If a borrower should ever default on a loan against their home such as a mortgage or a home equity loan, creditors may claim their home as payment through a process is known as foreclosure. In the state of Texas, the process of foreclosure lasts around 160 days and involves several steps. Our firm has detailed what happens from the first time a homeowner misses a payment to eviction.
1. Missed payment: Borrowers who miss payments are often given a 10 to 15 day grace period to make their payment before being assessed a late fee. This fee will often be five percent of both the principal and interest of the late payment.
2. Multiple missed payments: Borrowers who miss more than one payment in a row will likely receive a letter reminding them to catch up on their payments and attempt to collect. Debtors should not ignore these letters or phone calls as they can be provide a useful opportunity to negotiate an agreement and avoid foreclosure.
3. Breach letter: After a debtor has been more than 120 days delinquent on payments, lenders in Texas may send a breach or demand letter to the debtor informing them that their loan is in default and that judicial or nonjudicial foreclosure may be sought. Most foreclosures in the state of Texas are do not require a lender to go to court as long as the deed of trust has a “power of sale clause,” or a section that details the lender’s right to pursue nonjudicial foreclosure. This letter must include the borrower’s default, what is needed to cure the default, a date by which this default must be cured, and that failing to cure the default will result in acceleration of foreclosure.
4. Notice of Default and Intent to Accelerate: Under Texas law, lenders must send borrowers a notice of default and intent to accelerate. This notice must provide a minimum of 20 days to cure the default before pursuing seizure and sale of the property.
5. Notice of Sale: If the cure period expires and the borrower has not cured the default, the lender will inform the borrowers of their intent to sell the property. This notice will be sent to each borrower who is responsible for the debt and will include the date, time, and location of the sale. Notices of sale are filed with the county clerk in the county in which the property is located and are displayed on the door of the same county courthouse.
6. Foreclosure sale: The county courthouse holds foreclosure sales on the first Tuesday of every month from 10 am to 4 pm. These sales take an auction format and foreclosed properties are either sold to the highest bidder or reclaimed by the lender.
7. Deficiency judgments: If the sale price of the property is less than the total amount owed, a lender can file a lawsuit against the debtor in pursuit of a deficiency judgment to cover the difference. Debtors are granted a credit for the difference between the market value of the property and the sale price to be used towards covering this judgment.
8. Eviction: Borrowers must leave a property after it is sold or else eviction will be sought. While some lenders may offer to pay tenants a certain amount of money in exchange for their agreement to vacate the premises, others may choose to serve the tenants with a notice to leave within three days and file an eviction lawsuit. The courts will often grant this judgment and issue a writ of possession after five days have passed. The sheriff’s department will issue tenants a 24-hour warning to evict before forcibly removing them from the property.
If you are behind on your mortgage or have already received a notice of foreclosure on your property, it is vital you contact a knowledgeable Fort Worth bankruptcy attorney from The Pritchard Law Firm as soon as possible to protect your rights. With more than 45 years of experience, we are intimately familiar with the process of foreclosure and can maximize your chances of being able to keep your home.