Texas Foreclosure Process and Timeline
Knowing where you stand will help you decide what could be the best course of action moving forward as the Texas foreclosure process takes around 160 days from start to completion before a home is put up for auction.
Foreclosure is terrible, to put it mildly
When facing foreclosure, you may feel a variety of emotions, including rage and grief
Consider how much money you’ve already invested in the mortgage, only for it all to possibly be wasted, as well as the sense of powerlessness you would experience knowing that you and your family might need to pack up and go somewhere.
Even though it can be difficult to resolve a pending foreclosure, it’s crucial to understand how it works and how long you have to find a solution before the house is added to the auction list.
Let’s begin by discussing the foreclosure procedure in Texas
Is Texas a State With Judicial Foreclosures?
In Texas, the non-judicial method is used to execute the majority of foreclosures. This implies that neither the lender nor the borrower must show up in court. When a mortgage deed has a Power of Sale clause, the lender has this choice.
A lender can initiate the foreclosure process without having to appear in court in a non-judicial foreclosure, which considerably speeds up the procedure.
According to attorney Amy Loftsgordon, a power of sale clause is the borrower’s pre-authorization that permits the lender to sell the property to reclaim the outstanding balance if the borrower fails on the mortgage loan. A lender or a trustee acting on their behalf may exercise this right to sell the property.
A lender must file a lawsuit to get a court order that will start the foreclosure process when a mortgage deed lacks a power of sale clause.
It is customary for the property to be sold at auction to the highest bidder after the order has been obtained. The second of the two forms of foreclosures permitted in Texas is referred to as a “judicial foreclosure.”
How many late payments are required in Texas before a foreclosure?
Usually, the foreclosure procedure doesn’t start until a set number of payments have been missed. Therefore, making a late payment is acceptable as long as it flags your loan so that they can keep a watch on it.
Texas is constrained by federal law, which mandates that a borrower must fall behind on a mortgage loan for 120 days before the foreclosure process may get started. Because of how most mortgages are set up, it usually takes four missing payments before a lender starts the foreclosure process.
Is It Possible to Stop Foreclosure Once It Begins?
You still have some time to stop the foreclosure after it starts.
Usually, you may work out a deal with your lender by making the necessary payments to get the loan reinstated.
However, you should begin the loan modification process if you are unable to make the required payment.
The next best course of action is to try to sell the house if you are denied a loan modification and are unable to get your loan back on track.
A word of caution before selling your home: if you list your house and it doesn’t sell by the deadline, it will be put up for auction. Discuss the state of the market and how you are pricing your property about similar properties with your realtor.
If you don’t have much time, consider these two possibilities:
Selling the house to a cash buyer who can close on it right away without a banking institution’s approval.
If your mortgage exceeds the value of your home, consider a short sale.
A loss mitigation application must be submitted to your lender to complete a short sale. After submitting this form, which is also known as a foreclosure avoidance application, one of the following requirements must be satisfied for the lender to proceed with the foreclosure process:
- The borrower is informed that they are not eligible for the loss mitigation method.
- The loss mitigation process’s offered program is rejected by the borrower.
- The borrower disregards the program’s guidelines for loss mitigation.
If you think your property won’t sell quickly, you should start the loss mitigation application right away because it needs to be submitted at least 37 days before a planned foreclosure sale.
It should be mentioned that according to federal regulations, a mortgage lender must contact a late borrower by phone and send a written notice before starting the foreclosure process. Keep in mind that your lender or mortgage loan provider may contact you.
There is a chance that you and your family will be able to reach a deal that will let you stay in your house.
Is It Possible to Prevent Foreclosure by Making a Payment?
Once a notice of default has been sent, lenders in Texas are required to give debtors a 20-day grace period.
The borrower can stop the foreclosure process during this time, which is frequently referred to as the “pre-foreclosure period,” by making full payment of all past-due mortgage notes and any late fees that have been added to this total.
After receiving a notice of default, the process of foreclosure might take anywhere between 30 and 60 days.
How Long Does It Take in Texas to Foreclose on a House?
If you are unable to make your monthly mortgage payments, foreclosure does not happen all at once. Foreclosure is a sequence of phases in a somewhat complicated procedure.
Understanding the entire foreclosure process may be beneficial if you are falling behind on your payments or finding it difficult to make your mortgage payment each month.
It will also be to your advantage if you empower yourself with this information as soon as feasible. According to Jeff Davidson of the Jeff Davidson Law Firm, a foreclosure in Texas typically takes 159 days to complete.
What phases of foreclosure are there?
- Notice of Default – According to the law, a lender must give you 20 days to pay the entire amount past due to make the loan current after sending you a written notice. Other loan types, such as VA loans and FHA loans, could have a slightly different time range.
- Notice of Sale – The lender must establish an auction date after deciding to move forward with the foreclosure. You are issued the notice of sale to let you know an auction is going to happen. The notice is posted in the courthouse, mailed, and lodged with the county clerk 21 days before the auction.
- Foreclosure Sale – Lastly, the auction will be held on the first Tuesday of each month at the county courthouse (Harris County). For non-tax-related foreclosures, Texas does not recognize a right of redemption, so after the auction, you are unable to repurchase the property.
It is typical for lenders to grant borrowers a grace period of 10 to 15 days when they are past due on a monthly mortgage payment. After the grace period, a late fee will be charged, and this amount will increase each month the borrower fails to make a payment.
When a second mortgage payment is late, things become a little trickier. Your mortgage servicer’s communication with you about your mortgage loan default will probably change noticeably now that you are in default.
Things start to become a little stressful for the borrower at this stage of the procedure as well. If you decide that is the outcome you want, there is still a chance for you to keep your house.
Your lender will typically send you a demand letter if ninety days have passed since your last mortgage payment.
You will learn from this letter that you have 30 days to catch up on your mortgage payments. If you decide you want to keep living in your house, now is a crucial time for you to work out a deal with your lender.
You will get a breach letter in the mail when your home loan has been past due for 120 days. This letter serves as formal notification to the borrower that the lender intends to make the remaining balance of the mortgage loan payable.
The breach letter you get must outline the acts you took that caused your mortgage loan to go into default, the options you have to fix it, and the deadline by which it must be fixed.
The letter will also make it clear that if the issue isn’t resolved by the deadline, the mortgage will be accelerated and the house will be sold. Lenders frequently send this letter earlier in the process, sometimes at the 90-day point.
Alert of Default
Texas real estate law stipulates that borrowers must receive a notice of default and intent to accelerate the loan via certified mail if they are 120 days in arrears on a mortgage loan.
The notice of default must be delivered to the borrower’s last known address, and it must give them at least 20 days to fulfill the conditions necessary to remedy the default.
The breach letter can satisfy this obligation, but many lenders will also send borrowers other correspondence.
Statement of Sale
The lender’s next step in the procedure is to give a notice of sale once the borrower’s window of opportunity to discover a cure for default has passed.
How to Receive Foreclosure Notification
The state of Texas mandates that lenders issue certified postal notices of sale to each borrower responsible for a mortgage loan that is in default. Additionally, the notice of sale must include:
- posted on the county courthouse’s front entrance where the foreclosure property is situated.
- filed with the proper county’s county clerk’s office.
The location of the sale as well as the date, time, and execution of the sale must all be specified on the Notice of Sale.
Military Service members who are facing foreclosure should familiarise themselves with the unique remedies that are available to them.
How long after receiving a foreclosure notice do you have?
At least 21 days before a scheduled sale by the lender, a Notice of Sale must be sent to the defaulting borrower. Anytime after the 21-day window has passed, the sale can be planned.
What Sets Notice of Default and Foreclosure Apart?
It’s critical to keep in mind that a foreclosure is not the same as a Notice of Default.
A time of reinstatement is frequently used to refer to the crucial initial stage in the foreclosure process, the Notice of Default.
This notification warns the borrower that, should the defaulted portion of the mortgage loan not be brought current, the bank is prepared to take aggressive remedial action.
Following the start of a foreclosure, the bank or lender seizes ownership of the house to sell it for the unpaid mortgage balance owed by the borrower.
Lenders frequently lose money on foreclosures, so they would much rather avoid going through an auction by letting you catch up on your payments or selling the house privately.
The Repossession Sale
Texas often has foreclosure sales between the hours of 10:00 a.m. and 4:00 p.m. on the first Tuesday of every month. Typically, foreclosure sales start at the time specified on the notice of sale.
If this is not practicable, the sale cannot begin more than three hours after the time specified on the notice of sale.
At the auction, the property will be sold to the highest bidder. When a credit bid is made by the lender who is foreclosing, it usually suffices for them to take control of the property.
How to Avoid Foreclosure
Usually, financial strain—from losing a job, paying for medical expenses, or any other burden that prevents you from making mortgage payments—leads to foreclosure.
One out of every 200 homes experiences foreclosure each year, making it much more common than you might realize.
The risk of allowing your property to fall into foreclosure is that it will be extremely difficult to finance another home or obtain other types of loans for at least 7 years.
Knowing the potential effects of foreclosure is crucial during this process, just in case you consider allowing it to go into foreclosure.
A homeowner who hires a real estate agent who isn’t experienced in marketing pre-foreclosure properties or working with short sales runs the very real risk of not being able to sell their house in time.
We would want the chance to speak with you about buying the home from you if you are in danger of foreclosure and have no way to bring the loan back into good standing.
Not only do we buy properties in cash, but we also pay for all closing fees and can purchase swiftly if your auction date is around the horizon (we have been known to purchase 3 days before the auction) (we have been known to purchase 3 days before the auction).
With this strategy, you can avoid the loss of whatever equity you’ve developed and can repair your credit, and qualify for financing far sooner than with a foreclosure event on your record.
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