November 22, 2010

A November 18, 2010 article in the Boulder (Colorado) Weekly newspaper has attempted to alert homeowners in Colorado of an impending foreclosure crisis about to hit the state. The article also discusses the importance of what is known as a “Rule 120” hearing, which is a hearing where the foreclosing party requests the court to set a foreclosure sale date. The Rule permits the homeowner to oppose the request, and if there is no opposition, it makes defending the foreclosure much more difficult.

The problem with Rule 120 as it is worded is that it is very restrictive, only asking if there is a default and if the borrower is in the military. Fortunately, the Colorado Supreme Court issued an opinion back in 1989 stating that such a restrictive reading of the rule is improper, and that a court should permit matters such as the defense that the foreclosing party is not the real party in interest to be raised at the Rule 120 hearing.

Unfortunately, it seems, from the article, that Colorado District Court judges are not following the ruling of the Colorado Supreme Court and are letting banks literally get away with foreclosing without ever having to show that they own the Note and Deed of Trust through actual evidence, and simply presenting the Note at the hearing is sufficient even if there are serious questions as to how the foreclosing party came into the rights under the Note and Deed of Trust.

The article goes on to point out the inherent deficiencies in this type of process. Obviously the message here is that borrowers need to (a) be aware of their Rule 120 hearing and mount any proper challenge if warranted, and (b) make sure the judges know of the Supreme Court’s dictates on what is to be presented at a Rule 120 hearing.

Interestingly, this article comes on the heels of our receiving many inquiries from Colorado borrowers in the past few weeks who did not even know whether a Rule 120 hearing took place in their case or not. If it did and there was no notice of the hearing to the borrower, a due process challenge should be made. However, in view of the article, what appears to need to be done is an overhaul of the Colorado foreclosure system as a whole.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com