How Does Foreclosure Work in Texas?

How Does Foreclosure Work in Texas?
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Types of Foreclosure

In Texas, there are two types of home mortgage foreclosure. The first type is judicial foreclosure, which is often referred to as in-court foreclosure. With this type, the lender must file a lawsuit in court to foreclose on the borrower's home. The court then grants the foreclosure, and the property is sold at an auction. With non-judicial foreclosure, also called out-of-court foreclosure, a power of sale clause is included in the mortgage, allowing the lender to sell the property to pay off the defaulted loan, without going to court first.

The Start of Foreclosure Proceedings

Generally, foreclosure proceedings do not begin as soon as a homeowner misses a mortgage payment. According to Foreclosure Law, Texas lenders often wait about 60 days after a missed mortgage payment to start the process. During that time, Texas lenders usually send borrowers notices requesting payment.

Power of Sale Foreclosure

When a power of sale clause is included in a mortgage, a lender may not simply sell off a home without any notice. In Texas, the lender must first send the borrower a letter of demand. This letter lets the borrower know that she must pay overdue mortgage payments within 20 days or face foreclosure proceedings. After the 20 days' notice has expired, a foreclosure notice is filed with the clerk at the county courthouse, and a copy is mailed to the borrower. In Texas, a lender must also post this notice on the door of the county courthouse.

Judicial Foreclosure

A judicial foreclosure proceeds much like a power of sale foreclosure, except that the lender must first get a court order to proceed. The lender files a lawsuit with the county court and gives the homeowner notice of the lawsuit. The borrower then has the chance to defend against the foreclosure in court.

Foreclosure Auctions

Whether a Texas foreclosure is judicial or non-judicial, the auction process is the same. Homes are auctioned off in a foreclosure sale, which is held on the first Tuesday of the month on the steps of the courthouse. Foreclosure auctions are public, with homes going to the highest bidders.

Avoiding Texas Foreclosure

Sometimes lenders are willing to make payment arrangements with borrowers to avoid going through foreclosure proceedings. Once foreclosure proceedings have begun, it is still possible to put a stop to them if the borrower is able to pay off his back balances and fees or negotiate a satisfying payment arrangement. Sometimes homeowners refinance their original mortgage loans to avoid foreclosure and secure more affordable payments.