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Colorado Public Trustees’ Association HB 1387 – Concerning Real Estate Foreclosures Presented June 29, 2006 at the Summer Conference in Grand Junction,

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Presentation on theme: "Colorado Public Trustees’ Association HB 1387 – Concerning Real Estate Foreclosures Presented June 29, 2006 at the Summer Conference in Grand Junction,"— Presentation transcript:

1 Colorado Public Trustees’ Association HB 1387 – Concerning Real Estate Foreclosures Presented June 29, 2006 at the Summer Conference in Grand Junction, Colorado

2 HB 1387 History 2003 – The CPTA Legislative Committee discussed the possibility of reducing or removing the owner redemption and increasing the cure period. Chairman Karen Sheaffer sent a letter to the Colorado Bar Association Foreclosure Committee asking for their assistance in drafting legislation.

3 HB 1387 History, cont’d – The CPTA Legislative Committee voted to prepare a rough draft to give to the Bar Committee and again ask for their assistance. Larry Castle began working with the draft along with numerous other changes to the structure of the foreclosure statutes. It was decided to wait until the following year to pursue such a massive bill.

4 HB 1387 History, cont’d – After passage of the housekeeping bill, HB , work began in earnest on the foreclosure rewrite. Larry began the year as the committee’s drafter and Robert Hopp later took over the duties. Rep. Michael Garcia agreed to sponsor the bill and with the help of Peg Ackerman, Debbie Wagner, and Michael Valdez, set up a series of “stakeholder” meetings.

5 HB 1387 History, cont’d – After numerous negotiations and rewrites, HB was introduced in the House. Several amendments were attached before moving to the Senate. Sen. Jennifer Veiga was the Senate sponsor of the bill and there were again several amendments. The bill passed at the end of the session and was signed into law by Governor Owens.

6 HB 1387 E ffective Dates The bulk of the bill will go into effect on July 1, Nine sections of the bill will become effective on July 1, New provisions will apply to any foreclosures where the NED is recorded on or after the effective date.

7 Provisions that take effect July 1, 2006

8 HB 1387: Section 2 Provisions effective July 1, Public Trustee to act as successor in trust – additional duties. Adds language that if a deed of trust omits the name of the county, the public trustee in the county where the property, or any portion, is located shall act as a successor public trustee, or as if the public trustee and county were named in the deed of trust.

9 HB 1387: Section 3 Provisions effective July 1, Payments to public trustee. Clarifies that payments must be drawn on banks, savings and loan associations or credit unions.

10 HB 1387: Section 11 Provisions effective July 1, Court order authorizing sale mandatory. Requires that a copy of the order authorizing sale be filed with the public trustee no later than noon, the 2 nd business day before the sale. If no response was filed pursuant to the court hearing, the order only needs to recite the date the hearing was scheduled.

11 HB 1387: Section 18 Provisions effective July 1, Use of electronic documents authorized – repeal. Requires the public trustee or sheriff to establish and uniformly apply policies concerning whether and to what extent they will accept documents or records electronically. The repeal section changes public trustee or sheriff to “officer” pursuant to new definitions that will become effective July 1, 2007.

12 HB 1387: Section 26 Provisions effective July 1, Certificates assignable. Establishes that all certificates of redemption are also assignable. If a separate assignment is used, it must contain at least the information required in the certificate and the name and address of the assignor and the assignee.

13 HB 1387: Section 33 Provisions effective July 1, Providing information to homeowner and public – repeal. Gives the public trustee the authority to distribute information or materials concerning foreclosures to homeowners and the general public. The information and material must be approved by the Attorney General’s office, an agency of the State or Federal government or an attorney retained the by a public trustee. The repeal section changes public trustee to “officer” pursuant to new definitions that will become effective July 1, 2007.

14 HB 1387: Section 34 Provisions effective July 1, When holder of prior lien may file action. This establishes that the State of Colorado is to be treated as any other junior lienor if their tax lien is junior to the deed trust being foreclosed.

15 HB 1387: Section 35 Provisions effective July 1, Issuance and return of summons. This helps to streamline the process for a court foreclosure.

16 HB 1387: Section 39 Provisions effective July 1, Notice prior to residential foreclosure. This entire section is repealed.

17 HB 1387: Section Checking account – custodial funds. This section did not take effect due to passage of HB 1287: Concerning the investment of public funds. HB 1287 allows public trustee to utilize overnight depository accounts, local government investment pool trust funds and eligible money market mutual funds. Becomes effective August 9, 2006.

18 Provisions that take effect July 1, 2007

19 HB 1387: Section 1 Provisions effective July 1, Duties of public trustees – fees, expenses, and salaries – reports. The cure fee is replaced with a withdrawal fee of $ There is a new “Administrative” withdrawal fee of $ There is a new $ for “restarting” a foreclosure after a partial release is executed.

20 HB 1387: Section 1 (cont’d) Provisions effective July 1, Duties of public trustees – fees, expenses, and salaries – reports. Clarifies that all amounts paid to 3 rd parties in connection with a foreclosure are considered fees. Changes “clerk hire” to “staff wages and any benefits provided pursuant to county personnel policy” in the reporting section.

21 HB 1387: Section 5 Provisions effective July 1, Checking account – custodial funds. Adds the following accounts to the allowable list for public trustees: ACH, Escrow, & Custodial Accounts Savings and Loan Associations Amended from 2006 provision #4 of HB 1287, concerning investments.

22 HB 1387: Section 6 Provisions effective July 1, Definitions. Most terms associated with foreclosures are defined in this section. The definitions of “agricultural property” and “qualified holder” are now included in this section.

23 HB 1387: Section 7 Provisions effective July 1, Holder of evidence of debt may elect to foreclose. Only one notice of election and demand needs to be filed. A copy of the deed of trust and/or the assignment or indorsement may be filed with a certification from the holder or a statement from the attorney. A combined notice of sale and rights to cure and redeem must be filed.

24 HB 1387: Section 7 (cont’d) Provisions effective July 1, Holder of evidence of debt may elect to foreclose. A supplemental mailing list must be submitted no less that 60 calendar days prior to the 1 st scheduled sale date. Redefines what must be included in the notice of election and demand. If there are multiple evidences of debt, the holder may elect to foreclose on just some of them if properly identified in all docs.

25 HB 1387: Section 7 (cont’d) Provisions effective July 1, Holder of evidence of debt may elect to foreclose. Establishes procedures for assignment or transfer of debt during a foreclosure. Establishes procedures when a partial release is executed on a deed of trust in foreclosure. Expands the electronic transmission of funds to include payments back to the holder or their attorney.

26 HB 1387: Section 8 Provisions effective July 1, Recording notice of election and demand – record of sale. Allows the public trustee to retain electronic copies in their records. Removes the requirement for a record book. Records must be available in the public trustee’s offices during their normal business hours.

27 HB 1387: Section 9 Provisions effective July 1, Combined notice – publication – providing information. A combined notice must be mailed no more than 20 calendar days after recording the NED to the parties in the initial mailing list. A 2 nd combined notice must be mailed no more than 60 calendar days nor less than 45 calendar days before the 1 st scheduled sale to the parties in the supplemental mailing list (includes those in initial list).

28 HB 1387: Section 9 (cont’d) Provisions effective July 1, Combined notice – publication – providing information. An amended mailing list may be submitted at any time but no less than 65 calendar days prior to the date of sale and the officer must send the combined notice no less than 60 calendar days prior to the sale.

29 HB 1387: Section 9 (cont’d) Provisions effective July 1, Combined notice – publication – providing information. If the amended mailing list is submitted after the 1 st publication, the officer shall continue the sale, mail an amended combined notice, and republish. Defines what information must be included in the combined notice.

30 HB 1387: Section 9 (cont’d) Provisions effective July 1, Combined notice – publication – providing information. Publication of the combined notice must be commenced no more than 60 calendar days nor less than 45 calendar days prior to the 1 st scheduled sale date. The published notices will not include the copies of the statutes. The officer shall review all publications of the combined notice for accuracy.

31 HB 1387: Section 10 Provisions effective July 1, Right to cure when default is nonpayment – right to cure for certain technical defaults. Lists those who are eligible to cure. Request for cure statement must be sent to the holder or their attorney no less than 12 calendar days prior to the sale. Cure statement must have at least as much detail as required for a bid.

32 HB 1387: Section 10 (cont’d) Provisions effective July 1, Right to cure when default is nonpayment – right to cure for certain technical defaults. Cure payments will not be sent to the holder or their attorney until a withdrawal is filed. Cure statements must be effective for at least 10 calendar days but not more than 30 calendar days, or until the last day for a cure, whichever is first. Good faith estimates are allowed, if so indicated.

33 HB 1387: Section 12 Provisions effective July 1, Bid required – form of bid. Bids must be submitted by noon the 2 nd business day prior to the sale. Several items were added to the bid form. Bids must be made public upon receipt by the officer. Bids may be posted or provided rather than read. Bids may be amended in writing or electronically by noon the day before the sale or orally at the sale.

34 HB 1387: Section 12 (cont’d) Provisions effective July 1, Bid required – form of bid. Bid payments must be received no later than the date and time of the sale or at some other time on the date of sale if designated in writing by the officer. If highest bidder fails to pay, the next highest bidder who has tendered full payment shall be deemed the successful bidder at the sale.

35 HB 1387: Section 13 Provisions effective July 1, Fees and costs – definitions. The officer may decline to issue a confirmation deed until all sums are paid. Requires disclosure by the holder of any payment, benefit, or remuneration for services or products provided in connection with a foreclosure.

36 HB 1387: Section 14 Provisions effective July 1, Date of sale. Public trustee sales Non-Ag: days after NED Agricultural: days after NED Sheriff sales Non-Ag: No less than 110 days after recording lis pendens Agricultural: No less than 215 days after recording lis pendens

37 HB 1387: Section 14 (cont’d) Provisions effective July 1, Date of sale. Determination of whether a property is agricultural or not must be made no less than 10 calendar days nor more than 20 calendar days after recording the NED. Statements, rather than certificates, are required from city clerks or assessors and do not need to be recorded.

38 HB 1387: Section 15 Provisions effective July 1, Continuance of sale – effect of bankruptcy – withdrawal of sale. If a sale is not officially held or continued, it shall be deemed to be continued week- to-week. Sales may be continued no more than 9 months, rather than 6 months Sales may be continued to allow for filing of amended mailing lists.

39 HB 1387: Section 15 (cont’d) Provisions effective July 1, Continuance of sale – effect of bankruptcy – withdrawal of sale. If a request from a public trustee for a cure statement is received 30 calendar days or less before the sale and it is not filed by noon the 7 th calendar before the sale, the sale shall be continued week-to-week until the statement is filed or the 9 months expire.

40 HB 1387: Section 15 (cont’d) Provisions effective July 1, Continuance of sale – effect of bankruptcy – withdrawal of sale. If a request from the public trustee for a cure statement is received more than 30 calendar days before the sale and it is not filed within 10 days after receipt, the public trustee shall assess a fine equivalent to the original sale fee to be credited to the county general fund only if the cure is made. If the statement is not cured by the noon of the 7 th calendar day before the sale, it shall be continued week-to-week until the statement is filed or the 9 months expire.

41 HB 1387: Section 15 (cont’d) Provisions effective July 1, Continuance of sale – effect of bankruptcy – withdrawal of sale. If a request from a sheriff for a cure statement is not filed by noon the 7 th calendar before the last day of sale permitted, the sale shall be deemed dismissed and unless good cause can be shown, the holder or their attorney shall file a motion to dismiss with the court.

42 HB 1387: Section 15 (cont’d) Provisions effective July 1, Continuance of sale – effect of bankruptcy – withdrawal of sale. If bankruptcy is filed after all publications are complete, the officer shall announce, post, or provide notice of that fact on the sale date. The sale will then be automatically continued from week-to-week unless requested to do otherwise.

43 HB 1387: Section 15 (cont’d) Provisions effective July 1, Continuance of sale – effect of bankruptcy – withdrawal of sale. If bankruptcy is filed before all publications are complete, the officer shall cancel all remaining publications and on the sale date announce, post, or provide notice that the sale has been enjoined or stayed. The sale shall not be continued.

44 HB 1387: Section 15 (cont’d) Provisions effective July 1, Continuance of sale – effect of bankruptcy – withdrawal of sale. Upon termination of the injunction or the bankruptcy, the public trustee shall rerecord the NED and restart the foreclosure. (This is now in a separate section and may inadvertently refer to both cases where the publications were completed and where they were not.)

45 HB 1387: Section 15 (cont’d) Provisions effective July 1, Continuance of sale – effect of bankruptcy – withdrawal of sale. If a sale was held in violation of an automatic bankruptcy stay, the holder or their attorney shall notify the officer within within 60 days of the bankruptcy being over and the officer shall set a new sale date 24 to 49 calendar days after that notification. Republication shall be within 20 days but at least 10 days prior to the new sale date.

46 HB 1387: Section 15 (cont’d) Provisions effective July 1, Continuance of sale – effect of bankruptcy – withdrawal of sale. If a withdrawal is not filed within 45 days after the possible sale date, the public trustee may send notice to the holder or their attorney. If no response within 30 days, the public trustee may record an “adminstrative” withdrawal. All fees and costs are due from the holder and shall accrue interest. The public trustee may withhold services until paid.

47 HB 1387: Section 15 (cont’d) Provisions effective July 1, Continuance of sale – effect of bankruptcy – withdrawal of sale. If an “administrative” withdrawal is recorded while the property is under a bankruptcy automatic stay, the withdrawal is void. The public trustee shall record a notice of that fact and mail a copy of the notice to all persons on the mailing list.

48 HB 1387: Section 16 Provisions effective July 1, Sales by officer – location – announcement - records. Removes the requirement to read, post or provide notice of “the date on which the notice was issued”. If the street address is available, the legal description is not necessary. Removes the requirement for a foreclosure record book. Data may be entered in the records of the public trustee.

49 HB 1387: Section 17 Provisions effective July 1, Treatment of excess funds. Excess bid proceeds are first paid to the holder to the extent of any deficiency. They are then paid to junior lienors whose liens were recorded prior to the NED, who filed a notice of intent to redeem, and whose liens have not been redeemed. Lastly, they are paid to the owner as of the recording of the NED. Unclaimed funds are transferred to the treasurer within 90 days.

50 HB 1387: Section 19 Provisions effective July 1, Foreclosure of installments without acceleration. Some terminology and citations were changed.

51 HB 1387: Section 20 Provisions effective July 1, Holder of certificate of purchase paying charges – redemption. Allows holders of certificates of purchase and redemption to include the same fees and costs that are allowed for the initial bid, as described in

52 HB 1387: Section 21 Provisions effective July 1, Redemption by lienor - procedure. There is no owner redemption period. Liens of junior lienors must have been recorded prior the recording of the NED. Intents to redeem must be filed within 10 business days after the sale (except in certain defined situations). Statements of amounts due on liens must include per diem interest.

53 HB 1387: Section 21 (cont’d) Provisions effective July 1, Redemption by lienor - procedure. Redemption statements are due no later than 14 business days following the sale. Amended statements must be submitted no later than 2 business days prior to the start of each redemption period. If not filed within 15 business days, the officer may calculate the redemption amount.

54 HB 1387: Section 21 (cont’d) Provisions effective July 1, Redemption by lienor – procedure. Each junior lienor has five business days to redeem, starting 15 business days after the sale for the first lienor. Payments must be made on or before noon on the final day of the redemption period. Short redemptions are allowable with written consent of the certificate holder who is to be paid.

55 HB 1387: Section 21 (cont’d) Provisions effective July 1, Redemption by lienor - procedure. The officer shall set the redemption periods for each junior lienor on the 11 th business day after the sale and they may not be shortened or altered. The officer may accept evidence of electronic account-to-account transfers or copies of loan servicing computer screens along with receipts and invoices.

56 HB 1387: Section 21 (cont’d) Provisions effective July 1, Redemption by lienor - procedure. Any redemption rights granted under federal law are separate and distinct from those granted under Colorado law. The officer is not designated to receive redemptions under federal law.

57 HB 1387: Section 22 Provisions effective July 1, Effect of redemption. Removes reference to owner redemptions. Interest acquired through redemption is now also subject to the rights of omitted parties.

58 HB 1387: Section 23 Provisions effective July 1, Rights of other lienors to redeem. The owner may be entitled to refunds from payments held in escrow after final judgment on a mechanics lien. The owner’s rights to excess sale proceeds are subordinate to any beneficiaries of Deeds of Trust where the owner waived the Homestead Exemption.

59 HB 1387: Section 24 Provisions effective July 1, Certificate of purchase – issuance. The only certificate of purchase shall be recorded no later than 5 business days after the sale and shall also include any deficiency as a result of the sale. The recorded certificate shall be retained in the officer’s records.

60 HB 1387: Section 25 Provisions effective July 1, Certificate of redemption – issuance. The only certificate of redemption shall be recorded no sooner than 15 business days after the sale but no later than 5 business days following receipt of the redemption payment. The recorded certificate shall be retained in the officer’s records.

61 HB 1387: Section 27 Provisions effective July 1, Certificate as prima facie evidence. This section is moved from two other sections and includes certificate of purchase, the certificate of redemption, and the confirmation deed, or a certified copy thereof.

62 HB 1387: Section 28 Provisions effective July 1, Title vests upon expiration of redemption periods – confirmation deed. At the end of all redemption periods or, if none, upon the close of business 10 business days after the sale, title vests. No less than 15 business days after the sale or, if later, the end of all redemption periods, the officer shall issue and record a confirmation deed.

63 HB 1387: Sections 29 & 30 Provisions effective July 1, Form of confirmation deed for public trustee’s sale. Adds the word, “confirmation”. Changes “notice of sale” to “combined notice” Form of confirmation deed for sheriff’s sale. Adds the word, “confirmation”.

64 HB 1387: Section 31 Provisions effective July 1, Omitted parties – definitions. Clarifies that the omitted parties’ interest must be of record prior to the recording of the NED or Lis Pendens, and must be junior to the lien being foreclosed.

65 HB 1387: Section 32 Provisions effective July 1, Limitation of officer liability. Consolidates all liability sections. Updates what an officer shall no have responsibility or liability for determining Includes the accuracy of the legal description on a full release. Adds the legal sufficiency of the description of the property in the NED.

66 HB 1387: Section 32 (cont’d) Provisions effective July 1, No waiver of or agreement to shorten right to cure. Clarifies that an agreement to shorten the time to exercise the right to cure is void and against public policy.

67 HB 1387: Section 36 Provisions effective July 1, Contract for deed – escrow of tax moneys – written notice. Minor terminology changes.

68 HB 1387: Section 37 Provisions effective July 1, Public trustee forfeits fees for failure to meet statutory time requirements – validity of foreclosure unaffected. Changes citations and adds “confirmation” before deed.

69 HB 1387: Section 38 Provisions effective July 1, Application – use of term “foreclosure”. Adds the provision that if a deed of trust grants power of sale but contains no provision on the manner in which the power of sale is to be exercised, the holder may foreclose pursuant to the foreclosure statutes through the public trustee or the courts.

70 HB 1387: Section 40 Provisions effective July 1, Time of redemption by lienor. This entire section was repealed. All the provisions were moved to either or

71 HB 1387: Section 40 (cont’d) Provisions effective July 1, Replacement certificate issued in case of loss of originals. This entire section was repealed. There will no longer be an original. One certificate will be issued, recorded, and retained by the officer.

72 HB 1387 – Thank you’s Legislators Rep. Michael Garcia Sen. Jennifer Veiga Attorneys Rich Krohn Larry Castle Robert Hopp Bob Holmes Michael Valdez

73 HB 1387 – More thank you’s Ackerman & Associates Peg Ackerman Debbie Wagner Public Trustees Roxy Huber, Co-Chair Jack Arrowsmith, Committee Testimony Legislative Committee Appointed Public Trustees Executive Board

74 HB 1387 – Next Steps Forms Committee New “Combined Notice” of sale and of rights to cure and redeem Manual Committee July 1, 2006 provisions July 1, 2007 provisions Executive Committee New Fee Schedule Training Opportunities


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