Recovering Excess Proceeds: Mortgage Versus Tax Foreclosures - Part 2

If you’re going through a foreclosure, you may not care that the process differs for tax and mortgage foreclosure sales. After all, your home is on the block. But after the sale, once your unpaid obligations are fulfilled, you may be entitled to recover any money that’s left over. However, in Texas, recovering excess proceeds can vary depending on the type of foreclosure. That’s why you must understand the difference between foreclosures and which process applies to you. Our last post focused on what happens after a tax foreclosure [link to post]. In this post, we’ll focus on mortgage foreclosures.

After a Mortgage Foreclosure

The sale of your home after a mortgage foreclosure will typically take about 60 days. After the sale, the proceeds will first go to pay off your unpaid mortgage balance. However, the proceeds will also pay off:

• The costs of foreclosing on and selling your home,
• A second mortgage on your home, if you have one, and
• Any other unpaid liens on your home, such as a mechanic’s lien.

Recovering Excess Proceeds After a Mortgage Foreclosure

After paying off your mortgage and any liens or other obligations on your home, you’ll be entitled to recover anything left over from the sale, also known as the “excess proceeds.” But Texas law doesn’t have a specific statute governing how a trustee should distribute excess proceeds from mortgage foreclosures. That’s because mortgage foreclosures in Texas primarily happen through non-judicial foreclosure, which allows a trustee to handle a foreclosure and sale on behalf of a lender after a default. After the sale, the trustee must notify you if there are excess proceeds. You will then have two years from the date of the sale to petition the trustee to recover the excess proceeds.

Differences Between Mortgage and Tax Foreclosures

While the basic processes after a foreclosure are similar for both mortgage and tax foreclosures, there are some key differences.

• Trustee versus the court: You will petition the trustee who handled the mortgage foreclosure sale to recover your excess proceeds. In a tax foreclosure, you would petition the court.

• No right of redemption: There is no right of redemption after a mortgage foreclosure in Texas. A right of redemption is only available for some tax sales and those involving liens from homeowners’ associations.

• No limit on attorney’s fees: Tax foreclosures limit attorney’s fees when a lawyer helps you recover excess proceeds. This can make it challenging to find a competent lawyer to assist you after a tax foreclosure. There is no such limit for attorney fees assisting with recovering excess proceeds after a mortgage foreclosure.

Hire an Attorney Experienced in Recovering Excess Proceeds

Texas procedures for recovering your money after a mortgage foreclosure can be challenging to decipher without the help of an experienced lawyer. That’s where the seasoned lawyers at Manfred Law come in. Find out how they can help you. Call them at (713) 547-5460 or contact them online to schedule your consultation.