What is foreclosure? If you’ve recently run into some financial issues, you may have seen some mail or had some phone calls from the bank threatening you with foreclosure.
That word carries many negative connotations and strikes terror in the heart of any homeowner. Most people know that the outcome of foreclosure is that eventually, the owner loses their home.
However, most people don’t know that foreclosure is a very well-defined process that offers different defense and mitigation avenues.
To better understand what foreclosure is and how it can impact you, let’s analyze this topic in more depth.
We’ll answer the two questions in the title first. Then, we’ll go into more detail.
What Is Foreclosure and Can I Save My Dallas Home?
When the bank forecloses on a property, they’re taking back ownership of it to repay the debt you owe them. When you buy a home, you sign a promissory note. That note has some terms and conditions on it. If you breach one (most commonly by not paying your mortgage), the bank has the right to seize your property and sell it to recoup your mortgage balance.
Foreclosures are relatively well-regulated, so yes, you can almost always save your Dallas home right up to the point where the Sheriff sells it (more on that process later).
However, getting to the point where the bank is threatening foreclosure is often a warning sign.
Depending on your particular situation, it could happen again. Therefore, if you’re facing foreclosure, it’s worth questioning if you want to save the home or find something that doesn’t have quite the same level of stress.
If you want to sell your home, you can almost always escape foreclosure with an all-cash offer from Cash Home Offer USA. We can evaluate your home and give you an all-cash offer that helps you avoid foreclosure altogether. You can get a fresh start on your homeownership journey!
The Foreclosure Process in Dallas, TX
The foreclosure process in Dallas is the same as everywhere else in Texas.
The entire process typically starts with a missed payment.
By law, lenders cannot begin to report to credit bureaus until you are at least 30 days late on a payment. If you don’t make the payment or work with your lender to find an alternative, the lender will begin reporting to the credit bureaus that the mortgage is late.
However, during this time, your lender will call you or email you to let you know that there is a monthly payment outstanding. By law, they must try to contact you by phone to discuss loss mitigation options, including:
- Loan modification
- Forbearance
- Repayment plan
This must happen no later than 36 days after each missed payment. No later than 45 days after, the lender must contact you in writing to discuss loss mitigation options.
If you are in this stage of the foreclosure process, now is the time to negotiate! Do not wait!
Ask your bank, “what is foreclosure, and what do you recommend I should do to stop it?” Your lender will suggest various options and, most of the time, the lender and the owner can reach some agreement.
However, unfortunately, many people don’t negotiate. Instead, they hide from the calls hoping they will go away.
They don’t.
Once 120 days have passed, the lender is clear under federal law to start the formal foreclosure process.
What Does This Process Look Like In Texas?
There are two types of foreclosures in Texas:
- Judicial
- Non-judicial
Since judicial foreclosures cost quite a bit more money and time, they tend to be quite rare.So, we’ll focus on non-judicial ones for this post.
The formal foreclosure process starts with a Notice of Default and Intent to Accelerate. This letter must tell the borrower two things: the specific money they owe and a period by which they must cure the default. This period must be at least 20 days.
Once that period has passed, the lender is free to schedule a foreclosure sale at any time.
It’s impossible to state this enough: do not hide at this point. If you are in this stage of the foreclosure process, please explore your options. You can explore options with your current lender, another bank, or you can even sell your home altogether with an offer from Cash Home Offer USA. But, please don’t let the process get any further.
The servicer will schedule a foreclosure sale if the borrower does not cure the default. At least 21 days before the foreclosure sale, the mortgage servicer will send a notice of sale to each borrower. That notice will also appear on the county courthouse door. This notice will contain the exact date, time, and location of the sale.
At this point, you have a definitive time when the home will no longer be yours. It’s not too late, however. You can still negotiate or get another loan to wipe out the original mortgage. Or, you can sell the place!
The Sale
The Sheriff usually holds foreclosure sales on the first Tuesday of each month. At this sale, people will bid on your property. If the amount bid exceeds what you owe, you’ll receive that surplus money back. If the amount bid is less than you owe, the bank is entitled to a deficiency judgment against the borrower.
The bank will need to sue for this, and, typically, if the home is in foreclosure, the homeowner doesn’t have the funds to pay such a judgment anyways. This tool discourages people from walking away from high-LTV loans with the funds to keep paying but chooses not to do so.
Selling to a Cash Buyer
As you can see, foreclosure is a well-defined process in Dallas. There is plenty of time (typically more than 150 days) where you can find a way to avoid foreclosure altogether.
It’s not an overnight process by any means!
Therefore, yes, you can almost always save your Dallas home if you want. However, many times, getting out with an all-cash offer will make much more financial sense.
If you have a home facing foreclosure and want to avoid foreclosure with an all-cash offer, please contact us! We’d love to see if we can give you the offer you need to avert foreclosure!