Help With Foreclosure in Texas
Since 2008, foreclosure rates in the United States have hit all-time high levels. Although foreclosure may become necessary, most lenders do not want to enter into the foreclosure process with a borrower because it costs them time, money and resources. Many states offer programs to borrowers struggling to make monthly mortgage payments. Texas recommends a Foreclosure Avoidance Counseling. Other options are also available in Texas.
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Foreclosure Process
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Before a mortgage loan is funded, the lender will require the borrower to sign a series of documents. Possibly the most important of these is the security document. In Texas, lenders generally use a deed of trust. By signing the deed of trust, the borrowers agree to the terms and conditions stated within the document. One of these conditions is known as a power of sale clause. This clause enables the lender, or someone acting on its behalf, to sell the property for the unpaid loan balance if the borrower defaults on the loan's payments. When this clause exists, the lender does not need the court's authority to sell the property. In Texas, a nonjudicial foreclosure can be completed within 60 days. If the lender does not possess a valid security instrument with a power of sale clause, the judicial method of foreclosure must be used. Judicial foreclosures generally take longer to complete than nonjudicial foreclosures.
Counseling
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If a borrower is experiencing financial hardship and anticipates he will have difficulty making monthly mortgage payments, he should contact his lender immediately. The lender may be willing to offer a loan modification or refinance the loan. In 2009, President Obama approved the Home Affordability and Stability Plan. Under this plan, homeowner's may be eligible for special modification and refinance programs to avoid foreclosure. Texas works with the U.S. Department of Housing and Urban Development to offer free counseling to borrowers in need.
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Other Options
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If a borrower is not eligible for the modification or refinance programs above, there are other options for avoiding foreclosure in Texas. The borrower should first consider whether he wants to keep the property, or lose it. If the borrower wants to keep the property, filing for bankruptcy is an option. Under Chapter 13 bankruptcy, debtors are able to work out repayment programs with their creditors. Usually, Chapter 13 lasts three or five years. During this time, the creditors cannot solicit the borrower for payments and the borrower's credit score will be frozen. If losing the home is an option, the borrowers can consider a short sale or a deed in lieu of foreclosure. Short sales allow the borrowers to sell the property to a third party for an amount below market value, as long as the lender approves. A deed in lieu of foreclosure can be used if the borrowers choose to willingly grant the bank ownership of the property.
Considerations
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Foreclosure will damage credit scores and remain on the borrower's credit report for approximately seven years. After foreclosure, it will be difficult to obtain another mortgage loan. Looking at your options before the foreclosure process begins is always advised. Because the foreclosure process in Texas is generally quick, the borrower may not be able to stop it once it has begun. Texas homeowner's should be aware of the foreclosure laws and that free help is available in their area. For a list of HUD credit counselors, Texas homeowners can visit the HUD website.
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