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Family in DFW Texas losing their house to foreclosure because they can't pay mortgage

Foreclosure Process in Texas: Steps & Solutions

This article will explain the foreclosure process in Texas; why it happens, and how DFW Professional Home Buyers can help you find an easy, hassle-free solution.

If you’re finding yourself facing the risk of foreclosure, you should be aware of the severe consequences. Some of the possible results of foreclosure are lawsuits from the bank, taxation on deficiencies,  a large drop in your credit score. These could harm your financial stability and your chances of qualifying for mortgages or credit in the future. By acting quickly you can ensure that none of these harmful financial penalties are levied against you.

Going through a foreclosure is a stressful and potentially financially damaging process, but there are options to avoid it. Many homeowners are finding themselves facing difficult economic and real estate situations. We have options for people asking themselves “How do I sell my house fast and avoid foreclosure?” If you are looking for a fast, hassle-free, and efficient solution to your homeownership problems, DFW Professional Home Buyers can help. Give us a call at 888-320-8644 to discuss your situation confidentially.

Foreclosure is when a loan lender takes possession of a mortgaged property using legal measures. When a foreclosure occurs, a lender is attempting to recover the loan balance from an individual, or borrower, who has failed to make payments.

What Are the Differences Between Foreclosure and Pre-Foreclosure?

Pre-foreclosure is the beginning of the foreclosure process. During pre-foreclosure, the lender files a non-payment notice on the property. This notice lets the borrower know the lender will take legal action against them if the debt is not repaid.

Foreclosure is the legal action that results from pre-foreclosure when a debt is not paid, and the step before the eviction process occurs.

What is the Difference Between a Judicial and Non-Judicial Foreclosure?

There are two types of foreclosure, judicial and non-judicial. A judicial foreclosure process requires the lender to appear in court before they can get a mandate to auction off the property legally.

Non-Judicial foreclosure is more simple and more straightforward than a traditional foreclosure process. Non-judicial foreclosure allows the lender to quickly seize the property by the insertion of a clause into the mortgage deed.

 

Short-Sale vs. Foreclosure

A short sale and foreclosure are both options for homeowners who get behind on their mortgage payments. A short sale can occur if a homeowner owes more money on their mortgage than its property value during the time the borrower wants to sell. During a short sale, the borrower is asking the lender to accept less money than the amount of the mortgage.

Foreclosure occurs when the borrower is at least three months behind on their mortgage payments, and the lender takes legal action to recover the money owed on the mortgage.

A short sale may be the most beneficial option in this situation because it:

  • Reduces or eliminates mortgage debt
  • Makes some borrowers eligible for relocation assistance
  • Allows borrowers to start repairing their credit sooner
  • Helps the borrower avoid the negative impact of foreclosure

What is the Foreclosure Process in Texas?

The foreclosure process in Texas is straightforward and occurs in this order:

  • Notice of default and intent to accelerate
  • Notice of sale
  • Foreclosure sale

Texas Foreclosure Notice Requirements

Before a lender can sell your home at auction, the borrower must have at least 21 days’ notice in writing. In addition to a 21-day notice, the lender must file paperwork with the clerk of courts in the county where the property is located.

Eviction Process in Texas After Foreclosure

In Texas, the eviction process is:

  • Notice
  • Court filings and hearings
  • Writ of possession

Notice

The notice is the legal document a lender must give a borrower informing them an eviction is possible.

Court filings and hearings

In Texas, if the borrower does not vacate the premises within three days of receiving an eviction notice, the lender can legally start the eviction process.

Writ of possession

In Texas, the court issues a writ of possession to the bank after it wins an eviction case. After the judgment, distressed homeowners have a minimum grace period of at least five days to vacate the bank’s property or be forcibly removed by the sheriff.

What Are the Different Reasons Someone Would Go Into Foreclosure?

There are various reasons a person would go into foreclosure:

  • Adjustable-rate loans
  • Unemployment
  • Credit card debt
  • Medical expenses
  • Divorce
  • Multiple bills
  • Relocation

Adjustable-rate loans

Adjustable-rate loans become a problem when interest rates increase after the initial low-interest rates and low payments. Borrowers who give in to adjustable-rate loans are often forced to file for foreclosure or bankruptcy.

Unemployment

Unemployment is unfortunate and happens to a lot of people. Individuals who are unemployed may not have enough money saves to make their mortgage payments on time, which will eventually result in foreclosure.

Credit card debt

Many people have credit card debt for different reasons. More than half of the people in the U.S. have credit card debt. This type of debt occurs when people use their credit cards excessively and let the monthly payments add up along with interest.

In as little as three or four months, credit card debt can grow out of control and lead to someone filing bankruptcy or foreclosure.

Medical expenses

Medical expenses often occur unexpectedly. Over 10 percent of foreclosures nationwide are due to medical costs. Conditions that require continuous medical treatment accrue expensive medical bills depending on the severity of the situation, and a person could lose their job, which is the second cause of foreclosure.

Divorce

Divorce causes emotional and financial stress. Due to the expensive cost of divorce, once the divorce is final, many people are left with little to no money, which leads them to file bankruptcy or falling into foreclosure.

black background with pink broken heart representing divorcing couples in texas

Multiple bills

Successfully running a household requires people to pay numerous bills throughout the month. One late payment can cause a delay in other household payments, which is a financially dangerous cycle to break.

Relocation

Whether someone is moving locally or long distance, moving is expensive. Sudden relocations are the costliest types of moves because there is no time to plan things and find reasonable prices, which causes people to focus on expenses other than their mortgage. Paying one mortgage is more than enough, and adding another mortgage further complicates financial matters.

How to Stop a Foreclosure in Texas?

To stop a foreclosure in Texas, the borrower can:

  • Get a forbearance agreement
  • Get approved for a loan modification
  • File Chapter 13

Forbearance agreement

A forbearance agreement is an option to stop foreclosure when an individual is not able to pay their mortgage temporarily. The lender can issue a forbearance agreement, which gives the borrower more time to pay their mortgage.

Loan modification

A loan modification may be an option under the Home Affordable Modification Program (HAMP). This program can stop the lender from proceeding with the foreclosure process if the application is accepted.

Filing Chapter 13

Filing Chapter 13 bankruptcy becomes an option to stop foreclosure if the forbearance agreement is denied. Filing Chapter 13 immediately ends the foreclosure process due to an automatic stay when the borrower petitions the court.

The borrower’s attorney will propose payment terms to a court to allow the borrower to catch up on their payments. In general, a borrower is given anywhere between three and five years to catch up on delinquent payments.

How Can Borrowers Avoid Foreclosure?

There are different ways borrowers can avoid foreclosure, including:

  • Not ignoring the problem
  • Contact the lender
  • Respond to mail from the lender
  • Know your rights and options
  • Contact a housing counselor
  • Prioritize spending
  • Use assets

Not ignoring the problem

A lot of homeowners want to ignore the financial issues they’re experiencing, and unfortunately, that’s not the best way to handle a foreclosure. Once an individual accepts the fact they’re in financial trouble, they can focus their efforts on other aspects of the situation to get as much help as they can to possibly avoid the foreclosure process.

Contact the lender

As soon as a borrower knows they’re in financial trouble, they need to contact their lender to let them know they might miss a few payments. Some lenders are willing to work with individuals who let them know ahead of time there may soon be a payment issue.

Respond to the mail from the lender

Don’t leave the letter in the mailbox or throw the letter away. If a letter is received, contact the lender to discuss the payment options available and what they can do to help you get back on track with your payments.

Know your rights

The more knowledge a person has regarding the foreclosure process in their state, the better they can prepare necessary documents and possibly prevent the foreclosure and eviction process from occurring.

Contact a housing counselor

A lot of the time, housing counselors can provide insight into a foreclosure situation, their next steps, and help borrowers avoid making the same mistakes in the future. This type of counselor can pinpoint errors borrowers are making and offer a solution to the problem. Some solutions may be short-term or long-term.

Prioritize spending

Don’t fall into the buyer’s remorse trap. A lot of people fall into this trap and realize they didn’t have the money they thought they had available, which puts them further in debt.

Creating a spending plan can help with paying household bills, including the mortgage on time. With bills caught up, people can enjoy a more comfortable style of living with less stress and peace of mind.

Use assets

Using available assets, including a whole life insurance policy, car, jewelry, and other items of value can be sold to help with the reinstatement of a mortgage to prevent the foreclosure process. Individuals who are facing foreclosure can get a second job or find another way to generate income to demonstrate to the lender they are putting forth an effort to make the payments to keep their home.

People fall upon hard times, and it may seem there is no light at the end of the tunnel. Since January 2014, one in every 1,058 U.S. homes received a foreclosure filing. Having a foreclosure filed can be a hard pill to swallow, but there are a variety of ways foreclosure can be prevented.

It’s in the best interest of the homeowner to know everything you can about foreclosure in Texas and what you can do to protect yourself from fraud and keep your home. Use this article as a reference for answers regarding the foreclosure process in Texas.

FAQ's

Yes, an HOA can foreclose on a home, even if the mortgage payments are current. Being late making HOA dues gives an HOA cause to start the foreclosure process.

Once a homeowner misses several mortgage payments, a lender can file the necessary paperwork to start the foreclosure process, then the eviction process. When an eviction is filed, the property goes into a foreclosure auction.

This auction is held by trustees who are hired by the bank. At an auction, the lender can’t profit from the auction by selling the property for more money.

It takes approximately 60 days for a bank to foreclose on a property in Texas. There is a chance the foreclosure process will be delayed if the borrower decides to contest the action before a judge or files for bankruptcy. Foreclosure can also be delayed if the borrower seeks adjournments and delays of sales.

Before a foreclosure can officially start, the lender must wait until the borrower is at least 120 days past due on payments.

Once the foreclosure process is final, an individual’s credit score can decrease by at least 100 points. The higher a person’s credit score is, the more impact a foreclosure has on their credit. It will take at least three years of on-time payments to start repairing a credit score.

Before an individual can qualify for another mortgage, they will have to wait between five and seven years. Getting another mortgage after a short sale requires at least a two-year waiting period.

An individual does not have to move out of their home on the foreclosure sale date. People who are still living in the house once a foreclosure is final will need to be evicted by the new owners of the home.
The borrower will receive a notice at least three days prior to an eviction being filed. In some situations, lenders will pay the borrower’s moving expenses to avoid delays in the eviction process, also known as cash for keys.

A Deed in Lieu of Foreclosure is a notarized document that transfers the title of a home from the borrower’s name to the name of the lender. This title-transferring document can be suggested and used when a home is not in foreclosure.

Family in DFW Texas losing their house to foreclosure because they can't pay mortgage
Yashira & Gabe Gruszynski

Yashira & Gabe Gruszynski

We are professional real estate investors that buy homes in DFW (Dallas-Fort Worth) and all throughout Texas.

We are experienced in working with a variety of real estate asset types and situations and we buy properties in as-is condition. There’s never any need to clean or repair or have multiple showings, the way you would in a traditional real estate transaction.

We strive to help our clients sell their property with a win-win approach that is fast, and easy.

Contact us today to get started!

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