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What you Need to Know about Foreclosure in Texas


Foreclosure is a scary topic that we would all rather ignore, but the unfortunate truth is that it 1 out of every 200 homes will be foreclosed upon. In Texas, the minimum time frames between notifications are shorter than in most other states, so the foreclosure process occurs quickly. How exactly does the process work in this state? Here is what you need to know about foreclosure in Texas.


Pre-Foreclosure

The beginning of the foreclosure process or pre-foreclosure in Texas begins with missed mortgage payments. If you have lost a couple months worth of payments, or in some cases, a single month, you will start receiving letters and phone calls from your lender. Use these notifications as an opportunity to sort out a payment plan before things escalate. A lender can legally serve you with a notice of foreclosure after 120 days of delinquency. Keep in mind that not all lenders work under the jurisdiction of the law and those lenders may serve you as soon as the loan goes into default. 


Notice of Default

If a lender decided to move forward with the foreclosure, they would send you a notice of default. In Texas, it takes only 3 to 6 months of delinquent payments for your lender to put your loan in default. You will be given a period of 20 to 30 days to pay what you owe. However, there may be a way around this. Some law companies are more than willing to share tips on how to stop foreclosure in Texas


Notice of Sale

If you haven't met your payment amount within the time specified, you will be given a Notice of Sale by your lender. In Texas, foreclosure laws require that you are given at least 21 days notice in writing before selling your home in an auction. This notice begins the moment the notice is mailed.

The lender must also notify the county courthouse of the Notice of Sale, and it has to be filed with the clerk of the county. Be aware that courts have ruled that banks can sell your house for much less than what it is valued.


After the Sale

Foreclosure laws in Texas allow lenders to secure a deficiency judgment after foreclosure. This deficiency exists anytime there is a debt left after home sells at an auction. For example, if you owed 250 thousand dollars on your mortgage and the lender sold the house for 225 thousand dollars there would be a deficiency of 25 thousand dollars. If the lender files a lawsuit within two years of the foreclosure auction, they will be able to take legal action and sue you for the deficiency. 


Options for Avoiding Foreclosure

Don't panic if you have received a Notice of Sale or default. There are still things that you can do to avoid foreclosure. Go over your loan agreement and see if there is a power of sale clause. If there isn't, you can take the foreclosure to court in a judicial foreclosure. It is rare in Texas for a mortgage to not include a power of sale clause, but if you're lucky and there isn't one you will have some extra time to either pay the loan or find another solution.

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