Following the 2008 housing crisis, new federal and state laws were enacted for stricter regulation of loan servicing and foreclosure processes. Previously, the law generally favored lenders. Now, the new laws provide protections to the borrowers. So, if you are facing foreclosure, don’t despair. Our Texas real estate lawyer will be able to help you take full advantage of the protections offered to you.
Types of Texas Foreclosures
In Texas, a lienholder may initiate foreclosure on a property in one of three methods:
- Judicial Foreclosure: requires the lien holder to file a civil lawsuit against the homeowner & obtain a favorable judgment before proceeding with a sale. Depending upon circumstances, like property involving a reverse mortgage, home equity loan, or an assessment lien by a property owners association must go through a judicial foreclosure.
- Non-Judicial Foreclosure: aka a “power of sale” foreclosure, permits the lien holder to circumvent a civil lawsuit to sell the property. However, to do so, the lienholder must have a deed of trust with a “power of sale” clause, granting them authority to sell the property.
- Expedited Foreclosure: only specific lien holders may seek an expedited foreclosure. If granted, the foreclosure process will move similarly; but at a more rapid pace.
Foreclosure Process
Generally, a Texas foreclosure is a three-step process with few exemptions. Our Texas real estate lawyer may advise you if your home qualifies as an exemption.
The three-step foreclosure process is as follows:
- 1. Notice of Default (Demand Letter): By law, the lender or servicer must send a written notice of default to allow the homeowner 20 days to “cure” (meaning to pay the amount owed in full) to bring the defaulted loan to current. Some loans (like FHA, VA, and home equity loans) permit the homeowner 30 days to cure the loan.
- 2. Notice of Sale Filed, Posted, and Mailed: Then, the lender or servicer must provide at least 21 days’ notice of the date on which the foreclosure sale/auction is to occur. Notably, the 21 days begin from the date the notice is mailed, not the date you receive it. Failing to collect or accept certified mail will not invalidate or prohibit the foreclosure sale. Additionally, foreclosure notices must be posted at the courthouse and filed with the county clerk.
- 3. Foreclosure Sale: Regardless of national holidays, foreclosures sales are held at the county courthouse on the first Tuesday of each month without fail. Anyone may bid. Following the auction, the foreclosed homeowner doesn’t have the right to buy back your property from the new owner. Unless the property is being sold by a tax lender, government entity, or for nonpayment of homeowner’s association fees; also, specific time limits apply and, in some cases, the foreclosed homeowner must pay an added redemption fee.
Texas Foreclosure Protections
As mentioned, Texas now extends foreclosure protections to most homeowners. Most homeowners who take out a loan to buy a residential property in Texas must sign a promissory note and a deed of trust. These documents provide homeowners certain contractual rights, in addition to federal and state legal processions.
Including the right to:
- a pre-foreclosure breach letter
- receive specific foreclosure notices
- apply for loss mitigation
- receive special protections, if you’re in the military
- get current on the loan stopping the foreclosure sale
- pay off the loan preventing the sale
- receive any excess funds after a foreclosure sale
- file for bankruptcy
How does bankruptcy affect foreclosure?
At best, filing for bankruptcy will delay a foreclosure. However, it will not wipe out the lien nor allow foreclosed homeowners to stay in the home without making payments. If you’re facing a foreclosure, you may utilize one of the following bankruptcy avenues:
- Chapter 13: a reorganization in which certain debts are repaid over time and may provide a path to save the home
- Chapter 7: a liquidation that may delay foreclosure but typically it won’t save the home if the homeowner is behind on payments
Foreclosure Eviction Process
Legally, the homeowner may maintain residence of the home until the sale date. If the foreclosed homeowner is still residing in the home past the foreclosure date, the new owner will have to evict you. A notice to vacate (typically 3 days) must be provided before an eviction is filed.
Seek Representation Immediately
If you are facing foreclosure, our Texas real estate lawyer is here to advise you on your best path forward. Give us a call for a free consultation, and we’ll begin strategizing your options for your unique circumstances.
Our clients receive individualized attention from an attorney, not an assistant or paralegal. Although we handle a wide range of legal issues, our attorneys are limited to practicing a few practice areas to give you the specialized care you need. We are compassionate attorneys that will listen closely to ensure your voice is heard and to implement potential strategies that most other attorney will miss. Call us for a free consult with our real estate attorney to see why we vastly differ than most law firms.
We understand times are tough and that there probably hasn’t been a tougher time in your life. Although we could get away with charging exuberant amounts, we prefer not to as we are a law firm by the people, for the people. We do not want you to worry about whether you can afford to hire a Texas Real Estate Lawyer to protect and defend your rights. Call us for Foreclosure consult and be surprised at the quality you receive compared to what other Austin law firm will quote you!
Accordingly, the attorneys at AZ Law Firm will always provide you with a free initial consultation. During this initial consultation, our criminal lawyers will evaluate your case, inform you of any legal options that may be available, and allow you to ask any questions that you may have. AZ Law Firm offers affordable rates for all our clients and will work with you on payment plans. Our firm accepts checks, debit cards, and most major credit cards to cover the costs of your legal representation.
