Texas foreclosure is carried out both in court and out of court. The foreclosure process can take about three months.
If no Power of Sale clause is included in the mortgage or deed of trust, the foreclosure is administered by the court. This is a judicial foreclosure. The lender files suit against the borrower and obtains a court order to foreclose on the property. Once the court has declared foreclosure, the property is then scheduled for public sale.
A foreclosing lender in Texas has to give two notices of the foreclosure: a Notice of Default and a Notice of Sale.
- Notice of Default and Intent to Accelerate. The lender or servicer must mail a Notice of Default and Intent to Accelerate to the borrower. This notice must give the borrower at least 20 days to cure the default.
- Notice of Sale. After the cure period expires, and a minimum of 21 days before the foreclosure sale, the servicer or lender then mails a Notice of Sale to the borrower. The servicer is also required to post the Notice of Sale at the county courthouse door as well as file it with the county clerk.
Notice of Sale & Auction
All foreclosure sales are between 10 a.m. and 4 p.m. on the first Tuesday of the month usually on the county courthouse steps. Even in the case of a holiday this schedule stands true. The sale is a public auction with the property going to the highest bidder. The winning bidder is expected to pay in cash, although the trustee may allow some time for the high bidder to submit the full amount. The lender is also eligible to bid on the property, and often opens the bid with the default amount.
The trustee transfers ownership to the highest bidder free and clear of any junior liens. However, if there are liens senior to the foreclosed mortgage or Deed of Trust the ownership will be subject to any senior liens. In other words the deed of trust could have encumbrances in a Texas foreclosure. If the bid amount is higher than the amount owed to the lender, any surplus goes to junior lien holders, and then to the borrower.
In Texas, there is no right of redemption for the borrower.