What is a foreclosure?
Foreclosure is the legal process by which a lender (the creditor) with a claim (lien) to your property attempts to collect on a debt owed by taking ownership and selling the property.
Typically, the foreclosure process is triggered when a borrower misses a certain number of payments or fails to meet the terms of the agreed mortgage contract.
The foreclosure process varies between states. There are two types of foreclosures a judicial or non-judicial. However, some states have both options.
When is it too late to stop foreclosure in Texas?
The foreclosure process starts 90 days after the last payment was received by your lender. After 120 days have passed, the lender will send you a formal letter stating the intent to sell your property due to a breach of contract. The breach of contract is because you have stopped making the agreed-upon payments. You can stop the foreclosure process any time as long as the need for the property hasn’t been transferred to a new owner. This also includes stoping a foreclosure on the date of the auction.
How to stop foreclosure in Texas
There are a few options at your disposal when it comes to stopping the foreclosure process in Texas. The optimal method will depend on your circumstance and your desired outcome. Keep in mind that some homeowners want to foreclosure their homes and some don’t. If you would like to keep your home and your credit in good standing. Working with your lender to come up with a plan that can work for you is a great option.
Here are some options to keep in mind:
- Apply for loss mitigation
- Challenge the foreclosure in court
- Filing for bankruptcy
Types of loss mitigation:
- Loan modification: When the terms of the loan have been modified to help the homeowner keep their home. Common modifications are lowering the interest rate and extending the life of the loan.
- Short sale: This is the process where a lender accepts an offer for a home that is less than the principal balance.
- Deed in Lieu of foreclosure: When a homeowner signs a legal document transferring ownership of the property to the lender in exchange for being relieved of the mortgage debt.
- Special forbearance: When you are making reduced or no payments to the lender. When the forbearance period ends typically, you will pay back what you missed or, the loan will be modified.
- Partial Claim: When a lender advances funds to a homeowner in the amount necessary to reinstate a delinquent loan. However, the money advanced should not exceed the equivalent of twelve months of mortgage payments.
File for bankruptcy:
You can stop or delay a foreclosure by filing for chapter 7 or chapter 13 bankruptcy.
You can use chapter 7 bankruptcy to save your home if you are current on your payments. If not, it will only delay the process.
Chapter 13 bankruptcy will be a better option if your goal is to keep the home. You will be able to pay your delinquent balance over the span of three to five years.
Challenge the foreclosure in court:
If you believe you have a valid argument against a pending foreclosure, you can take the fight to your lender in court. You can file an answer in a judicial foreclosure or file your own suit to fight a non-judicial foreclosure.
Texas foreclosure notice requirements
Texas foreclosure law requires the lender to give the borrow a 21-day written notice of the date of when the foreclosure sale will occur. Whether you receive the letter and read it, the foreclosure process will begin. The lender is only required by law to send the letter out. They are not held responsible if you didn’t receive it.