Millions of Americans struggle to keep up with their house payments, especially in the wake of the COVID-19 pandemic. If you’ve missed mortgage payments and you’re worried about foreclosure looming on the horizon, the foreclosure attorneys at Leinart Law Firm can help you understand how the process works and what you can do to stop it. Learning about foreclosure in Texas and how much time you may have before your home is foreclosed on can help you make informed decisions about your available options.
What Is Foreclosure and How Much Time Do I Have Before the Process Begins?
When a borrower fails to keep current on their mortgage payments, foreclosure is the action a lender takes to repossess the mortgaged property. Federal law stipulates that a borrower must be 120 days delinquent on payments before the foreclosure process can be initiated. Because of the way most mortgage loans are structured, this means a borrower will likely have to miss four payments before the foreclosure process begins. However, once it is initiated, foreclosure can proceed rapidly in Texas.
Timeframes for Foreclosure in Texas
In Texas, the foreclosure process can take as little as 160 days before a home goes to auction. Most foreclosures in Texas are non-judicial actions, which means lenders can immediately start the process after 120 days without going to court, speeding it up significantly.
When you buy a home in Texas, you’ll typically sign a promissory note and a deed of trust. The deed of trust usually includes a power of sale clause, which allows the lender to sell the property to recoup the balance owed if a borrower defaults on the mortgage loan.
If there is no power of sale clause in a mortgage deed, a lender must take the judicial route and file a lawsuit to initiate the foreclosure process. Although this process takes more time, once the judge enters a judgment, your home can be sold at auction.
If you’re late on a monthly mortgage payment, it’s common for lenders to grant a grace period of 10-15 days. Typically, they’ll apply a late fee if you pay after the grace period. When you miss a second mortgage payment, you are technically in default of your loan. Your lender will become more persistent about collecting payment, and things can start to become stressful. Typically, once 90 days have passed since your last payment, your mortgage servicer will send a demand letter.
At this point, your home is not yet in foreclosure. The demand letter will notify you that you have 30 days to become current in your payments. If you want to keep your home, this is your chance to negotiate a loss mitigation agreement with your lender.
It’s important not to ignore phone calls and letters from your mortgage servicer. They are required by law to help you find alternatives to foreclosure, such as loan modification and forbearance. These options are much more prevalent now because the federal government put a moratorium on mortgage foreclosures during the COVID-19 pandemic.
Although the moratorium ended in the summer of 2021, many lenders are still willing to work with borrowers to help them keep their homes.
If your loan has been delinquent for 120 days or more, you will receive a breach letter. This letter provides formal notice of the lender’s intent to make the loan balance due. It will also specify that the matter must be resolved before a certain date or they will accelerate the process and sale of the property.
In some cases, lenders may send this letter around the 90-day mark, which gives you a bit more notice to figure out what to do. A foreclosure lawyer can take a comprehensive look at your financial situation and give you advice on the most effective solutions, which will also depend on your specific financial goals and whether you want to keep your home.
Whether these options involve filing bankruptcy, renegotiating the terms of your loan or other debt relief options, it’s definitely worth the effort, and it won’t cost you anything to speak with a Texas foreclosure attorney.
Stages of Foreclosure in Texas
Foreclosure is a series of steps in a complex process, and you have to miss several (typically four) payments before it can begin.
Notice of Default
If you are at least 120 days delinquent on payments and your lender plans to foreclose, they must send a written notice that gives you 20 days to pay the full past due amount and bring the loan current. During this time, you can halt the foreclosure process by paying all past due amounts and any late fees that have been added to this balance. Government-issued loans such as VA and FHA loans may have different time frames.
Notice of Sale
If you’re unable to pay the past due balance and haven’t been able to find any loss mitigation solutions, the lender can move forward with foreclosure and set an auction date. The notice of sale must be sent to you 21 days prior to auction. This notice is also filed with the county clerk and posted in the courthouse.
This is the final step in which your home will be sold at auction. Foreclosure sales in Texas take place at the county courthouse on the first Tuesday of each month. In Texas, borrowers do not have a right of redemption for non-tax related foreclosures, so once the home is sold at auction, you cannot buy back the property.
Halting Foreclosure by Filing Bankruptcy
Filing bankruptcy in Texas can delay or stop the foreclosure process as long as your home hasn’t yet been sold. In many cases, filing Chapter 7 bankruptcy can delay foreclosure for a few months. Filing Chapter 13 bankruptcy restructures your debt and allows you to continue paying your mortgage and stay in your home.
Regardless of which type of bankruptcy you file, an automatic stay is put on most debts, which prohibits your lender from moving forward with foreclosure. This gives you time to find solutions and make important decisions about which course of action to take. It’s critical to find an experienced Texas bankruptcy lawyer who understands ever-changing state and federal mortgage and bankruptcy laws.
Texas also offers specific homestead exemptions and other property exemptions that can help you retain the equity in your home. A Dallas or Fort Worth bankruptcy attorney should be well-versed in how these exemptions work and how to maximize them to your benefit. Even if you don’t want to keep your home, filing bankruptcy can help you avoid a potential lawsuit if the lender tries to collect on any loan balance deficit.
A Lawyer Can Help You Take Action and Find Solutions
Whether you’re behind on one mortgage payment or your home is already in foreclosure, taking action and discovering the available options can give you peace of mind and help you find financial stability. No matter where you are in the process, a good debt relief attorney can help you sort it all out and help you understand the benefits and drawbacks of different alternatives to foreclosure in Texas.
Contact a Dallas Foreclosure Attorney
If you’re finding it tough to pay your mortgage or your home is already in foreclosure, the bankruptcy lawyers at Leinart Law Firm can help you find options to improve your financial situation and get back on track. Please use the convenient contact form or chat feature on our website or email us to schedule a free consultation with a bankruptcy lawyer. Our dedicated team serves clients throughout North Texas.