Disbelief you still have to think about the foreclosure

You just want the answer. The foreclosure process was enough confusion and harm and you don't have any more patience. Now you are here trying to understand what everything means. Your house was already taken from you but nothing made sense during or after that process. There was some information about a credit bid but it wasn't properly explained and this all feels exactly like the last 9 months. Weird terms, none explained and no one to help you understand what they mean. I see that. It's not right to leave you in the dark when it's what you are going through in your life and I am here to make sure that doesn't happen today.

The sale of your home but you have no say in selling it

A credit bid is when the lender bids at your foreclosure auction by canceling the debt you owed them, instead of bringing cash. This process is often used by the lender to acquire the property back from you. If reading that was painful I could only imagine but I need to make sure you finally get all the information you deserve.

The lender can bid the entire debt or less but in either case a credit bid is effectively cancelling the debt you already owed them. If this is still confusing, I agree so let me provide a quick analogy. Say someone owed you $400k and the auction price was $400k, instead of you paying cash for that home you would say "we're even, I'll take the property" by "crediting the debt". Therefore, no new cash was required and you now have ownership of the property. This is a legal and formal process and the lender's credit bid must be submitted to the Public Trustee by 12 noon on the second business day prior to the auction date (CRS 38-38-106).

You might be wondering, is the bank the only one allowed to bid on my house? That feels unfair if it's true. Luckily it's not. Other cash buyers can and will be involved in the auction, but in many cases the lender wins. Why? Outside bidders are working with short notice, they are required to have cash, and they have no ability to inspect the home. This increases their risk and reduces their willingness to put forward a competitive offer. So, in some cases, this can lead to the bank "selling" your home for much cheaper than it actually should be and that is not right but luckily you can make it right as you'll see shortly.

Why do I even care what it sold for?

This credit bid or the final accepted offer on your home will be the legal sale price and is very important for you in three primary ways. If the sale price was more than you owed the bank and all third party liens this is what is considered a surplus. Finally some good news, you are entitled to that surplus and that money is owed to you so please make sure you get what you deserve. To do so, you will need to claim it through the Public Trustee as it will not be sent to you automatically.

Of course, there is a bad side of this, and I know, hearing that is the last thing you need. I get it. This has been exhausting and I see that. Unfortunately, when the sale price is less than you owed, in some cases, the difference can come back to you as a separate lawsuit that is considered a deficiency judgment (CRS 4-3-118). This lawsuit can have a variety of negative consequences and impact you even further after the foreclosure.

If you're facing a deficiency lawsuit, Colorado law allows you to argue the sale price of your home was not "fair market value". This could be really important to you as it could get you out of a lawsuit or reduce the deficiency you owe. If it feels like, 'here we go again, more things to learn that I don't know', I feel you. The best way to discover "fair market value" is to find comparable properties to your home based on a variety of specific property details. If you go through this exercise and it's still confusing after seeing the details, we at Transitus are happy to help you get this information.

Finally some help that isn't asking for something

I hope this was helpful information for you and I see the hardship you have already gone through during this foreclosure process. It's heavy, it's confusing, it's lonely. If you haven't been foreclosed on yet, you still have hope and other options and we at Transitus are here to help support you directly if you can't find what you need. Even if you have lost your home but could still use help in real estate, please reach out as we are a communication away.

This article is general information from Transitus, not legal, financial, or tax advice. Foreclosure rules change and every situation is different. Transitus is not a foreclosure consultant (CRS 6-1-1103) and charges no upfront fees. For free help, call the Colorado Foreclosure Hotline at 1-877-601-HOPE or consult a Colorado real estate attorney.