There are two different foreclosure processes in Texas: judicial and non-judicial. Non-judicial foreclosure is the more common of the two in Texas, because the state allows the non-judicial process to be written into the deed. Here is an overview of both types of foreclosure processes according to Texas state law.
Non-Judicial Foreclosure
Every foreclosure process starts with having failed to pay something you’re legally obligated to pay. This may be a mechanic’s lien, tax lien, HOA lien or mortgage. Most foreclosures are by mortgage companies, and that’s especially true for non-judicial foreclosures.
No non-judicial foreclosure is out of the blue. They must inform you of when the payments are late. They typically have 90 days of warning letters with information on how to remedy the breach of contract before they will foreclose on the home. There is certainly a possibility you can’t pay the late fees in addition to the past due amount. We’ll say that this is a very good reason not to ignore the warning letters from your lender or anyone else who has foreclosure power over your home. Refusing to open your HOA notices for a year is no excuse when the sheriff shows up to evict you. Suppose you’ve received the notices of the past due payments. There will be a “cure period” in which you can get caught up. We’ll assume that has passed, so they’ve decided to foreclose.
In a non-judicial foreclosure process, the lender or loan servicer has to post a notice of sale at the courthouse. The notice will be filed with the county clerks. These notices of sale are generally shared in the classified sections of major local newspapers, because it is both a means of informing the general public of the event and a potential avenue for generating interest in the sale. The person who owes the debt should receive a notice of the sale via certified mail. The notice of sale will include the date, time and location of sale.
Foreclosure sales are typically held at the county courthouse, though a different location may be listed in the notice. The property goes to auction, and it goes to the highest bidder. This could be the lender foreclosing on the home, since they get to put in the first bid at auction. The first bid is typically the amount the lender is owed. They do this to ensure that the house doesn’t sell for less than they are owed.
After the foreclosure sale, you no longer have any right to live in the property, and you can be evicted. Texas doesn’t have a redemption period where you can get the house back after it is sold at auction.
Judicial Foreclosure
Texas requires most mortgage holders like banks and home equity lenders to go through the judicial foreclosure process. If your deed of trust doesn’t authorize a non-judicial foreclosure sale, then the lender has to go through the judicial foreclosure process, as well.
The Texas home foreclosure process in this case involves a lawsuit filed with the court. The court will declare a foreclosure. At that point, the house can go to auction.
It is easier to stop a judicial foreclosure by filing for bankruptcy, because the judicial foreclosure process is much slower. Since this is a lawsuit, you’ll be sent letters informing you of the lawsuit filing in addition to the standard warnings about being past-due. You can often negotiate a cure or payment in full at this point, if you have the money. This is because creditors will add their legal fees to the balance owed. If you go through a liquidation bankruptcy, you’ll lose your home but it is part of the process of selling everything else off. And this process will take longer than a mere foreclosure. A debt repayment plan supervised by the bankruptcy court may allow you to keep your home, as long as you make the payments agreed to by the trustee. Miss mortgage payments during the debt repayment plan, and the mortgage lender can foreclose on the property.
