In Texas, there are two types of foreclosure: judicial and non-judicial. Most foreclosures in the Lone Star State fall into the latter category. Here are a few basic things that lenders need to know about the non-judicial foreclosure process in Texas.
Non-Judicial Foreclosure in Texas: How It Benefits Lenders
Similar to non-judicial foreclosures in other states, lenders benefit from non-judicial foreclosure in Texas in several ways. First and foremost, courts are not involved in the process. If the borrower defaults on the loan, lenders can begin a foreclosure by engaging a property trustee to file a notice of sale. The lender is not required to get permission from the courts to sell the foreclosed property to recover any losses from the default. Keeping the process out of the courtroom expedites the process and keeps costs down - in Texas, the non-judicial foreclosure process may take as little as 41 days. In addition, if the property sells for less than what the lender is owed, lenders have the right to sue for a deficiency judgment following the non-judicial foreclosure, but not a judicial foreclosure.
Important Steps for Lenders in Non-Judicial Foreclosure
Texas foreclosure laws are extremely complex. Lenders can reduce their exposure by making sure that they adhere to the state’s requirements. Following the steps in the process is crucial.
Once a loan goes into default for either a monetary or non-monetary breach, the foreclosure starts with the sending to the borrower of a notice of default and intent to foreclose. This notice, which advises the borrower that the loan is in default and the property is in danger of foreclosure unless the default is cured or the loan is paid off, must be given no sooner than 20 days before the loan is accelerated. Once the loan has been accelerated, the lender can direct the trustee to prepare and file with the clerk a notice of trustee’s sale.
The notice of trustee’s sale will indicate the date, time, and location of the foreclosure sale. In addition to filing the notice of trustee’s sale with the county clerk, it is also posted at the county courthouse and sent by certified mail to the borrower no less than 21 days before the sale date. The borrower then has three weeks before the sale date to pay off the loan. If the borrower fails to do so, the property can be sold at auction to the highest bidder. In Texas, all non-judicial foreclosure auctions are held on the first Tuesday of every month.
At Total Lender Solutions, we advocate for lenders looking to maximize recoveries on defaulted loans. For over 15 years, our team of highly experienced real estate professionals and legal experts has transformed complicated processes into clear resolutions for institutional and private lenders. We work as a vigorous extension of your team to provide comprehensive solutions and seamless communication, from pre-foreclosure and notice of default to the final sale phase. Our dedication and persistence when it comes to the foreclosure process ensures that our clients feel confident in reaching a successful outcome. Contact us today.
