A new law that took effect August 1 may offer some Colorado homeowners facing foreclosure a 90 day deferment.
HB 1276 offers homeowners a 90 day deferment on their foreclosure sale date, meaning that the public auction process will be delayed. This can provide up to an additional 90 days for the homeowner and their HUD approved housing counselor to work with the bank.
HB 1276 offers homeowners a 90 day deferment on their foreclosure sale date, meaning that the public auction process will be delayed. This can provide up to an additional 90 days for the homeowner and their HUD approved housing counselor to work with the bank.
When a homeowner has officially entered the foreclosure process, meaning that their foreclosure has been filed with their county Public Trustee, the holder of the loan will be required to post the document physically on the home.
The posting notifies the homeowner that they may be eligible for a foreclosure deferment through HB 1276, and provides contact information to reach a HUD-approved housing counselor.
Eligibility does not mean that the homeowner will qualify for the deferment, but a housing counselor can help them determine if they qualify. Counselors can also help homeowners determine if they may be eligible for a loan modification or other assistance.
Some of the groundrules for deferment include:
1. The home must be owner-occupied.
2. The home must be a primary residence.
3. The mortgage cannot be greater that $500K.
4. The homeowner must have some source of income that allows them to make two-thirds of their regular mortgage payment.
5. The homeowner must continue actively working with a HUD-approved housing counselor to negotiate with their mortgage company.
One irony to this whole program is that when Colorado was leading the country in foreclosures per capita in 2005 and 2006, none of this help was available. In fact, virtually none of the loan modification or foreclosure deferment programs that are increasingly available today were around when we were diving head-first into the foreclosure crisis.
The fact is that the $8,000 first-time buyer tax credit program would have been sweet tonic for our market three years ago, but because the housing markets in California, Arizona and Nevada were still relatively stable, the federal government had no interest in helping Colorado.
Now that Colorado is among the healthiest markets in the country (or, perhaps more accurately, among the least ailing), the $8,000 tax credit has simply thrown more incentives onto an already recovering entry-level market.
