Understanding the foreclosure process in TX is essential when it comes to navigating your own home foreclosure.
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to claim ownership of a property securing a loan, generally after the borrower stops making payments.
Foreclosure can be devastating, but it’s not the end of the world.
In order to avoid the tragedy of losing your home to a foreclosure, it is paramount that you understand the way foreclosure works in TX.
The Basic Stages of A Foreclosure
In any foreclosure process, there’s a few stages involved that can’t be overlooked.
Foreclosure works differently in different states around the country.
The two ways to foreclose upon a property are: judicial sale or power of sale. Different states use either of the two processes.
Connect with us by calling (979) 431-1663 or through our contact page to have us take you through the foreclosure process here locally in College Station.
Either in “power of sale” or “judicial sale”, foreclosure isn’t taken to court until 3-6 months of missed payments have elapsed. In most cases, a lender will periodically send out a number of notices that the borrower is overdue or behind in his/her payment before taking action.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- The court will then send you a letter, demanding payment.
- If the loan is valid, you’ll be given 30 days to bring payment to court to avoid foreclosure (the deadline can sometimes be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender will have the right to request the sale of your property – usually through an auction.
- After the property is sold, you’ll be served an eviction notice by the sheriff, forcing you to immediately vacate the property.
Under Power of Sale (or Non Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, this time without the court getting involved – although the process may be subject to judicial review.
- After you must have exceeded the waiting period, a deed of trust is drawn up your property is handed over to a trustee.
- The trustee can then sell your property for the lender at a public auction (notice must be given).
It is compulsory to notify anyone who has an interest in the property during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to benefit from the proceedings of an auction.
What Happens After A Foreclosure Auction?
At the end of a foreclosure, the loan amount is paid off with the sale proceeds.
Sometimes, the sale of the property at auction isn’t enough to pay off the loan, in such cases, 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 owed to the bank on the loan amount after the foreclosure sale.
In Some states, the amount owed in a deficiency judgment is limited to the fair value of the property at the time of sale, while in other states the full loan amount will be considered and assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgement laws, since it varies in every state.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Texas Direct Home Buyers to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can assist you in negotiating directly with banks to reduce the amount you owe in a sale – or even eliminate it, even if the value of your home is way less than your debt.
If you need to sell a property near College Station, we can help you.
We buy houses in College Station TX like yours from people who need to sell fast.
Give us a call anytime (979) 431-1663 or
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Other Foreclosure Resources For College Station TX HomeOwners: