Facing foreclosure is a difficult time for homeowners. The emotions and stress can get in the way of rational thinking, which may help you find a way to avoid foreclosure and keep your home. Texas has laws regarding the foreclosure of residential property, and if lenders do not follow those laws, the homeowner can possibly delay or prevent the foreclosure process. Delaying a foreclosure can provide the time you need to find a way to keep your home.
Title Theory
Texas is a title theory state, meaning that the title of the residential property is in trust for the homeowner until the loan is fully paid. When the loan is paid in full, the lender releases claim on the property. Until that happens, the lender can foreclose and take the home for any breach of contract. Breaches of contract include nonpayment of the mortgage loan and nonpayment of property taxes or insurance.
Nonjudicial Foreclosure
In this type foreclosure, no court action is required other than notice of foreclosure. If your mortgage contains a power of sale clause, the lender's representative -- known as a trustee -- can place the property for auction. If your mortgage does not contain the clause, the lender has to go through the court system to foreclose on your property. A nonjudicial foreclosure will typically take approximately 60 days to complete if the homeowner does not contest the foreclosure.
Notice of Sale
Lenders must serve notice to Texas homeowners before starting a foreclosure proceeding, giving you 20 days to bring the loan to current status. If you do not bring the note current, the lender must file notice to you and the county clerk of the county where the property is located, providing the date of the property auction or sale. Notices must be provided at least 21 days before the sale date and posted at the court where the sale will take place.
Sales
Auctions must be held at the courthouse in the county where the property is located. Texas law requires auctions be on the first Tuesday of the month between the hours of 10 a.m and 4 p.m. The highest bidder, even if it is the lender, wins the auction. Original lenders can apply the balance of the loan to the bid when bidding on property.
Deficiency Judgment
Texas statute of limitations gives a lender two years to sue the homeowner to recover any amounts that are not paid from the sale of the property. Along with the balance remaining on the loan, lenders can sue for court costs and attorney fees. If the court finds in favor of the lender, it will enter a deficiency judgment against the borrower, allowing the lender the right to attach other properties or garnish wages to recover the amount granted by the judge. If the lending company attaches other property, it will place liens on other property that you own that prevent you from selling the property without paying the amount you owe.
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