The anxious anticipation of not knowing the difference

It feels like something is wrong but you don't know how bad it is or how to figure it out. There is both curiosity and concern of what you will find once you hear the answer. You are wondering, if I am in foreclosure does that mean my house is lost? What about pre-foreclosure? How are these different and what does it mean for me? You have heard the two terms but no one explains what the difference is. Now, you're here and you need to learn what is happening on your own. I understand that's frustrating and the real estate industry is complex and there is a large information gap. I'm here to bridge the gap as you deserve to know what is going on with your life and home.

The beginning of what feels like the end

Here is the simplest distinction between the two. In Colorado, foreclosure legally starts when a Notice of Election and Demand (NED) is recorded with the Public Trustee (CRS 38-38-101, 38-38-102). Transparently, you won't hear about the NED and this is the beginning process the bank uses to sell your home. I understand that is the last thing you want to think about but you have time to resolve it. Meanwhile, pre-foreclosure is everything before the NED filing date and begins when you miss your first mortgage payment and don't resolve the grace period. This is structural information but the important difference for you is this: in pre-foreclosure, you have more time and potentially more options to resolve the problem than when you're in the foreclosure process.

The moment your private struggle becomes public

Foreclosure is the formal and legal process with specific deadlines that you, the homeowner, have to fulfill to stop the sale and keep your home. When the NED is filed, there is now a specified sale date of your home that normally is 110 to 125 days after the filing. If hearing this is stressful and you need to pause or re-read, I had to sit with the information for a while myself so that is completely normal. With that, there is still more you should know. The missed mortgage payments will effectively become public record due to the NED filing which is a scary thought. So, if that feels like a breach of your privacy I totally get it but it's important I share it so you are not blindsided.

The hidden time that matters most

On the other hand, pre-foreclosure is not a formal legal process and the deadlines that exist are requirements the bank must follow and are protections for you, not explicit requirements for you to complete like in foreclosure. I could imagine it doesn't feel like anyone is protecting or helping you so that may feel like bullshit. I get it. Here's one thing that does work in your favor. About 90 days after your first missed payment, your servicer is required by law to send you a pre-foreclosure notice. This notice has to be sent to you at least 30 days before they can file the NED — important because the NED filing itself doesn't notify you directly. This is helpful because, unlike in foreclosure, your missed mortgage payments are not public knowledge and there isn't a specified sale date for your home in place. If this is all too much information and you don't know where to go, we at Transitus are here to help.

A slightly relieving surprise

Here's something that often surprises people: you still own the property in both phases. Again, you still own the property. The bank cannot take or sell your home during pre-foreclosure or foreclosure until the sale date found on the combined notice. So, no matter what phase you are in, you still have options available. And you can use these options to make the most of your circumstances.

The burden of acting quickly

Here is why all of this matters. You have hope in both foreclosure phases. With this hope, you can move forward toward the best available options given your timing and situation. In most cases, the most options available and the greatest amount of time will be during the pre-foreclosure stage. So, if you have missed payments, I know it's hard to face it, but it's a great time to discover how you can fix the problem today rather than waiting for the foreclosure process tomorrow. A common misconception is that you need to wait until you are in foreclosure to take action but the truth is the earlier you take action on missed payments the more likely you will get the outcome you want in this tough situation. I know it feels like life seems to ask the most of you in the hardest times and that's a brutal thing to accept. If you can push through, and keep your home, you will be grateful tomorrow that you did.

No matter what phase you are in, it's hard. That's all I want to say. This is hard for you. I see it. If you need other information about foreclosure or more specific support you can always read our other articles or connect with us at Transitus.

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.