|CAR-Opposed Foreclosure Reform Bill Dies in Committee
HB13-1249, by Rep. Beth McCann (D-Denver) and Sen. Angela Giron (Pueblo), Concerning Foreclosure Sale and Loan Modification Document Requirements, was postponed indefinitely on a committee vote last night.
As introduced the bill would have:
·Removed the ability of the holder of the evidence of debt (lender) to foreclose on real property by providing a statement by the holders attorney that the holders interest in the property is valid based on an assignment from the original lender, and tightens the rules for documentation that must be filed with the public trustee and with a court before a foreclosure sale is authorized.
·Added disclosure requirements to both the notice that a residential borrower receives when a holder seeks an order authorizing a sale and to the notice posted on the property in advance of the order authorizing sale (OAS).
·Addressed dual tracking by prohibiting the lender from starting or continuing with the foreclosure process if the borrower is complying with the terms of a trial payment plan or other foreclosure prevention alternative.
-Established a single point of contact by which the borrower may communicate with the lender and stay apprised of the status of his or her application for a loan modification.
·Authorized any party to an OAS proceeding to raise, and requires the court to consider, the issue of whether the moving party has an enforceable legal interest in the property.
The bill was amended to more closely follow Consumer Financial Protection Bureau (CFPB) rules requiring dual tracking and single point of contact. Still, even with the amendment the bill went well beyond addressing these important concepts.
While CAR believes the proposal addressed some important concepts, specifically, dual tracking and ensuring that the proper entity is foreclosing on real property, the bill still left many questions needing to be answered and conflicts that needed to be resolved in order to alleviate our concerns. For example, on one hand the bill said that if a lender granted a loan modification to a distressed borrower, the lenders legitimacy would never be questioned. However, if that same borrower who was granted a loan modification then defaults and winds up back in foreclosure, the borrower could then contest the legitimacy of the lender to foreclose on the property.
CAR is continually interested in improving the integrity of the foreclosure process; distressed homeowners deserve a credible process in which there is certainty that the right entity is foreclosing. At the same time, CAR evaluated the potential effects on the rest of the market and how it could have impacted the cost of lending and credit availability to qualified borrowers. Ultimately, and we understand this is not the stated intent of the proponents, we believe the bill would have created something akin to a judicial foreclosure process, which would have severely increased the amount of time distressed properties remain in foreclosure and added serious costs to the process.
After careful consideration of the legislation, the LPC took an opposed position on this bill. In this very passionate issue it is paramount that policy and not emotion guide policymakers. CAR believes a more targeted approach should be considered to really alleviate the problems affecting distressed borrowers. We do not believe HB-1249 was the right approach to address the concerns it purported to satisfy. With foreclosure filings in the Colorado metro counties at a seven-year low, Colorado should not be enacting policies that could disrupt this progress.
CAR Takes Neutral Position on HOA Debt Collection
HB13-1276, by Rep. Angela Williams (D-Denver) and Sen. Morgan Carroll (D-Aurora), Concerning HOA Debt Collections Limitations, was discussed recently in LPC.
Section 1 of the bill requires the unit owners' association of a common interest community (HOA) to adopt, and comply with, a policy regarding the collection of delinquent assessments and other past-due amounts from unit owners. The HOA may not refer a unit owner's account to a collection agency or attorney without first giving the unit owner notice of the total amount due and how it was determined, offering the unit owner a one-time opportunity to enter into a 6-month payment plan, and listing the legal remedies, including foreclosure, that are available to the HOA.
Section 2 of the bill prohibits an HOA from foreclosing its lien for past-due assessments unless the total amount is at least equal to 6 months of regular assessments and unless the HOA's executive board has formally approved the foreclosure action on an individual basis.
Section 3 specifies the terms and conditions of the repayment plan that must be offered. The plan must permit the unit owner to pay off the deficiency in equal installments over a period of at least 6 months; however, the plan requires the unit owner to remain current on regular assessments as they come due during the period and allows the HOA to pursue collection if the unit owner fails to comply with the plan, has previously been subject to a payment plan, or is a bank that has acquired the unit as a result of default by a borrower.
Section 4 of the bill applies its provisions to common interest communities created before July 1, 1992, the effective date of the "Colorado Common Interest Ownership Act", as well as to those created after that date.
The LPC discussed some concerns with this proposed legislation, including the fact that most of this is housed in HOA governing documents, however they opted to stay neutral on this until we have more information. This bill passed out of its first committee and will be heard on the House floor for second reading in the coming days.
CAR Takes Neutral Position on HOA Licensing Community Managers
HB13-1277, by Rep. Angela Williams (D-Denver) and Sen. Morgan Carroll (D-Aurora), Concerning HOA Regulation License Common Interest Community Managers, was taken up in LPC recently.
Under current law, common interest communities and their unit owners' associations (HOAs) are not subject to regulation by any state agency. The bill requires any person who manages the affairs of a common interest community on behalf of an HOA for compensation, on or after July 1, 2014, to meet minimum qualifications and obtain a license from the director of the division of real estate in the department of regulatory agencies. Licensees are identified as "community association managers".
The licensing requirement does not apply to persons who perform clerical, ministerial, accounting, or maintenance functions, not requiring substantially specialized knowledge, judgment, or managerial skill, under the supervision of a licensed community manager or directly for an HOA's governing board. Licensing examinations will be developed and administered by the director of the division of real estate or by a person or entity under contract with the director. The bill grants the director powers and duties similar to, but less detailed than, the powers and duties of the real estate commission under existing statutes governing the licensing and supervision of real estate brokers. The director is to monitor the operation of the licensing program during its first year and make recommendations for improvements to the general assembly on or before January 1, 2016. The regulatory scheme is also subject to review after 5 years under the existing sunset law.
The LPC wants more information on this particular legislation. There were options proposed as far as the licensing requirements that may make this a more palatable option, but for right now, CAR will remain neutral to possibly work with stakeholders on the bill. This bill passed out of its first committee and is headed for the House Appropriations Committee.
RPAC Mini iPad Drawing a Success!
Thank you so much to everyone who participated in the RPAC drawing for a Mini iPad. We raised nearly $15,000 through this campaign to assist in our advocacy efforts at the federal, state, and local levels. Congratulations again to Ted Bryant, winner of our drawing!
CAR Mid-Session Legislative Update
Webcast recording is available for the CAR Mid-Session Legislative Update featuring Rachel Nance, VP Public Policy. Special guests include representatives from the Colorado Oil and Gas Association. The one hour presentation can be viewed HERE. Thank you to Metro Brokers and First American Title for supporting the seminar.
April is Fair Housing Month
The 1968 Fair Housing Act prohibited housing discrimination on the basis of race, color, national origin, religion, sex, familial status, or handicap. Every April, REALTORS® celebrate Fair Housing Month to reaffirm their continuing commitment to fair and equitable treatment and a professional level of service for all in their search for real property. For more information, click here.