What Happens When a Texas Judge Declares Foreclosure?
Foreclosures in Texas can be either judicial or non-judicial. The difference between the two is that a judicial foreclosure requires a judge to grant the order to move forward with the foreclosure while the non-judicial foreclosure can be completed at the discretion of the lender via a trustee appointed by the lender.
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Judicial Foreclosure
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Most Texas foreclosures are non-judicial in nature and do not require court approval. In a non-judicial foreclosure, the primary mortgage holder can repossess the house as collateral in the event of default. The deed of trust is a document filed with the county recorder's office that outlines the property rights for all parties who have an ownership interest in the home. The borrower has primary ownership interest in the home. The mortgage holder, right behind the borrower, also has ownership rights per the deed of trust through financing the home. When the deed of trust does not contain the appropriate language indicating a non-judicial foreclosure, a judicial foreclosure is necessary. The deed of trust must specifically state that the primary mortgage holder can foreclose for default on payments.
Court Appearance
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In a judicial foreclosure, the lender must first file a complaint and lawsuit with the county recorder's office where the property is located. Once this is filed, a court date is issued. The borrower is served with the notice via certified mail or court-appointed process server. On the appointed date at the specified time, the lender will be able to present his case in front of a judge regarding foreclose on the borrower based on a loan default. The borrower is also allowed a rebuttal. However, if the homeowner fails to appear, he forfeits the right to defend his position. Once the judge has had an opportunity to review and deliberate both sides, he will make a decision. If the judge rules in favor of the lender, the foreclosure will proceed; if he finds in favor of the borrower, the homeowner can remain in the residence, and the lender must accept a court-ordered payment arrangement.
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Foreclosure Notice
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The foreclosure notice is served to the homeowner at least 21 days prior to the auction in accordance with Texas real estate law. On the first Tuesday of every month, homes are auctioned off, either in front of the court house or in the yard of the foreclosed property. Should a buyer not come forward with an amount that the bank requires as a minimum or acceptable bid, the bank will keep the home for resale on the open market at a later date. Even at the time of auction, the previous homeowner can still reside on the property.
Eviction
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Once a new owner has made a purchase of the property or if the bank has retained ownership for later sale and the homeowner fails to vacate the home, eviction proceedings will begin. The new owner will have to go to court and file the appropriate eviction paperwork. This paperwork will be turned over to the county sheriff's department which will serve the resident with a 72-hour notice to leave the premises. Should the evicted party fail to do so, the sheriff's office is allowed to remove him by any means allowed by law as well as remove any personal items left in the home.
Considerations
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Most mortgage holders prefer to use non-judicial foreclosures as opposed to judicial foreclosures. Non-judicial foreclosures are less time-consuming and less costly since the courts do not have to be involved and extra fees need not be paid. Because of this, the wording in most deeds issued for a property purchase will have the appropriate language in regard to foreclosure and mortgage default.
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References
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