Foreclosure remedy is put on hold

Homeowners in foreclosure were supposed to get double the time, up to 125 days versus 60, to catch up on their delinquent payments starting this month.

But the reforms, passed in 2006, have been delayed until January because harried public trustees weren't ready to carry them out.

"The delay was at our own request," said Bob Sagel, chairman of the legislative committee with the Colorado Public Trustees' Association.

Software problems related to running two foreclosure processes at the same time were an issue, as was turnover.

Some county officials didn't survive the November election. And incoming Gov. Bill Ritter appointed a new slate of public trustees at the state's largest counties earlier this year.

"We started looking at some of the issues of getting ready. I, myself, wasn't completely ready, and I have been working with it more than anyone," said Sagel, who also is the public trustee for Morgan County.

Under the current system, a Colorado homeowner in foreclosure has between 45 and 60 days to get current on, or "cure," their delinquent payments before the home is sold to the highest bidder in a public trustee auction.

After that sale, typically to the lender, the homeowner has another 75 days to redeem the loan.

But the redemption period was a misnomer, leading to little of that for homeowners, contends Zachary Urban, director of housing counseling with Brothers Redevelopment in Denver.

Redemption requires coming up with the entire amount of the mortgage, plus additional costs, something only a small fraction of homeowners in foreclosure are able to do.

Public trustees responding to a statewide survey reported that 29,000 foreclosures were started last year and only 199 redemptions, Sagel said.

State legislators in 2006 extended the cure period, with its lower hurdle of getting current on late payments, in return for eliminating the redemption period.

"Any way we can get more time is going to be beneficial to both the lender and the borrower," Urban said.

Many homeowners move out after their homes are sold by the public trustee, leaving those properties vacant and in legal limbo for another two months.

"It is confusing. You said you sold my property, now you say I have another two months," Sagel said.

Although disappointed that the new timeline isn't in place, Urban said it is better to get the changes right. "We would see more people in their homes," he said.

Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.

BY THE NUMBERS

29,000

Foreclosures started last year in Colorado

199

Redemptions out of those foreclosures, in which the homeowner pays off the mortgage and additional costs

60

Days homeowners have to catch up with delinquent mortgage payments

125

Days homeowners would have under reforms that were due to begin this month; the change has been delayed to 2008

75

Days a homeowner currently has to redeem a loan after the house is sold