The Foreclosure Process
Before the Sale
Day 0: Missed Payments
Loan payments must become delinquent for 120 days before the foreclosure process can begin.
Day 120: Notice of Default
In non-judicial Texas foreclosures, the homeowner will be sent a notice letting them know the loan or obligation is in default. This notice is often referred to as a "Notice of Default."
Right to Reinstate
Texas law gives the homeowner the right to reinstate their loan by paying the amount that was past due, not the total loan amount, within 20 days after receiving the Notice of Default. It's also important to check your loan documents, as they may provide additional time in which to reinstate the loan.
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Day 140: Notice of Sale
After the 20-day "right to reinstate" period has expired and at least 21 days before the sale, the servicer must provide the borrower with a Notice of Sale, letting them know the date and earliest time of the sale. These notices can also be called “Notice of Trustee’s Sale” or “Notice of Substitute Trustee’s Sale." This notice must also be posted on the courthouse door and filed with the county clerk.
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Day 161: The Foreclosure Auction is held.
Foreclosure auctions are generally held the first Tuesday of each month between 10:00 a.m. and 4:00 p.m. at the county courthouse. The sale must begin at the time stated in the notice of sale, but no later than three hours after the time scheduled on the notice of sale.
After the Sale
Deficiency Judgments
After the sale, if the property sells for less than what is owed, the creditor may try to come after the borrower for the remainder of what is owed to them. This is referred to as a deficiency judgment. In nonjudicial foreclosures, a lawsuit must be filed in order to obtain a judgment to collect the deficiency. In judicial foreclosures, a second lawsuit needs to be filed. These lawsuits must be filed within two years of the sale. If requested by the borrower, the remaining amount that is owed may be determined by the fair market value of the property.
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Distribution of Excess Funds
After the foreclosure sale, if the property sells for a higher price than what is owed, the excess funds would then be used to pay off any additional liens that may be on the property. If no other liens exist, or if there are additional funds after the junior liens have been paid, the rest of the funds may be available to the former homeowner. The clerk of the court will notify the former homeowner if there are any excess funds. The homeowner then has two years from the date of the sale to claim them.
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Right of Redemption
The "right of redemption" refers to one's ability to reclaim the property even after the foreclosure sale takes place. In Texas, the "right of redemption" is only available for specific kinds of foreclosure actions such as foreclosures of certain tax liens and property owners' association assessment liens. The redemption period as well as how much it will cost will vary, so see the resources below for further details.
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