Understanding the foreclosure process in TX is an important part of navigating your own home foreclosure.
Before we dive in…
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property that has a loan, typically after the borrower stops making payments.
Foreclosure is not fun, but know that it’s not the end of the world.
Understanding how foreclosure works in TX equips you with the knowledge you need in order to navigate it well and come out the other end as well as possible.
The Basic Stages of A Foreclosure
In any foreclosure, there are several stages that are significant to the process.
Foreclosure works in various ways in different states around the country.
To foreclose upon a property, different states use one of these two ways: judicial sale or power of sale.
Connect with us by calling (512) 345-9090 or through our contact page to have us go through the foreclosure process that is specifically for here in Austin, TX.
In either case, foreclosure usually doesn’t go to court until 3-6 months of payments are missed. Typically (but not always), a lender will send numerous notices that you are overdue or behind in your payments.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll receive a letter from the court demanding payment.
- If the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – typically by way of auction.
- When the property is sold, the sheriff serves an eviction notice and forces you to vacate the property immediately.
Under Power of Sale (or Non Judicial Foreclosure):
- The mortgage lender serves you papers demanding payment, and the courts are not essential – although the process might be subject to judicial review.
- After the set waiting period has passed, a deed of trust is written up and the control of your property is given to a trustee.
- Then, the trustee can sell your property for the lender by way of public auction (they must give notice).
During either type of foreclosure, any individual who has interest in the property must be notified.
For example, any contractors or banks with liens against a foreclosed property are authorized to collect from auction proceedings.
What Happens After A Foreclosure Auction?
After a foreclosure is completed, the loan amount is paid off with proceeds from the sale.
If the sale proceeds from the auction isn’t enough to cover the loan, sometimes 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 after the foreclosure sale.
Some states allow the loan amount to be weighed against the borrower in full, while other states put a limit on the amount owed in a deficiency judgment according to the value of the property when it was sold .
Because every state is different, here’s a great resource that lays out the state by state deficiency judgement laws.
It’s usually better to avoid a foreclosure auction. Instead, call the bank, or work with a reliable real estate firm like us at Austin Direct Home Buyers.
Experienced investors like us can help by negotiating directly with banks to lower the amount you owe in a sale – or remove it, regardless if your home is worth less than you owe.
If you need to sell a property near Austin, we can help.
We buy houses in Austin, TX like yours from people who need to sell quickly.
Give us a call anytime (512) 345-9090 or
fill out the form on this website today! >>
Other Foreclosure Resources For Austin, TX HomeOwners: