Judicial/ Non-Judicial Foreclosure: Both
Right of Redemption/ Deficiency Judgment: Both are allowed
Timeline: 120 Days, Can vary depending on individual cases
Deed of Trust / Mortgage as Security Instruments: Both are required
Judicial Foreclosure Process:
The Judicial foreclosure process is followed when there is no ‘Power of Sale’ clause in the Deed of Trust/ Mortgage document. This process requires the lender to obtain a court order facilitating the foreclosure of property upon default. After that, the property is sold to the highest bidder through a public auction.
Non-Judicial Foreclosure Process:
If a ‘Power of Sale’ clause is present in either the Deed of Trust or Mortgage document, the Non-Judicial foreclosure process can be followed. In a Non-Judicial Foreclosure process, the borrower has already given permission to the lender to sell their property in case they default on the loan amount.
The actual foreclosure process can be carried out by either the lender (bank) or their authorized agent/ attorney, referred to as ‘Trustee’. The following guidelines need to be followed in a Non-Judicial foreclosure process.
In Colorado, the Non-Judicial foreclosure process is handled by a Public Trustee, specifically appointed for this job by the Government. The Public Trustee is expected to be impartial to either side and is required to carry out the procedure involving the foreclosure process.
The lender submits the appropriate documents to the office of the Public Trustee in the county to which the property belongs to, which is followed by the Public Trustee filing a ‘Notice of election’ with the recorder’s office/ county clerk.
This noticed needs to be published in the local newspaper of the county where the property is located for at least five consecutive weeks.
The public trustee is required to mail a notice to the borrower indicating the procedure to re-claim the property. This has to be done before at least 21 days of the actual sale proceedings. In addition to this, the notice of election, as published in the newspaper needs to be sent by registered post to the borrower and any other party mentioned in the Deed of Trust/ Mortgage document. This has to be done within at least ten days after the publication of the notice in the newspaper.
The borrower is required to file a ‘Intent for cure’ document with the public trustee in case they wish to re-claim their property by paying the dues applicable to them. This document needs to be filed at least 15 days before the actual sale proceedings/ auction and the payment needs to be made by noon, at least one day prior to the sale proceedings.
The public trustee can hold the auction before the entrance of the county courthouse and it needs to happen within 45 to 60 days of filing of the initial notice/recording of the election at the recording office.
The borrower still has a right of redemption for up to 75 days from the date of sale of their property. They can re-claim their property within that period by paying up the dues along with interest. The lender is allowed to file for deficiency judgment if the price paid by the highest bidder is less than the actual amount owed to them.