Table of Content
- How to buy a foreclosed home in Texas
- Conduct due diligence on the property
- How Can I Stop a Foreclosure in Texas?
- Buying bank-owned foreclosures in Texas (REOs)
- Here’s What you Need to Know About the Foreclosure Process and Foreclosure Timeline in Texas and How to Stop Foreclosure.
- Redeeming the Property Before the Sale
- Federal Rules
- You Don’t Have to Lose Your House!
The cruel fact for borrowers is that wrongful foreclosure suits face challenges from the beginning. It is, however, undoubtedly the bias of Texas judges, whether one approves or not. The Servicemembers Civil Relief Act (or SCRA found at 50 U.S.C. App. §§ 501 et seq.) provides protections for those serving in the armed forces. For example, except by court order, a landlord may not evict a servicemember or dependents from the homestead during military service. The SCRA provides criminal sanctions for persons who knowingly violate its provisions.
The notice is sent to the borrower's last known address and must include the amount due and the date it has to be paid.
How to buy a foreclosed home in Texas
Unlike a nonjudicial foreclosure, homeowners who have been foreclosed upon via a judicial foreclosure have a limited right of redemption. This means they have up to 2 years after the foreclosure sale to pay what is owed and get their property back. Texas law requires that the lender/servicer must send the borrower a notice of default and intent to accelerate by certified mail that provides at least 20 days to cure the default before notice of sale can be given. (The 30-day breach letter sent pursuant to the terms of the deed of trust can satisfy this requirement.) The notice is sent to the borrower’s last known address and must include the amount due and the date it must be paid. The most common foreclosure process in Texas is non-judicial foreclosure, which means the lender can foreclose without going to court so long as the deed of trust contains a power of sale clause. Non-judicial foreclosure is most common with purchase money loans as well as rate-and-term refinances.
If you’re a regular home buyer, check out the HUD Home Store first, because you’ll get first dibs over investors. If you’re an investor looking for rentals or flips, foreclosures could be one piece of a broader deal-sourcing strategy, but probably not your primary approach. Even though the foreclosure rate is the highest in places like Real and Cochran Counties, there aren't a ton of houses there in general. Houston and Dallas offer more possibilities than less populous areas, even if the foreclosure rate is a bit lower. Our passion is helping clients turn around their tough situations – just as we’ve done for hundreds of clients since 2009.
Conduct due diligence on the property
Accordingly, every foreclosure case should begin with a consultation that includes a thorough document review. A judicial foreclosure is used when a homeowner fails to pay property taxes. The taxing authority must file suit in the county where the property is located to have the property sold to pay the taxes that are owed. A hearing will be held during which the taxing authority must prove that taxes are in fact due. If such proof is provided, the judge will sign a foreclosure order and the property will be sold at a foreclosure sale. The foreclosure sale takes place on the first Tuesday of every month and is held in a facility designated by the county courthouse.
Note that the IRS also has 120 days following the sale to redeem the property, although this seldom happens. The successful bidder on an IRS-liened property is therefore not entitled to breathe a sigh of relief until the 121st day. If the court determines that the fair market value of the home is greater than the foreclosure sale price, the borrower is entitled to an offset against the deficiency. This publication, written in 2009, from the Texas A&M University Real Estate Center discusses Texas laws on home foreclosures and the foreclosure process focusing on ways homeowners can protect their homes from improper foreclosures. These are just some of the reasons to consider consulting a lawyer if you're facing a foreclosure. If you have questions about Texas's foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney.
How Can I Stop a Foreclosure in Texas?
Most sellers are in a tight place financially, so savvy buyers can leverage that situation to negotiate lower sale prices. The closing process for pre-foreclosures and REOs is similar to closing on conventional homes — you go to a title company, fill out the paperwork, and pay the seller for the property. One major benefit to buying pre-foreclosures or REOs is that you can tour the property before making an offer (this isn't usually possible with auctions). If you're not experienced in renovating and rehabbing properties, you should always try to see a property in person before submitting an offer.
The difference between the total debt and the sale price is called a "deficiency." For example, say the total debt owed is $300,000, but the home sells for $250,000 at the foreclosure sale. In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount—in our example, $50,000—from the borrower.
Buying bank-owned foreclosures in Texas (REOs)
Texas also has a relatively long redemption period for tax-delinquent foreclosures, which can last up to two years. During that time, prior owners can pay off their delinquent taxes to regain possession of their property, regardless of any improvements you may have made to it. The major benefit of buying a foreclosed home is the possibility of getting it for below market value.
Buyer/tenants could forfeit all sums paid if they defaulted and be evicted as ordinary tenants. If the buyer/tenant has paid more than 40% of the amount due or made 48 or more monthly payments, then pursuant to the equity protection provisions of Prop. Code sec. 5.066, the seller/landlord must provide a 60 day notice of default and opportunity to cure the default. If the default is not cured, then a trustee may be appointed who can proceed with a non-judicial foreclosure. Texas law allows the borrower to block a nonjudicial foreclosure sale by “reinstating” the loan within 20 days after the bank serves the notice of default by mail.
A list of foreclosure-related articles available from legal self-help publisher Nolo. The State Law Library cannot tell you what a law means for your situation.Pleasecontact an attorney for help determining what the law means for you. If you have questions or need help finding resources, please ask a librarian.
If there is going to be a change in the trustee who was named in the deed of trust, it will also be necessary to file a written appointment of substitute trustee signed by the lender. Texas law requires the servicer to send you a notice of default and intent to accelerate by certified mail that provides at least 20 days to cure the default before a notice of sale can be given. The 30-day breach letter sent pursuant to the terms of the deed of trust can satisfy this requirement. The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default.
We advise you to contact us so you have someone on your side, fighting to stop your foreclosure. You can find foreclosures and pre-foreclosures on sites like Foreclosure.com, RealtyTrac, and Zillow, as well as on the MLS. Searching with foreclosure or pre-foreclosure filters will help you find them on real estate websites. Auctions occur the first Tuesday of every month, usually at the county courthouse or another publicly owned building. Many foreclosures have been vacant or neglected for an extended period, so they may have substantial damage that needs to be repaired.
Most banks can complete a Texas foreclosure without court involvement and, under state law, the homeowner gets only two mailings during the process. Though, federal law also requires the servicer to send certain notices as well. If you have a different kind of loan, call your servicer and ask what kind of loss mitigation options are available. If you're facing a foreclosure, filing for bankruptcy might help. In fact, if a foreclosure sale is scheduled to occur in the next day or so, the best way to stop the sale immediately is by filing for bankruptcy.
Typically, there are two options for selling your house – listing with a realtor or selling directly to a professional home buyer. The good news is that, except in rare cases, most lenders can’t start the foreclosure process in Texas until at least 120 days after your first payment is missed. During that time, you can typically work with your lender to apply for various “loss mitigation” options to stop the foreclosure before it starts. We’ll cover your options for loss mitigation in the sections below.
That also means that the process goes faster than judicial states, which can take months or even years to complete the foreclosure process. With an auction, you'll need a cashier's check ready for the down payment the day of the auction. The trustee of the sale will give you the information for you to pay the remaining amount by the deadline — usually no longer than 30 days after the sale.
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