Foreclosures have become an all-too-common experience. At last count, according to Realtytrac, 400 homes in El Paso County are in foreclosure — one out of every 626. And while losing your home would be traumatic, in Colorado, companies don't even have to prove ownership to begin, and win, a foreclosure proceeding.
"You can lose your house in Colorado easier than you can lose in small-claims court," says Stephen Brunette, a local attorney. "Every other legal proceeding requires evidence to support a claim, right? Foreclosures happen every day with no evidence to support them, just a statement from an attorney that they have the evidence."
That's because a 2006 state foreclosure omnibus bill eliminates any requirement for evidence. It states the minimum requirement for a "holder" to proceed with foreclosure can simply be "the statement of the attorney for the qualified holder ... that the party on whose behalf the foreclosure was commenced is the holder of the evidence of debt."
In other words: If an attorney claims his or her client has proof of ownership, that's good enough for the court.
If a homeowner wants to fight, and can afford to fight, Brunette says, it can take up to three years of litigation just to force a company to provide documentation that proves its right to foreclose. For most people, hiring an attorney isn't an option.
Brunette is co-author and co-sponsor of a ballot initiative aiming to change this.
Initiative 84 would alter the current law to state that "no person shall be deprived of real property through a foreclosure unless the party claiming the right to foreclose ... files competent evidence of its right to enforce a valid security interest."
"We are just trying to get lenders to provide their documentation," says attorney Debra Fortenberry, co-author of the initiative.
One of Fortenberry's clients, Patricia Higgins, had lived in and owned her home for more than 20 years when she ran into financial troubles.
"I got divorced, and had some legal matters, domestic violence," she says, "so I fell behind back in 2007."
She had gotten the loan through Countrywide, but after they went out of business, the loan was sold off. She worked with the servicer and negotiated a modification. For the next 18 months, she paid her mortgage payments. She even put a new roof on the house. But, despite numerous requests, she says she was never given any paperwork regarding her loan modification approval.
In May 2010, she got a letter from the servicer, which now claimed to also hold the loan, saying it was foreclosing and her house would be sold in a matter of weeks.
"So then we started this long process," she says, referring to her legal efforts. She has spent thousands on legal support, and is currently $25,000 in debt.
Since starting the legal process, the servicing company has changed three times. The original servicer is still claiming to hold the loan, but as Fortenberry points out, they haven't had to prove it.
Higgins compares it to a shell game: "As far as the servicers, who is it today? Oh, it's not under this shell; it's not under this shell."
"Someone like Patty needs to know if she is negotiating a resolution to this, she is negotiating with the right party," says Fortenberry. "If she is paying money to cure a default, she has to know that she is paying the right party."
A coalition of nonprofits, including the Colorado Progressive Coalition and Pikes Peak Justice and Peace Commission, will assist in the collection of the 87,000 signatures needed to get Initiative 84 on November's ballot.