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Understanding the Foreclosure Process in TX

Understanding the foreclosure process in TX is an important part of navigating your own home foreclosure.

Before we dive in…

Understanding the Foreclosure Process in TX

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 know that it’s not the end of the world.

When you know how foreclosure in TX works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.

The Basic Stages of A Foreclosure

There are a few stages that are important to any foreclosure process.

Foreclosure works differently in different states around the country.

The two ways different states use to foreclose upon a property are: judicial sale or power of sale.

Connect with us by calling 713-379-4376 or through our contact page to have us walk you through the specific foreclosure process here locally in Houston.

In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment.

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 payment to court to avoid foreclosure (and sometimes that can be extended).
  • 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, the sheriff serves an eviction notice and forces you to immediately vacate the property.

Under Power of Sale (or Non-Judicial Foreclosure):

  • The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
  • After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
  • The trustee can then sell your property to the lender at a public auction (notice must be given).

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.

What Happens After A Foreclosure Auction?

After a foreclosure is complete, the loan amount is paid off with the sale proceeds.

Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.

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.

Some states limit 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.

Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Hero Homebuyers to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.

Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.

If you need to sell a property near Houston, we can help you.

We buy houses in Houston TX like yours from people who need to sell fast.

Give us a call anytime 713-379-4376 or
fill out the form on this website today! >>

 

Another Foreclosure Resource For Houston TX HomeOwners:

Fred Paskell

Fred A. Paskell has served the Houston community for almost 20 years, providing real estate solutions and learning from some of the very best in the business. A native Texan and Army Combat Veteran, Paskell began his career in the commercial real estate sector and has since evolved into a subject matter expert in many aspects of both commercial and residential real estate, including valuation and investment analysis. Throughout his career he has worked for several notable and respected firms including Cushman & Wakefield, CBRE, Mohr Partners and the Newmark Group. On the commercial side, Paskell focuses on Office, Industrial and Retail assets while being purely focused on the investment side of residential real estate. While beginning his college studies at Louisiana State University (and still a big LSU football fan), he earned both his M.B.A. in Real Estate Finance and B.B.A. in Marketing from the University of Houston, cum laude, with honors. Paskell is also a CCIM designee, the pinnacle designation for commercial investment real estate. Fred devoted ten years of his life to protecting our country in the U.S. Army, including two combat tours to Iraq with the 7th Squadron, 6th Cavalry Regiment as an AH-64 Apache Helicopter Crew-chief, completing his service at the rank of Staff Sergeant. He is also an avid scuba diver of over 26 years having reached the levels of divemaster, rescue diver and technical diver. With this passion he enjoys scuba diving and spearfishing on the offshore oil platforms in the Gulf of Mexico in his spare time as well as fishing, playing poker, staying healthy and spending time with friends and family . Paskell also volunteers for several groups serving disabled veterans, including being a member of the Armed Forces Appreciation Committee at the Houston Livestock Show and Rodeo.

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