Understanding the foreclosure process in Texas is an important part of educating yourself on how you got into this position and what to expect next. This will help guide you on the steps you can take now to prevent the foreclosure from actually happening.
But before we dive in…
Understanding the Foreclosure Process in Texas
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally, after the borrower stops making payments.
Foreclosure is no fun, but just understand that it’s not the end of the world. You are already making the correct steps by reading this. It’s so important to stay educated and understand that you still have options.
When you understand how the foreclosure process in Texas works… it arms you with the knowledge to make sure you understand how to navigate it and come out the other end as well as possible.
So What Are the Basic Stages of A Foreclosure?
There are actually a few stages that are important to any foreclosure process.
The process of a foreclosure is very different in every state.
The two ways different states foreclose is either by judicial foreclosure or non-judicial foreclosure.
Connect with us by calling 214-761-3150 or through our contact page to have us walk you through the specific foreclosure process here locally in Dallas.
In either scenario, foreclosure typically doesn’t get filed until roughly 3 to 6 months of missed payments have elapsed. Usually, a lender will send out many notices stating that you are behind on your mortgage payments.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring your payment to the court in order to avoid foreclosure (and sometimes that can be extended based on your circumstances).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold at auction, the sheriff serves you with an eviction notice and forces you to immediately vacate the property.
Under Non-Judicial Foreclosure:
- When you originally purchased your home, you signed a deed of trust. This one piece of paper is what allows the lender to start the foreclosure process once you stop making payments, vs the judicial process which requires a lender to file suit.
- The mortgage lender serves you with papers demanding payment, meaning the courts are not required in this type of foreclosure – although the process may be subject to judicial review depending on your state.
- After the established waiting period has elapsed, which is usually about 60 to 90 days, an appointment of a substitute trustee is drawn up and control of your property is transferred to a trustee.
- The trustee then manages the foreclosure and preps it for auction. Once the auction date is here, the trustee is responsible for reading the home at auction.
- If the home sells at auction, the trustee signs over the deed to the highest bidder immediately. If it doesn’t sell, then the trustee signs the deed to the lender. This is called a trustee’s deed.
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
So What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount as well as any other debt is paid off.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, then a deficiency judgment can be issued against the borrower. This is why it’s important to make sure you have an understanding of the foreclosure process because otherwise, you could potentially be liable for an unexpected tax bill.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
However, some states do have a limit on the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state-by-state deficiency judgment laws, since every state is different and it well better help you with understanding the foreclosure process.
Once the home is auctioned off, the homeowner will start receiving eviction notices within 24 to 48 hours. Depending on your state and the eviction process, you will continue to get notices for 20 to 30 days.
That’s important to know, because if you are not out of the house after they post the last eviction notice, then a sheriff will stop by and force you out of the home. They will require you to drag all of your desired belongings to the curb because you will no longer have access to the property once the sheriff leaves. Literally kicked out on the curb with nowhere else to go.
As you can tell, it’s best to avoid a foreclosure auction at all costs. Instead, call up the bank, or work with a reputable real estate investment company like us at North Texas Cash For Homes to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure. After understanding the foreclosure process, if you’re dealing with this within the state of Texas, then read our blog that breaks down the 9 different ways to stop a foreclosure.
It’s important for you to understand that you are not alone in this situation. This is more common than people think, but nobody likes to talk about it. Instead, they bury their heads in the sand and just hope that it resolves itself over time. I can personally tell you that it won’t. It’s very important for you to understand the process as well as understand that the fight isn’t over for you yet. You still have options!
Experienced investors can help you by negotiating directly with banks to understand what options you have based on your payoff amount.
If you need to sell a property near Dallas, we can help you.
We are here to help you in any way we can even if that means helping you have an understanding of the foreclosure process and even if means we don’t purchase your home. We understand that it helps to just talk it through with someone who is more experienced and knowledgeable about the foreclosure process. If you want to discuss if a cash offer is best for you or if you have other potential alternatives, don’t hesitate to reach out to us! We love to help people every day make a better tomorrow.
We buy houses in Dallas Texas like yours from people who need to sell fast.
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Another Foreclosure Resource For Dallas Texas HomeOwners: