Understanding the foreclosure process in Texas is an important part of navigating your own home foreclosure.
From my experience as VP of Foreclosure Resolutions and Client Success at Right Path Property Solutions I know that many homeowners would greatly benefit from learning how the foreclosure process works. If you end up in this situation, you may be asking yourself questions such as “what is a foreclosure?”, “how to stop a foreclosure?” or “when is it too late to stop a foreclosure?”
One thing I’d like to be clear about right away is that in this situation time is of outmost importance, so let’s dive right in!
Understanding the Foreclosure Process in Texas
What is a Foreclosure Anyway?
Foreclosure is a legal process which banks or other creditors can use to reclaim the property used as collateral for a loan, usually following the borrower’s failure to make payments for some period of time.
Going through foreclosure can be very stressfull, but remember, it doesn’t have to be the end of the world! Learning about how the foreclosure process works as well as how to stop a foreclosure in Texas gives you the tools to successfully navigate through it so you can get the best out of the situation you are in.
The Basic Stages of A Foreclosure
The foreclosure process involves several key steps.
The way foreclosure is handled varies from one state to another across the nation.
States employ two primary methods for foreclosing on a property: judicial sale or power of sale.
In both cases, the foreclosure process usually does not go to court until 3-6 months have passed since the first missed payment. Typically, a lender will issue numerous warnings to inform you that you are behind on your payments – in arrears.
To get started, connect with us by calling (737) 373-2467 or by visiting our contact page, so we can guide you through the foreclosure process here locally in Houston. We know all the ins and outs and, most importantly, will make sure you avoid any big mistakes that cost some homeowners their house! Believe or not, each month we get many calls as late as on the day of (!) the auction and people tell us they don’t have a plan in place or their plan fell through. Remember that we are here for you to make sure this never happens to you!
Under Judicial Foreclosure:
- Your mortgage lender must take legal action in a court.
- You’ll receive a court notice requesting you to make a payment.
- If your loan is valid, you have 30 days to settle the debt in court to prevent losing your home (and in some cases, this deadline can be extended).
- If you fail to make payments during this time, a court order will be issued, allowing the lender to seek the sale of your property (most often through an auction).
- After the property is sold, the sheriff may issue a notice of eviction and you may be forced to leave the property immediately. In some cases, we’ve seen the new owner being more flexible as far as the move out time goes. But we surely would not want you to count on that!
Under Power of Sale (or Non-Judicial Foreclosure):
- The lender issues documents asking for payment and involving the court system isn’t necessary, though the procedure might face legal scrutiny. We have the experts on our team to stop the foreclosure the legal way when all of the other options fail.
- Once the required waiting time has passed, a deed of trust is created, and ownership of your property is handed over to a “trustee”.
- The trustee is then able to sell your property on lender’s behalf through a public auction (a notice must be posted).
An individual or business that has interest in the property must be notified of the foreclosure.
For instance, any contractors or other entities holding claims on a property that has been foreclosed upon have the right to collect payment from the proceedings of the auction.
What Happens After A Foreclosure Auction?
Once the sale is finalized, the total loan balance is paid off using the money from it.
Occasionally, if the auction sale of the property doesn’t cover the full payoff on the loan amount, a deficiency judgment may be issued against the borrower.
This is when the bank obtains a court order against you, the borrower, for the outstanding balance still owed to the bank after the sale of the property at the auction.
Certain states cap the total debt in a deficiency judgment at the property’s fair market value at the moment of sale, whereas other states permit the entire loan balance to be pursued against the borrower..
Here’s a great resource that outlines the state by state deficiency judgment laws.
Usually, it’s wise to steer clear of a foreclosure auction. Rather, reach out to the lender, or make the decision to work with a reputable and local real estate company like us at Right Path Property Solutions to assist you at every step of the process.
Experienced professionals can assist you by directly negotiating with lenders to reduce the total amount you owe in a sale – in some cases even eliminate it, even if your home is worth less than you what you owe.
One of the easiest and most reliable options to avoid a foreclosure is to open up yourself to the possibility of selling your house. Some homeowners are attached to their place, especially if they’ve lived in it for many years. However, it is always helpful to weigh in all of the pros and cons of trying to hold on to a property which one has not been able to afford.
If you need guidance on making the right decision for your property near Houston, we can help you just like we’ve done for many other homeowners that are now grateful to us for being their guides in such a challenging and stressful situation!
We also buy houses in Houston Texas like yours from people who need to sell fast.
Give us a call anytime (737) 373-2467 or
fill out the form on this website today! >>
Another Foreclosure Resource For Houston Texas HomeOwners: