Bankruptcy & Foreclosure

When financial storms arise, bankruptcy and foreclosure are two seemingly safe ports. In today’s world, both of these alternatives come with serious consequences for your financial future

Bankruptcy and Foreclosure will remain on your credit record for many years. They will likely change the way many lenders deal with you. Your ability to purchase may be limited and where it is not, interest rates are likely to cost you a good deal more. Most financial advisers agree that in most cases it is best to avoid foreclosure and to avoid bankruptcy.

When facing financial troubles it is often best to step back and take inventory of your options. If your goal is to get back on your feet, this exercise will usually lead back to your largest asset. For most people this is their house. During times of financial stress this asset, your house can become a burden.

But since it is likely your largest asset, it may also if used wisely become a financial life preserver. First it is wise to evaluate the benefits of using this asset to borrow funds that will get you through a difficult period. If you see a clear ability to repay borrowed funds, this may be a wise use of your assets. If you do not see this ability, you should be asking yourself if I should sell my house. Depending on your time-frame, selling to an investor may be your best alternative. As an investor who specializes in such situations, we look for win-win solutions to these problems. Contact us for a free assessment of what we can pay for your house.

State of Texas Quick Facts

• Judicial Foreclosure Available: Yes
• Non-Judicial Foreclosure Available: Yes
• Primary Security Instruments: Deed of Trust, Mortgage
• Time-line: Typically 60 days
• Right of Redemption: No
• Deficiency Judgments Allowed: Yes

In Texas, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, the property will be auctioned off to the highest bidder.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the “Power of Sale Foreclosure Guidelines”.

Power of Sale Foreclosure Guidelines

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, non-judicial process of foreclosure is used:

1. Prior to proceeding with a foreclosure, Texas laws state that the lender must mail the borrower a letter of demand, informing the buyer he has twenty (20) days to pay the delinquent payments or foreclosure proceedings will begin.
2. At some point after the borrowers twenty (20) days have expired, but at least twenty one (21) days before the foreclosure sale, a foreclosure notice must be: 1) filed with the county clerk; 2) mailed to the borrower at their last known address; and 3) posted on the county courthouse door. .
3. The foreclosure sale must take place on the first Tuesday of any month, even if said Tuesday falls on a legal holiday, but only after the proper preliminary notices have been given. The sale is on the courthouse steps by auction to the highest bidder for cash. Anyone may bid, including the lender, who bids by canceling out the balance due on the note, or some part of it. Lenders may obtain deficiency judgments, but they are limited to the difference between the fair market value of the property at the time of sale and the balance of the loan in default.

If you have received a notice about a pending foreclosure, contact us NOW!

For immediate service call us now at713.539.4365