Legislative Committee Meeting

July 28, 2008

The Legislative Committee Meeting met at the Ritz-Carlton on July 28, 2008 at 10:00 a.m.  The meeting was hosted by Castle, Meinhold and Stawiarski.  Present were:  Linda Statz, DeeAnn Stults, Susie Velasquez, Margaret T.Chapman, Tom Mowle, Tom Hill (Ackerman Info. Corp.), Peg Ackerman (Ackerman Info. Corp.), Connie Joiner, Jim Covington, Sandra Berry, Debbie Wagner (Ackerman Info. Corp.), Carol Snyder, Larry Castle, attorney, Deanne Stodden, attorney, and Patty Bartlett.  Attending via telephone conference were Bob Sagel, Michelle Miller and Robert Hopp, attorney.  Rich Krohn was unable to attend the meeting.

Carol Snyder was in charge of the meeting and stressed that we will not do a complete rewrite but may need a few word changes here and there.  For example, a cure statement is required to have the same detail per 38-38-106 as bid including signature but felt signature was probably not intended to be needed.  Say “itemization of figures as required in 38-38-106”.  Bob Sagel agreed to clean up instead of leaving it slide but not do a complete rewrite.

Carol shared statistics: cures have gone down in Adams almost 25% (25 of 43 for 2008 cases).  Tom Mowle is getting fewer cures but he thinks economy is worse and by third or fourth month it is more difficult to cure.  Larry – loss mitigation from front end more aggressive and referrals are down.  Withdrawals are increased according to Tom and Larry because of loss mitigation.  Larry and Robert - Freddie and Fannie are taking care of defaults in attorney’s offices prior to going to PT. Larry may need to get information on cures and withdrawals to determine what is going on.  Michelle has more withdrawals than ever before.  Carol – foreclosures are not going up as fast now about 1%.  Debbie foreclosure rate was at 6% prior.  Carol will gather statistics to Bob for distribution.  Carol is going to put her information on her website.

The Matrix that Bob sent to committee members was followed for discussion:

Commence Foreclosure:

1a.  Approved as written

1b.  Additional title search required per Robert and Larry for gap period for true owner at recording of NED so need chance to give supplemental.  To be forced to withdraw is nuts per Larry.  Tom suggested to call it an amended ML so that under old and new law would be the same.  Bob – initial it to notify that a foreclosure is happening and supplemental to remind interested parties so need second mailing.  Carol reminded us that we will be working with three sets of statutes when we change the statutes again.  Larry believes the changes can be made retroactive because you are not changing anyone’s rights.  Sandy suggested we be consistent at 65 days deadline for receipt of amended mailing list.  The suggested language would be changed to refer to amended instead of supplemental mailing list and change time to sixty-five calendar days instead of sixty.

2b  Was discussed at this time because it deals with a supplemental or amended mailing list.  It was the consensus to change first scheduled to actual sale date and supplemental to amended.

Tom wants to make sure that it is clear that there are two mailings and only additional if amended mailing lists are given to us.

1c. and 2d.  Larry and Robert – the lenders hire the law firm not the specific attorney  so changed to name, address, and telephone number of law firm and bar registration of an attorney. 

1d.  Approved as written except Larry because he noted that legal descriptions can be bad and/or an incorrect street address can be listed.  Case law states that a description adequate to know what the property is required.  DeeAnn we foreclose on what is listed so refer to what is listed on DT.  Larry – if it is wrong it is up to attorneys at title companies to remedy.  Public Trustees are not a tryer of fact but Rich advises the Public Trustees that what is stated in DT is exactly what we foreclose but on the other hand Rich doesn’t want us to foreclose anything that is wrong.

Suggested “The legal description of the property as set forth in the deed of trust.”   Tom wants only the legal description so if the address is incorrect it can be left off.  Suggested wording approved.  Larry will discuss this issue with Robert Hopp and Robert Holmes to get suggested wording for the next meeting.

1e.  Larry – the indorsements or assignments are not always recorded and now we are getting electronic docs so what is an original.  Okay if we get electronic copy with assignments on EOD per next sentence.  Approved.

1f.  If we change what is published the suggested amount of $800 may not be necessary. It may be difficult for small firms to advance this much so for this issue a large firm has an advantage.  This language is permissive so many PT would not ask for that much.  It was agreed to change the suggested language from eight to six hundred fifty.

Publication – Larry is having trouble with one County on publications and still is of the opinion that he wants the law firm to be in charge of publication and Michelle agreed.  Robert – this would be a system like what other states do and it works smoothly there.  Carol objects because she doesn’t want her name on the publication she is not in charge of but it needs to be there because she sells the property.  Some attorneys would like to do away with the Public Trustees and if we give up more and more of the duties then this will happen.  Carol believes if someone is not doing what is necessary and following through with accurate publications, then the Public Trustees need to talk to them.  DeeAnn suggested that the Public Trustee handle the publications and publish only the notice of sale only - remove right to cure and redeem.  2g should be notice of sale only. 

Larry – wants to know if we should discuss fees again – more broader based.  Carol is doing time and motion study. Debbie stated that it should be actual cost and suggested that we run a separate bill.  Peg stated that if you have supporting data then you may be able to get fees changed.

We need to look at the overall scheme to determine what are the appropriate fees for each item.  Larry reminded everyone that when the “worm turns” in three or four years you will have residual legacy files that need to be taken care and you will have already been paid for those files.  Larry needs the Public Trustee offices open during the week so he can handle his business and that doesn’t happen when they are closed due to budget constraints.

Combined Notice:

2a.  Approved as written

2b.  See above discussion.  Carol inquired that if we receive an amended mailing list with two names only, do we mail just to those two names or to all names on both lists.  Tom feels we need to mail to the additional names only.  Larry and Robert - amended mailing list may force sale date out because of amendment so everyone should be advised.  Carol – when we get amended list, she adds new sale date by noting this on her mailing.

2c.  Public Trustee is notified because we have an interest in the property.  Larry suggested the wording be changed to “to everyone interested in the property except the Public Trustee conducting the sale” and this language was approved.

2d.  Approved

2e.  This is not for publications but only the mailings.

2f.  Approved

2g.  Approved

2h.  Larry would hire a company to proof the publications.  Attorney would give us proof of publication in a timely manner.  Carol and Tom do not want their names on something they have no control over.  Tom Hill said that the Court does this all the time with the Clerk’s name on something she did not actually publish personally.  Tom stated that this gives his office a final opportunity to review file when reviewing publications so work will not go away because he will still have to review.  Larry – changing to “the” takes away proofing each publication but his foreclosure relies on all five publications for him to have a good foreclosure.  Carol suggested that we ask this question at Western and Eastern Division meetings and then discuss at next meeting.  Susie asked if the Public Trustees couldn’t hire a service to proof the pubs?  Attorneys do publication in Sheriff’s sales with Sheriff’s name on pub.  Tabled for next meeting.

Cure of Default:

3a.  Cure statements – Carol puts the requirements in her request because she does not get what is required.  Requirements same as bid then cure statements needs to be signed.  Larry believes that this refers back to amounts.  Bids need to have detail and itemization – what is due under loan, advanced by beneficiary, paid for attorneys and public trustees.  Need to remove requirement of Certificate of Purchase in 38-38-106.  Problem if only ten days – consensus was that it doesn’t seem to be a problem so we should leave as is.

3b.  No time line for Public Trustee to give to borrower.  Michelle – add to guidelines to promptly send out.  Remove “promptly” and say “transmit the statement in writing to the person filing intent to cure the default”

3c.  Approved

3d.  Larry – suggested that we do not extend sale date but accept late filing.  Larry, Rich, Robert and Deanne will work on language.

Bid:

4a.  Add to language, “as of date of sale” – approved

4b.  Carol and Margaret - Already exercising this right even if not granted.  Written policy – check in with information and understand that they must have the funds to cover their bid and if they don’t have the money, they will be banned from sale.  Sale would be void and started over with people who have money available.  Needs to be in writing “The officer may establish written policies relating to all aspects of the foreclosure sale.”

Set Sale Date:

5a.  Approved

Continuance:

6a.  Suggestion Bob – all due within ten business days and all continued one week.  Not too much to change.  Separate into two sentences – first what they need to do and second penalty of continuance.  Does this deadline need to stated in 104 (2)(a)?  Larry will work on language.

6b  Continuing while in bankruptcy may be in conflict with the stay.  Approved programming by GTS and MTech may need to be changed to keep track.

6c.  Tom - If Court tells us to set aside sale but doesn’t tell us what to do then, this gives us direction  Approved

Excess Proceeds:

7a.  Carol – According to the law, we are not to pay out any excess proceeds but if there is an overbid the foreclosure systems will reduce the deficiency.  This should be the way it is done, so change the wording in the law.

Recission of Sale:

8a.  Approved

Redemption:

9a.  Larry – endorsements on obligations?  The lien follows the debt (Colorado a lien theory state).  Will get objections from UCC lawyers – let the lawyers argue about this.  Carol – we need something to show us how we should issue documents.  Larry – statement from qualified holders as same as filing of foreclosure.  Carol  - Certificate of Purchase are being assigned even before it is issued or the sale is held.  Larry – need info from Certificate of Purchase or Certificate of Redemption in order to assign.  Robert – assignments are not being sent in for recording until after the fact.  Some firms have right to sign for insuring lenders.

9b.  Tom – once the holder of Certificate of Purchase has been redeemed, he should no longer have any say.  Larry – get rid of redemption – all in favor.  Gives finality to everything but would be having sales.  If you are interested in the property, they are required to pay money and we don’t have to worry about the status of anyone’s lien.  Tom – make sure everyone is notified that their rights will be extinguished.   Bob – there were a lot of people in the bidding community that came in and fought against removal of redemptions on the previous codification .  Bob is now in favor of this but maybe it should be considered in a separate bill.  Carol – a section can be removed from a bill.  Larry – pointed out that second lienholders actually have more time to come to sale than they do to redeem.  Margaret – can all come up with horror stories.  Bob – how do we divvy up overbids.  Attorneys will work on this.

9c.  Won’t be applicable if we remove redemptions altogether.

9d.  Won’t be applicable if we remove redemptions altogether.

There was discussion whether a statement of intent to file lien or the actual lien filed were required to give a right to cure.

Release with Production of EOD Form:

10a. Larry – real party in interest so wording may need to be looked at in definitions.  Approved.

Release without Production of EOD Form:

11a.  Approved 

11b.  Bob – wording on release paragraph c is more liberal than what is in statute.  So need to change form in release to match statutes.  Approved.

Other Items:

12a.  Must wait fifteen business days to make sure a cashier’s check or certified check (which is the amount in your account at time check is issued) is good.  Carol – check with local bank and when it is in account.  Tom – should be an office policy – not part of statute.  Deanne – if cure funds are not paid timely, the borrower will miss next payment and be in default.  Carol – put in guidelines what is reasonable time to wait prior to pay out.  Robert – wires can be held for so many hours in banking regulations.  Larry – maybe 72 hours - Patriot Act requires many documents.  Larry – talk to LTAC and Division of Real Estate because it creates problems for closings also.

12B.  Larry- language from old statute.  No waiver predefault.  Approved.

12c.  Approved

Larry – the procedure to correct a Public Trustee’s Deed is through a scrivener’s affidavit and not to re-record Public Trustee Deed and definitely not to record another Public Trustee’s Deed.  He always prefers the affidavit.  In a name of a lender, anything after the “,” is for qualifying the status and is irrelevant Larry believes.

Deanne Stodden – property must be vacant before a Deed is issued to HUD.  Servicer is required to do the eviction and this may take some time and this is the reason for most delays in requests for Deeds.

12d.    Rule 120 – Bob thinks there is a hang up but he is not aware of the details.  Rich and Larry are talking to Rules Committee.

12e.  Need to have alternate course if removal of redemptions does not work.  Will address later.

12f.  It was discussed as to what the Public Trustees need to allow the change to be recognized in our offices.  Sometimes someone may be disbarred, pass away, etc.  Michelle and Tom believe there should be guidelines.  Larry  believes no matter who is acting as the attorney, it does not change the fact that the loan is in default and believes the lawyers should address this issue.

Carol - 38-38-106 required form of bid - change some of the categories:  for example, send attorney Certificate Of Purchase needs to be removed.  Confirmation Deed should be requested and therefore removed.  Note, if any, with deficiency.  What else has the lender paid – property insurance, water, taxes, etc. attorney fees and expenses and public trustee fees and expenses 

It was discussed why deficiencies are coming in larger than bids?  Robert says they can take into consideration the costs to market the property and are taking these costs up front.  Larry – they are now required to mark to market and that may be the difference.  Larry will check on approximate 99% of the deficiency bids and may get a reasonable explanation and sometimes that is what they want to bid. 

Larry – title commitments and others should be properly categorized.  Lawyers will look at recategorizing items in the bid.

Debbie wants a draft to take to a sponsor by mid or third week in August.  Jim – asked if the association would be willing to pay for Rich to come over to talk to Larry, et al.  Larry and Robert – at this time they can talk to him on via phone.  When it gets closer to drafting, they may need to meet in person. 

Next meeting – Larry will be leaving Sept. 3 for a month.  DeeAnn – get e-mail out and canvas Public Trustees regarding publication and who should be responsible for delivery to newspaper and accuracy of publication – the Public Trustees or should it be turned over to attorney  Should we try to do away with all redemption periods and therefore force everyone to come to the sale to protect junior liens.  Larry will talk to Colorado Bar. DeeAnn Stults can compile results from the e-mails sent out by Bob.  Connie – Public Trustees are not required to use the same newspaper that the County uses.  Larry – statute sets forth guidelines for a legal publication.  Susie, wants it published in a newspaper wherein the monies would stay in that County.   Larry does not designate which paper to use but leaves it up to the Public Trustee so long as it does not screw up because it is too important to the foreclosure to be correct.

It was agreed that the next meeting would be August 22 at 10:00 in Jefferson County.  Meeting adjourned at 2:25.

Submitted 8/5/08 by Patty Bartlett, Secretary