Foreclosure Process in Texas

By: Kathy Swift

In Texas, both judicial or in court and non-judicial or out of court foreclosures are followed.  As in all states where this is the case, the determining factor as to which process will be followed, is whether or not the mortgage or deed of trust has a power of sale clause in it. Most do and therefore most foreclosures follow the out of court process.  It’s less costly and quicker for the bank to do it this way.

Judicial foreclosure takes longer, because a judge must declare a foreclosure, sollowing the filing of a law suit.  After this happens, the auction proceedings are the same as power of sale or out of court foreclosures.

Before going forward with a foreclosure, the bank has to send the home owner a letter of demand.  This letter states that homeowner has only twenty days to make up the payments they are behind on, or the foreclosure will start.

After the twenty days has expired, and at a minimum of 21 days prior to the scheduled sale of the property, the bank must file a notice of foreclosure, with the county clerk.  They must also send this same notice to the home owner at their last known address.   In addition to these two announcements of the sale date, this same notice must be placed or posted on the door of the courthouse in the county where the home is located.

Texas is what is referred to as a Super Tuesday or super sale date state.  On the first Tuesday of every month, every property in foreclosure for that month is auctioned off.  Holidays are no exception to this rule.

The sale is held at the courthouse steps and the bidders must be prepared to pay in cash.  Of course, the bank may bidat the auctioin as well.  If they don’t like the highest offer, they may choose to do so.  Since they are the ones who are owed the money that this home is securing, they don’t really pay that bid, they just take it back.  In other words, they are choosing to be stuck with the property, rather than take the highest bid.  At the conclusion of the auction the trustee transfers ownership of the home to the person or entity who placed the highest bid on the home.  This is awarded free and clear of any junior liens.  Senior liens ae another matter all together. Senior liens follow through the sale and become the obligation of the new owners.  These liens are internal revenue tax liens  and property tax liens.

In Texas, the bank can choose to pursue the home owner for the difference between the fair market value of the property and what was not generated at auction.  Fair market value is calculated at the time of the sale.  Most banks realize that the person who lost the home to foreclosure does not have other resources to pay the difference between the auction price, and the loan amount, so they usually don’t pursue the homeowner for the money.

Integrity 1st Consulting is your specialist- Kathy Swift

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