1987 Statutory Amendments Concerning Foreclosures of Deeds of Trust and Mortgages
| Jurisdiction | Colorado,United States |
| Citation | Vol. 08 No. 1987 Pg. 1386 |
| Pages | 1386 |
| Publication year | 1987 |
1987, August, Pg. 1386. 1987 Statutory Amendments Concerning Foreclosures of Deeds of Trust and Mortgages
On July 1, 1987, House Bill ("H.B.") 1197, which made certain changes to the public trustee foreclosure statutes, became effective for foreclosures commenced on or after this date.(fn1) The bill was designed to address problems existing in the foreclosure statutes, primarily in the commercial real estate area. Of utmost concern were foreclosure delays being experienced in the more heavily populated counties and positions being taken by some public trustees in their interpretation of the statutes. There were also practical problems with the statutes such as the definition of agricultural real estate, the failure to address which costs and expenses could be added to the redemption price and the failure to define costs which should be allowed as part of the total amount due to the holder of the note.
This article addresses each section of H.B. 1197 and its intended effect on the foreclosure process.
Due to the heavy volume of foreclosures in some counties, foreclosing creditors were experiencing delays in the public trustees' offices. Many public trustees interpreted the foreclosure statutes as placing a fiduciary duty on them to review certain amounts involved in the foreclosure proceeding; others felt that this duty was on the attorney conducting the foreclosure. This burden of review by the public trustee and the increased volume of foreclosures were the reasons given for the delays.
Subsection (4) was added to CRS § 38-37-105 to make it clear that a public trustee has no responsibility for determining the following: (1) the amount or reasonableness of a bid or the costs and expenses allowed in computing the total sum due; (2) the amount necessary for the reinstatement of the loan; or (3) the amount required to redeem property sold at a foreclosure sale. In addition, a public trustee is also absolved from the duty of reviewing the description of property in a partial release of a deed of trust. This new subsection should eliminate disagreements concerning amounts which can be included in the bid, cure and redemption figures.
The amendment to CRS § 38-37-142(2) was proposed due to the confusion surrounding the interpretation of the statute with respect to which costs and expenses are allowed in the foreclosure bid, especially when a deficiency is involved. There was a lack of uniform procedure among some public trustees in this area. For example, some public trustees were disallowing the cost of an appraisal, although mortgagees contended that this was a necessary expense incurred in order to calculate the bid.
The amendment allows for an itemization of all amounts due under the note and deed of trust and all costs and expenses allowed by the note or deed of trust. This includes appraisal fees, attorney fees and costs of an attorney in the employ of the owner or holder of the indebtedness which are used in calculating the total amount due and the costs and expenses allowable. There was also a specific category added to the bid form for the appraisal fee. The provision allowing for the costs of an inhouse attorney was included to clarify that these costs could be included in the bid.(fn2)
H.B. 1197 added new CRS § 38-37-143...
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