Texas Foreclosure Law
Foreclosure is a legal process that allows a lender to sell a property to satisfy an unpaid debt secured by the property. In Texas, foreclosures are governed by both state and federal laws.
Types of Foreclosure in Texas
There are three main types of foreclosure in Texas:
- **Judicial Foreclosure:** This type of foreclosure requires the lender to file a lawsuit against the borrower and obtain a judgment from the court before selling the property. Judicial foreclosure is rare in Texas.
- **Non-Judicial Foreclosure:** This type of foreclosure, also known as a “power of sale” foreclosure, allows the lender to sell the property without a lawsuit. It requires a deed of trust with a “power of sale” clause.
- **Expedited Foreclosure:** Certain lienholders can apply for an “expedited foreclosure” or “quasi-judicial foreclosure” in specific situations, such as home equity loans, reverse mortgages, or property owners’ association assessments.
Rights of Borrowers in Texas Foreclosure
Borrowers in Texas have certain rights during the foreclosure process, including:
- **Preforeclosure Stage:** Before a foreclosure officially starts, there is a preforeclosure stage where the servicer can charge fees and must inform the borrower about options to avoid foreclosure.
- **Protections and Options:** Borrowers have the right to receive a preforeclosure breach letter, apply for loss mitigation, receive foreclosure notices, get current on the loan, receive special protections if in the military, pay off the loan, file for bankruptcy, and potentially receive excess money after a foreclosure sale.
Nonjudicial Foreclosure Process in Texas
The nonjudicial foreclosure process in Texas involves the following steps:
- **Notice of Default and Intent to Accelerate:** The servicer must send a notice of default and intent to accelerate to the borrower, providing at least 20 days to cure the default before a notice of sale can be given.
- **Notice of Sale:** After the cure period, the servicer sends a notice of sale to each borrower obligated to pay the debt. The notice is posted at the courthouse and filed with the county clerk. It includes the date, time, and location of the sale.
- **Foreclosure Sale:** Foreclosure sales are generally held on the first Tuesday of each month at the county courthouse. The lender can make a credit bid up to the total amount owed. If the lender is the highest bidder, the property becomes “Real Estate Owned” (REO).
Sources
- Texas State Law Library – The Foreclosure Process
- Texas State Law Library – Foreclosure
- Nolo – Texas Foreclosure Laws and Procedures
FAQs
1. What is foreclosure?
Foreclosure is a legal process that allows a lender to sell a property to satisfy an unpaid debt secured by the property.
2. What are the different types of foreclosure in Texas?
There are three main types of foreclosure in Texas: judicial foreclosure, non-judicial foreclosure, and expedited foreclosure.
3. What are the rights of borrowers in Texas foreclosure?
Borrowers in Texas have certain rights during the foreclosure process, including the right to receive a preforeclosure breach letter, apply for loss mitigation, receive foreclosure notices, get current on the loan, receive special protections if in the military, pay off the loan, file for bankruptcy, and potentially receive excess money after a foreclosure sale.
4. What is the nonjudicial foreclosure process in Texas?
The nonjudicial foreclosure process in Texas involves the following steps:
- Notice of Default and Intent to Accelerate
- Notice of Sale
- Foreclosure Sale
5. What happens if the lender is the highest bidder at the foreclosure sale?
If the lender is the highest bidder at the foreclosure sale, the property becomes “Real Estate Owned” (REO).
6. Can I stop a foreclosure in Texas?
Yes, there are a few ways to stop a foreclosure in Texas, including reinstating the loan, redeeming the property before the sale, or filing for bankruptcy.
7. What is a deficiency judgment?
A deficiency judgment is a personal judgment against the borrower for the amount of the debt that remains after the foreclosure sale.
8. What resources are available to help me with foreclosure in Texas?
There are a number of resources available to help you with foreclosure in Texas, including the Texas Homeowner Assistance Fund, the Texas Foreclosure Prevention Counseling Program, and the Texas Legal Services Center.