A homeowner in Pueblo County, Colorado is 90 days behind on her mortgage payments and has received a Notice of Election and Demand from the Public Trustee. She contacts a broker who specializes in distressed properties. The broker tells her he can stop the foreclosure for an upfront fee of $3,000, but she must sign over a power of attorney giving him control of the property. Under Colorado law, which statute most directly governs and restricts this type of arrangement?
Correct Answer
A) Colorado Foreclosure Protection Act, C.R.S. § 6-1-1101
The Colorado Foreclosure Protection Act (C.R.S. § 6-1-1101 et seq.) specifically governs and restricts the conduct of 'foreclosure consultants' and 'equity purchasers' who deal with homeowners in foreclosure. The Act prohibits practices such as charging large upfront fees, requiring homeowners to sign over control of their property, and other deceptive arrangements. Violations can result in criminal penalties and civil liability.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
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