If you own a home with a mortgage, you may be aware that a foreclosure could happen if you fall behind in your mortgage payments. However, many homeowners don’t have a good understanding of what a foreclosure is and what happens in the event their house is foreclosed upon by the bank that owns the mortgage.
The bottom line is that facing foreclosure is something no homeowner in Texas wants to face. That being said, if you are behind on your mortgage or already in the process of being foreclosed on there are still things you can do to avoid the worst consequences of foreclosure. Keep reading to learn more.
The Basic Stages of the Foreclosure Process in Texas
Before we dive in, it’s important to understand that foreclosure works differently in different states. This information is based on Texas law and if you are facing foreclosure in a different state, things may work slightly differently.
Nearly all foreclosures in Texas are handled through either a “judicial sale” or a “power of sale.”
Judicial Sale Foreclosure
The differences between a judicial sale foreclosure and a power of sale foreclosure amount to just how involved the court will be in the process. For example, in a judicial sale foreclosure, you can expect that:
- The lender will file a lawsuit with the court system resulting in you receiving a letter in the mail from the court demanding you pay what is owed.
- Next, you’ll have 30 days in which you can come to the court with the amount demanded and avoid facing foreclosure.
- If the amount demanded is not paid in the time allotted, the court will render a judgment in favor of the lender and allow them to sell your house. This is typically done through an auction.
- Upon sale of the property, a sheriff will serve an eviction notice and force you to vacate the property at that time.
Power of Sale Foreclosure
Unlike a judicial sale foreclosure, a power of sale foreclosure doesn’t involve the court. With this kind of foreclosure:
- The lender themselves serves the homeowner with papers demanding they make payment on the amount in question. Despite the fact the court is not involved in this step, it is subject to review by the court in the state of Texas.
- Once the allotted time has elapsed and no payment has been made, a deed of trust will be drawn up so that ownership of the property can be transferred to a trustee who will then sell the property on behalf of the lender. This is typically done through a public auction just as in a judicial sale foreclosure.
In Texas, whenever there is an auction of a foreclosed property, anyone with any interest in the property must be notified. This is true of both power of sale and judicial sale foreclosures. This is done so that any contractors or banks with liens against the property will be able to receive the amount they are owed from the proceeds of the sale.
What Happens After a Foreclosure is Publicly Auctioned and Sold?
Once a foreclosure has been sold, the proceeds pay off the amount of the loan. In some cases, the amount the property sells for isn’t enough to cover the balance. In cases like these, the court may issue a “deficiency judgment” against the former homeowner. This judgment means that you still owe the lender for any amount not covered by the sale.
It’s always better to sell your house on your own and avoid a foreclosure auction. ACF Buys Homes is a professional home buying company that specializes in working with homeowners in Texas who are facing foreclosure and wish to minimize the negative impact on their credit and future ability to own a home again.
ACF Buys Homes finances our own deals and will buy almost any house in Texas as-is. In most cases, we can close in about 7 days. Just fill out the form on this page or give our office a call to learn how we can help you.