In Texas, most foreclosures are non-judicial—meaning that the foreclosure is held without going to court. As long as there is a “power of sale” clause in the deed of trust, then a non-judicial foreclosure can effectively transfer ownership of the property from the borrower to the lender. If the loan is a home equity loan, then a quasi-judicial is used to foreclose the property. If there is no “power of sale” clause in the deed of trust, then a lender must appear before a judge to foreclose the property.
Acceleration and Notice of Default
In the state of Texas, an intent to accelerate and notice of default letter must be sent to the borrower via certified mail, meaning that a signature must be obtained when it is delivered to the recipient. The intent to accelerate and notice of default letter must give at least 20 days to cure the default before any notice of a foreclosure sale can be give to the borrower. The notice is sent to the borrower’s last known address and must give the amount to be paid to cure the default and the date it must be paid. This effectively accelerates the note and brings the full amount of the loan due, and gives the borrower notice that the borrower is in default of the loan.
Notice of Sale
After the 20-day cure period has expired, but at least 21 days prior to the foreclosure sale, a notice of sale must be sent to each of the borrowers obligated on the note, filed with the clerk and posted to the courthouse door in the county where the property sits. The notice of sale must include the date, time, and location of the foreclosure sale as well as a notice that any servicemembers should contact the lender to notify it of their military status.
The sale of the property takes place on the first Tuesday of each month, on the steps of the county courthouse between 10 a.m. and 4 p.m. The property when up for auction will be sold to the highest bidder, or will go to the foreclosing lienholder and all subsequent liens are cleared from title.
RIGHT OF REDEMPTION
The Right of Redemption is the right to reclaim a property after a lender has foreclosed it provided the borrower repays all funds that
TEXAS MORTGAGE LOANS
A mortgage loan in the state of Texas typically requires a person to sign (1) a promissory note, and (2) a Deed of Trust.
Promissory Note: The borrower makes a promise to repay the loan according to the terms laid out in the promissory note.
Deed of Trust: The borrower gives the lender rights to collateral property if the borrower fails to repay the loan according to the terms of the promissory note. This secures the lender’s investment in the borrower.
If you miss a mortgage payment you will likely be assessed a late fee after a certain number of days. The amount of the late fee and when the fees will be assessed as outlined in the terms of the promissory note.
The mortgage servicer will likely send a default letter and/or call the borrower to make payment arrangements or offer loss mitigation options. The default letter is usually required under the deed of trust prior to an acceleration of the promissory note, which allows the lender to demand the balance on the note in full upon default, and foreclosure of the property.
After January 10, 2014, federal servicing rules prohibit notices of default or filings of foreclosure within the borrower’s first 120 days of delinquency. This allows you the time to seek out and apply for loss mitigation options offered to you to avoid foreclosure. In order to find out more information, contact the mortgage servicer and ask what loss mitigation options are available.
In Texas, after a non-judicial foreclosure sale, a lender is able to pursue a deficiency judgment against you. A deficiency judgment is a judgment that a lender receives for any remaining balance it is owed after the home is sold at foreclosure.
In other words, if you owe $200,000 under the Note, but the house is sold to a third party at foreclosure for $100,000, then the lender could sue you and be awarded a deficiency judgment for the remaining $100,000 by the courts, plus any additional fees and costs.
How long does foreclosure usually take in Texas?
A foreclosure can take anywhere between 2-4 months, but may take longer depending on delays.
Can the lender foreclose if I miss one mortgage payment?
Typically no, though upon missing only one payment under your mortgage note you are technically in breach of contract and your lender can begin the process of foreclosure proceedings—albeit non-judicial proceedings, judicial proceedings, or quasi-judicial proceedings.
These days, however, a lender usually doesn’t proceed with foreclosure until a borrower is 90 days past due.
Can I keep my house if I file for bankruptcy?
Depending on your income and your financial circumstances, you can often times restructure or reaffirm debt so that you can retain the collateral that secures that debt.
Are there ways to delay the foreclosure process?
Yes, there are several ways to slow down the process of foreclosure. You can do a modification to delay the foreclosure. You can also negotiate with the lender for additional time to bring the account current. You can also file for bankruptcy in order to halt the foreclosure.
Do I need an attorney to deal with creditors or a bankruptcy?
The short answer is no, however, dealing with bankruptcy and/or collections is a very complex legal process. You should be represented by a qualified attorney.
Should I file for bankruptcy if I am facing foreclosure?
If you are facing foreclosure, a bankruptcy will halt foreclosure and allow you more time to work out a solution with the lender to keep your home, however, whether or not a bankruptcy is the correct solution for your particular situation depends on many factors. It is advisable to seek legal counsel to evaluate your particular legal rights.