Texas Foreclosure Law
Texas State Foreclosure Law dictates that lenders may avail of the Judicial and Non-Judicial processes to foreclose deeds of trust or mortgages in default. The typical time of process last about 60 days and the deeds of trust and mortgages are the primary security instruments recognized. In Texas, Deficiency Judgments are allowed but the borrower’s Right of Redemption is not recognized. 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.
The Judicial Foreclosure process is used when there is no power of sale clause existing in the deed of sale or in the mortgage. Petitioners must file a lawsuit before the court issues an edict ordering foreclosure proceedings to take place. It has been a general practice that when the court declares a foreclosure, the property will be auctioned off and will subsequently be awarded to the person making the highest bid for cash. On the other hand, the Non-Judicial Foreclosure process is used when a power of sale clause is expressed in the deed of sale or in the mortgage. “Power of Sale” is the process wherein the borrower agrees to sell the property in dispute to settle the remaining balance from a loan in case of default. Its most obvious difference from the judicial foreclosure is that it doesn’t need any court order to auction off the property as it is already stated in the security instruments. The lender or their duly designated representative, commonly referred to as the “trustee,” may execute the “power of sale.”
Power of Sale Foreclosure Guideline:
Should the security instruments contain a power of sale clause, the terms specified therein must be strictly followed. Otherwise, the non-judicial foreclosure should be carried out according to the process specified as follows:
- Before any foreclosure proceedings will take effect, Texas law requires the lender to send the borrower, through certified mail, a Letter of Demand, informing him that he has 20 days to cure his default or else, foreclosure proceedings would begin.
- After the borrower’s 20 day period has expired, a Notice of Foreclosure must be filed with the clerk of the county where the property is located. A copy must then be mailed to the borrower at their last known address, then another copy should be posted on the entrance of the county courthouse at least 21 days before the foreclosure sale.
The foreclosure sale must take place on the first Tuesday of any given month, even if that date should fall on a legal holiday. However, the said foreclosure sale will only take place after all the proper preliminary notices have already been issued. The sale will be held at the entrance of the county courthouse through a public auction where the property will be awarded to the highest bidder for cash. Anyone is entitled to make a bid, including the lender. The lender may bid canceling out the entire balance due to him or parts of it.
Texas Foreclosure Help : Local Texas HUD Office
Dallas
A. Maceo Smith Federal Office Building
525 Griffin Street, Suite 860
Dallas, TX 75202-5007
Phone: (214) 767-8300
Fax: (214) 767-8973
TTY: (214) 767-4140
Fort Worth
Burnett Plaza, 25th Floor
801 Cherry Street
Fort Worth, TX 76102
Phone: (817) 978-5965
Fax: (817) 978-5569
TTY: (817) 978-5595
Houston
1301 Fannin, Suite 2200
Houston, TX 77002
Phone: (713) 718-3199
Fax: (713) 718-3255
TTY: (713) 718-3289
Lubbock
George H. Mahon Federal Office Building
1205 Texas Ave, Suite 511
Lubbock, TX 79401
Phone: (806) 472-7265
Fax: (806) 472-7275
TTY: (800) 887-8339
San Antonio
One Alamo Center, Suite 405
106 South St. Mary's Street
San Antonio, TX 78205
Phone: (210) 475-6806
Fax: (210) 472-6804
TTY: (210) 475-6885
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