Texas Foreclosure Process
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Homes may be foreclosed upon in Texas either by Non-Judicial or Judicial Foreclosure. If the loan was a purchase money loan, generally the Non-Judicial Foreclosure method is used.
NON-JUDICIAL FORECLOSURE
Non-Judicial Foreclosure is used without the need to file a lawsuit. The Deed of Trust that was executed at the time the loan was made usually has a "power of sale" clause which allows the lender to foreclose on the property if the terms of the Deed of Trust are violated. There are many conditions that could invoke a forced sale of the property; however, the most common is non payment on the loan. If the lender decides to sell the property the lender's representative conducts the sale. This representative is usually called a "trustee".
The lender must follow the requirements of the Deed of Trust, and/or State law to complete the sale. The most common procedures are outlined below:
- The lender must mail a Demand Letter to the borrower giving the borrower at least 20 days from the date of the postmark to make up all of the delinquent payments.
- If all of the payments have not been made by the deadline, the lender must mail a Notice of Trustee's Sale to the borrower postmarked at least 21 days prior to the foreclosure sale stating the time and place of the sale.
- The foreclosure sale will always be on the first Tuesday of the month. The house will be sold to the highest bidder.
- If the bid for the house at the auction is less than the loan balance, the lender may seek to collect the deficiency from the borrower after the sale.
- There is no redemption after the sale. The sale is final.
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.
For a typical time line of the foreclosure process in Texas in PDF Format Click Here
For the new Freddie Mac time line of the foreclosure process in PDF Format Click Here
JUDICIAL FORECLOSURE
Judicial Foreclosure involves the filing of a lawsuit prior to the auction sale. For More Detailed Information from HUD Regarding Foreclosure in PDF Format Click Here