4 Things to Know About Texas Foreclosure If You’ve Lost Your Home or Property
The Texas foreclosure rate is declining, which reflects the national trend. This is in part thanks to a housing boom that limits home purchases to only those borrowers who can afford to buy (and who represent low risk).
In other words, banks aren’t giving out risky loans as they were in the early 2000s.
But foreclosure still happens. Sometimes it’s the result of a dramatic change in circumstances, and other times, a series of poor decisions catch up with you.
Are you facing foreclosure proceedings in Texas? Here’s what you need to know about keeping your house.
1. Texas Foreclosure Usually Begins in 120 Days After You Miss a Payment
In most cases, a bank will start foreclosure proceedings once you are 120 days behind on your loan.
However, banks aren’t required to wait this long. If you borrowed from a small bank, they could send you a foreclosure notice the day after you miss your first payment.
2. You Can Prevent Foreclosure by Talking to Your Lender
The best way to prevent a foreclosure is to talk to your bank early.
If your missed payment is part of a temporary loss (like job loss or medical bills), then you may be able to ask for a temporary forbearance. Some banks are also willing to set up a payment plan to get you caught up. A loan modification agreement may also be possible in certain circumstances.
However, the best time to do this is before or just after you miss a payment. Don’t wait for your account to become extremely delinquent, especially if you expect to miss further payments.
Banks are generally willing to work with you. Foreclosure is an expensive process, and the bank prefers to get years of interest payments from you than sell the property at cost.
3. Foreclosure Happens in Three Steps
Texas foreclosures typically take place in three steps.
Your lender is only required to send you two notices, and these constitute the first two steps. You’ll get a Notice of Default – Demand Letter, which gives you 20 days to pay the amount owed to bring your account up to date. You may have 30 days if you have an FHA or VA loan.
Then, they send a Notice of Sale, Posted, and Mailed. This signals that your home will be sold in 21 days from the date of issue (not the day you receive it).
The third is the foreclosure sale itself, which is irreversible.
4. Bankruptcy and Refinancing Aren’t Usually Options
Once you enter foreclosure, your bank will usually decline any attempt to refinance. Bankruptcy may slow your foreclosure, but it often won’t prevent it.
If you can sell the property for the amount owed (plus the cost of sale), then selling may be a good idea. However, it is the last resort that you should only take if keeping the house is no longer a viable option.
Are You Facing a Foreclosure?
Banks don’t relish foreclosure proceedings. They are expensive, and it deprives the bank of the interest you’d pay over the life of your loan. However, if you stop making payments, you will receive a foreclosure letter around 120 days after your first missed payment.
Even if you are facing a Texas foreclosure, you still have rights. If you can’t get your bank to cooperate or if it pursues a sale when it is not allowed to do so, you may need legal help. Get in touch to learn more about your case.