How to Stop Foreclosure Under Texas Law

Foreclosure laws in Texas favor the lender.

The state of Texas has the most aggressive foreclosure laws in the country, making it very easy for lenders to foreclose on properties and sell them at public auction. The entire process can move quickly, with foreclosure possible in as little as 41 days after you have defaulted on your mortgage, according to a 2006 study by the Texas Department of Housing and Community Affairs. Although foreclosure is possible in less than two months, the process generally takes about 90 days, according to RealtyTrac.com.

Instructions

1. Contact your lender when you miss a payment or you realize you cannot make future mortgage payments. Some consumer advocates, such as the U.S. Department of Housing and Urban Development, and the nonprofit group, Housing Help Now, maintain that failing to communicate with lenders is the first mistake people make when battling foreclosure. The fast-track foreclosure process in Texas makes it imperative that homeowners consult with their lender before defaulting on the loan.

2. Ask your lender about programs that could help you stay in your house. The Texas attorney general encourages homeowners to talk to their lenders about options that may include temporary deferred payments, delaying a scheduled increase in your interest rate, and refinancing or conversion of an adjustable-rate mortgage (ARM) to a fixed-interest loan. There are other possibilities as well, such as forbearance, which allows you to make up missed payments by paying a lump sum by an agreed upon date. There are also repayment plans that allow you to pay a little extra each month to cover the payments you've missed.

3. Decide which plan works best for you and get the lender to agree. The lender may require documentation from you to support your hardship claim, such as proof of unemployment or medical expenses. If the lender agrees to place you in one of the programs, the foreclosure proceedings will stop. If the lender doesn't agree, you'll have to pursue other options.

4. Contact a real estate agent that is experienced in selling homes facing foreclosure. If you owe more on the mortgage than it is worth, ask the lender if they will consider a short sale. A short sale allows you to sell the home for less than you owe the lender and not be held liable for the balance. Leasing the home to someone who can make the payments is another option. A signed lease agreement or a contract with a potential buyer may be enough to encourage the lender to work something out with you.

5. Communicate with your lender while you're trying to find a buyer for your home. Make an effort to raise enough cash to bring your account current. According to RealtyTrac.com, you've got a fighting chance until the lender files suit to obtain a court order to foreclose on your property, generally about 70 days after you have defaulted. Once the court declares foreclosure, the property will be scheduled for public sale. If the house is sold for less than the mortgage balance, the lender can obtain a deficiency judgment against you for the balance. However, the judgment is limited to the difference between the fair market value of the property at the time of sale and the loan balance. Don't give up until you've found a solution or you simply run out of time.

References

• Attorney General of Texas: Foreclosure Rescue Scams
• Dallas Morning News: Texas' Swift Foreclosure Process
• United States Foreclosure Law: Texas Foreclosure Law Summary
• Housing Help Now: What To Do If You Are Behind On Your Mortgage Payments
• U.S. Housing and Urban Development: Contact Your Lender To Avoid Foreclosure