Understanding the foreclosure process in Houston TX is an important part of navigating your own home foreclosure. It’s also, imperative to understand the laws of each state and the options you have within those laws.
Need to know how the foreclosure process works in Houston Texas, read below.
Understanding the Foreclosure Process in Houston TX
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally, after the borrower stops making payments.
Foreclosure can be a life-altering situation and you should do what is necessary to help yourself and your family.
But understand that going through a foreclosure isn’t the end of the world. In fact, some homeowners have faired better after going through the foreclosure process in Houston because they made the right decisions.
The right decisions comes down to your unique set of circumstances.
You might chose to sell your home fast in Houston, file for bankruptcy, have a short sale or let the home foreclose. There are many options and you have to decide what’s best for you.
When you know how foreclosure in TX works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.
The Basic Stages of A Foreclosure
There are a few stages that are important to any foreclosure process.
Foreclosure works differently in different states around the country.
The two ways different states use to foreclose upon a property are: judicial sale or power of sale.
Connect with us by calling 832-535-2034 or through our contact page to have us walk you through the specific foreclosure process here locally in Houston.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property to the lender at a public auction (notice must be given).
- The trustee sale is held the first Tuesday of every month at the Bayou Center in Houston.
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower. That means you will be liable for the amount of money that wasn’t recovered from the sale.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Unfortunately, Texas laws allow the foreclosing bank to get a deficiency judgment for the difference between the sale price and the borrower’s debt.
Texas also allows for a fair market value offset. This means the homeowner gets an offset of the deficiency amount if the value of the property is greater than the foreclosed amount.
For example, let us say the total debt owed on a property is $150,000 and the home sells for $100,000. If you can prove the value of the property is $125,000 by using an appraisal. The deficiency judgment would be reduced by $25,000 from $50,000.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call the bank, or work with a reputable real estate firm like us at Sell Your Homes Houston to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
Reminder, don’t get pressured into a decision that isn’t right for you, always explore several options.
If you need to sell a property near Houston, we can help you.
We buy houses in Houston TX like yours from people who need to sell fast.
Give us a call anytime 832-535-2034 or fill out the form on this website today! >>
Another Foreclosure Resource For Houston TX HomeOwners: