Colorado legislators on Thursday passed a pair of bills designed to minimize the harm homeowners can face during a foreclosure.
The two bills — House Bills 1295 and 1130 — ensure homeowners aren’t needlessly overpaying to save their home and have a chance to work out terms with their lenders.
Both bills were sponsored mainly by Rep. Beth McCann, D-Denver, a longtime advocate of foreclosure reform, and Sen. Jessie Ulibarri, D-Westminster. The House unanimously concurred with changes approved by the Senate.
Both are headed to Gov. John Hickenlooper’s desk.
McCann worked longest on HB 1295, which had failed to pass the state General Assembly in prior sessions. It ensures a foreclosure is stopped while a homeowner is in the process of working through a loan modification with their lender.
“It goes to show you that persistence pays off,” Mc-Cann said.
Known as dual-tracking, lenders and the lawyers hired to foreclose on their behalf often did not consult with each other, leaving homeowners fighting a two-front attack to save their house. While the bill mirrors federal protections by establishing a single point of contact for a homeowner, it exceeds them by also giving county public trustees who oversee foreclosures the authority to stop the process pending the modification.
“By giving the county trustees the power to stop a foreclosure when an individual is undergoing a loan modification, Colorado will put into law a system that keeps families in their homes and creates greater stability for our housing market,” said Corrine Fowler, a housing advocate formerly with the Colorado Progressive Coalition, who pressed for the bill’s passage.
The other bill, HB 1130, takes on a number of problems, including those identified in stories by The Denver Post last year that showed homeowners unknowingly overpaid to stop a foreclosure against them. Called a cure, the amounts were inflated by hundreds of dollars when lawyers charged homeowners for foreclosure lawsuits, known as a Rule 120, that did not exist.
A Rule 120 is a hearing in which a judge ultimately signs an order to auction a foreclosed property. Lawyers representing lenders pass on the expenses of those Rule 120 lawsuits to the homeowner, who must pay them in order to stop the foreclosure process.
The Post found dozens of examples where homeowners were assessed the costs of a Rule 120 case that was never filed at the county district court as required. The discrepancies were not uncovered because public trustees are not allowed to question a lawyer’s bill for a homeowner to cure the amount they owe.
Overpayments were simply passed on to the lawyers and the lenders.
The new law requires lawyers to file a final bill, called a cure statement, with the public trustee, certifying all the charges are real and accurate before the homeowner’s payment is given to the law firm on behalf of the lender. Any overage is to be returned to the homeowner.
That would include the costs of posting notices of pending court hearings, a matter under investigation by the Colorado attorney general.
David Migoya: 303-954-1506, dmigoya@denverpost.com or twitter.com/davidmigoya
