On January 20, 2012, Rep. Beth McCann and Sen. Mike Johnston introduced HB 12-1156 – Concerning Measures to Improve the Reliability of Information Provided in Connection with Real Estate Foreclosures. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.
The bill tightens the rules for documentation of the holder’s interest that must be filed with the public trustee before a foreclosure sale is authorized. Current law allows a “holder of an evidence of debt” (holder), generally, a bank or other financial institution, to foreclose on real property under a deed of trust even if the holder’s interest is based on an assignment from the original lender and the assignment or other intermediate documents are not produced, simply by providing a statement from the holder’s attorney that the holder’s interest in the property is valid.
The bill amends provisions governing the court order authorizing sale by a public trustee (“Rule 120 order” referring to C.R.C.P. 120) to place the burden of proof on the holder in all cases to demonstrate that the holder does in fact have a valid assignment or other basis for its assertion that it is entitled to foreclose on the property. The bill also explicitly states that the Rule 120 order is not a final judgment adjudicating all claims of rights and interests in the property, as a judgment under rule 105 (a “quiet title judgment”) would be.
The bill suspends any eviction proceeding if the Rule 120 order has been challenged, until the challenge is resolved. The bill is assigned to the Economic and Business Development Committee; it is not listed on the printed calendar for the committee.
Summaries of other featured bills can be found here.