Fast Evictions Hurting Loan Modification Homeowners

Denver-area foreclosures aren't expected to drop too significantly anytime soon.  First Quarter 2010 Foreclosure rate was  1.9 percent, up 21.9 percent from the previous year. One reason more homes are going to auction is because lenders are dropping prices so they don't have to take homes back, evict homeowners and fix houses up to resell.  

Under Colorado law, departing owners are served with a court proceeding and has 3-5 days to respond. After the response is filed, a hearing will be held before the court within two weeks. If former owners lose, eviction can be scheduled within days.  But in some cases people are being told to get out the same day their house is sold at auction. Facing aggressive foreclosure buyers who want to resell homes quickly, struggling homeowners often don't know their rights.

We have received several calls that are typical of this story.  The caller has been working with a lender on a loan modification when the house they had owned for years was sold at a foreclosure auction. They had already given the lender all the necessary documentation made payments on time and were told that this modification was pending and the foreclosure was postponed. Then a man appeared at the door two days after the sale and told them to get out, the resident demanded proof of the sale and wouldn't leave his house until he saw it. But the sale did take place and the lender only has phone tree hell for the mortgagee to call.

Another family could only watch from the sidewalk as the movers packed up the house. The buyers, concerned the family might damage something or take the home's appliances, refused to let them back inside the home to get their belongings.

The foreclosure-auction process is regulated by Colorado law, but no state or county agency monitors the auctions or the initial eviction efforts by new owners.  Colorado Revised Statutes, Title 38, Article 38 The laws that govern Colorado foreclosures.  Title 38 Colorado Revised Statutes (Property Real and Personal) and Article 37 (Office of Public Trustee), Article 38 (Foreclosure Sales), Article 39 (Mortgages, Deeds of Trust.  According to these statues, "The buyer of a foreclosure home has to give the home's former owner notice to move out. If after five days the former owner doesn't move out, the new owner can file with the courts for a forcible eviction.

Many new buyers taking over recently purchased foreclosure homes know they can't legally evict the former owners without a court hearing. And some new buyers don't want angry people trashing a home, so they might offer more time to move out. Beyond having a window of time to move, there is not much a homeowner can negotiate once the home is sold at a foreclosure auction.

Lenders have been offering homeowners facing foreclosure money for cooperation. The program, endorsed by the federal government's housing plan, is known as Cash for Keys.  Homeowners are typically offered $1,000 or more if they don't strip or vandalize a home after losing it to foreclosure. There are also instances of new buyers offering former owners cash to move out quickly and leave behind appliances and other fixtures.

Some new buyers may rent the house to the former owners to give them more time to find another place. Federal legislation, The Federal Protecting Tenants at Foreclosure Act,  was recently passed to allow lower-income homeowners to stay in the house after foreclosure and rent it from the new owner.  If a tenant with a bona fide lease or tenancy occupies a foreclosed property, under the Act, the recipient of a PT Deed cannot start an eviction for a minimum of 90 days (assuming the tenant complies with the terms of the lease post-foreclosure).

Many times the foreclosing Attorney does not know that the owner is involved in a Loan Modification program.  The loan modification department has no idea that the attorney is proceeding with the foreclosure sale.  This is the typical left hand and the right had have no communication.  If this happens to you in Colorado, it is critical that you act immediately.  You have 8 business days to post with the Public Trustee and contact the foreclosing attorney.  If you have supporting documentation, the sale can be rescinded.  Since the Loan Modification has been cancelled without your notification, you can then  proceed to a Short Sale and work with an investor to keep the foreclosure off of your credit.  

It is NEVER TOO LATE.  Even if the trustee sale has taken place, you still have rights and solutions.  Give us a call or fill out the form below.