The most common types of mortgage foreclosures under Texas law are judicial and non-judicial foreclosures.
A judicial foreclosure is required when the property owner owes the government taxes on the property. In that instance, the government files a lawsuit seeking to have the property sold in order to pay the taxes owed. If the government proves that the taxes are owed, the judge signs an order of foreclosure and the property is sold at a foreclosure sale. While this type of foreclosure is available to lenders, it takes longer and is less subject to control by the lenders. As a result, lenders prefer to use non-judicial foreclosures when possible. Property owners are strongly encouraged to retain attorneys to represent them in judicial foreclosure situations.
In a non-judicial foreclosure certain notices must be served by the lender once the property owner is in default. The first notice is the “Notice of Default and Intent to Accelerate” which permits the property owner 20 days to cure the default. Once 20 days has passed without the owner curing the default, the lender must serve the “Notice of Sale and Acceleration of Debt” which provides the details of the upcoming foreclosure sale. What follows is the foreclosure sale, which must be held on the first Tuesday of the month in a designated area of the county courthouse. Following the foreclosure sale, the sale proceeds are distributed as necessary to pay for the costs of sale and to pay back the balance of the loan. The new property owner must permit the old property owner 3 days from the date of sale to vacate the property. Also, the lender has 2 years from the date of sale to sue the old property owner for any costs not covered by the proceeds of the foreclosure sale.
A “right of redemption” permits the old property owner a period of time after the sale within which to buy back the home. However, Texas law does not generally permit the old property owner a “right of redemption” following a non-judicial foreclosure sale
As a Texas property owner, it is important to know which type of foreclosure procedure is being used by the lender. This information will permit the property owner to decide whether to handle it themselves or to retain an attorney.
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