Are you behind on your mortgage payments? Are you worried about losing your home? You are certainly not alone. The Federal Deposit Insurance Corporation (FDIC) estimates that an average of 250,000 foreclosures take place nationwide each year. According to data from SoFI Learn, the year-over-year nationwide foreclosure rate was up more than 140% in June of 2022.
Facing the risk of foreclosure is stressful, confusing, and emotionally draining. The good news is that there are several different things that you can do to protect your rights and interests. You should explore every option to save your home. In this article, our Frisco mortgage foreclosure prevention lawyer provides a comprehensive guide to the key things to know about the legal process in Texas.
Understanding the Foreclosure Process in Texas
While there are some federal regulations in place regarding mortgages, the foreclosure process is always governed by state law. There are some differences between states. Here are some key things to know about the mortgage foreclosure process in Texas:
- A Residential Property Can be Foreclosed Upon After a Mortgage Default: First and foremost, it is important to emphasize that a bank or mortgage lender may take action to foreclose upon—take and sell—a residential property after a mortgage goes into default. Certain pre-foreclosure steps give financially-distressed homeowners some time to take action.
- Texas is a Non-Judicial Foreclosure State: Most foreclosures in Texas are non-judicial foreclosures. As explained by the Texas State Law Library, a non-judicial foreclosure means a lender can seek to initiate the foreclosure process without getting a court order, which makes the process can move faster. Foreclosures in Texas are especially time-sensitive.
- Lenders in Texas May Seek a Deficiency Judgment: With limited exceptions, a foreclosure sale will often not cover the entire cost of the default. In Texas, banks and other mortgage lenders can seek a deficiency judgment against a borrower. Put another way, a lender could try to sue a homeowner for the remaining balance owed even after a foreclosure sale. Though, lenders do not always pursue deficiency judgments.
Three Notices You Should Receive During the Foreclosure Process in Texas
Rules and regulations are in place governing foreclosures. For example, there are certain legal pre-foreclosure requirements for (12 CFR § 1024.39) federally-backed mortgages. The key thing to know is that a bank or mortgage company cannot simply foreclose on your home without any warning. As a general rule, you should receive the following three notices:
- Notice of Default: A lender should provide a notice of default. The notice indicates that you are behind on your mortgage. It should also include details about what you need to do to cure the default and get your loan back in good standing.
- Notice of Acceleration: The next notice is a notice of acceleration. In effect, this notice means that the lender is getting ready to foreclose. They are seeking the entire balance due immediately—not just the amount of the default.
- Notice of Foreclosure Sale: Finally, a homeowner should get a notice of foreclosure sale. The notice is supposed to be posted in the county in Texas where the property is located. A foreclosure sale notice should be provided a minimum of 21 days before the sale date.
Know Options to Halt a Mortgage Foreclosure
There are very few things that are more difficult than facing foreclosure. You need to take proactive measures to protect your rights and interests. You may still have options available to protect your home. Some potential options include:
- A Forbearance Agreement: If you are falling behind on your mortgage in North Texas, you should never ignore the issue. The bank or mortgage lender is undoubtedly going to take action. With a proactive approach, you may be able to secure some form of forbearance agreement. In effect, a forbearance agreement is a settlement that allows you to temporarily reduce or pause payments. A lender is not required to offer a forbearance agreement—but it is always a possibility that is worth exploring.
- A Loan Modification: Another option that could potentially be used to halt the foreclosure process is a loan modification. You should apply for a loan modification as early as possible in the foreclosure process—always a minimum of ten days before the date of a scheduled foreclosure sale. With a loan modification, the terms of your mortgage will change. You will need to apply for a loan modification. It is not guaranteed to be approved, but it is an option.
- Filing for Bankruptcy Protection: You can stop the mortgage foreclosure process by filing for bankruptcy protection. With Chapter 7 bankruptcy protection, you will get access to an automatic stay. This will (temporarily) halt the foreclosure process. Though, it is not, by itself, a permanent solution. With a Chapter 13 bankruptcy filing, you will also get access to the automatic stay, which will pause the foreclosure process. As part of Chapter 13 bankruptcy, you may also be able to work out a repayment plan to avoid foreclosure.
- Wrongful Foreclosure Claim: Do you believe that the mortgage foreclosure is an error or that the bank/lender violated your rights in some manner? If so, you may be able to raise a wrongful foreclosure claim as a defense. Wrongful foreclosure claims are notoriously complicated. You should consult with an experienced Texas foreclosure defense and prevention lawyer as soon as possible.
Call Our North Texas Foreclosure Prevention Attorney for Guidance and Support
At The Page Law Firm, our Frisco foreclosure defense lawyer is committed to helping people save their homes. If you have any questions or concerns about the mortgage foreclosure process, we are here to help. Give us a call at (214) 618-2101 or send us a message online to set up a complimentary initial strategy session. From our office in Frisco, we provide foreclosure prevention and defense services throughout North Texas, including in Dallas, Fort Worth, Plano, Garland, and Irvine.