Are you behind on your payments? We get it! Life can come at you super fast and many things are unexpected. The foreclosure process in Texas can be scary but you are not on this journey alone. We work with many other homeowners every week to understand the foreclosure process in Texas and explore options to get them back on their feet. We have a wealth of resources we can share with you and talking with one of our experienced team members, in Houston TX, can be what you need to put this chapter behind you.
Key Takeaways In This Article:
- Non-Judicial Foreclosure is the most common form of Foreclosure in Texas.
- You have 20 days to fix late payments and after that you have 21 days to either pay off the whole loan, refinance or sell
- There are a lot of ways to fix challenges but you need to take the first step to ask for help
Three Types of Foreclosure in Texas
There are three types of Foreclosures in Texas: Judicial, Non-Judicial and Expedited Foreclosure. The most common is Non-Judicial but here is a quick summary of the difference between each. Judicial Foreclosure require that the lienholder file a civil suit against the homeowner and they must go through the court procedures and receive a judgement before they can sell the property this is very rare in Texas. Non-Judicial Foreclosure, also referred to as “power of sale,” allows the lienholder to sell the property without having to file a civil suit. Expedited Foreclosure is typically reserved for speacial home loans like home equity loan, reverse mortgage etc. where Texas requires these to go through the judicial process. In these cases the lienholder may apply for an Expedited Foreclosure, also known as a “quasi-judicial foreclosure.” If the application is accepted then it will move forward in a similar fashion to non-judicial foreclosure. The most common type of foreclosure in Texas is the Non-Judicial Foreclosure so we will cover the process of the non-judicial foreclosure in more detail.
How Does The Non-Judicial Foreclosure Start?
When you first took out your loan and signed the documents to purchase or refinance your home you signed a document called a Deed of Trust. The Deed of Trust is a document that basically says I will borrow $X and if I don’t make the payments in the Promissory Note then the Trustee, who usually works for the lender, can initiate the foreclosure process. This Deed of Trust is filed with the County Clerk and a lien is created on the property to secure the repayment of the loan. The bank must have this deed of trust in order to initiate a non-judicial foreclosure in Texas. The County Clerk would then look up the records to verify the non-judicial foreclosure may proceed.
Once a home owner misses a payment the bank must send a notice to the owner at their home giving them at least 20 days to make the payment and late fees. This gives the owner the chance to get caught up. This is known as a Notice of Default or Notice to Cure.
How Much Time Do I Have After The Notice?
Once the Notice of Default has been received the home owner has 20 days to get the loan caught up on payments. Keep in mind that once these 20 days are up the bank can call your entire loan balance due plus any fees. That means if they don’t wish to continue serving you a loan you have very little time to sell or refinance your house. Once these 20 days have passed the bank may send an acceleration letter or issue a notice of sale. This letter will tell the homeowner that the house will be sold in 21 days or more at the next auction sale. In Harris County the auction is held the first Tuesday of every month. You then have 21 days to pay the full balance, sell the property or refinance out of the loan or the property will be auctioned. It is important to note the bank doesn’t actually gain ownership or possession of your property before auction. Many people believe the bank “takes” the house from you but this isn’t true. When the house is auctioned the highest bidder takes the house and if there is money left over after the debt is paid this goes to the owner of the property. This is intended to benefit the homeowner if there is equity in the home and it is sold however there is a risk in this too. On average around 20-30% of the foreclosed homes that are auctioned are sold, the rest go back to the bank if no one buys the property. When this happens this is called a Zombie Foreclosure and you are still responsible for costs like taxes, HOA fees and other costs of the property. If this happens you no longer own the property but still bear the costs. Not cool!
If I Have a Federally Backed Loan Does It Change The Timeline?
Yes, It does change the timeline. The Consumer Financial Protection Bureau outlines the guidelines of the foreclosure process for Federally backed loans, like Fannie Mae and Freddie Mac. Your loan may be owned by one of these two entities but you may be paying another bank like Chase or Wells Fargo who are servicing the loan for you. Even though the loan is federally backed they would still go through the non Judicial Foreclosure process. Here are the general milestones in a Federally backed loan:
- 30 Days- You should have already received a notice from the bank informing you of the delinquent payment
- 36 Days- The bank will attempt to make live contact and inform you of the delinquent payment
- 45 Days- The bank will assign a person to your case and they will be contacting you to try to help you through a plan
- 121 Days- Foreclosure attorneys may begin submitting paperwork for a foreclosure.
As you see there are a few more steps taken to assist the owner and make sure that it is clear that you are facing foreclosure.
Important Take Aways
Make sure you take any notices of late payments seriously and most of all REACH OUT FOR HELP! Whether you want to move or not there are creative solutions out there that you probably don’t know about yet. Foreclosure can have serious long lasting impacts on your credit and your financial future. Take action by speaking to someone who has experience helping others, in circumstances just like you. Life comes at you and it’s not your fault but you need to take the first step in helping yourself by seeking help from someone. Fill out our form on this site or call us for a no hassle conversation with a neighbor by you.