If you’re a struggling Colorado homeowner in foreclosure, you may be able to defer (delay) the sale of your home for as many as 90 days to give you time to work out an agreement with your lender. Most homeowners with a first mortgage that is $500,000 or less are eligible for this additional time.
Read on to learn about the precise eligibility criteria for a Colorado foreclosure deferment, how to request one, and how long this opportunity will be available in Colorado.
Colorado’s Foreclosure Deferment Law
Colorado law provides homeowners who are facing foreclosure with the opportunity to get a 90-day postponement of the foreclosure sale, so long all requirements and deadlines are met.
The purpose of the deferment is to allow the homeowner to work with the lender to try to come up with a way to avoid foreclosure, such as a mortgage modification, forbearance agreement, or repayment plan.
To be eligible for a deferment, you and your loan must meet all of the below criteria.
- You must live at the property that is being foreclosed (as your primary residence) on the date that the Notice of Election and Demand (the first official step in a Colorado foreclosure) is filed. (To learn more about foreclosure laws and procedures in Colorado, visit Nolo’s Colorado Foreclosure Law Center.)
- You must intend to continue to reside at the property.
- The deed of trust you signed when you took out the loan must be a first lien on the property.
- You must have occupied the property as your primary residence within 90 days after the date of the deed of trust. (Learn about the difference between a mortgage and a deed of trust.)
- You must be personally obligated to pay the debt.
- You took out the loan for personal, family, or household purposes.
- The original loan amount was $500,000 or less.
You won’t qualify for a deferment if any of the following are true.
- You abandoned the property.
- You provided false information to obtain the loan.
- You are currently in bankruptcy or you received a bankruptcy discharge within the last 24 months (and you included the property in the bankruptcy estate).
- You have used the property for illegal purposes.
- You have damaged the property or have been cited for major code violations.
How You’ll Get Information About the Deferment
If you’re eligible, you’ll receive a notice explaining that you may request a foreclosure deferment. The lender or the lender’s attorney will post the notice in a conspicuous place on your property, usually on or near the front door.
How to Request a Deferment
Once the notice is posted, you have 20 days to contact a HUD-approved foreclosure counselor by telephone, online, or in person to request a deferment. The counselor will review your financial situation with you and determine if there is a reasonable likelihood that you and the lender can achieve a mutually acceptable agreement to avoid foreclosure.
If the counselor approves the deferment, he or she will notify the public trustee (the party that administers Colorado foreclosures) to delay the foreclosure. The trustee will postpone the sale on a week-to-week basis for up to 90 days while you work with your bank and the counselor to try to find an alternative to foreclosure.
Required Payments During the Deferment
During the deferment, you must make a monthly payment equal to two-thirds of your regular mortgage payment amount (principal and interest) plus the amount for taxes and insurance (if you’re obligated to pay for these through your monthly mortgage payments).
You must make the initial payment five days after the date the counselor approves the deferment and every 30 days thereafter until the deferment ends.
Actions that Will Terminate (End) Your Deferment Early
Your deferment will be terminated early if any of the following occurs.
- You don’t make your payments on time.
- You pay an incorrect amount.
- You transfer ownership of the home.
- You add new liens to the home.
- Another lienholder starts a foreclosure on the home.
- You file bankruptcy during the deferment.
Deferment Law Extended Until 2015
On May 9, 2014, Colorado Governor John Hickenlooper approved House Bill 14-1312, which extended the deferment law’s sunset (end) date to September 1, 2015. This means that foreclosure deferments will be available to eligible homeowners up until this time. (The law was previously set to expire on June 30, 2014.)
Should You Request a Deferment?
Even though getting a deferment does not guarantee that your lender will offer you a workout option, it doesn't hurt to request one. A deferment will buy you some more time in your home and give you the opportunity to explore ways that you may not have previously considered to bring the loan current and avoid a foreclosure.
Learn More About Colorado’s Foreclosure Deferment Law
Colorado’s foreclosure deferment statutes are codified at Colo. Rev. Stat. § 38-38-101 through § 38-38-808. You can find them by going to Title 38, Article 38, Part 8 of the Colorado Revised Statutes.
To find the text and history of House Bill 14-1312, you can go to the Colorado General Assembly webpage. Click on “Search for a Bill” and enter “14-1312” (the number of the House Bill) in the search box.
For further information about the foreclosure deferment program, you may contact the Colorado Foreclosure Hotline at 877-601-HOPE (4673).