Colorado Homeowners can Benefit From Foreclosure Delays to Remain in Home

As a Denver foreclosure defense lawyer who frequently helps debtors do everything they can to keep a home from foreclosure or, at the very least, to delay foreclosure for as long as possible, there’s turning out to be a longer delay until eviction eviction. Despite the high and ever increasing number of foreclosures in both Colorado and nationwide, numerous homeowners have remained in their home rent free well after the sale date.

Nationwide, from the time that the mortgage lender declares a default on the mortgage loan obligation, through the entire foreclosure process and up to the date of eviction, the average duration of this entire cycle has increased from 251 to 438 days, according to the New York Times. This prolonged delay is attributable to numerous obstacles that mortgage lenders face in the current housing climate.

First, numerous mortgage obligors have sued their mortgage lender to either eliminate the mortgage lien or in claiming that the lender violated the Truth in Lending Act (TILA) in order to minimize or avoid any personal liability on the mortgage note. For instance, TILA mandates that lenders use certain disclosures and language when the mortgage loan is originated. The borrower can often avoid personal liability altogether if the lender fails to comply with this aspect of TILA. Put another way, absent full compliance with TILA, the mortgage lender may now be barred from pursuing the borrower for the difference between the foreclosure sale price and the debt owed by the borrower.

Second, many states have implemented temporary moratoriums on foreclosures (although not yet in Colorado).

Third, the Obama Administration has applied more pressure to mortgage lenders to offer loan modifications in lieu of the foreclosure process.

Finally, most mortgage lenders are completely overburdened with the exorbitantly high number of homeowners who are behind on their mortgage payments and who are facing foreclosure, such that the lender cannot even institute eviction proceedings until well after they’re eligible to do so under Colorado state law.

(On a slightly different note, many mortgage lenders which hold a second lien are not even making an effort to institute the foreclosure process, particularly with homeowners who are upside down (e.g. have negative equity) in their homes. As such, these homeowners often live rent free with respect to the second mortgage.)