The Colorado Title Board today hammered out a simple and concise phrase to describe a proposed ballot initiative that would require lenders to prove they are the right party to foreclose on a property.
The three-person board haggled over the phrase, parsing definitions and insinuations of words to come up with ballot language that, if it appears in November, clearly explains to voters what they’ll be asked to decide.
It’s all part of Colorado’s legal process for citizens to place a measure on the ballot, a multistep process that could derail a proposal at any time. The Title Board’s job is to ensure any ballot initiative deals with a single subject and clearly states its purpose.
“What’s pertinent here is the right to enforce a valid security interest,” Colorado Springs lawyer Stephen Brunette told the board as it worked on the phrase.
made it through a 45-minute board hearing and emerged as a single phrase that best describes what it will do if passed.
The title phrase to describe the ballot initiative is: An amendment to the Colorado Constitution requiring competent evidence be filed to establish a party’s right to enforce a valid recorded security interest prior to the deprivation of any real property through foreclosure.
Put simply, anyone seeking to foreclose on a property must first prove they are the proper party to do so. A security interest is a deed of trust and the note or mortgage that goes with it.
The ability to enforce it means the bank or lender seeking to foreclose must show they own the rights to that note.
Initiative 84 looks to rescind a 6-year-old practice allowing lawyers to file foreclosure cases without actually proving their client, usually a bank, has that right. Known as a “statement of qualified holder,” lawyers can attest without penalty that they think their client has the right to foreclose, but they don’t have to prove it.
The board is made up of representatives from the secretary of state, the attorney general and the office of legislative and legal services.
The petition drive comes after how the law came to be and its effects on homeowners. An earlier effort at changing the law legislatively failed in the Republican-controlled House mostly on party lines.
Several cases have emerged in recent months of homeowners learning the bank that foreclosed on their home was the wrong one, preventing them from negotiating a loan modification that could have saved their house.
Colorado used to require banks first prove they own a mortgage before they could foreclose. That changed in 2006 when banks bought and sold mortgages so frequently that no one really knew who owned a promissory note at a given moment.
The next step for the initiative is for proponents to submit for review a petition format to Secretary of State Scott Gessler. Its approval could come as soon as late next week.
Backers will then need to gather more than 87,100 validated signatures from registered voters to be eligible for the statewide ballot, an effort some say will cost between $200,000 and $300,000 to accomplish.
David Migoya: 303-954-1506, dmigoya@denverpost.com, Twitter.com/DavidMigoya, Facebook.com/david.migoya
