Foreclosure Rights in Texas
Foreclosure laws in Texas give rights to both the mortgage holder and to the borrower. The legal process of foreclosure terminates the real property rights of a borrower. The mortgage lender has the right to initiate one of two forms of foreclosure process in Texas when the borrower defaults on the mortgage loan.
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Forms
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In Texas, the main form of foreclosure is the non-judicial foreclosure process. When the mortgage lender retains the title to property in a deed of trust, the lender has the right to foreclose on the property without involving the court. A power of sale clause is often included as part of the deed of trust and outlines specific notice requirements and steps involved in a foreclosure. A non-judicial foreclosure may also be referred to as a foreclosure by advertisement.
If the property title is in the name of the borrower and secured by the mortgage note, or if no power of sale clause exists, the lender must initiate a judicial foreclosure through the court system. The appointed judge has the right to declare a foreclosure and set the time, place and conditions of the foreclosure sale.
Notices
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Before the lender proceeds with a non-judicial foreclosure, they must mail the borrower a letter of demand. The borrower has the right to pay the delinquent payments within 20 days to avoid foreclosure proceedings. After the 20 days have expired, the lender has the right to initiate the foreclosure process with a notice mailed to the borrower, filed with the county clerk and posted on the door of the county courthouse. Notices must be initiated at least 21 days before the date of the foreclosure sale.
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Sale
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Texas foreclosure sales, whether judicial or non-judicial, take place on the first Tuesday of a month after proper notices are given. The sale takes place on the courthouse steps, even if the first Tuesday falls on a legal holiday. Anyone has the right to bid on the properties, including the lender. The property is sold to the highest bidder.
Redemption Rights
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The state of Texas has no redemption rights allowing the borrower to reclaim the foreclosed property. Many states do offer a right of redemption for a specific time frame after a judicial foreclosure, whereby the borrower can make payment in full for the outstanding loan balance plus costs to recover the foreclosed property.
Deficiency Judgments
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Texas laws do offer the lenders the right to obtain a deficiency judgment if the foreclosed property sold for less than the outstanding loan balance. Texas deficiency judgments are limited to the difference between the defaulted loan amount and the fair market value of the property.
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