Colorado is the only state that allows for a foreclosure without the lender first proving it is the right entity to do so. Colorado allows foreclosure lawyers to sign a “statement of qualified holder,” which basically says they think their client owns the note or mortgage without ever actually seeing it — a practice some states have labeled as “robo-signing.”


Yet, legislators killed a bill requiring that lenders prove their right to foreclose on a home this session. HB 1156 sought to have lenders provide proof — theoretically a certified copy of a mortgage or loan note — that they had the right to foreclose on a property. It also would have required a judge to review the paperwork and certify a lender’s standing before ordering the public auction of a foreclosed home. Opponents of House Bill 1156 who helped kill it in a Republican-controlled committee March 13th argued that the initiative could push lenders from the market.
Colorado has not required assignments — the legal term for when a mortgage or note exchanges hands — to be recorded for years, a critical part of the problem in determining who actually owns a note during a foreclosure, proponents of the initiative say. Colorado law allows a foreclosure to continue even if the lawyer gets it wrong — and doesn’t hold anyone accountable for the mistake.
Not deterred, backers of the failed proposal have filed it as a ballot initiative which provides that foreclosures are prohibited until all loan papers are properly recorded with the county. That would mean anytime a lender sells or transfers a note, as has been the practice for several years in the mortgage-backed securities business, the holder must file it with the county recorder of deeds.
The ballot initiative — called the Foreclosure Due Process and Fraud Prevention Initiative — squarely takes on Colorado law that uniquely allows for “no-doc” foreclosures, where lenders can take a home without ever having to prove they have that right.
The proposed initiative is scheduled for a hearing at the Legislative Council on April 6, the first step to reaching November’s ballot. The proposal would need more than 87,100 validated signatures to get on the ballot, according to the Colorado secretary of state’s office.

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