If you're dealing with foreclosure in Colorado, you might still have time to recover. In most situations, foreclosure proceedings can’t begin until your mortgage is more than 120 days past due.
Once this 120-day period has passed, the loan servicer, acting on behalf of the lender (referred to as the “bank” in this article), can start the foreclosure process. This can happen through one of two methods:
- judicial foreclosure, which involves filing a lawsuit in court, or
- nonjudicial foreclosure, a mostly out-of-court process governed by state law.
In Colorado, the majority of foreclosures follow the nonjudicial route. This article explains how the state’s public trustee (nonjudicial) foreclosure process works and outlines the rights you have as a homeowner.
When Can a Foreclosure in Colorado Start?
In the past, struggling homeowners who fell behind in mortgage payments didn't have much time to recover from a financial setback before losing the house to foreclosure. That changed in 2014. Now, under federal law, the bank must usually wait until the loan is more than 120 days overdue before making the first notice or filing, which starts a foreclosure. (12 C.F.R. § 1024.41 (2025).)
This preforeclosure period provides additional time for applying for a foreclosure alternative, such as a mortgage modification.
What Are the Different Types of Foreclosure in Colorado?
In Colorado, the bank has the choice of using a judicial or nonjudicial process. In most instances, the bank utilizes the more efficient, less costly nonjudicial procedure. Here's a short outline of both systems.
How the Judicial Foreclosure Process Works
A judicial foreclosure begins when the bank initiates a lawsuit in court. The bank will serve you with a lawsuit asking the court for permission to sell the home to pay off the debt. If you don’t answer the suit, the bank will most likely get a default judgment allowing it to hold a foreclosure sale.
If you choose to challenge the foreclosure, the case will proceed through the litigation process. If the bank wins the case through summary judgment or at trial, the judge will enter a judgment against you that allows the bank to sell the property at a foreclosure sale.
How the Nonjudicial Foreclosure Process Works
In a nonjudicial foreclosure, the bank must complete certain out-of-court steps detailed in Colorado law before selling the property at a foreclosure sale. However, the nonjudicial process in Colorado involves one court hearing, which is described below.
Again, most foreclosures in Colorado are nonjudicial.
Notice Before a Nonjudicial Foreclosure in Colorado
Under Colorado law, in most cases, at least 30 days before filing a Notice of Election and Demand (see below) at least 30 days after the default, the loan owner or servicer must mail the borrower a notice containing the following:
- the phone number for the Colorado foreclosure hotline
- the servicer's loss mitigation (foreclosure avoidance) department’s telephone number, and
- a statement that it's illegal for any person acting as a foreclosure consultant to charge an up-front fee or deposit for services related to the foreclosure. (Colo. Rev. Stat. § 38-38-102.5 (2025).)
The loss mitigation department helps borrowers explore foreclosure alternatives.
What Are the Steps Involved in the Nonjudicial Foreclosure Process in Colorado?
Unlike other states that allow a private trustee to conduct a nonjudicial foreclosure, the process is handled by an official known as a public trustee in Colorado.
Notice of Election and Demand
Foreclosure starts when the foreclosing party files a Notice of Election and Demand with the public trustee, who then records it with the county clerk and recorder. (Colo. Rev. Stat. § 38-38-101 (2025).)
Sale Date
The public trustee will then set a date for the foreclosure sale. The sale date can't be less than 110 calendar days or more than 125 calendar days from the Notice of Election and Demand recording date. For agricultural properties, the dates are 215 and 230 calendar days, respectively. (Colo. Rev. Stat. § 38-38-108 (2025).)
Combined Notice
The public trustee will mail the borrower a "combined" notice twice. The first must be sent no more than 20 calendar days after the recording of the Notice of Election and Demand. The second must be sent no more than 60 calendar days nor less than 45 calendar days before the first scheduled sale date. This document includes the date and place of sale, and information about the right to cure (discussed further below), among other things. (Colo. Rev. Stat. § 38-38-103 (2025).)
The trustee must publish the notice in a newspaper, too. (Colo. Rev. Stat. § 38-38-103 (2025).)
Rule 120 Hearing
Even though the process is considered nonjudicial, the court plays a minor role in a Colorado nonjudicial foreclosure. At the Rule 120 hearing, the court determines if the bank has the right to foreclose and sell the property.
How the Rule 120 process works. The bank's attorney files a motion under Rule 120 of the Colorado Rules of Civil Procedure asking the court for an order authorizing the foreclosure sale. The court then sets a deadline by which any response to the motion must be filed. The bank then mails a notice about the right to file a response to you and others who might have an interest in the property no less than 14 days before the response deadline. The notice is also posted at the courthouse and on the property that's being foreclosed.
The four issues that you may raise in a filed response and at a Rule 120 hearing are:
- whether you're in default
- whether you're in the military and therefore entitled to protections under the Servicemembers Civil Relief Act
- whether the party that filed the motion is the real party in interest (that is, does the bank have the legal right to foreclose, which is called “standing”), and
- whether the status of any request for a loan modification agreement should prevent a foreclosure sale. (For example, say the bank agreed to modify your loan if you made three on-time trial payments. You made the payments, but the bank didn’t follow through on giving you a modification. You may bring up this matter as part of the Rule 120 process.)
If you file a response, it must be limited to one or more of the four listed issues, and you're restricted to these issues at the hearing. If you want to challenge the foreclosure on other grounds, you’ll have to file your own lawsuit. To find out more about this option, talk to a foreclosure lawyer.
Filing your response. If you choose to respond to the bank's Rule 120 motion, you must file your written response with the court by the deadline in the notice of hearing and state the facts supporting your position. You may include copies of documents that back up your assertions. You'll also have to pay a fee and serve a copy of your response to the bank (through its attorney).
If you file a timely response, the court will review your response, grant or deny the bank’s motion, or set a hearing. If the court sets a hearing, you must attend and be prepared to argue your case because your legal rights are at stake.
What happens if you don't respond to the hearing notice. If you don’t respond to the notice of hearing, the court generally cancels the hearing and rubber-stamps an order allowing the foreclosure sale.
Ultimately, a Rule 120 hearing allows Colorado homeowners facing a nonjudicial foreclosure to go in front of a court and explain why the foreclosure should not go forward, so long as the reason is based on one of the four areas described above. Keep in mind that making a legal argument is complicated, and ensuring you follow proper court procedures can be difficult.
If you want to fight a nonjudicial foreclosure by filing a response to a notice of Rule 120 hearing and attending the hearing, it’s recommended that you hire a foreclosure lawyer to help you.
Curing the Default Before the Foreclosure Sale
In Colorado, the borrower can stop a nonjudicial foreclosure sale by curing the default (bringing the account current by paying all missed payments plus fees and costs). This procedure is known as “reinstating” the loan.
At least 15 calendar days before the sale, the borrower must file a notice of intent to cure with the trustee. The borrower will receive a cure statement explaining the amount that must be paid to stop the foreclosure and will have until 12:00 (noon) on the day before the foreclosure sale to cure the default. (Colo. Rev. Stat. § 38-38-104 (2025).)
Can the Bank Get a Deficiency Judgment in Colorado?
The entity or person that buys the property at the sale (either the foreclosing bank or a third party) might pay less than you owed. The difference between your debt and the purchase price (which includes the outstanding balance of the loan plus foreclosure fees and costs) is called a “deficiency.”
For example, suppose you owe $700,000 on your loan, including the fees and costs associated with the foreclosure. At the foreclosure sale, your home sells to a new owner for $650,000. Because you owed $700,000 at the time of the foreclosure, the deficiency is $50,000.
In some states, like Colorado, the bank can get a personal judgment, called a “deficiency judgment,” against the borrower for the deficiency amount. (Colo. Rev. Stat. § 4-3-118 (2025).) Under Colorado law, the bank has six years after a nonjudicial foreclosure to file a lawsuit asking a court for a deficiency judgment against you. (Colo. Rev. Stat. § 4-3-118 (2025).)
But if the bank bought the property at the foreclosure sale and didn't bid at least the fair market value of the home (less any unpaid property taxes, senior liens, and other specified costs associated with selling the property), you may raise this as a defense in the deficiency action. If the court decides that the bank’s bid was inadequate, the court may reduce the amount of the deficiency. (Colo. Rev. Stat. §38-38-106 (2025).)
Will the Bank Sue You and Go After Your Assets in Colorado?
Once it gets a deficiency judgment, the bank may then use regular collection techniques (like placing a lien on other real estate you own, garnishing your wages, or levying your bank account) to collect on the deficiency judgment.
However, even though the bank can sue you for a deficiency judgment, it might not bother, especially if you don’t have many assets. Banks often skip the hassle and costs associated with suing for a deficiency and instead write off the borrower’s debt. If the bank cancels the deficiency amount and issues you a 1099-C, you might have to pay taxes on the canceled amount.
People with a steady income or ample assets are more likely to face a deficiency judgment suit. If you’re not able to protect your assets using exemptions specific to garnishment, levies, or attachment, you might consider filing for bankruptcy. While filing for bankruptcy probably doesn’t make sense just to avoid a deficiency judgment, if you have a lot of other dischargeable debts, it might be worthwhile to consider this route. To get information about bankruptcy that’s relevant to your specific circumstances, talk to a bankruptcy attorney.
If bankruptcy isn’t right for your situation, you might be able to work out a payment agreement with the bank, or it might agree to accept a reduced deficiency amount. Again, you might have tax consequences if the bank forgives all or part of the deficiency.
Is There a Redemption Period After Foreclosure in Colorado?
Some states have a law that allows a foreclosed homeowner to redeem the home after a foreclosure sale. In Colorado, some lienholders may redeem after the sale. However, foreclosed homeowners can't. (Colo. Rev. Stat. § 38-38-302 (2025).) (However, HOA foreclosures are different. Under Colorado law, foreclosed homeowners get a 180-day redemption period for properties that an HOA has foreclosed.) (Colo. Rev. Stat. § 38-38-302 (2025).)
Getting Help With Foreclosure
Colorado's Emergency Mortgage Assistance Program (EMAP), a Homeowner Assistance Fund program, provides financial assistance for eligible homeowners.
The City of Denver offers the Foreclosure Financial Assistance Program, which provides financial assistance to eligible households facing foreclosure. Your household income must be at or below 80% of the area median income, the residence must be located in both the city and county of Denver, and you must meet other eligibility criteria.
If you need help understanding the laws or want to find out about possible defenses to a foreclosure, contact a local foreclosure attorney.
To learn about different options to avoid a foreclosure, like a loan modification, short sale, or deed in lieu of foreclosure, consider contacting a HUD-approved housing counselor. Colorado Housing Connects provides free, HUD-approved housing counseling services. Call 877-601-HOPE (4673).