How Does Foreclosure Work In Texas?

If you find yourself facing foreclosure (or even threatened by the prospect of it), it’s absolutely critical to understand how the foreclosure process works in Texas.

Understanding the Foreclosure Process in Texas

What is foreclosure anyway?

Legally, foreclosure is the official process by which a mortgage lender attempts to take back real estate property (a home) securing a loan (a mortgage) – usually after a borrower (or a homeowner) stops making payments.

By no means is this process easy, but it’s not the end of the world.

By knowing how foreclosure works in Texas… you’ll be much better equipped to navigate it well and come out on the other end in the best position possible.

Stages of the Foreclosure Process

Foreclosure works differently in different states around the country, but there are a few stages that are important to this process.

According to Texas State Law Library there are three ways in which a lienholder can foreclose upon a property in Texas: judicial sale, non-judicial, or expedited foreclosure.

Connect with us through our contact page or by calling us at (214) 989-4949 to have us walk you through the specific foreclosure process here in Dallas.

In either scenario, a foreclosure action typically doesn’t make its way to court until 3-6 months of missed payments. Usually (but not always), a lender will send out several notices letting you know that you’re overdue or behind in your payment.

Under Judicial Sale:

Your mortgage lender must file suit in the court system.
You’ll get a letter from the court demanding payment.
You’ll have 30 days to bring payment to court to avoid losing the house (sometimes that can be extended).
If you don’t pay after this period, a judgement will be entered and the lender can request the sale of your property – generally through an auction.
Once the property is sold, the local sheriff serves an eviction notices and you must vacate the property.

Under Non-Judicial (Power of Sale):

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

Under Expedited Foreclosure

Certain lienholders can apply for what is known as an “expedited foreclosure” (also referred to as a quasi-judicial foreclosure) which, if granted, allows the process to move forward similar to a non-judicial sale.

So, What Happens After A Foreclosure Auction?

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

Sometimes, if the sale of the property isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower. A deficiency judgement is where the bank gets a judgement against you, the borrower, for the remaining funds owned to the bank.

Some states limit the amount owed in a deficiency judgement to the fair value of the property at the time of the sale, while other states will allow the full loan amount to be assessed.

Here’s a great resource that lists the state by state laws when it comes to deficiency judgements.

Generally, it’s best to try to avoid a foreclosure auction. Instead, call up the bank to negotiate, or work with a local, reputable real estate firm like us at Higher Home Buyer to help you negotiate and avoid having to go through that process.

Whether you want to sell property near Dallas fast and make some money before it gets foreclosed or you want to try one of the many FREE strategies we know to STOP foreclosure, please contact us. We can help!

We buy houses in Dallas, Texas like yours from people who need to sell fast!