Texas law recognizes the legal concept of homesteads, granting that every family and single person should be allowed to have a rural or urban homestead that is free from the threat of foreclosure by creditors except under well defined cases in which liens or encumbrances have been properly attached. The broad concept is to make every effort to see that all citizens maintain at least the basic means for self-sufficiency when it comes to a place to live, thereby reducing the number who become wards of the state.
The Texas Homestead Exemption law prevents creditors from foreclosing on a qualifying homestead property unless they first establish an exemption. Recognized exemptions include delinquent property taxes, a mechanic's lien, a materialman's lien, home equity loans, reverse mortgages, manufactured home refinancing, a preexisting lien, refinancing, purchase money liens or a Owelty of Partition lien, which is a legal concept that arises in cases of co-tenancy and division of assets.
Types of Foreclosure
Once a creditor has established a legal exemption claim to the homestead law, he can proceed with a foreclosure according to the standard process defined by the state. In Texas, judicial and non-judicial foreclosures are allowed, although the non-judicial method is more common, according to Realtytrac.com. Compared with many states, Texas foreclosures can take place rather quickly, often being completed in three months.
Most mortgages include a power-of-sale clause that allows the lender to avoid court and start the process by notifying the borrower through the mailing of a letter stating the intention to foreclose. The borrower has 20 days to remedy the delinquency. Following this time period, the lender may send a second letter, this one accelerating the loan, demanding full payment immediately and giving notice of intention to set a date to sell the property.
The process the lender follows to properly notify all parties involved of the pending foreclosure auction has three steps. The lender posts a notice of foreclosure in the court house in the county in which the property is located. This step accompanies filing of a notice of sale with the county clerk. Both these actions must be completed at least 21 days in advance of the sale. Finally, the borrower must be notified in writing of the pending sale, an action that also should abide by the 21-day rule.