If you’re reading this, there’s a good chance you’re facing foreclosure in Texas. This can be frightening and confusing, but don’t worry – you’re not alone. Millions of Americans go through foreclosure yearly, and many find a way to keep their homes. Whether you’re facing foreclosure in Texas because you can’t keep up with mortgage payments to bring your defaulted loan current, or you face HOA or tax lien foreclosures, we’ve got answers for you!
Let’s look at how to stop foreclosure in Texas! We’ll also see what doesn’t work. With our help, you’ll be back on your feet again in no time!
Bankruptcy Does Not Stop Foreclosure for Non-Payment
One common myth is that bankruptcy can always stop a foreclosure. However, filing for bankruptcy is only a short-term solution to halting your lender’s foreclosure activities.
Lenders often seek permission from a bankruptcy court judge to foreclose on properties despite an active bankruptcy filing. And most creditors end up repossessing a home even after you file for bankruptcy protection.
However, bankruptcy may help you avoid a deficiency judgment or a property tax lien.
Making a Large Payment Does Not Stop Foreclosure
If you’ve missed payments but need to prevent foreclosure, making a few payments or writing a promissory note won’t do the trick! You need to pay your entire outstanding balance with your lender to keep your house.
You’ll need to “reinstate” the loan (which generally costs thousands of dollars), or else they have full rights to commence foreclosure proceedings. They will simply credit what you paid as an initial deposit.
Homestead Exemptions Don’t Protect You Against Foreclosure
Texas law homestead foreclosure protections may help prevent you from becoming homeless if your contractor places a lien on your home for a remodel. They can also protect you from an HOA foreclosure in some cases.
However, a homestead exemption cannot save you from foreclosure if you have a pre-existing mortgage or a tax lien. (If over 65, disabled, or living in poverty, you may have a legal right to an automatic stay in your case.)
How to Stop Foreclosure in Texas: Loan Modifications and Other Strategies
So let’s see the options that can help you if you’re facing foreclosure on your home in Texas!!
3rd Party Buyer
Desperate homeowners should be aware of predatory home-buying services. These companies earn a profit by convincing desperate sellers to accept an abysmally low price for their properties. They capitalize on the seller’s urgency and take away potential profits that would otherwise go directly into the homeowner’s pocket. There are many similar services, so it is essential to research before making any decisions!
However, going through your attorney for a 3rd party sale can help ensure you’re getting a fair price. Your attorney represents your rights during the transaction so that you make a reasonable amount of money for your home.
If the current market value of your home is significantly lower than how much you owe on it, a short sale may be an option. Most loans allow for this type of loss mitigation to avoid foreclosure.
In a short sale, you agree to sell your home for less than what is owed on the loan. Your lender will then forgive any outstanding debt and take ownership of the property.
The loss mitigation application process works through negotiations with your lender, so you should consult a real estate attorney if you choose this option!
Home Equity Loan or Line of Credit
With significant equity in your home, many lenders may be willing to refinance your house, especially if it’s your primary residence. They may also offer you a home equity line of credit that you can use to pay off your mortgage company.
Refinancing can help you repay your loan and prevent a costly Texas foreclosure! Up to 70% of specialty lenders will consider you as a borrower if your equity is high enough!
Forbearance: Stop Mortgage Payments for a Time
After being notified of delinquency from your lender, phone the bank and ask what programs they may offer to help you fight off foreclosure. Lenders lose money during a foreclosure process also, so they are often willing to work with you under some circumstances.
If you are a homeowner in Houston, forbearance is an ideal option for delaying foreclosure. This agreement between yourself and the lender can help prevent a default on your mortgage.
If you can demonstrate that you can make mortgage payments in a timely fashion over the upcoming months, many lenders may be willing to postpone foreclosure proceedings.
Negotiating with your lender to alter the terms of your loan to make it more affordable may avoid foreclosure. The modification may include reducing interest rates or extending repayment deadlines.
But be careful! Even if you’re in the middle of applying for a modification, your lender could still push forward with foreclosure proceedings.
To minimize your risk of facing foreclosure, completing and submitting your loan modification application at least 45 days before any potential foreclosure sale date is essential.
Don’t wait until the last minute; act proactively to protect yourself!
Cash for Keys Program (Deed in Lieu)
The Cash for Keys program can help prevent a foreclosure sale! The bank agrees to buy your home in exchange for money and release you from your mortgage obligation.
As a Texas homeowner, ask your lender about the program. Agree on a date to move out. The bank or lender will give you an agreed-upon amount of cash, contingent upon your move. Working with your real estate foreclosure attorney to get the best deal can help you get more cash for your keys!
Reverse mortgages are FHA loans that let homeowners 62 years of age or older borrow against the equity in their homes. With this program, you can receive one of these possibilities:
- A lump sum cash offer
- Monthly payments
- A line of credit
Check out the consumer resource “Reverse Mortgages” to find out more.
Rent Your Home
Despite your inability to make payments on a mortgage, other individuals may be eager to do so! There are many well-qualified renters with sound credit who cannot purchase a home since they lack full time employment or don’t have access to W2 earnings.
Compared to going into foreclosure, renting your home out may offer you more financial flexibility monthly. You will likely rent your home out to someone for more money each month than you pay for your mortgage. So, you can make money by renting your home to someone else!
Just be careful while screening potential tenants. Don’t let yourself feel convinced about a future renter because of their personality. Get a background check and call their references!!
Renting your home also allows you to continue building equity while finding somewhere cheaper to live. Investing in your property by keeping it is usually beneficial, especially if it’s in an area with growth potential. As your property value grows over time, you’ll make a profit.
Get a Federal Loan
Consider a federal loan to pay for other expenses such as business, education, or housing so that you can pay your mortgage.
Check the site GovLoans.gov for information and get your loan for purposes as varied as:
- Disaster relief
- Veteran options
At Benefits.gov, you can discover various programs that may help reduce your expenses — all tailored to best fit your needs!
Sell Your Home
If your home is worth more than you owe, you can put it on the market for a profit and move without losing your home equity! When the market is good, this is always a logical step!
Talk with a real estate foreclosure attorney to get started deciding whether this is your best option against foreclosure!
How Foreclosure Works
You will receive a foreclosure notice in the mail if you fail to pay your mortgage for three to six months or if your HOA is trying to foreclose on you.
Two Certified Mail Notices of Intent and Acceleration
Before a foreclosure can happen, you will receive two certified mail notices. The first is a “Notice of Default and Intent to Accelerate”. After you receive this notice, you have 21 days to pay what you owe before receiving the second notice.
The second notice is called the “Notice of Acceleration and Posting for Foreclosure” and must state the location of the sale and a three-hour period during which the sale will take place. This notice is also filed with the county clerk and physically posted at the courthouse.
Most lenders will post a public notice of default on your door to alert you that you risk losing your property in 30 to 120 days.
Foreclosure Sale: Auction is Scheduled
The time scheduled for the auction depends on when you receive the second notice during that month. Your home will be scheduled for sale at the next monthly foreclosure auction, which is generally the first Tuesday each month.
This second notice could give you another month to prepare or the auction could be only a few days away. It is of utmost importance that you act now to defend your rights as a homeowner.
Non-Judicial Foreclosure In Texas
In Texas, foreclosure of a home does not necessarily require the lender or HOA to go through court proceedings. This is called Non-Judicial Foreclosure.
A non-judicial foreclosure can happen without a court order if the mortgage documents contain a power of sale clause. You have minimal time in TX to assert your rights or lose your home.
In the state of Texas, foreclosure and eviction are two distinct proceedings. Consequently, even if your home is foreclosed on, you can stay in it until the eviction process is finalized. Then a hearing will be scheduled for you to leave the property when necessary.
Non-payment of your mortgage can have serious consequences. If you fail to pay in full, the lender may choose to evict you from your home and auction off the property. Your bank or mortgage provider might also offer a cash for keys option, allowing them to buy back their property at an agreed price. Otherwise, it’ll be sold at auction with the highest bidder winning ownership rights over it.
Take control by finding ways to stall and ultimately prevent foreclosure. Don’t miss out on any potential opportunities – now is the moment to safeguard your property before your chance slips away!
Bring in an experienced real estate lawyer to stay aware of your entitlements and have a legal representative in court!
Tax Lien Foreclosure Process in Texas
If you don’t meet your property tax obligation in Texas, it’s within the state government’s right to repossess your land and send you multiple bills asking for payment of outstanding taxes.
If you fail to pay your taxes on time, the tax collector will deem them delinquent. Based on where you reside, penalties may accumulate and become severe if not addressed promptly.
“You can incur 38% of your tax bill in property tax penalties, interest, and collection fees in just 5 months of nonpayment. Additional penalties include collection and attorney fees that can be as high as 20% of your total property tax bill at the time of collection. On top of all that, you will owe 1% as a monthly penalty in interest (or 12% per year) for as long as your bill is unpaid.” (1)
Not only do the steep penalties and interest continue to increase, but they also make the entire bill much higher. It is possible to mitigate the damage of delinquent property taxes with help. An experienced real estate attorney may help you avoid a foreclosure sale using one of the following strategies:
- Set up a repayment plan with the tax office. Payment plans can help you get on top of the accruing penalties based on their interest rates and give you a viable option to remain a homeowner! And with a payment plan, you may not need to pay additional interest.
- Apply for an exemption if certain factors apply to your situation. If you are over 65 or disabled, you may have a legal right to an automatic stay in your case.
- Negotiate a settlement with the tax office so you can pay property taxes
- Property tax deferral if you are facing financial hardship. If your income is below a certain amount, you may get a break on your past-due taxes for some time.
- As a last resort, file for bankruptcy to stop the tax foreclosure process. However, know that bankruptcy can tank your credit score and remain on your credit report for seven years!
Find Legal Help
Don’t be fooled by big banks with their legal teams that use complicated language to make you feel intimidated and submit to foreclosure. It is no wonder they are so successful when their jargon has become so confusing! Instead of fighting this battle alone, take advantage of the power of professional legal counsel.
Contact us at Jarrett Law Firm for a free foreclosure consultation. We can help you understand your rights and options as a homeowner. If you’re facing foreclosure, protect your home and ensure its security long-term with our experienced foreclosure attorneys. Get in touch today and start finding answers!