An Introduction to Home Foreclosure

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What Is Home Foreclosure?

Home foreclosure is the process by which a lender seizes your home. Home foreclosure in Texas will take several months. You’ll receive a foreclosure notice from the creditor notifying you of the impending foreclosure. It is often called a breach letter, informing you of your breach of contract that says you have to make payments in order to retain ownership of the home. This is generally after your last payment is 90 days past due.

What Can Trigger Home Foreclosure Proceedings?

Most home foreclosures are due to someone failing to pay the mortgage on time. You won’t be kicked out of your house if you miss this month’s payment. Lenders are reluctant to seize property and pay the associated legal fees to do so. However, if you don’t pay the mortgage at all for several months, you will be evicted. This is true of both a primary mortgage holder and a second mortgage. Your home equity line of credit or HELOC counts as a second mortgage.

Know that it isn’t just your mortgage lender who can foreclose on your home. Tax liens on your home for unpaid taxes can be leveraged to force your home to be sold at foreclosure. Taxing authorities will typically wait years before doing so, but a tax lien investor might force the issue. Mechanics liens against your home could be used the same way. Note that a mechanics lien could be filed by the building contractor you didn’t pay to renovate the kitchen as well as a car mechanic.

Texas is unusual for allowing Home Owners’ Associations to not only file liens against your home for unpaid HOA dues but allowing them to foreclose on the home to get their money. This is why you don’t want to throw out those letters from the HOA, because some unscrupulous HOAs have foreclosed on homes after just a year or two and sold the property to a well-connected investor.

What Will Stop the Foreclosure Process?

If you receive a breach letter, it should tell you how to cure the default. You’ll probably be charged interest, late fees and legal fees in addition to the past due amount. You’ll generally be given 30 days from the time the breach letter is sent to the day the house is sold on the courthouse steps. Once the home is sold at foreclosure, the lender can’t accept payment because it isn’t their house anymore. Furthermore, if the deed has a non-judicial foreclosure process in the contract, they don’t have to go to court to take possession of your home.

You can try to enter a foreclosure avoidance mediation program or foreclosure prevention program. These programs are often available when your area was part of a federal disaster area.

Filing for bankruptcy will stop the foreclosure process. You still owe the money, but the court proceedings are stalled for several weeks while the case is evaluated. This can give you the opportunity to renegotiate your house payments and other payments. You may be able to stay in your house, if you go through a repayment plan that includes your mortgage lender. Or you have the time to negotiate the sale of your home. Then you could use the proceeds to pay off the mortgage loan and a number of other debts, though you’ll need to find a place to live.

If you can’t stop the foreclosure, you’ll have to leave the property. If you don’t leave after the new owner takes legal possession, you can be evicted.

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