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Texas Foreclosure Laws
Judicial Foreclosure Available: Yes
Non-Judicial Foreclosure Available: Yes
Security Instruments: Mortgage, Deed of Trust
Right of Redemption Period: No
Deficiency Judgments Allowed: Yes
Time Frame: 60 Days
Public Notice: Publication
Texas is known as a title theory state, meaning that a property title will remain in trust until the loan is paid in full. In the state, a title can be secured by either a mortgage or a deed of trust, both of which serve the same purpose.
Two types of foreclosures are allowed in the state: judicial and non-judicial. Once the property is sold at auction, borrowers do not have a right of redemption period to reclaim the property. Lenders do however have a right to pursue a deficiency judgment to claim the remaining balance between what the borrower owed on the property and the fair market value of the property. The borrower will be responsible to pay for the difference.
Types of Foreclosures Allowed in Texas
Judicial foreclosure, also known as foreclosure by judicial sale, involves selling the defaulted property under court supervision. In order for a judicial foreclosure to be possible, no power of sale clause may be present in the loan documents.
The process begins with the lender filing a lawsuit in a court that has jurisdiction in the county where the property is located to obtain a court order to foreclose. Once the court declares a foreclosure, the property will then be sold at auction to the highest bidder.
Texas also allows for non-judicial foreclosure proceedings, which are also known as foreclosure by power of sale. In order for non-judicial foreclosures in Texas to be possible, the loan documents must contain a power of sale clause, which authorizes the lender to sell the property in the event of default to be able to recover what is owed on the property.
Unlike judicial foreclosure, non-judicial foreclosure allows for the property to be sold without court supervision. This type of foreclosure process is usually much faster and less expensive than a judicial foreclosure.
There are two ways in which a non-judicial foreclosure in Texas can proceed. If the power of sale clause states a specific time, place, and outlines terms of sale, then the lender must follow the procedure that is stated. If there is no specification, then the following guidelines must be followed:
1. The lender must mail the borrower a letter of demand, informing them that they will have twenty (20) days to pay the debt on the loan or the property will be foreclosed.
2. After the twenty (20) day grace period has ended, a foreclosure notice must be filed with the county clerk, posted on the courthouse door and mailed to the borrower as well at least twenty one (21) days before the sale is scheduled to take place.
3. The sale must be held on the first Tuesday of any month, even if it falls on a legal holiday. The sale will take place on the courthouse steps and will be auctioned off to the highest bidder for cash. Lenders are allowed to bid on the property in Texas.
Hiring a Foreclosure Lawyer in Texas
If you have defaulted on your mortgage, chances are you may have already received a letter of demand or a foreclosure notice. Although it may seem as though not much can be done to correct the situation, help is readily available to you right now. Speak to a skilled team of foreclosure attorneys in Texas right away to fight for your rights as a homeowner and stop the repossession of your property.
When you solicit the help of an elite foreclosure lawyer, you can rest assured that your case will end with the best possible outcome. Your paralegal will do whatever it takes to prevent your home from being seized. Your foreclosure attorney will review your current financial situation and come up with a plan, such as mortgage modification or a temporary stop in payments, to present to your lender in lieu of foreclosure. Since the process of foreclosing a property costs lenders money, if an adequate plan is proposed, your lender will most likely agree to it.
Whatever your reason for defaulting, be it because you experienced a pay cut, lost your job or are struggling with medical issues, you still have rights in Texas as a homeowner and should fight for your property. Contact an acclaimed team of Texas foreclosure lawyers immediately to stop foreclosure on your home.