(Jan. 24) – Rep. Steve Lebsock (D-Thornton) cleared his first hurdle as a state legislator today when the House Business, Labor & Economic & Workforce Development Committee advanced his bill to close a loophole in home mortgage loan modifications.
Rep. Lebsock explained that in cases where mortgages are sold while they are in the process of being modified, current Colorado law allows the new servicers of the mortgages to disregard the proposed modifications. HB13-1017 would end that practice.
Because loan modifications often involve homeowners who are struggling to make their payments, the collapse of a loan modification often turns a distressed loan into a foreclosure.
Representatives of the banking, credit union and real estate industries, and the state public trustees who oversee mortgage foreclosures, testified in support of the bill. “This is going to save the homes of many people in Colorado,” Rep. Lebsock told the committee.
“Successor servicers should receive notification from previous servicers when loans are in modification prior to the transfer, and successor servicers should honor the new terms of the loan,” Rep. Lebsock told the panel, which voted 6-4 to send the bill to the House floor.