July 17, 2019

HB 13-1017: Requiring Successor Loan Servicers to Honor Modification Terms Offered by Predecessor Loan Servicers

On January 9, 2013, Rep. Steve Lebsock introduced HB 13-1017 – Concerning a Requirement that Successor Servicers of Residential Mortgage Loans Follow Through with Loan Modifications Offered to Borrowers, and, in Connection Therewith, Requiring a Servicer to Inform a Successor Servicer of the Terms of Any Modification Offer Upon Any Transfer of Servicing Rights for the Loan. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill addresses situations in which a homeowner has been offered a modified payment schedule or other loan modifications by one loan servicer, but the loan is then transferred to another loan servicer, which enforces the loan according to its original terms without regard to the modification offer.

The bill requires a loan servicer that has made any such offer to notify a successor loan servicer of the terms of the offer upon transfer of the servicing rights, and states that the successor servicer is subject to, and shall honor the homeowner’s acceptance of, the offer.

The bill adds a violation of these requirements to the existing list of violations for which a homeowner may sue for actual damages plus a $1,000 additional penalty, attorney fees, and costs. On Jan. 24, the bill was amended and approved by the Business, Labor, Economic, & Workforce Development Committee.

Since this summary, the bill passed Second Reading Special Order with amendments and passed Third Reading in the House.

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