Homeowners in default on their mortgage can, by law, lose their home in as few as 41 days. And because Texas is a non-right of redemption state, there is no opportunity to reclaim your property once the foreclosure has taken place. For these reasons it is extremely important for you to be informed and act quickly when you encounter difficulty making your mortgage payment.
The sooner you contact your lender or a HUD-approved housing counselor the better! Fortunately there are many options available to assist Texas Homeowners facing mortgage or financial difficulty.
Texas Foreclosure — A Three-Step Process
When a borrower defaults on their mortgage loan their lender (or loan servicer) may initiate the foreclosure process. The lender/servicer is required by law to send a written notice to the borrower allowing the borrower 20 days to “cure” or pay in full the amount owed to bring the defaulted loan current; otherwise, the foreclosure will be initiated. (Step One)
Step One – Notice of Default/Demand Letter
- Under Texas Law a homeowner is given 20 days to cure the default
- Servicer must also honor investor/insurer guidelines, which may extend the timeframe
- Default/Demand Letter outlines amount due, date it must be paid
After the allowable 20-day cure period, at least 21 days must pass before a foreclosure sale is scheduled at which time the lender is required to post the notice of foreclosure at the courthouse and file the notice with the county clerk as well as notify the borrower of the date and time of the foreclosure sale. By law, foreclosure sales (an auction) in Texas occur on the first Tuesday of each month (including legal holidays) following legal notice, and anyone may bid on the property.
- Filed with County Clerk
- Posted at county courthouse door
- Must state earliest time the sale will be held
- Sent certified mail to all borrowers
- Must be delivered at least 21 days prior to sale date
The trustee named in the deed of trust or its representative reads the foreclosure on the courthouse steps. The sale is to the highest bidder for cash. The trustee or lender representative places a bid for the lender at either the amount of the debt or a lesser amount. A bid higher than the lender’s bid will buy the property. Title is transferred by means of a trustee’s deed to the lender or the highest bidder.
Step Three – Foreclosure Sale
- Sale takes place by auction on the first Tuesday of each month (including legal holidays)
- Conducted at County Courthouse
- Must be conducted within three hours of time designated in notice
- Anyone may bid
Once the foreclosure sale has concluded, the lender or the new property owner may file an eviction notice if the former owner is still occupying the property. Eviction notices are served by county constable’s offices and the notices include a court date. After the court hearing the defendant/former property owner has five days to vacate the property or appeal the judge’s ruling. After five days, the former owner will have a minimum of 24 hours to vacate the property.
Texas does NOT have a redemption period — Therefore it is very important for Texas homeowners to be aware of their options and to take steps to protect their homeownership. Once a home has been foreclosed upon, there is not a redemption period.
The information in this article is for informational purposes only. Texas law prohibits real estate agents from giving legal advice. If legal advice in needed please consult an attorney. If you need help finding a real estate attorney, please give us a call and we’ll point you in the right direction.
- What Is Foreclosure? Does It Work The Same in Every State? How Does A Foreclosure Work? – Real Estate – Foreclosures (rawbusinesslaw.com)
- The Pros & Cons of Bank Owned Foreclosures – Real Estate – Foreclosures (rawbusinesslaw.com)
- Freddie Mac Releases Updates to Foreclosure Alternative Processes (barbarasmallteam.wordpress.com)
- What Texas Homeowners Needs to Know About Foreclosure in Texas (fightforeclosuredotnet.wordpress.com)
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