According to RealtyTrac, there were 494 foreclosure filings in September 2009 against Colorado Springs home owners. This takes the total to about 29,511 active Colorado Springs foreclosures.

One of the questions that we hear a lot is:

My Colorado Springs Home is in Foreclosure. When Do I Need to Move Out?

If there are almost 30,000 Colorado Springs foreclosures, then this question is being asked a lot.

GOOD NEWS:  Just because you fall behind on your mortgage payment, and cannot catch up, does NOT mean that you need to move out immediately.

In fact, you may have up to 7 months to stay in your home before you need to move out!*

Let’s understand the foreclosure process in Colorado:

• You are a few days late on your mortgage payment (but less than 30 days). This means that you are DELINQUENT. You do not need to move out.

• Once you become 30 days late, you are in DEFAULT. (Usually this is because you are in a financial situation that has made it difficult for you to keep up on your bills – NOT because you just “don’t want to” pay your mortgage.) This is when the collections departments start harassing you endlessly. They can be outright mean. You do not need to move out.

• During this time, you may qualify for either a loan modification (where the lender changes the terms of your loan to accommodate your current financial situation) or they may agree to work with you to catch up on your payments a different way. The ONLY way that his can happen is if you ASK THEM and explain your financial situation – and why you have been unable to pay. Right now, banks and lenders are more than willing to work with people to get caught up on their mortgages, as long as they know what is going on …
  
  
• If your loan is an FHA loan, it will become a FORECLOSURE after 3 missed payments. If your loan is NOT an FHA loan, then the lender can decide to start the foreclosure process the MINUTE you miss just ONE payment. This just means that the lender has transferred your “file” to foreclosure attorneys to start processing it to be sold at the public auction. You will start getting all kinds of legal notices and even more harassing phone calls.  You do not need to move out.

• Once your “file” has been transferred from the attorney to the Public Trustee, your home will be placed on the Election and Demand list, with a date that the home will be auctioned off. This date is generally between 110-125 days in the future (roughly 3-4 months). [FIND YOUR FORECLOSURE DATE HERE] You will get even MORE legal notices and harassing phone calls. This is also when you will start getting a bunch of mail from both real estate agents and investors asking you to sell your home. [Beware of Foreclosure Assistance Scams!] You do not need to move out.

• If you do not catch up on your mortgage (which will include all your missed payments, late fees and legal fees) OR if you do not CURE the loan through selling your Colorado Springs home (or short selling the home – see below), then your home will be SOLD AT THE PUBLIC AUCTION on the date posted by the Public Trustee. MOVE OUT BEFORE THIS DATE or you will be evicted. (Should this be the option you take, consider asking your bank for a “Cash for Keys” option, where they may give you a few hundred bucks to leave the property on time and in decent shape.)

Based on this information, you could possibly live in your home for up to another 7 months after your 1st missed payment, before HAVING TO MOVE. Use this time to save your money to get into another home.

More Questions? Contact us for a free, no-obligation,
PRIVATE consultation regarding your situation: 719.434.7525

Now,there are options that could both have you AVOID foreclosure AND stay in your home even longer.

Read More: Foreclosure SUCKS – You Have Options

Currently, the Colorado Springs Pikes Peak MLS only shows 1,056 foreclosures either for sale or under contract (as of 11/2/2009). This means that there are about 28,000 people out there who MAY not know that they have a LEGAL and EFFECTIVE way to avoid a foreclosure. This is called a short sale.

Read More: Why a Colorado Springs Short Sale is a Great Alternative to Foreclosure

If you owe more than your home could sell for, a Colorado Springs SHORT SALE may be a perfect option. Not only will a short sale be a softer hit on your credit than a foreclosure, but a competent real estate agent may also be able to push back the foreclosure date to accommodate a successful closing – giving you even more time to prepare to move.

Additionally, when a Colorado Springs home forecloses the bank has the right to go after the foreclosed homeowner for the DEFICIENCY between the loan amount and what the home sold for (after fees). In a short sale, a competent real estate agent can negotiate with the banks to NOT go after the homeowner for this amount, but, instead 1099 (tax) them for the amount.

Example:

• Foreclosure: The deficiency (minus fees) in the foreclosure was $30,000. The homeowner MUST pay back the bank that $30,000.
• Short Sale: The deficiency between what was owed and what the home sold for (minus fees) was $30,000. The bank will send the homeowner a 1099 for $30,000. This shows up as “income” for the homeowner and that homeowner will be taxed on that amount.** My thought? It is better to pay the TAX on the amount than pay the WHOLE amount … yes?

*Please contact a real estate attorney to see how this does or does not apply to you.
**Consult with a tax attorney on how this will affect you, specifically.

If you are still trying to decide what to do, please give us a call. We understand that you are in a crazy and emotional situation and we may be able to help you … with NO OUT OF POCKET EXPENSE TO YOU.

We are Certified Distressed Property – Colorado Springs Short Sale Experts and know how to help you.

Contact us: 719.434.7525 or ShortSaleHelp@wagneriteam.com

Thanks for reading our Colorado Springs Real Estate Blog!
Posted By: Mariana Wagner - Colorado Springs Real Estate Agent - Wagner iTeam
The Wagner iTeam is a power team of Keller Williams Realty,
specializing in Colorado Springs Real Estate and Monument Real Estate
Pictures of Colorado Springs
(719) 434-7525