Texas Foreclosure Law Summary
Stop Texas Foreclosure
Quick Facts
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed of Trust, Mortgage
- Timeline: Typically 60 days
- Right of Redemption: No
- Deficiency Judgments Allowed: Yes
In Texas, lenders may foreclose on deeds of trusts or mortgages
in default using either a judicial or non-judicial foreclosure process.
Judicial Foreclosure
The judicial process of foreclosure, which involves filing a lawsuit
to obtain a court order to foreclose, is used when no power of sale is present in
the mortgage or deed of trust. Generally, after the court declares a foreclosure,
the property will be auctioned off to the highest bidder.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of
sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the
clause in a deed of trust or mortgage, in which the borrower pre-authorizes the
sale of property to pay off the balance on a loan in the event of the their default.
In deeds of trust or mortgages where a power of sale exists, the power given to
the lender to sell the property may be executed by the lender or their representative,
typically referred to as the trustee. Regulations for this type of foreclosure process
are outlined below in the "Power of Sale Foreclosure Guidelines".
Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a power of sale clause
and specifies the time, place and terms of sale, then the specified procedure must
be followed. Otherwise, the non-judicial power of sale foreclosure is carried out
as follows:
- Prior to proceeding with a foreclosure, Texas laws state
that the lender must mail the borrower a letter of demand, informing the buyer
he has twenty (20) days to pay the delinquent payments or foreclosure proceedings
will begin.
- At some point after the borrowers twenty (20) days have expired,
but at least twenty one (21) days before the foreclosure sale, a foreclosure
notice must be: 1) filed with the county clerk; 2) mailed to the borrower at
their last known address; and 3) posted on the county courthouse door.
- The foreclosure sale must take place on the first Tuesday
of any month, even if said Tuesday falls on a legal holiday, but only after
the proper preliminary notices have been given. The sale is on the courthouse
steps by auction to the highest bidder for cash. Anyone may bid, including the
lender, who bids by canceling out the balance due on the note, or some part
of it.
Lenders may obtain deficiency judgments, but they are limited
to the difference between the fair market value of the property at the time of sale
and the balance of the loan in default.
More
information on Texas foreclosure laws.
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