FORECLOSURE

Overview

If the borrower misses a mortgage payment they will likely be assessed a late fee after a certain number of days.  The amount of the late fee and when the fees will be assessed is outlined in the terms of the promissory note. These days, however, a lender usually doesn’t proceed with foreclosure until a borrower is 90 days past due. 

Assets

A mortgage loan in the state of Texas typically requires a person to sign (1) a promissory note; and (2) a Deed of Trust.  

Promissory Note: The borrower makes a promise to repay the loan according to the terms laid out in the promissory note.  

Deed of Trust: The borrower gives the lender rights to collateral property if the borrower fails to repay the loan according to the terms of the promissory note.  This secures the lender’s investment in the borrower.

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Depending on your income and your financial circumstances, you can often times restructure or reaffirm debt so that you can retain the collateral that secures that debt. 

Requirements

  The mortgage servicer will likely send a default letter and/or call the borrower to make payment arrangements or offer loss mitigation options.  The default letter is usually required under the deed of trust prior to an acceleration of the promissory note, which allows the lender to demand the balance on the note in full upon default, and foreclosure of the property.  

After January 10, 2014, federal servicing rules prohibit notices of default or filings of foreclosure within the borrower’s first 120 days  of delinquency.   This allows you the time to seek out and  apply for loss mitigation options offered to you to avoid foreclosure.  In order to find out more information, contact the mortgage servicer and ask what loss mitigation options are available.

Time

A foreclosure can take anywhere between 2-4 months, but may take longer depending on delays.
 

After the 20-day cure period has expired, but at least 21 days prior to the foreclosure sale, a notice of sale must be sent to each of the borrowers obligated on the note, filed with the clerk and posted to the courthouse door in the county where the property sits.  The notice of sale must include the date, time, and location of the foreclosure sale as well as a notice that any servicemembers should contact the lender to notify it of their military status.