Each state has different rules governing foreclosure of real estate. In Texas, lenders have the option of pursuing foreclosure in court or out of court. By either means, the foreclosure process in Texas is relatively quick.
When a foreclosure is executed by the court, it is called a judicial foreclosure. Judicial foreclosure is required when the mortgage documents do not have a power-of sale clause which gives the mortgage lender the right to proceed with foreclosure without the court’s participation. When the mortgage documents do have a power-of-sale clause, the mortgage lender can employ non-judicial foreclosure. This process is much more common in Texas, and takes about three months.
The first step is for the lender to send notice to the borrower that they are behind on their payments and must get caught up. The borrower has twenty days to pay the default amount on the loan. If the borrower is unable to cure the default they will receive a second letter which notifies them that their loan has been accelerated. Acceleration of a mortgage is when the lender requires the debtor to either pay off the entire loan amount. Unless the borrower has a rich relative this usually means that the borrower will have to find a lender willing to refinance the loan.
If the loan isn’t paid off then the mortgage lender will schedule the home for foreclosure. The lender is required to send notice of the foreclosure sale to the borrower at least twenty-one days before the sale. All foreclosure sales take place between 10:00 a.m. and 4:00 p.m. on the first Tuesday of the month and the auction is usually held on the steps of the courthouse. Debtors who file bankruptcy to protect their home from foreclosure should file the case before 10:00 a.m. on the day of the foreclosure. Once the foreclosure is filed, the bankruptcy case will no longer protect the debtor’s interest in the home.