In response to the crisis where lenders were foreclosing on an unprecedented number of homes in Colorado, in 2009 Governor Ritter signed into law a Foreclosure Deferment Program (“Program”) which is currently scheduled to expire on June 30, 2011. The Program provides eligible homeowners with an opportunity to defer public trustee foreclosure sales on their homes for a period of up to 90 days while they pursue options to remain in their homes.
On January 12, 2011, Representative Mark Ferrandino introduced House Bill 1023 which would keep the Program in place until June 30, 2016. The bill was fast tracked through the Colorado House of Representatives where it was passed by the House in an amended version on January 26th. The amended version of the bill provides that the Program will remain in place until June 30, 2014.
From a community association perspective, it is not clear whether this is a positive development. Generally speaking, once a lender begins the foreclosure process the owner of the home stops paying association assessments. In fact, it is not uncommon for homeowners to stop paying assessments prior to a public trustee foreclosure action being commenced. Since many of these foreclosure actions are being continued by the lenders for many months, tacking on an additional 90 days to the already lengthy process means that associations may be out another 3 months of assessments. However, if the Program is successful and the owner is able to remain in the home – associations will be able to pursue payment of all assessment delinquencies from the homeowner.
We will provide you with updates as HB 1023 proceeds through the legislative process.