Proposed legislation designed to end the practice of dual tracking in Colorado died in committee this week.
The Colorado House Committee on Business, Labor, Economic & Workforce Development postponed House Bill 1249 indefinitely, stalling efforts to revamp how banks foreclose in the state.
House Bill 1249 challenged several foreclosure procedures that have made headlines over the course of the past five years.
For one, the bill attempted to stop dual tracking – or the process of a lender simultaneously handling a loan modification for a borrower while pursuing a foreclosure with a trustee at the same time.
The legislation’s goal was to prohibit dual tracking when a borrower is otherwise complying with terms of a foreclosure-prevention initiative.
Furthermore, the bill codified a single-point of contact requirement for lenders and added new documentation and procedural requirements for foreclosing banks.
The bill also attempted to limit liability protections for banks when they foreclose without having possession of all the original documents.
In addition, HB 1249 stipulated that foreclosing financial firms should be required to produce more documentation to prove a bank’s interest in the property. Current law in Colorado allows a foreclosing firm to prove its interest by simply providing a statement from an attorney, according to the bill.
Servicers nationwide are already following post-financial crisis servicing standards – such as the single point of contact rule - and other guidelines created by the national mortgage servicing settlement and the Consumer Financial Protection Bureau.
Still, real estate law remains state-centric, and HB 1249 was Colorado’s attempt to codify new foreclosure processing standards. The bill failed at the committee level, ending this particular attempt for now.