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Tuesday, May 14, 2013

US Bank Bails on Foreclosure Constitutionality Hearing

US Bank has decided to agree to the injunction against its foreclosing on Lisa Brumfiel’s home.
Why?  US Bank didn’t want to face a hearing in Federal Court on the constitutionality of Colorado’s foreclosure process.  Judge William Martinez had set a hearing on Colorado’s Rule 120 hearings for Wednesday May 15, 2013.
In Colorado a court must approve a foreclosure sale following a Rule 120 hearing.  The only two issues litigated at the hearing are whether there is a default on the note and whether the borrower is in the military.  However, the issue of standing must always be addressed in any court proceeding.  Here a company can be in court if it is the holder of the borrower’s note.
Unlike other states, Colorado does not require a mortgage company to prove they hold the original note on a mortgage.  Colorado statutes section 38‑38‑101 allows a foreclosing company to produce just a copy of the note along with a statement by its attorney that the company is the holder of the note.
Ms. Brumfiel was to argue to the Court that not allowing a borrower to contest the validity of the holder’s evidence of ownership is a violation of the Due Process Clause of the 14th Amendment to the United States Constitution.
If Judge Martinez had ruled that Rule 120’s attorney statement provision is unconstitutional, foreclosing in Colorado would no longer be a slam-dunk.
Congratulations to Ms. Brumfiel, but I’m sure we’ll be back in court.  US Bank may have dodged this attempt at justice for Colorado’s homeowners by giving up on one foreclosure, but we’ll keep fighting.

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