Just like there are dangers of rushing to foreclosure in Texas, in sports there are risk takers and there are conservatives. For example, what if you are coaching a basketball team and you are down by 2 points with 3 seconds left. Do you go for the tie or do you go for the win with a three point attempt? If you make the 2 point shot, you give yourself a chance to win in overtime. If you make the three point shot, the game is over and you win. Obviously if you miss either you lose, but going for the win is much less likely as 3 point shots are statistically less successful unless you are Stephan Curry.
Similar to basketball, there can be different thresholds of risk when it comes to real estate lending.
You never know what kind of borrower you will face and what they are willing to do to save their home. To make matters worse, sometimes the lenders don’t always service loans properly and borrowers really have legitimate claims. This can turn into a legal nightmare and extend the timeframe it can take to repossess the asset that secures the loan.
Working at a real estate law office, we’ve seen some unique situations that can cause a lender to reconsider their rush to foreclose on a property. In most cases it is caused from not properly preparing documents in the first place.
For example, a lender out of state prepared closing documents with an out of state attorney. The deed of trust stated the lender needed to foreclose according to out of state law. Since the property is in Texas, the lender would also be required to foreclose according to Texas State law. With the extra provisions of the out of state law, it increased the foreclosure process by 60 days. Hoping that the borrower doesn’t fight the foreclosure, couldn’t the lender take a chance and foreclosure strictly on Texas law? Sure. On the other hand, what if the borrower does fight back? What it be worth taking shortcuts? The solution here was to minimize risk by foreclosing according to both state laws and make sure there are no claims possible by the borrower. Sometimes the longer road is the less risky.
Here’s another example. We had a lender that did an owner finance deal and claimed that the borrower was in default. We sent a Notice of Default to the borrower and the floodgate of potential claims came rushing in from the borrower. Could the lender have moved forward to foreclosure? Sure. Knowing that the borrower was already fighting back, the lender did not want to test the borrower and potentially spend time and money fighting a legal battle. Even if the lender was right, it is not a win if it takes years to get an asset back. The solution here was to negotiate a loan modification. In return the borrower agreed to forfeit any prior claims and move up the maturity date of the loan.
Knowing the foreclosure process in Texas and understanding what risks are involved in foreclosure are extremely important if you want to recover your asset in the least amount of time.
If you are concerned about a scenario and are not sure how to handle it, don’t take any chances. Contact an experienced real estate attorney in San Antonio, Houston, or Edinburg, to help you devise a solid plan to foreclose efficiently.
