Texas Foreclosure Law
Texas foreclosures are carried out both in court and out of
court. Compared to many states, it is extremely easy to
foreclose on properties in Texas and the process moves rather
quickly. The entire foreclosure process can take about three
months.
Pre-foreclosure Period
When no power-of-sale clause is included in the mortgage or
deed of trust, the foreclosure is administered by the court. The
lender files suit against the borrower to obtain a court order
to foreclose on the property. Once the court declares
foreclosure, the property is scheduled for public sale.
Foreclosures are more often accomplished out of court. Before
starting the foreclosure process, the lender first mails a
letter to the borrower which allows at least 20 days to pay the
default amount on the loan. Following this time period, the
lender may begin the foreclosure process by mailing a second
letter to the borrower which states that the loan has been
accelerated (full balance now due), and a sale has been
scheduled to recover the full amount due.
Notice of Sale / Auction
The lender posts a notice of sale at the door of the county
courthouse and files a foreclosure notice with the country clerk
21 days prior to the foreclosure sale. The lender also mails a
copy of the notice to the borrower at the last known address 21
days prior to the sale. Texas does not require the lender to
publish notice of the sale in the local newspaper. All
foreclosure sales are between 10 a.m. and 4 p.m. on the first
Tuesday of the month (regardless of holidays) usually on the
county courthouse steps. The sale is conducted as a public
auction with the property going to the highest bidder, who pays
in cash, although the trustee may allow some time (within the
same day) for the highest bidder to collect the full amount. The
lender is also eligible to bid on the property. The trustee
transfers ownership to the highest bidder free and clear of any
junior liens but subject to any senior liens. If the bid amount
is higher than the amount owed to the lender, any surplus goes
to junior lien holders. In Texas, the borrower's right of
redemption after the sale does not exist.
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