If you find yourself facing foreclosure (or even threatened by the prospect of it), itโs absolutely critical to understand how the foreclosure process works in Texas.
Understanding the Foreclosure Process in Texas
What is foreclosure anyway?
Legally, foreclosure is the official process by which a mortgage lender attempts to take back real estate property (a home) securing a loan (a mortgage) โ usually after a borrower (or a homeowner) stops making payments.
By no means is foreclosure fun, but itโs not the end of the world.
By knowing how foreclosure works in Texasโฆ youโll be much better equipped to navigate it well and come out on the other end in the best position possible.
Stages of the Foreclosure Process
Foreclosure works differently in different states around the country, but there are a few stages that are important to any foreclosure process.
There are generally two ways different states use to foreclose upon a property: judicial sale or power of sale.
Connect with us through our contact page or by calling us at (972)-996-1905 to have us walk you through the specific foreclosure process here in Addison.
In either scenario, a foreclosure action typically doesnโt make its way to court until 3-6 months of missed payments. Usually (but not always), a lender will send out several notices letting you know that youโre overdue or behind in your payment.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- Youโll get a letter from the court demanding payment.
- Youโll have 30 days to bring payment to court to avoid foreclosure (sometimes that can be extended).
- If you donโt pay after this period, a judgement will be entered and the lender can request the sale of your property โ generally through an auction.
- Once the property is sold, the local sheriff serves an eviction notices and you must vacate the property.
Under Power of Sale (Non-Judicial) Foreclosure:
- The lender serves you with a notice demanding payment, and the courts are not required โ although there may be some level of judicial review.
- After the established waiting period has gone by, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trusteed can then sell your property to the lender at a public auction (notice must be given).
So, What Happens After A Foreclosure Auction?
After a foreclosure is complete, the amount of the loan is paid off with the proceeds from the sale of the property.Sometimes, if the sale of the property isnโt enough to pay off the loan, a deficiency judgment can be issued against the borrower. A deficiency judgement is where the bank gets a judgement against you, the borrower, for the remaining funds owned to the bank.
Some states limit the amount owed in a deficiency judgement to the fair value of the property at the time of the sale, while other states will allow the full loan amount to be asssesed.
Hereโs a great resource that lists the state by state laws when it comes to deficiency judgements.
Generally, itโs best to try to avoid a foreclosure auction. Instead, call up the bank to negotiate, or work with a local, reputable real estate firm like us at Sell My House in Texas to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced invested can help you by negotiating directly with the banks โ or even eliminate the prospect of a foreclosure, even if your home is worth less than you owe.
If youโre currently facing foreclosure and need to sell a property near Addison, please let us know. We can help!
We buy houses in Addison, Texas like yours from people who need to sell fast!
Give us a call anytime at (972)-996-1905 or fill out this quick form to get started today! >>