Colorado Law Incentivizes Foot Dragging By County Officials When Returning Surplus Sale Proceeds To Foreclosed Homeowners After Public Auctions

In Arapahoe County, Colorado, The Denver Post reports:

• What [Barry] Gragert didn't know was that a defining traumatic event for him — the loss of his Aurora home to foreclosure not long after the death of his wife two years ago — actually had a bittersweet outcome. Arapahoe County officials had quietly been holding more than $50,000 for him — funds left over from the foreclosure sale of the house where he had lived and raised a family for 19 years. Trouble is, no one had told him about it.

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• State law requires counties to hand over any proceeds from foreclosure sales after all the debtors on a property have been paid. Usually there's little or nothing left. But when money is owed, counties put almost no effort into locating former homeowners. They're only required to send a notice to the homeowner's last-known address at the time the foreclosure began — usually the very house the homeowner was forced to leave — and to publish an ad in a local newspaper, often one the homeowner has never heard of.

• In a search of just three Front Range counties — Denver, Arapahoe and Adams — The Denver Post found that dozens of former homeowners were owed more than $653,300 since 2008.(1) Kenneth Aragon, who lost his Aurora home to foreclosure in 2009 and is owed money, was dumbstruck when told by The Post he had money coming. "They sent it to my old address?" said Aragon, who lives in Aurora. "How dumb is that?"

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• In July 2008, the law changed, allowing counties to keep funds unclaimed after five years from the date of foreclosure. Previously the money was held in perpetuity. The three counties say their search efforts are minimal because of limited resources and small staffs.

For more, see Money owed to victims of foreclosure rarely gets to them.

(1) Here's a list of people in three metro-area counties due at least $10,000 from the county treasurer for property sold at foreclosure:

• Adams County: Efrain Ruiz ($14,203), Mike L. Zamora ($48,325), Richard A. Wasilkow ($37,026), Anthony J. Peters ($11,625), Arthur Schilling ($32,653), Rosa E. Martinez ($15,895), Barbara L. Brinkley ($11,792);
• Arapahoe County: Clarita Fritz ($10,536), Shirley Shellenbaum ($12,995), Patricia Rasmussen ($19,037), Thomas Allman ($42,156), Bernard and Margaret Krueger ($14,158), Barry Gragert ($50,641), Kenneth and Beatrice Aragon ($27,456), Clinton and Christine Rivard ($15,426), David and Jami Childress ($12,717), Laura Van Norden ($45,875);
• Denver County: Jesse and Theresia Morrison ($18,572), Marie Duran and Olan Gulley ($21,658), LeRoy Green ($31,730), Ruth Dewey ($39,412), Fayetta Curry and Sharon Davis ($33,212).