Most people do not have a couple hundred thousand dollars laying around, so when they want to buy a home, they must rely on a mortgage. A mortgage is a loan that is provided by the lender in exchange for the homebuyer's promise to keep making loan payments.
The catch with mortgage loans is that the homeowner doesn't actually own the home, the mortgage lender does. That means if the homeowner stops making monthly mortgage payments, as promised, the lender has the right to repossess the home. This process is known as foreclosure.
How many payments do I have to miss to be at risk of foreclosure?
Don't worry, you won't face foreclosure for being late on your mortgage payment or even missing a couple of payments. Under new federal laws that went into effect after the mortgage crisis, you have to be at least 120 days delinquent on your mortgage payments before your lender can start moving forward with filing for foreclosure.
The good news is that this gives you enough time to work out with your lender, perhaps with the help of a lawyer. However, it's important to take action as soon as you start receiving calls or letters from your lender stating that your mortgage payments are overdue.
What does the foreclosure process entail in Texas?
If it's too late and you are already facing foreclosure, you might be wondering what to expect. Generally speaking, the foreclosure process in Texas lasts around 160 days. This is faster than some other states because Texas allows foreclosures to proceed outside of the court process in many cases.
Essentially, the foreclosure process involves giving the homeowner property warnings and opportunities to catch up on their payments before the property can be auctioned off to someone else in a foreclosure sale. Generally speaking, this occurs in three steps (so long as the mortgage allows for a nonjudicial foreclosure sale):
- Notice of Default and Intent to Accelerate: Under Texas law, the lender must provide the homeowner with proper Notice of Default and Intent to Accelerate at least 20 days before the "notice of sale" can be sent.
- Notice of Sale: After the 20 days has passed and at least 21 days before the foreclosure sale can take place, the lender must provide the homeowner with a proper Notice of Sale, which states when and where the sale will be held.
- The Foreclosure Sale: In Texas, foreclosure sales take place on the first Tuesday of every month at the county courthouse. At the sale, the property is sold to the highest bidder.
The next foreclosure sales in Texas will take place on Tuesday, Dec. 1. If your home is at risk of foreclosure, speak with an attorney right away to help increase the likelihood of staying in your home. Find out more about foreclosure defense here.