Steps of Foreclosure in Texas
The most important document in the Texas foreclosure process is the Deed of Trust. This document allows the owner of the loan to foreclose the property through a non-judicial process (without court intervention) if the borrower defaults on payments. This document allows the lender to foreclose without a court order which can save a lender thousands of dollars. A court ordered foreclosure can literally take over a year and more than ten thousand dollars. Add this to the fact that no payments are being made through the process, the borrower is still in the home, and its easy to see how important the non-judicial process is.
The steps in the Texas non-judicial foreclosure process are as follows:
20 Day Notice of Default – This written notice states that the debtor is in default under the deed of trust or other contract lien and gives the debtor at least 20 days to cure the default. This must be sent certified mail to all Grantor(s) (Borrower(s)) listed within the Deed of Trust. This document is also known as the “notice to cure”.
Appointment of Substitute Trustee – All non-judicial foreclosures must be carried out by an individual appointed as trustee. The deed of trust, signed at closing, states the name of the person initially appointed to this position. In many cases, an appointment of a substitute trustee is needed if the original trustee is not available. Remember, the only person that can carry out the foreclosure sale is the person on the deed of trust. In most cases, the person who was listed on the deed of trust several years ago, may no longer be available.
21 Day Notice of Sale/Acceleration – This document calls the entire note due and states the day of the foreclosure, the time, and the location. It is important to understand that Texas foreclosures only take place on the first Tuesday of every month. This notice must also be sent certified mail to all Grantor(s) (Borrower(s)) of the Deed of Trust. Once this notice is sent, the individual or business conducting the foreclosure no longer has to accept partial payment for the arrears. They have the right to demand the entire note and unless the entire note is paid in full before the foreclosure sale, the property will be sold.
Trustee Sale – This occurs on the first Tuesday of every month between the hours of 10am-4pm in Texas. The home is foreclosed and is auctioned to the highest bidder after the opening bid is met. This step must take place at the county courthouse steps within the county where the property is located.
Trustee/Substitute Trustee Deed – Once a property has been sold at the auction, the trustee will execute a Trustee/Substitute of Trustee Deed. The Deed of Trust authorizes the Trustee to execute the deed on the debtor’s behalf and is the final title document that transfers the property back to the lender.