The Colorado House resoundingly passed two of the four real estate-related bills introduced so far this year. House Bills 11-1022 and 11-1023 are both going to the Senate with unanimous House support.
The first bill, sponsored by Rep. Ray Scott, R-Grand Junction, and Sen. John Morse, D-Colorado Springs, was introduced to clean up collateral damage from the SAFE Act of 2010.
The SAFE Act was designed to ensure that all mortgage loan originators are properly licensed, which seems noble enough, but it inadvertently impinged upon a rare type of real estate transaction.
This bill would allow a mortgage loan originator to engage in three seller-financed transactions a year without obtaining a license. These transactions are not common, but the legislation should reduce the burden on sellers in the farm and ranch markets.
You can find out more about this in my Jan. 21 column.
If House Bill 11-1023 passes the Senate, it will give distressed borrowers additional time to work with their bank on an alternative to foreclosure.
The bill, sponsored by Mark Ferrandino, D-Denver, would extend the existing foreclosure deferment program until 2016. The program is currently set to expire this year.
Under the deferment program, if a borrower is a good candidate to renegotiate a loan with a lender, they will get an additional 90 days to work with the bank before the foreclosure proceeds.
“When you look at the volume of foreclosures, it just gives people some extra time,” Ferrandino said. “During that time they still have to make payments, but it helps to make both the lender and the borrower responsible for the negotiation.”
If a borrower misses a payment during those 90 days the deferment will end and the foreclosure will proceed.
Homeowners that are too far under water will not be eligible for the deferment, but Ferrandino said the program could help those borrowers in a different way.
“While not everyone who calls the foreclosure hotline will be eligible for this, we’ve found that the program increases the number of people who call early,” he said. “There are a lot of other programs the counselors can offer that (the borrower) might not even have been aware of.”
House Bills 11-1042 and 11-1047 are still in committee.