A Denver lawmaker plans to sponsor a bill this year that aims to require lenders to prove they are the holders of evidence of debt before they foreclose.
Rep. Beth McCann, D-Denver, is sponsoring the bill in hopes of making the foreclosure process cleaner and fairer for homeowners.
Colorado Springs real estate attorney Stephen Brunette of the Gasper Law Group has been waiting for more than three years to see a bill like this.
Brunette has been litigating three Colorado cases where the lender that foreclosed on the homeowners he’s defending weren’t able to prove they held the loans they were foreclosing on, but were still able to proceed.
The problem, Brunette said, is that lenders aren’t required by law to prove they have the right to foreclose in Colorado.
“I’m not exaggerating,” Brunette said. “Colorado law is they can say, ‘I have the right to foreclose because I say so.’”
One of Brunette’s cases involving Colorado Springs homeowner Sonya Robison is set to go to trial within the next month or two, Brunette said. Because it’s set for trial, he didn’t want to discuss the case of the woman who lost her home in foreclosure to a lender she said she never had a loan with.
Another of Brunette’s cases, William Henry Wesson vs. Onewest Bank, is in the Colorado Court of Appeals.
Wesson lost his Pitkin County home to foreclosure though he had more than $500,000 of equity in it and could have sold it and paid off his loan, Brunette said.
“People have no opportunity to work a new deal if they can’t even find out who holds their loan,” Brunette said.
Brunette said he’s been fighting to change the law to require lenders to offer up documentation proving they own the debt they’re foreclosing on.
Colorado has a much lower burden of proof for lenders than most states, he said. And it leaves homeowners and borrowers more vulnerable than they are in the rest of the country.
It’s become increasingly complicated for lenders to supply those documents as mortgages have been sold into securities, Brunette said.
His legal cases with the banks have lasted years against well-funded advisories and it took years just to get to breaking points in the cases, he said. Brunette is hoping that if his three court cases don’t result in a change to the law, McCann’s bill will.
But he has little hope the bill will pass.
Opponents to legislation like this have said in the past that the system is overwhelmed with foreclosures and any added regulations will just bog down the process even more.
“This whole thing could just rot on the vine,” Brunette said. “But it’s a good start.”