If you own a home in Texas and are currently behind on your mortgage or facing foreclosure, you should try to learn as much as you can about how foreclosure works in the state of Texas.
What is Foreclosure?
Foreclosure refers to the legal process used by banks and lenders to take back property to secure a previous loan. This is typically done when the borrower stops making payments. As you might imagine, such a process is not pleasant. That being said, it could be worse and there are likely steps you can take to mitigate the damage depending on how soon you act. If you have specific questions and would like to talk to our team of experienced homebuyers in the Corpus Christi area, call our office at 361-223-6198.
The Basic Stages of Foreclosure
In the state of Texas, foreclosure can proceed in one of two ways: through a judicial sale or a power of sale. Either way, a foreclosure will not likely head to court until payments have elapsed for 3 to 6 or so months. Though this is not always the case, many banks/lenders will send out multiple notices that payments are overdue.
Power of Sale Foreclosure
This is the simpler form of foreclosure in the state of Texas. With a power of sale foreclosure:
- The courts are not required to be involved, although the process is subject to judicial review.
- The lender will serve the borrower with papers that demand payment and an official waiting period for that payment begins.
- If payment is not made during the waiting period, a deed of trust will be drawn up. This deed will transfer control of the house in question to a trustee.
- This trustee will then sell the house on behalf of the lender at a public auction.
- The mortgage lender is required to file a suit within the Texas court system.
- The homeowner then receives a letter from the court that will demand payment.
- The homeowner then has 30 days to bring the specified payment to the court.
- If no payment is made during that period, a judgment will be entered, and the lender will be allowed to sell the property. This sale is typically done through an auction.
- After the property has been sold, the sheriff will evict the former owner from the property.
With either type of foreclosure, anyone with an interest in the property itself must be notified. That would include any other banks or possibly contractors who have liens against the property. This is required so that they may collect what they are entitled to from the auction.
After the Foreclosure Auction
Once the auction is over and the foreclosure settled, the loan amount is paid off with the proceeds of the sale. In many instances, the proceeds from the auction end up not being enough to cover the loan. In this case, a deficiency judgment is issued against the borrower. This judgment allows the lender to go after you for the portion of the loan the sale of the property did not repay.
You cannot be certain how much a deficiency judgment will say you owe and what total value is used (the value of the house at the time of foreclosure or the amount of the original loan). For these reasons as well as many others, it is best to avoid a foreclosure auction.
An Alternative to the Foreclosure Auction
You absolutely want to take almost any option available to you to avoid a foreclosure auction. Your best bet, however, is to try to negotiate a discount off of what is owed by working with a professional firm like ACF Buys Homes that is familiar with the courts and banks in Texas. By enlisting the help of a reputable firm, you can ensure you sell your house for a better price than at an auction as well as get help negotiating a lower amount needed to avoid a deficiency judgment against you.
If you’d like to know more about how ACF Buys Homes can help you avoid foreclosure on your home in Corpus Christi or the surrounding area, call our office at 361-223-6198 or fill out the form on this page today.