Colorado’s Foreclosure Rules Challenged
Some excerpts from the report.
(Case file below)
Borrowers say they don’t get a fair hearing from public trustees and limited court hearings.
Denver attorney John Prater sued the state of Colorado in federal court Friday, alleging that it is allowing lenders to seize properties without the due process required under the U.S. Constitution.
“Colorado’s foreclosure process and law are unconstitutional,” said Andrew O’Connor with the Prater Legal Offices.
He said borrowers aren’t getting a fair hearing under the state’s current system of public trustees and limited “Rule 120” court hearings.
Prater is fighting a foreclosure on his Douglas County home and filed a federal lawsuit after failing to get the hearing he wanted in state courts.
Under Colorado’s current system, lenders can foreclose even if a fraudulent origination contributed to the delinquency. They can foreclose even while promising a loan modification that never gets fulfilled. And they can foreclose without ever providing proof before a judge that they have clear legal standing to do so, O’Connor said.
He said Colorado serves a lender’s interest by having judges in Rule 120 hearings address only two issues: Is a borrower in the active military, which allows special consideration, or are they delinquent?
O’Connor comes from Florida, one of 20 states where judges oversee foreclosures. Another 29 states use a private trustee working on behalf of the lender to reclaim property.
Colorado alone uses an elected official or appointee of the governor as trustee.
Defenders of the current system contend that Colorado offers a more balanced approach.
Borrowers have more protections than offered in private- trustee states, without the added strain and costs of putting everything into the courts.
“I am not sure how the judicial system would protect people’s rights that aren’t being protected,” said Mike Rosser, a lending industry veteran and former chairman of the Colorado Foreclosure Prevention Task Force.
Changes benefit lenders.
Although public trustees are neutral, they must follow the letter of the law. Whoever has the most influence in writing the rules controls the process, consumer advocates claim.
“It looks to me like the lending industry knew what they needed and were able to get it passed without thinking about the ramifications for debtors,” said Nancy Bentson Essex, a Crested Butte attorney.
One example is a change in 2006 that allowed lenders or their attorneys to sign a certificate claiming they are the “qualified holder” of a note and to provide a copy of the original note to the public trustee.
Lenders initiating a foreclosure don’t have to prove to the public trustee that a note was properly endorsed or assigned to them, Essex said.
Colorado doesn’t require that assignments and transfers on a mortgage be recorded with the country clerk.
Eliminating that paper trail makes it easier to sell mortgages and pool them into securities, now common industry practice. But it also means borrowers can lose their homes without ever knowing if the wrong or right party is foreclosing.
Without that knowledge, they can’t mount a defense.
Denver County Clerk and Recorder Stephanie O’Malley, who is also Denver’s public trustee, would like to see assignments once again recorded in the public record.
She also knows that the lending industry will fight that kind of change.
“The truth is that they have a heavy lobby,” she said. “They are going to protect their interests.”
Aurora resident Kathy Linder is attempting to sue Snyder, the Adams County public trustee, after losing her home last year.
She alleges that Snyder allowed the wrong lender to foreclose on her home and that Snyder oversaw its sale at auction without a judge’s approval.
“The foreclosure attorneys know what they are doing is illegal,” Linder said. “The public trustees know what they are doing is illegal.”
Read more: Colorado’s foreclosure rules challenged
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Prater et al
v.
Bank of New York Mellon et al
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From the complaint…
1. Plaintiffs LYNN PRATER AND JOHN PRATER (hereinafter “PLAINTIFFS”) are residents of Douglas County, Colorado. PLAINTIFFS purchased a home located at 4349 Chatswood Court, Littleton, Colorado 80126, secured by a mortgage through First Horizon Home Loans with an original monthly mortgage in the amount of $1,117.56. PLAINTIFFS deny that they are in default on said loan. PLAINTIFFS are consumers or debtors for purposes of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., and the Colorado Fair Debt Collection Practices Act (CFDCPA), 12-14-101.
2. Defendant THE BANK OF NEW YORK MELLON, FKA THE BANK OF NEW YORK (hereinafter “BANK”) is a national banking association with its principal place of business located in New York, NY. However, BANK has failed to register with the Colorado Secretary of State’s Office and does not have a registered agent to receive service of process in COLORADO. However, BANK may not be the real party in interest in the pending foreclosure action in Case Number 2010CV2952. PLAINTIFFS hereby demand strict proof that BANK can prove ownership and is the real party in interest and can produce the original Note and Deed of Trust and can show a chain of title and that all assignments are valid. BANK provides numerous services and products such as mortgages, auto loans, personal loans, short term loans, etc. Some of the company’s target customers are those who have poor credit records. BANK engaged in subprime financing and is often criticized for using predatory practices to profit on the backs of the people with bad credit records. BANK has engaged in a nationwide scheme of illegal, unfair, unlawful, and deceptive business practices that violate both federal and state law in the servicing of home-secured loan transactions and in the provision of certain related services. Said scheme is carried out by means of a centrally controlled set of policies and practices and is implemented with form documents, form notices and uniform accounting mechanisms. BANK routinely treats borrowers as in default of their loans even though the borrowers have tendered timely and sufficient payments or have otherwise complied with mortgage requirements. In addition, BANK routinely enters into and then breaches uniform reinstatement agreements with borrowers who seek to prevent foreclosure of their homes. When BANK subsequently breaches the reinstatement agreements, it resumes foreclosure activity without notice to the borrowers. It then collects its unlawful charges in the foreclosure process from the borrowers’ equity in their homes when the borrower reinstates, pays off the loan or after the foreclosure sale of the home. It is also BANK’S regular practice to initiate foreclosure actions without serving required notices, demands or proper complaints and engaged in predatory lending practices. BANK is a debt collector for the purposes of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., and is in violation of Colorado and Federal law including, but not limited to the Colorado Fair Debt Collection Practices Act (CFDCPA), 12-14-101 and FDCPA, 15 U.S.C. § 1692 et seq.
3. Defendant FIRST HORIZON NATIONAL BANK (hereinafter “HORIZON”) is a national banking association headquartered in Memphis, Tennessee. On 12/01/2010, HORIZON’S registration with the Colorado Secretary of State’s Office expired and HORIZON does not have a registered agent to receive service of process in Case 1:10-cv-02995-REB Document 3 Filed 12/13/10 USDC Colorado Page 3 of 24 4 COLORADO. However, HORIZON may not be the real party in interest in the pending foreclosure action in Case Number 2010CV2952. PLAINTIFFS demand strict proof that HORIZON can prove ownership and is the real party in interest and can produce the original Note and Deed of Trust and can show a chain of title and that all assignments are valid. HORIZON provides numerous services and products such as mortgages, auto loans, personal loans, short term loans, etc. Some of the company’s target customers are those who have poor credit records. HORIZON engaged in subprime financing and is often criticized for using predatory practices to profit on the backs of the people with bad credit records. HORIZON has engaged in a nationwide scheme of illegal, unfair, unlawful, and deceptive business practices that violate both federal and state law in the servicing of home-secured loan transactions and in the provision of certain related services. Said scheme is carried out by means of a centrally controlled set of policies and practices and is implemented with form documents, form notices and uniform accounting mechanisms. HORIZON routinely treats borrowers as in default of their loans even though the borrowers have tendered timely and sufficient payments or have otherwise complied with mortgage requirements. In addition, HORIZON routinely enters into and then breaches uniform reinstatement agreements with borrowers who seek to prevent foreclosure of their homes. When HORIZON subsequently breaches the reinstatement agreements, it resumes foreclosure activity without notice to the borrowers. It then collects its unlawful charges in the foreclosure process from the borrowers’ equity in their homes when the borrower reinstates, pays off the loan or after the foreclosure sale of the home. It is also HORIZON’S regular practice to initiate foreclosure actions without serving required notices, demands or proper complaints and engaged in predatory lending practices. HORIZON is a debt collector for the purposes of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., and is in violation of Colorado and Federal law including, but not limited to the Colorado Fair Debt Collection Practices Act (CFDCPA), 12-14-101 and FDCPA, 15 U.S.C. § 1692 et seq.
4. Defendant ARNOWITZ & MECKELBERG, LLP, (hereinafter “ARNOWITZ”) is a law firm based in Denver, Colorado that specializes in representing banks in non-judicial uncontested residential foreclosures in the Denver area. ARNOWITZ is a debt collector for the purposes of Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., and is in violation of Colorado and Federal law including, but not limited to the Colorado Fair Debt Collection Practices Act (CFDCPA), 12-14-101 FDCPA, 15 U.S.C. § 1692 et seq.,.
5. Defendant STATE OF COLORADO (hereinafter “COLORADO”) is a state of the United States of America. Like all states, COLORADO’S state constitution provides for three branches of government: the legislative, the executive, and the judicial branches. § 38-38-101 of Colorado Revised Statutes governs foreclosures in COLORADO. COLORADO is a non-judicial foreclosure state and the COLORADO foreclosure process and law pursuant to § 38-38-101 C.R.S. is inherently unconstitutional because it violates the due process rights of COLORADO homeowners facing foreclosure under the 5th Amendment of the United States Constitution.
Full complaint below…
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4closureFraud.org
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I petitioned my county court for a ruling 120 hearing last thrusday, we’re meeting this friday in his chambers for the answer, what has been so upsetting is the state as been relucant to provide me representationn. They continue to tell me this is nonjudical like 38 and ruling 120 don’t! My sitition is I’m not on the mortgage but on the Deed and who is on the mortgage is my deceased wife who passed away July 7th 2012 not me I’m only on the Deed. I did make the last 6 months worth of modification payments thru last January only to get a letter last febuary I hadn’t so I stopped and it’s been a year since I have any. What has stunk is their pretending she alive to foreclose, they have only wanted to talk to her not me, they called all last year asking for her when they knew she was dead! I had notify the Public Trustee a few weeks ago she foreclosing on a dead person, first time she had heard ii. Last week not even there own leagl representation in Denver knew I had to inform them! If your’re interested in my case you can reach me Billy Horak at (970)390-2631 or mtnhorak@earhtlink.net William J. Horak Jr. and Michelle Horak
Beth Mccann has legislature up for review that would force lenders to follow the law in Colorado. As it stands, no mortgage assignments are filed as they occur; they are filed by bank lawyers when the process of foreclosure begins, so it’s not as simple as going to the county office. What homeowners need to do NOW is send a qualified written request to their lender (google for the format), which will provide the homeowner with the paper (assignments, satisfactions, etc) the lender is giving to the bank lawyer. Because it’s just as fraudulent in Colorado as elsewhere, taking proactive measures is critical for those in Colorado. Google all of the signatures; check where the “assignment” was originated, and you’ll be holding the fraud. If that doesn’t piss you off enough to fight it, then let the banks continue to steal homes.
If atty affirmations are required, things *might* change, if homeowners are able to demonstrate to the trustee that the whole thing is just as fraudulent in Colorado as elsewhere, but it has to be initiated by the community. Go to Beths site, and email your representatives regarding the legislation, to be discussed on March 13th- if you don’t, they’ll continue to allow one fraudulent foreclosure after another.
IT IS NOT GOING TO CHANGE IN COLORADO UNLESS YOU FORCE THE ISSUE AND SUPPORT PEOPLE LIKE BETH WHO RECOGNIZE A BIG PROBLEM.
PLEASE ADVISE HOW CAN WE JOIN THE CLASS ACTION SUIT VS BANK OF NY MELLON
Thank You.
Mr. Prater has several cases in District Court, to my knowledge this is not a class action suit.
However the more cases flooding the courts maybe Judicial Review will be a reality for
Colorado Homeowners. Contact Mr. Prater directly.
praterlaw@msn,com
I’m in California…can I join…
I would like to know the progress on this law suit. We do not seem to have attorneys local to Denver area and Northern Colorado who are willing to provide foreclosure defense.
What is happening in this federal law suit now? I cannot get John Prater’s law firm to return my telephone calls. Thank you.
Be patient I forwarded your comment to Mr. Prater. He is working on serveral cases. Keep trying to
reach him, it is worth the effort.
Please provide contact information for John Prater.
Thank you Ili Bennett
I’m watching this case with interest, although my situation is different . I’m hoping that by posting someone may want to pursue other instances of injustice and corruption that wrongfully dispossesses owners from their homes.
I built my home in Summit County, Co. (Silverthorne) in the early 80’s and have lived there ever since. It’s a 3 story 6800 sqft Victorian on 7 acres with incredible views, a lake, a stream, water rights, bordering Wilderness. Appraised at $1.6millioni.
I paid off the mortgage in 2001. My ex and his friend the judge awarded me 60% of the home and gave me a priority right to buy out his 40% share at any time. Despite orders that the home be ‘fixed up’ before sale so as to bring the best price, ex and the judge decided to sell it ‘as is’ in violation of the Court of Appeals orders. Based on ex’s high ‘as is’ appraisal i couldn’t afford to buy out his share. But when the Receiver appointed to sell the property, instead paid himself over $200,000 for shoddy repairs that actually devalued the property to a point where he said the home was a ‘scrape off’ worth less than $500,000, I obtained financing to save my house .
It appears that the judge and receiver didn’t want me to exert my right to buy out ex’s share, even though I offered more for the house than any other offer. Despite having financing in place for a 10 day closing scheduled in February, 2010…..the court ignored my contract and instead allowed the Receiver to sign a contingency contract for significantly less in a very not-arms-length transaction. (think intimate friend). I tried to file a chapter 13 bankruptcy ‘reorganization’ to exert my state court right to buy out the ex at the highest price. Wealthy ex objected to my reorganization plan that offered to pay bonafide creditors 100%. The house was abandoned back to me/ex and since the friend to ex judge had retired I hoped that the newly appointed judge would allow me my priority right to buy out my ex’s share so we could be done with 8 years of my trying to get the property awarded to me from a 2003 divorce. But the retired judge prevented this and instead, in gross violation of the law, without notice, summons or hearing, evicted me from my own home while it was still under the protection of the automatic stay of the federal bk court. Then, without notice, the Receiver sold the house to the intimate friend AND gave my share, even my mandatory homestead exemption to ex, himself and a few ‘officers of the court’. I am now homeless and living on $890/mo social security, while the Receiver made over $135,000 less mordita, the ex made $250k and a loan he had taken out on his share of th ehouse paid off , the Realtor $76,000, and who knows what % went to the powers that be. My attonrey says: this is WRONG by operation of law…..but will the Appeal Court get me my house back two years from now? I think not. My only hope is for someone somewhere to beg the question of how an owner (60% outright, 40% under contract to purchase for cash) with no mortgage could be evicted and her home sold out from under her.
Sorry to be so long winded, but after having to give away my pets (to good homes, but they are seniors too, livedw with me all their lives, and I miss them terribly), having to see 30 years of belongings thrown out of my house, being homeless in a ski resort town that has no rentals available under $2500/mo, …..all in complete defiance
of state and federal law…..makes me cry out for some relief, some justice.
No one should lose their home to greed and illegality and judicial corruption. And people should care about this; because today it is me, but tomorrow it might be you.