before the home is scheduled to be sold. The homeowner may also be able to retrieve his home if the lender files a lawsuit against him for deficiency, meaning that the homeowner can have his house back if he pays the amount his home sold for during the foreclosure sale, plus interest.