In Colorado, there are two ways that a lender can foreclose: judicial foreclosure and nonjudicial foreclosure. But foreclosure isn’t a black-and-white process. If you’re about to go into foreclosure, the situation may be more complicated than you think. Here is what you need to know about the foreclosure process in Colorado:
Lenders Have Different Rules With Foreclosure
Whether it’s judicial or nonjudicial, you should be aware that different lenders have different foreclosure processes. Some lenders will start to foreclose the second they can — after 120 days of late payments. If four months sounds fast, it’s because it is. Many lenders won’t start foreclosure until six months, and even then, some might take up to a year. It really depends on the lender. It’s possible that you can interrupt a foreclosure using three methods:
- Selling your house. Sell your house fast enough, and you will be able to pay your bank note off in full, and they will have no reason to foreclose on your property. But many people hesitate to sell their home because they’ll need to make repairs or because they worry their home isn’t ready for the market.
- Short sales. You can ask your bank if it’s possible for you to sell your property short. If you owe $200,000 on your property, you could sell it for $160,000. This is common if you’re underwater on your loan (if you owe more than it’s really worth).
- Bankruptcy. It’s not always a great idea, but bankruptcy does stall foreclosure. But that also means that you’re going to have a bankruptcy on file, which is often worse than a foreclosure.
Usually it’s best to talk to your lender. If you’ve experienced a temporary shortfall, they may be able to work with you. But if you really can’t afford your property anymore, there are other options you’ll have to pursue.
The Types of Foreclosure in Colorado
A judicial foreclosure means that the bank has to go to a judge and get an order to foreclose. This will take some time, but you can’t know how long it will take; you should be aware that foreclosure is imminent. Once the bank has a court order, they’ll be able to remove you from the property and sell it.
A nonjudicial foreclosure occurs when the bank has power of sale, which is outlined in your legal documents. “Power of sale” means the bank can sell your property in the event that you fall into foreclosure without having to go to court.
At every stage, you need to be notified of the bank’s actions and intent. You should be notified 21 days before a foreclosure sale, with information about how to cure the sale. You may also be able to stall foreclosure proceedings by filing an “intent to cure” within 15 days, which states that you’re intending on paying the amount owed.
Foreclosure Should Always Be Avoided
There are some serious consequences to foreclosure. Not only will you find it difficult to rent and buy a home in the future, but your credit will be damaged, and you may lose any equity you built in your home. The bank will charge legal fees and administrative fees, in addition to possibly selling the house below market (to get it off their books), so it’s not likely you’ll get much from the sale.
It’s better to take control of the situation.
If you’re heading toward foreclosure, often your best option is to sell your home as quickly as you can, for as much as you can. In this situation, a cash buyer is going to be your best option. You should be able to get fair market value for your property, pay off your mortgage loan, and walk away. You may even be able to walk away with some cash in your pocket, to start a new life altogether.
Purple Mountain Holdings Can Help
At Purple Mountain Holdings, you can receive a cash offer to your house as soon as possible. You don’t need to make any repairs, renovations, or updates. You don’t need to worry about the amount of time it will take to get the mortgage loan through. Purple Mountain Holdings can offer you cash for your property. Contact us today to find out how much we can offer you for your home.