Have you missed a few mortgage payments, and now you’re worried about what will happen next? Here’s a breakdown of the foreclosure process in Texas.
How quickly does foreclosure happen?
Texas has one of the fastest foreclosure processes in the country. It can be as quick as 60 days, whereas the US average is 720 days.
In Texas, both judicial and non-judicial foreclosures are allowed.
A judicial foreclosure entails filing a lawsuit to get a court order to foreclose.
However, most foreclosures in Texas are non-judicial, which are much quicker since they do not require court approval.
Foreclosure does not automatically start after one missed mortgage payment. Texas law states that lenders must wait until you are 120 days delinquent before sending an official written Notice of Default. The notice will allow you 20 days (some loans allow 30 days) to “reinstate” your loan, meaning you can catch up on your missed payments and prevent foreclosure.
Foreclosure notice and sale
If after the 30 days, you are unable to reinstate your loan or work out a plan with your lender, they will send a foreclosure notice, called a Notice of Trustee’s Sale. The lender must give you at least 21 days notice of the sale. The letter must include the date, time and location of the sale. This will give you an idea of how long you can stay in your home.
Foreclosure sales in Texas happen on the first Tuesday of each month between 10:00 am and 4:00 pm at the county courthouse.
After your home has been sold, it’s time for you to leave. It’s preferable to leave voluntarily — evictions will appear on your credit report. If you do not vacate the home, the owner will file an eviction notice, sometimes called a Notice to Quit, giving you three days to leave.
If you do not leave during this timeframe, the owner will serve you with an eviction lawsuit. Pursuing the lawsuit can extend the time you have in your home, however, it will compound the harm you’ve already done to your credit due to foreclosure. It will also impede your ability to rent or lease a home in the future.
Note that the state of Texas does not have a statutory right of redemption. Once your home is sold, you have no right to live there, nor do you have the right to attempt to redeem your home. Once your home is gone, it’s gone for good.
If the sale of your home was not enough to cover the full amount that you owed on your mortgage, your lender may come after you with a deficiency judgment. Some states have anti-deficiency laws, however, deficiency judgments are allowed in Texas. A deficiency judgment means that you must pay the lender the balance of what is still owed on your mortgage, even though you no longer own your home.
Another issue to consider is taxes. If your mortgage debt was forgiven in the foreclosure, you might actually owe taxes on the amount between how much the home sold for and what was still owed on your mortgage.
Finally, foreclosure is a nightmare for your credit. It puts a black mark on your credit report, which stays there for seven years. This means that it will be difficult, even impossible, to secure another loan for many years. Make an effort to slowly rebuild your credit with healthy financial habits.
Foreclosure is a stressful process that can be damaging to your finances and to your morale. Foreclosure should be seen as a last resort — there are ways to stop it.
If you are looking for options to stop foreclosure, consider selling your home for cash. Contact us at Keller Home Solutions today. We can help you to sell your home for a fresh start. We’re an Austin-based investor with local experience. We can offer you a fair market price on your home, all in cash and with a quick turnaround time.
If you are having trouble making ends meet, you might be able to ask your lender or credit card companies for assistance. Oftentimes, writing a hardship letter to explain the details of your situation can help your case.
What constitutes a hardship?
How do you know if you are experiencing financial hardship? The IRS defines “hardship” as when you are not able to pay for allowable living expenses.
“Allowable living expenses” are the day-to-day things you need to take care of your family. These expenses include:
- Housekeeping supplies
- Apparel and services
- Personal care products and services
Another way to look at it: If what you owe each month is more than what you earn, you are experiencing financial hardship.
There are many different situations that can lead to financial hardship —
Losing your job, work cutbacks, or reduction in pay
These are the most common reasons for financial hardship. If you or a contributing member of your household loses their job, your finances can take a big hit. If you work an hourly job and your hours have been significantly cut, this can also qualify. Or, perhaps you got a new job, but it pays far less than your previous job. Even though you are employed, this can be treated as hardship.
If you are a business owner or are self-employed, a decline in business and revenue is also considered financial hardship.
Divorce or separation
Besides the legal fees, taking over sole responsibility for mortgage payments and other household expenses can be overwhelming with only one income. Add shared debt and child support, and the expenses can stack up quickly.
Illness or injury
Medical bills associated with serious conditions such as cancer or a heart attack, or even the slower onset of symptoms of Alzheimer’s disease or diabetes can take a significant toll on finances.
Funeral costs due to a death in the family can put a serious strain on finances.
Natural disasters and acts of God, as well as fires or car accidents can cause thousands of dollars of damage.
If you or a family member is involved in a costly litigation or is incarcerated, it can have a devastating effect on your finances.
If you have exhausted all other options to get out of hardship, you may look at selling your home and downsizing to a cheaper living situation to alleviate some of the financial stress. Keller Home Solutions is an Austin-based investor with local experience. We are willing to offer a fair market price on your home, all in cash and closing within days instead of weeks.
Contact us for a consultation today.