Q: What may be the statute of restrictions for lenders to pursue borrowers in Colorado who default for mortgage loan?

A: Six years. Main-stream knowledge has been that collection actions must be brought by lenders within six years through the date the mortgage first went into standard. Nonetheless, in a July 2012 choice, the Colorado Court of Appeals determined that when the financial institution will not speed up your debt, the statute of limitations will not start to run before the readiness date of this loan, even though the debtor defaulted years that are many.

First, some history:

Loans guaranteed by genuine home in Colorado require two basic instruments: a note that is promissory deed of trust. The promissory note may be the debtor’s vow to settle the lending company, as the deed of trust secures payment regarding the loan by developing a lien from the subject home. Each tool holds its rules that are own to what sort of loan provider may enforce its terms. When a debtor defaults on the loan payment, the statute of limits regulating collection on promissory records is implicated.

Colorado courts have very long held that in the eventuality of standard on a note that is promissory the creditor must bring appropriate action from the debtor within six years. The most frequent form of standard under a promissory note is non-payment. The borrower can raise the defense that the lender is prohibited from bringing the action due to the statute of limitations if the collection action is not brought within the requisite six year period. Continue reading →