New State Law Slams Shut Loophole That Allowed Colorado Counties To 'Snatch' Unclaimed Proceeds From Public Auctions Belonging To F'closed Homeowners

In Denver, Colorado, The Denver Post reports:

• Homeowners who are legally entitled to excess funds from the public auction of their foreclosed properties can now claim the money years after they learn of it, according to a new law signed by Gov. John Hickenlooper [].



• Until now, counties were allowed to keep — and often did — excess funds known as "overbid proceeds" if no one claimed them within five years of the foreclosure auction.



• The law, the result of SB-30 by Sen. Cheri Jahn, D-Wheat Ridge, requires county public trustees who oversee the foreclosure process to give the unclaimed funds to the state treasurer. The treasurer's fund, known as the Great Colorado Payback, is held in perpetuity for its rightful owner or heir to claim at any time.



• The legislation comes as a result of Denver Post reporting that last year exposed how many counties did little or nothing to track homeowners who were due money after their houses were foreclosed and liens paid.(1)



• In some cases, county treasuries pocketed hundreds of thousands of dollars in large part because homeowners due the money weren't notified or didn't know they had money coming to them.



• "This is really a great thing you've done," Barry Gragert said to Jahn as he watched Hickenlooper sign the bill. "So many people who weren't as lucky as me will be helped so much."



• Gragert had more than $50,000 coming to him but never knew it until The Post located him as part of its story. The retired veteran had lived in his car and was recovering from cataract surgery after his house was foreclosed.



• The Denver resident was only a few months from never seeing the money. At the time, counties only had to advertise the availability of the funds once a week for five weeks, often in weekly newspapers that were in communities far from where the foreclosed property was located. In addition, counties were only required to mail a single notice to the homeowner at their last known address — usually the foreclosed home that they'd already left behind.



• Under the new law, counties are required to make an effort to locate homeowners and notify them. If not located, the money is then turned over to the state treasurer for safe-keeping. The state payback fund advertises the names of people due money once a year.



• It also requires counties to notify homeowners during the foreclosure process that they could be due money — which occurs when a home is auctioned for more money than is owed on it. Once all liens are paid, any money left over is due the homeowner.



• Others read The Post and contacted county officials about the funds, many of whom were able to collect a piece of the more than $635,000 that remained uncollected.(2) The Post also found that public trustees in some counties skirted the law and never tried to contact homeowners or publish the existence of the money.(3) Provisions of the law kick-in Sept. 1.

Source: New law makes it easier for homeowners to collect foreclosure auction money due them.

(1) See Money owed to victims of foreclosure rarely gets to them.
(2) See Foreclosed homeowners get unexpected windfalls.
(3) See People foreclosed on in Arapahoe County might be owed money and not know it.