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What are the Foreclosure Laws and Procedures in Texas?
Are you facing foreclosure, or looking for information to help someone who is? Many people struggle with foreclosure, so you’re not alone. Each state has different laws and procedures regarding foreclosure. Below, we describe briefly how foreclosures work in Texas.
A Lesson On Foreclosure Procedures From Big State Home Buyers
Delinquency
The first step in the foreclosure process is, obviously, going through foreclosure. In the first 90 days of being behind on payments, you are what’s called delinquent on payments. After day 90, you are now in default of the loan. This is when a substitute trustee deed is filed.
Under Texas law, a lender may allow the mortgage servicing company, which handles payments from the borrower, to appoint a substitute trustee. Sometimes known as a foreclosure deed, a substitute trustee deed is a deed held by a person appointed by the mortgagee or mortgage servicer to exercise the power of the sale. A trustee deed describes a deed to your home, given to a third party, who ensures that the foreclosure is fair and impartial. The bank is often not prepared to carry out court filings, attend hearings or gather foreclosure paperwork and will turn those tasks over to a law firm by substituting the attorneys as trustees.
Now that the bank has appointed a law firm to act as the substitute trustee, they begin handling the collection and foreclosure. You will start receiving attorney’s fees that start piling on, so make sure you communicate with the lender throughout the process instead of ignoring the problem. You don’t want a small amount of money owed to snowball into something you just can’t manage anymore.
In Texas, foreclosure can sneak up on you much faster than in other states. Texas is one of the most efficient states for foreclosure in the nation. This makes it important for you to stay up to date with your lender. Texas only holds foreclosures on the the first Tuesday of each month. According to law, your lender only has to give you notice 21 days ahead of the foreclosure.
Auction
If you aren’t able to stop your foreclosure in the ways we’ve outlined before, then your home will eventually go to auction. Rather than at the bank or your home, the foreclosure auction takes place with a contract auction site. These auctions often attract many eager investors looking to make a tidy profit. These work just like any other auction you might have seen on television. The auctioneer opens bidding with a minimum bid and investors either meet the bid or drop from the auction.
If at this point the investors fail to bid the minimum required amount to satisfy the debt, then the banks buy back the home and it becomes an REO. Banks aren’t in the business of owning homes and it’s not in their best interest, so they try to avoid this at all costs. By this point in the process they have already spent thousands in lawyers fees and upkeep fees, so the last thing they want is to hold onto a property that drains more and more resources. For this reason, they avoid this situation and sell the homes for very low bids.
Don’t Give Up
When facing foreclosure, it can be hard but you must keep your head on straight. Reading posts we’ve written about the topic reveals that there are many ways out of foreclosure. You may not be as trapped as you think. If you’re really underwater, you have options. Consider working with an investor like Big State Home Buyers. For some families, selling their house allows them to downsize and bring their finances back in order. We want to help, but we can’t do that until you call. No problem is too big, we’ve seen it all. Call today.
