Texas is a non-judicial foreclosure state. This means that the foreclosure process can be quite quick. A non-judicial foreclosure as the name would suggest, is not a court proceeding; but rather, a foreclosure that is accomplished via a series of notices.
The first notice is a default notice, which is mailed to the Debtor. The default notice/demand letter provides that the Debtor has twenty days to cure the mortgage, or the mortgage or servicer will go forward with a foreclosure sale.
The second notice is the notice of the foreclosure sale. This notice must allow at least 21 days for the sale date. The notice will be mailed certified to the Debtor and is then posted on the courthouse door and filed with the county clerk. In Texas, foreclosure will take place on the first Tuesday of the month starting at 10:00 am.
After all the proper notices are given, the sale will take place on the county court house steps. The sale is an auction, and the home will go to the highest bidder. Whoever buys the property will pay off the mortgage. Typically, the lender will buy back their mortgage.
After the mortgage is paid, any remaining deficiency balance is an unsecured debt. A mortgage company can then sue the lender for the difference between the sale and the amount of the debt. They will also usually get attorney fees and other expenses.
At the fastest, a foreclosure can take place within 41 days; however, since the date for foreclosure sale is always the first Tuesday of every month, the amount of time will vary from case to case.
There are several ways to stop a foreclosure. The first and most obvious is to pay off the default and get current on the mortgage. This is usually not an option for most debtors, since they do not have the funds to become current.
A Debtor can also file for a loan modification with their lender. The loan modification process can be a frustrating one, and will usually involve the Debtor sending documents repeatedly to the mortgage company. The final result, however, can be rewarding. If the modification is approved the Debtor can have payments reduced and have the arrearage put into the back of the note.
Be careful with mortgage rescue companies. There are a lot of companies that offer mortgage assistance to people who have fallen behind on their mortgage. It is always a good idea to research any company you would work with. While many companies are legitimate, there are still plenty that are not.
Be wary of any company that has you transferring the property from your name into someone else’s name or a company that wants you to place your home in a trust or LLC. This can confuse the title, but will ultimately not stop a foreclosure. It can also have damaging effects on your ability to keep your home in the future.
Also, be careful of filing a lawsuit on the basis that the deed of trust was not signed by the original lender or signed by MERS. MERS is the mortgage electronic systems and there was a trend whereby people would sue the lender based on the fact that the lender was not the mortgagee listed on the original note. Since Texas is a title theory state, the holder of the note is the owner of the house until the lender is paid in full. A lawsuit to try a title will usually not be successful. Courts are not in the practice of denying the mortgage company the right to collect under the debts.
Another option is to file for chapter 13 bankruptcy. Chapter 13 is a 3-5 year plan payment that allows Debtors to get current on their mortgage through the chapter 13 process. The automatic stay in bankruptcy will stop the foreclosure sale and allow the Debtor to reorganize their debts. Furthermore, a Debtor may file chapter 13 and still pursue a loan modification.
For more information about saving your home or for filing for bankruptcy, contact the experienced attorneys at the Fears Nachawati Law Firm at 1.866.705.7584.