Foreclosure is the legal process effected through the court system in which a mortgagee (lender—often a bank) terminates a mortgagor’s (borrower’s) interest in the real property in which the mortgagor gave the mortgagee a security interest (a lien) as collateral for the loan used to purchase the property.

Foreclosure generally occurs when a homeowner defaults and fails to make mortgage payments as required by the loan agreement (promissory note).

Foreclosure allows the lender to seize the property, remove the homeowner, and sell the home—all of which are legal remedies the mortgagor and mortgagee agreed to in the mortgage contract.

In Colorado, foreclosure is a legal process that allows a lender to terminate a borrower's interest in a property due to default on mortgage payments. Colorado primarily uses two types of foreclosure processes: judicial and non-judicial. Judicial foreclosure involves the court system and is required when there is no power of sale clause in the mortgage agreement. Non-judicial foreclosure, which is more common in Colorado, can be used when the mortgage contains a power of sale clause, allowing the lender to sell the property without court intervention after providing proper notice and following specific procedures set by state law. The process begins with the lender filing a Notice of Election and Demand (NED) with the public trustee. The borrower is then notified and has a period to cure the default. If the default is not cured, the property is sold at a public trustee sale. Colorado law also provides a right of redemption for the borrower, allowing them to reclaim the property under certain conditions after the sale. It is important for homeowners facing foreclosure in Colorado to consult with an attorney to understand their rights and options.