Foreclosure is an important legal matter in which you need to understand your rights and options. Craig Lesok has dealt with Non-Judical and Judicial Foreclosures for over 15 years.
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the “Power of Sale Foreclosure Guidelines”.
POWER OF SALE FORECLOSURE GUIDELINES
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:
- Prior to proceeding with a foreclosure, Texas laws state that the lender must mail the borrower a letter of demand, informing the buyer he has twenty (20) days to pay the delinquent payments or foreclosure proceedings will begin.
- At some point after the borrowers twenty (20) days have expired, but at least twenty one (21) days before the foreclosure sale, a foreclosure notice must be: 1) filed with the county clerk; 2) mailed to the borrower at their last known address; and 3) posted on the county courthouse door.
- The foreclosure sale must take place on the first Tuesday of any month, even if said Tuesday falls on a legal holiday, but only after the proper preliminary notices have been given. The sale is on the courthouse steps by auction to the highest bidder for cash. Anyone may bid, including the lender, who bids by canceling out the balance due on the note, or some part of it.
JUDICIAL FORECLOSURE (TRCP 736)
Foreclosures of Home Equity Loans, Tax Lien Transfers and Property Owners’ Association Liens are all governed by Texas Rule of Civil Procedure 736 and Section 51.002 of the Texas Property Code.
- After Default by Debtor, Notice of Intent to Accelerate/ Default is mailed to Debtor
- If Debtor fails to cure default within thirty (30) days, Notice of Acceleration is mailed to Debtor
- Application drafted in compliance with TRCP 736.1
- Citations issued by clerk in compliance with TRCP 736.3
- After expiration of thirty-eight (38) days from the date of mailing of citations, on the following Monday:
- Creditor is entitled to Order Allowing Foreclosure if no response is filed (TRCP 736.7);
- Hearing is required if response is filed by Debtor (TRCP 736.6)
- After obtaining Order, Creditor must post for foreclosure in accordance with Section 51.002 of the Texas Property Code