Texas Foreclosure Information
Foreclosure proceedings can be initiated by lenders when the mortgage or other lien against the property goes into default. A government authority can also foreclose on a property for reasons such as delinquent taxes. Texas foreclosure laws are skewed in favor of lenders, but there is help available for the homeowner in danger of losing his home. A variety of services are offered at no cost to the homeowner, including education, counseling, loan adjustment and other programs.
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Statistics
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According to Foreclosure Listing Service, Inc., 14,000 foreclosures were posted in Texas in 2009. This represents a 57 percent increase over 2008. As of January 2011, there were 19,123 posted foreclosures in Texas.
Types
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Judicial foreclosures require the lender to get a court order to foreclose. Texas is one of 27 states that also allows for nonjudicial foreclosures when a "power of sale" clause is in the mortgage contract or deed of trust. This provision serves as a preauthorization by the borrower for the home to be sold by the lender in case of default. Unless specific terms are detailed in the document, the lender is required to mail a demand letter to the borrower, allowing him 20 days to become current on his payments. After that 20-day period, the lender may file a Notice of Foreclosure with the county clerk and, in as little as 21 days, the home may be sold at auction. The majority of foreclosures in Texas are nonjudicial foreclosures.
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Shadow Inventory
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Only a portion of the houses in foreclosure in Texas is listed for sale. The majority of homes in the process of foreclosure are not yet listed for sale (as high as 63 percent in Dallas County). These homes are referred to as "shadow inventory." Many Texas lenders may hold back from listing foreclosed properties for sale to stem over-saturation of the market.
Right of Redemption
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Texas does not have a statutory "right of redemption," which would allow the homeowner to reclaim his home after foreclosure by paying the delinquent amount of the mortgage plus court costs.
Foreclosure Sales
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Foreclosure sales in Texas take place on the first Tuesday of every month, even if that day falls on a national holiday. Foreclosure sales are held at county courthouses through public auction. Anyone, even the lender, can bid on the house and the property will go to the highest bidder. Additional liens on a property, such as a second mortgage, are said to be subordinate, or "junior," to the first mortgage. Ownership is transferred through a foreclosure sale free of junior liens, meaning the buyer does not have to pay them and the holders of those liens lose their collateral, regardless of the amount of the lien. However, some liens, such as those for unpaid taxes, are considered "senior" liens and must be paid by the buyer.
Scams
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There are many scams that target homeowners in foreclosure. They guarantee to end the foreclosure -- for a fee -- by negotiating a loan modification with the lender. After the fee is paid, the scammers disappear. The Texas Foreclosure Prevention Task Force exists to assist Texas homeowners facing foreclosure and avoid loan-modification scams. Frameworks Community Development Corporation, serving Central Texas, is another nonprofit organization approved by the United States Department of Housing and Urban Development (HUD) to give assistance to homeowners at no cost.
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