Texas Foreclosure Process and Timeline

Learn about the Texas foreclosure process and timeline to know what stage you are in and how you much time you have before your home goes to auction
Contributor: Cindy May

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The Texas foreclosure process has roughly 160 days from start to finish until a home goes into auction, so knowing where you stand can help you decide what might be the next best course of action.

Foreclosure is awful, to say the least.

There’s a wide range of emotions that you experience when facing foreclosure, including both anger and sadness. 

Thinking about how much money you’ve already put into the mortgage, only for it all to potentially go to waste, and also the helplessness you may feel knowing that there’s a possibility that you and your family have to pick up and move somewhere.

While it’s challenging to figure out the solution to a pending foreclosure, it’s important to know how that process works and how long you have to figure out a solution before the home gets included in the auction list.

Let’s start with what the foreclosure process looks like for Texas.

Is Texas a Judicial Foreclosure State?

The majority of foreclosures in Texas are executed through what is known as the non-judicial process. This means there is no need for the lender or borrower to appear in court. This option is available to the lender when a mortgage deed contains a Power of Sale clause.

What happens in a non-judicial foreclosure is that a lender can immediately start the foreclosure process without requiring a court appearance, which will significantly speed up the process.

Attorney Amy Loftsgordon explains that a Power of Sale clause is a pre-authorization on the part of the borrower that allows the lender to sell the property to recoup the balance owed if a borrower defaults on the mortgage loan. This power to sell the property can be executed by a lender or a trustee representing the interests of a lender.

When no Power of Sale clause exists in a mortgage deed, it is then necessary for a lender to file a lawsuit in hopes of obtaining a court order that will initiate the foreclosure process. Once the order is granted, it is commonplace for the property to be auctioned off to the highest bidder. This type of foreclosure is referred to as judicial foreclosure and is the second of the two types of foreclosures allowed in Texas.

How Many Missed Payments Before Foreclosure in Texas?

Typically the foreclosure process begins only after a certain number of missed payments. So, it’s okay to have a late payment, but that does flag your loan so that they keep an eye on it.

Texas is bound by federal law that stipulates a borrower must be 120 days delinquent on a mortgage loan before the foreclosure process can begin. The manner in which most mortgages are structured means that four mortgage payments will likely be missed before a lender will begin the foreclosure process.

Can You Get Out of Foreclosure Once it Starts

Once the foreclosure process begins, you still have some time to get out of it.

You’re typically able to negotiate with your lender by paying the arrears to get the loan back in good standing.

However, if you’re unable to pay the amount owed, then you will want to start the loan modification process (click here to learn how the loan modification process works).

If you are not approved for loan modification and you’re unable to get the loan back in good standing, then the next best option is to try and sell the house.

Here’s a warning about selling the house: if you list your home and it does not sell in time, then it will go to auction. Talk with your realtor about the state of the market and how you are pricing your property compared to surrounding houses.

If you’re short on time, we suggest looking into two options:

  1. Selling the house as-is to a cash buyer that can close on it immediately without the approval of a financial institution.
  2. Looking into a short sale if your mortgage is greater than the value of your home.

The short sale involves submitting a loss mitigation application to your lender. This document is also referred to as a foreclosure avoidance application and once submitted, one of the following conditions must be met before a lender can move forward with the foreclosure process:

  • The borrower is notified the loss mitigation process is not available to them.
  • The borrower does not agree to the program offered under the loss mitigation process.
  • The borrower fails to adhere to the requirements of the loss mitigation program.

The loss mitigation application must be submitted at least 37 days before a scheduled foreclosure sale, so it’s important to get started on this immediately if you believe that your home will have difficulty selling.

It should also be noted that federal guidelines require a mortgage lender to notify a delinquent borrower both through written correspondence and via telephone call before the foreclosure process begins. Don’t ignore communications from your lender or mortgage loan provider. 

There is a chance that an agreement can be struck that will allow you and your family to stay in your home. 

Check out our article on how to stop foreclosure to see more in-depth information on methods you can use to prevent your home from going to auction.

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Can You Stop Foreclosure by Paying the Past Due Amount

Lenders in Texas are required to extend a 20 day grace period to borrowers once a notice of default has been issued. 

This period is often referred to as the pre-foreclosure period and during this time a borrower can halt the foreclosure process by paying all past due mortgage notes and any late fees that have been added to this balance.

The time it takes to foreclosure after notice of default can vary, but it is typically around 60 days.

How Long Does it Take to Foreclose a House in Texas?

A foreclosure is not a singular event that takes place once you are unable to make monthly mortgage payments. Instead, foreclosure is a series of steps in a relatively complex process. 

If you are behind in your payments or struggling to pay your mortgage each month, it may be helpful to have a complete understanding of the steps that make up the foreclosure process.

It will also benefit you to arm yourself with this knowledge as early in the process as possible. Jeff Davidson, of Jeff Davidson Law Firm, explains that, on average, it takes 159 days to complete a foreclosure in Texas.

What are the stages of foreclosure?

1. Notice of Default – A lender is required by law to send a written notice that allows you 20 days to pay the full amount past due in order to bring the loan current. Other types of loans may have a slightly different time frame, such as VA loans and FHA loans.

2. Notice of Sale – Once the lender has decided to push forward with the foreclosure, they will need to set an auction date. The notice of sale is sent in order to notify you that an auction is to take place. It must be mailed 21 days prior to the auction, and the notice is also posted in the courthouse and filed with the county clerk.

3. Foreclosure Sale - Finally, the auction will take place at the county courthouse on the first Tuesday of each month (Harris County). Texas does not have a right of redemption for non-tax related foreclosures, so once the auction takes place you are not able to buy back the property. 

Pre-Foreclosure/Loss Mitigation

When a borrower is late on a monthly mortgage payment, it is common for a grace period of 10 to 15 days be extended to him or her. A late fee will be assessed after the grace period and these fees will accumulate with each month thereafter that a payment is not made by the borrower. 

Things get a little more complicated when a second mortgage payment is missed. You are now in default of your mortgage loan and you will likely see a noticeable change in the way your mortgage servicer communicates this fact to you. 

This is also the point in the process where things begin to get a bit stressful for the borrower. However, there is still a chance to keep your home if you decide that is the outcome you desire.

Once ninety days have passed since your last mortgage payment, it is common practice for your lender to send a demand letter to you. 

This letter will inform you that you have 30 days to become current in your mortgage payments. This is also a critical time for you to negotiate an agreement with your lender if you determine you want to continue living in your home.

Once your mortgage loan has been delinquent for 120 days, you will receive written notice in the form of a breach letter. This letter is used to provide the borrower with formal notice of the lender's intent to make the balance of their mortgage loan due.

The breach letter you receive is required to specify the actions on your part that resulted in your mortgage loan default, available actions that will resolve the default, and the date by which the default must be resolved. 

The letter will also make it clear that failing to resolve the matter before the date specified will result in the acceleration of the mortgage and a sale of the property. In many cases lenders will send this letter a little earlier in the process, sometimes around the 90-day mark.

Notice of Default

Texas real estate law requires that borrowers who are in default of a mortgage loan for 120 days receive a notice of default along with an intent to accelerate the loan via certified mail. 

The notice of default must be sent to the borrower's last known address and will provide a minimum of 20 days for the borrower to satisfy the requirements to cure the default. 

This requirement can be satisfied by the breach letter but many lenders will send both correspondences to borrowers.

Notice of Sale

Once the allotted time provided for the borrower to find a cure for default has elapsed, the next step in the process for the lender is to provide a notice of sale.

How You Are Notified of Foreclosure

Lenders are required by the state of Texas to send a Notice of Sale by certified mail to each of the borrowers who are responsible for the mortgage loan that is in default. It is also required for the notice of sale to be:

  • Posted on the door of the county courthouse where the foreclosed property is located.
  • Filed with the office of the county clerk of the appropriate county.

The information provided on the Notice of Sale must include the date and time the sale will be executed as well as where the sale will take place. 

Military Service Note: Service members facing foreclosure should educate themselves regarding the special provisions available to them.

How Long do You Have after You Received a Foreclosure Notice

A Notice of Sale must be delivered to the borrower in default no less than 21 days prior to a scheduled sale by the lender. The sale can be scheduled for any time after the 21 day period is expired.

There's still time!

You can still sell your house even up to 3 days before the auction date.
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What are the Differences of Notice of Default and Foreclosure

It is important to remember that a Notice of Default is not the same as a foreclosure. 

A Notice of Default is an important first step in the foreclosure process and is often referred to as a period of reinstatement. This notice informs the borrower that the bank is ready to actively seek remedy if the defaulted portion of the mortgage loan is not made current. 

Once a foreclosure begins, the bank or lender takes possession of the home with the intent to sell the property to recoup the unpaid mortgage balance owed by the borrower.

A foreclosure often results in the lender losing money on the deal, so they would much rather allow you to become current on the loan or sell the property yourself than having to go through auction.

The Foreclosure Sale

Foreclosure sales in Texas most often take place between 10:00 A.M. and 4:00 P.M on the first Tuesday of each month. Foreclosure sales usually begin at the time indicated on the notice of sale. When this is not possible, the sale must not start more than three hours after the designated time stated on the notice of sale.

The highest bidder at the sale will take control of the property. The foreclosing lender will make what is known as a credit bid that usually proves sufficient for them to take possession of the property.

The Danger of Foreclosure

Foreclosure is usually the result of some financial stress, either from losing a job, medical bills, or some other strain that inhibits you from making mortgage payments.

Every year, 1 out of 200 homes goes through foreclosure, so it’s a lot more common that you might think.

The danger of letting your home go into foreclosure is that your credit becomes tarnished for a minimum of 7 years, making it very difficult to finance another house or to get other kinds of loans.

It is very important during this process that you know what are the possible consequences of foreclosure, just in case you had a thought of letting it go into foreclosure.

Not being able to sell your home in time is also a very real danger, and often occurs when a homeowner contracts with a real estate agent who isn’t well-versed in marketing pre-foreclosure properties or working with short sales.

If you’re facing foreclosure and have no way to bring the loan back into current standing, we would like the opportunity to speak with you about purchasing the home from you.

Not only do we buy homes in cash, we pay for all closing costs and can purchase quickly if your auction date is around the corner (we have been known to purchase 3 days before the auction).

With this route, you can mitigate full loss of any equity you’ve built and can salvage your credit and qualify for financing much sooner than with a foreclosure event on your report.

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