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The uncertainties created by foreclosure are stressful, disheartening, and can be overwhelming. Sometimes the uncertainly that comes with not knowing what to expect can be worse than actually knowing what’s going to happen. That’s exactly why we put together this guide to help homeowners navigate the foreclosure process in Texas. The worst thing you can do is to ignore the problem and get caught by surprise when your house is sold at auction. By knowing what you’re up against, you can take steps to regain control of your life.
Pre-foreclosures are properties under threat of foreclosure that have been listed on the open market. Texas foreclosures can be good purchases for investors, flippers, or regular home buyers — especially if you are patient and cautious. They're often more affordable than regular homes, meaning you might be able to score a deal. To fight the foreclosure on other grounds, you’ll have to file your own lawsuit. That you made the payments (and you'll have to provide proof). Equity loans, like home equity loans and home equity lines of credit.
Real estate owned (REO) foreclosures
However, there are limitations on a POA’s ability to foreclose. First, a POA must determine if the homestead exemption impacts its ability to foreclose. A POA may foreclose despite the homestead exemption if a POA’s assessment lien attaches on or before the homeowner took title to the lot. In general, the assessment lien attaches when the document describing the lien is recorded in the real property records. Unfortunately, the specific language in a declaration can create issues with lien priority and ultimately affect a POA’s ability to foreclose due to the homestead exemption. Yes, once the foreclosure process is started, you still have time to stop it.
That said, you'll probably have to deal with the lender directly if you intend to buy a house as a short sale. Financing is usually not an option at foreclosure auctions, unless you're borrowing from a private investor or hard-money lender. It's more common for people to use cash to buy properties at auction.
Which Is the Most Common Foreclosure Process in Texas?
You’re probably worried how a foreclosure will affect your credit and if you’ll be able to buy another house or even another car with a foreclosure on your credit report. You may even be wondering where you and your family are going to live. If you do decide to buy a foreclosure, we also recommend working with an experienced agent that can help you get the first crack at great opportunities and avoid money pits. If you wish to participate, contact the county sheriff's office for instructions on how to register and bid. Ask about specific requirements such as minimum bids, bid increments, and payment types accepted. In a state like Texas where housing demand is consistently outpacing supply, any opportunity to add homes to your search increases the chances of finding the right property.
For government-owned foreclosures, you can go to the HUD home store. Obtaining a title report (or “down date” as it is sometimes called) may also be prudent under the circumstances. Who knows what has been recorded against the property since the last title policy was issued? Such filings could potentially affect the course of the foreclosure process as well as notices that may be required. The advantage of a foreclosure over an eviction is that there are no effective defenses to the foreclosure process except for the borrower to block it with a temporary restraining order or file bankruptcy. For either option, the buyer needs money and probably an attorney.
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Auctions are all-cash affairs, so you either need to compile the necessary funds from your own assets, or you need to borrow the cash from a friend, family member, private investor, or hard money lender. You can also visit mypublicnotices.com to conduct a wider search for advertised auctions in Texas. Texas foreclosures go to public auction before being repossessed by the bank or U.S. government. Consider including a letter in your offer explaining your situation and why the seller should work with you.
If more information is needed about the property itself, one can contact the trustee named in the Notice of Trustee’s Sale. Trustees vary in their level of cooperation but are often willing to provide additional information if they have it. They may have a copy of an inspection report on the property which they may be willing to share. One might even be able to arrange to view the property if it is unoccupied. Depending on the first lienholder’s strategy, however, it may be useful to discuss the issue with them. Martindale-Hubbell® Peer Review Ratings™ are the gold standard in attorney ratings, and have been for more than a century.
It specifies the details of the foreclosure sale such as the date, time, and location of the sale. The lender must conduct the sale on the date and time specified in the notice otherwise the lender will have to start the entire process again . If the homeowner fails to contest the foreclosure or loses at the foreclosure hearing, the court will issue a foreclosure order. This allows the lender to proceed with a nonjudicial foreclosure. At this point the lender will send the homeowner a second notice.
Note that the IRS also has 120 days following the sale to redeem the property, although this seldom happens. The successful bidder on an IRS-liened property is therefore not entitled to breathe a sigh of relief until the 121st day. If the court determines that the fair market value of the home is greater than the foreclosure sale price, the borrower is entitled to an offset against the deficiency. This publication, written in 2009, from the Texas A&M University Real Estate Center discusses Texas laws on home foreclosures and the foreclosure process focusing on ways homeowners can protect their homes from improper foreclosures. These are just some of the reasons to consider consulting a lawyer if you're facing a foreclosure. If you have questions about Texas's foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney.
Lenders may obtain deficiency judgments, but they are limited to the difference between the fair market value of the property at the time of sale and the balance of the loan in default. The information provided is exclusively for consumers’ personal, non-commercial use, and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Why have many have struggled with the foreclosure process in Texas?
In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines". Federal law applies in Texas, which states that a borrower must be at least 120 days delinquent on their mortgage loan before the foreclosure process can begin.
While you may not have time to order an inspection, you can bring a contractor with you to get an initial sense of any major flaws with the property — and what they'll cost to fix. If your goal is to flip the house, this will be crucial for figuring out your after repair value . Only consider auctions if you're experienced in real estate, have substantial cash reserves, and are willing to take the risk of buying a home you haven't seen. It's also possible that your agent will have a relationship with REO departments of local lenders or other entities who deal with foreclosed homes. Having the inside track could be the difference between you getting your dream home or not.
You should attend auctions in person, but some counties do allow you to bid online. They're usually all-cash purchases only — bring a cashier’s check for the down payment. You’ll also want a good attorney to run a thorough title check and ensure you don’t run into any nasty legal surprises down the road. If the seller listed the day they received the Notice of Default and Intent to Accelerate, for example, then you would only have about 20 days to close. This is usually the best stage to find deals, because homeowners are highly motivated.
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