Finding yourself in a situation where you can’t pay your mortgage on time is very stressful in Texas. Things can be worse if you find yourself facing foreclosure and don’t understand how it works. This article covers the two types of foreclosure in Texas to help you prepare.
A judicial foreclosure is a process that takes place in the state courts. The lender files a lawsuit and asks the court to order you to sell your house by auction or some other means with the proceeds of sale satisfying the loan balance.
In a judicial foreclosure, you have the opportunity to “reinstate” your loan and keep your house. As long as you repay all amounts that are past due before or within 20 days after getting served with legal papers from the lender, most states provide for reinstatement of the original terms of the loan contract, including interest rates.
In a non-judicial foreclosure, the lender does not have to get permission from the court in order to sell your house. The term refers both to sales of real estate by lenders who hold title and also sheriff’s sales under power-of-sale clauses contained in mortgage deeds of trust where no title insurance policy is in effect.
In a non-judicial foreclosure, you have fewer remedies to stop the sale of your house, and there’s less time for you to act if you want to save it. For both reasons, lenders like this method better than judicial foreclosures where they might not get paid at all.
If you find yourself in a situation where you can’t pay your mortgage on time, make sure to understand how foreclosure works in Texas. That can help you make a more informed decision and save you a lot of time, money, and stress.