A foreclosure is usually a very stressful process that comes at a very stressful time in life. That’s why it’s totally reasonable to want to know exactly how long the process will take. We’ll answer that question in this article, along with a few other questions about foreclosures and the process around them.
It might not be a great experience, but at least after this article, you’ll be clued up on what to expect. Uncertainty is worse than knowing exactly how things stand.
What Is Foreclosure?
If you have a mortgage, then you know that you’ll have monthly payments to make to the institution that lent you the money. If you stop making those payments for any reason, that institution can begin a foreclosure.
This means they can force you to sell the house or property that’s used as collateral for the mortgage. In everyday language, people often say that the bank takes the house, or something similar.
Types Of Foreclosure Procedure
The process and nature of a foreclosure vary by state and there are two kinds: judicial and non-judicial foreclosure. Only one kind of these can be in progress at any one time. In Texas, most foreclosures are non-judicial but we’ll look at both kinds here.
Judicial foreclosure: Judicial foreclosures are the result of a lawsuit and are ordered by a court. This means that a court process is necessary for a judicial foreclosure.
Non-judicial foreclosure: In non-judicial foreclosures, a court process isn’t necessary. The lender can force the sale of the property without one. As a result, non-judicial foreclosures are usually much quicker than judicial ones.
How Long Does A Foreclosure Take?
The answer to this question varies by state and also due to several other factors, such as any negotiations that may be ongoing between the lender and the borrower. Texas is a power of sale jurisdiction, meaning that a lender can go through with the sale of your property without having to go to court.
As a result, foreclosures in Texas can be very quick, sometimes being completed about two or three months after the process begins, though this is quicker than average. In fact, Texas has the quickest average time for a foreclosure of all the states, at 159 days.
To put this into perspective, the national average for the length of the foreclosure process is 477 days, well over a year and about three times as long as in Texas.
Something to bear in mind is how quickly the lender will be willing to start the foreclosure process. This isn’t part of the foreclosure process itself, but it’s something you should be thinking about if you think you’ll have trouble with your mortgage. They generally have the right to do this as soon as agreed payments stop being made.
In theory, this would include even one missed payment under most loan agreements but in practice, most lenders will not want to begin a foreclosure until the borrower is at least 3 months behind. Sometimes, it can even be a fair bit longer than this. You will likely receive lots of warnings by letter and phone before the foreclosure process begins.
While it is rare in Texas, judicial foreclosures are also possible. This is the only form of foreclosure possible if you have a home equity loan. In theory, this process could take as little as 41 days, but can be longer – possibly much longer – depending on the details of the case and the borrower’s defense.
Frequently Asked Questions
What Is A Deed Of Trust In A Foreclosure?
A deed of trust is a document that is used as part of the purchase of a house. It gives the lender (usually a bank) the right to force the sale of the property as a means of recovering the money lent in the event that the borrower either cannot or will not continue to make repayments.
Are There Alternatives To Foreclosure?
There are alternatives to foreclosure which may be available to you depending on your situation – not all of these will be possible in every situation. One is to negotiate with your lender to alter the terms of your loan agreement to allow you more time to pay, or to reduce your monthly repayments.
Another possibility is short sale. Short sale is when you sell your house for a value less than your outstanding debt to the lender. This might be possible if you have only one mortgage on the property. If you have more than one, you would need to gain permission from the other mortgage lenders.
They would almost certainly not give you this, because they would make nothing from the sale as the first lender would have to be paid first. However, if you manage to arrange a short sale, the lender will not be allowed to pursue you for the remainder of the debt after the sale.
This has the benefit of being better for your credit score than a foreclosure would be. Another alternative similar to a short sale is detailed in the answer to the question below.
Can I Give My House To The Lender In A Foreclosure?
A foreclosure is a process which forces you to sell your house so that you can repay a lender. However, as long as you have only one mortgage on the property, there is another option. Rather than selling your property to repay them, it is possible to simply give the property to the lender directly.
They can then sell it and keep the money from the sale. The legal term for this is “deed in lieu of foreclosure” and it is technically an alternative to foreclosure, rather than an option within it. If you choose to do this, then the lender will be responsible for selling the house.
If the money earned from the sale is not enough to cover your debt to the lender, then they may sue you for deficiency after the sale.