Foreclosure Guide
What Is Foreclosure and What Can You Do?
How to Stop Foreclosure in San Antonio, TX
How to Stop Foreclosure in San Antonio, TX
Foreclosure can be one of the scariest and most uncertain times in a person’s life. This guide is meant to help explain the foreclosure process, different types of foreclosure, some of the consequences of foreclosure, and ways you can stop foreclosure in San Antonio, TX.
Mortgage foreclosure and property tax foreclosure both follow a series of steps. The more you understand about the process of foreclosure and where you are in that process, the more you will know about what your options are at that time. The steps can vary across different states and counties, but this guide will help educate you about both the general aspects of foreclosure and more specifically the options to stop foreclosure in San Antonio, TX.
This guide is not meant to be legal advice but instead an easy to understand overview of the parts of foreclosure and some of the options available to homeowners in San Antonio and across Texas.
What is Foreclosure
Foreclosure is the legal process by which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender. The lender can legally force the sale of the asset (usually a house or other property) that was used as collateral for the loan. The mortgage or deed of trust contract gives the lender the right to seize the property if the borrower stops making the agreed upon payments for the property.
When a lender loans you money for the purchase of a house, it is what is considered a secured loan because the loan is secured by a lien placed on the title of the house. The borrower is guarantees payment of the loan for the house by placing the house as collateral. If the loan is paid in full, then the lien is removed from the home.
If a borrower fails to make a payment or payments the borrower is considered in default and the loan becomes delinquent. When a loan becomes delinquent the foreclosure process can begin.
QUICK TIP: The foreclosure process is not just for the loan used to purchase the property. Many different liens can be placed against a house and used to start the foreclosure process such as mortgage liens, tax liens, HOA liens, and home equity lines of credit.
Types of Foreclosure
Judicial and nonjudicial foreclosure are the two different types of foreclosure in the United States and the process depends on whether the property is in a deed of trust state or a mortgage state.
Texas is a deed of trust state and follows a nonjudicial foreclosure process.
Judicial foreclosure is when a lender forecloses on a property by filing a civil lawsuit against the borrower and the entire process is handled by the court system of that state. When the lender files the lawsuit, they will also file a lis pendens on the property. The lis pendens is recorded with the county and will let people know of the foreclosure lawsuit. Later a second notice known as a Notice of Foreclosure Sale is posted after the court system has set the date, time, and place for the property to be auctioned.
Nonjudicial foreclosure is also known as foreclosure by power of sale. Nonjudicial foreclosure allows the lender to advertise and sell the property at a public auction without involving the court system. Written in the deed of trust is a power of sale clause that allows a third party trustee to sell the property if the borrower does not make their payments. When a borrower signs the deed of trust at closing, they are agreeing to this process if they fail to make their payments. The trustee will file a Notice of Default with the county clerk where the property is located and this document announces the impending foreclosure and gives the borrower a period of time to either object to the claim by the lender or pay what is owed.
QUICK TIP: Most lenders do not want to foreclose on a property. Foreclosures cost lenders time and money. Look for other options: You may or may not be able to stay in your home, but you may be able to prevent the foreclosure.
Foreclosure Process
The foreclosure process can vary from state to state but here are some general guidelines for the majority of foreclosures.
1.) Missed Payments – There can be many reasons why a person would fall into foreclosure but the process always starts when the borrower has failed to make their payments. Usually, the lender will send a missed payment notice and after approximately 15 days they will charge a late fee. You still have many options when you first fall behind on your mortgage payments.
2.) Notice of Default – Typically, after 30 or more days of non-payment, the lender will file a Notice of Default (NOD). This sets a period of time for the homeowner to pay the amount past due and lets the homeowner know that the lender intends to pursue legal action if the loan is not brought back in good standing. In most states, the lender will also send this letter to the borrow via certified mail.
3.) Pre-foreclosure – After the lender files the Notice of Default, the borrower is now in pre-foreclosure. This time period is the last chance the borrower has to take action or the home will be foreclosed and sold at auction. There are several actions the homeowner can still take to stop the foreclosure process and we will cover some of them in a later section.
4.) Auction – If the default is not fixed, the lender to the trustee for the lender will put the home up for auction. This is known as the foreclosure auction or trustee’s sale and is often held at the county courthouse. At this public auction, the property will be sold to the highest bidder and upon completion of the sale, the highest bidder will be given a trustee’s deed.
5.) Real Estate Owned (REO) – If the property is not sold at the auction then the lender takes ownership of the property and the property often becomes known as a bank-owned property or REO (Real Estate Owned) property.
6.) Eviction – At this point, the new owner or the lender will have the occupants of the home removed from the property. The occupants may be given a few days to gather their belongings while the eviction process takes place and finally the occupants can be removed by the local Sheriff or Constable’s Office.
Consequences of Foreclosure
Loss of Home/Eviction – One of the biggest impacts of foreclosure is that the homeowner will lose the home and whoever lives there will have to leave the property and find another place to live. Even if you will have to leave the home, if you can stop the foreclosure process, you can limit many of the other negative effects of foreclosure.
Emotional Stress – Foreclosure can have many negative emotional effects on the homeowner. Even if the foreclosure is due to circumstances that are not the homeowner’s fault, foreclosures can cause stress, anxiety, and depression.
Credit Score – Damage to your credit is another major consequence of foreclosure. A couple of late payments will have a negative effect on your score, but if the foreclosure process is completed it can be devastating to your credit score and remain on your credit report for 7 years.
Where You Live Next – The majority of apartments and rental properties will use credit score to help screen potential tenants. The negative effects of having a foreclosure on your credit report can make it difficult to find a place to rent.
Tax Consequences – Many people do not know that there can be tax ramifications from a foreclosure. Borrower money that is not paid back can be viewed as income and increase your tax burden. This situation should be discussed with a qualified tax professional.
Getting Other Loans – Almost all lenders will use your credit to decide if they will lend to you, how much they will lend to you, and the interest rate that they will be charging you. If your credit is damaged because of foreclosure, the credit that will be available to you will have low limits and high interest rates.
Employment – Employers often check the credit of applicants during the interview process. They may not take the time to find out why there is a foreclosure on your credit report. Many employers will see it as a red flag and move on to a different applicant.
Local Community – Foreclosures can have negative effects on the local community. Foreclosures and vacant properties can result in vandalism and a negative neighborhood perception. If there are multiple foreclosures in a given area, this can lead to a reduction in property values.
How To Stop foreclosure
Talk To Your Lender – Most lenders would prefer not to foreclose because foreclosures take time and money. It is always a good idea to stay in communication with your lender and see if there are any payment or loan modification options. Your lender will also be able to provide you with an accurate past due amount that will include all late payments, late fees, and attorney’s fees. Repayment plan options vary by lender and different lenders may offer loan modifications that can add payments to the end of a loan in order to make up for the payments and fees that are currently due. This is just one of the ways to avoid foreclosure, below are some more.
Short Sale – A short sale is when the lender will allow the homeowner to sell the property for less than the total amount that is due. The short sale and the short sale amount must be agreed to by your lender because they are accepting less than the total amount that is due. Lenders will often consider this option when the property is damaged and the lender views the property to be worth less than the total amount due. Each bank has its own process for short sales and sometimes short sales can take a long time to complete.
Bankruptcy – Filing for bankruptcy can provide temporary relief from foreclosure. This is a complicated process with many restrictions, and you will need to hire a qualified attorney to guide you through this process. Bankruptcy does not guarantee that you will get to keep your home.
Sell with a Realtor – Listing and selling your house with a realtor is the most common and well-known ways to sell a home and if done quickly, can help you sell the house before foreclosure. Selling your home with a realtor usually involves preparing the home, listing the home, agreeing to a sale, and finalizing the transaction. This process can take 30 days to several months and this option may not work for everyone who is facing foreclosure. You will need a realtor with the experience and contacts to get the house sold fast.
Sell To An Investor – Many homeowners will choose to sell their house to an investor when they are facing foreclosure. An experienced investor will have the knowledge and ability to quickly purchase a home in order to stop the foreclosure process. Investors will typically pay cash and they will buy the property even if it is need of repairs. Make sure that you are working with an experienced investor who is familiar with the foreclosure process and has the resources and capital to quickly purchase the home.
Deed in Lieu – To deed in lieu of foreclosure the property owner surrenders the deed to the property owner to the lender in exchange the lender agrees to release the homeowner from the current debt. The homeowner will have to leave the property and relocate but the lender will not continue with the foreclosure process. Lenders are not required to accept the deed in lieu of foreclosure and this is often viewed as a last resort after the homeowner has tried other options.
QUICK TIP: Some of these options take longer than others. Know where you are in the foreclosure process so you can make the best decision based on your timeline.
Property Tax Foreclosure
If you get behind in paying your property taxes, you might lose your home to tax foreclosure. This is also known as a tax lien foreclosure. Each state has laws that allow local governments to sell a home through a tax sale process in order to collect delinquent taxes. Local governments can recoup delinquent property taxes through tax lien foreclosures or tax deed sales.
Texas and Bexar County use Tax Deed Sales
In a tax deed sale, the property is auctioned off to the highest bidder and that person will receive a Sherriff’s Deed giving them ownership of the property.
To stop a property tax foreclosure, you can pay off the amount of the judgment anytime prior to the sale. Paying the judgment amount will release the lien and stop the foreclosure process.
For tax lien foreclosures in the state of Texas, there is a right of redemption period. The right of redemption period is a period of time in which the homeowner can pay the back taxes and any penalties and interest in order to regain ownership of the home. These timelines will vary depending on if it is an owner-occupied home or an investment property.
HOA Foreclosure
HOA foreclosures happen when the Homeowners Association or HOA has not received their fees and assessments on time. If you live in a house, condo, or townhome that is part of a common interest community then you are probably responsible for paying HOA dues and assessments. If you do not pay these dues and assessments the HOA and file a lien to claim these payments. An HOA is permitted to sell your property to repay the past amounts due. With HOA foreclosures there is also a right of redemption period in which you can pay back the amount owed and reclaim your property. The length of this redemption period can vary from state to state.
Take Action
No matter what your situation is or how bad things may seem, if you choose to ignore the problem then the process will continue and it may become too late. Educate yourself and find out what options are available to you. Then decide on the best path based on your personal situation. And Take Action!
Thousands of people have been through the foreclosure process and it happens to very good people and for all kinds of reasons. Even when it gets stressful and seems too confusing, don’t give up, and don’t be afraid to reach out to professionals who are familiar with the process and can help you with your situation.
Want To Learn How To Stop Foreclosure Now?
So, are you in foreclosure and want to learn how to stop foreclosure now? We’ve helped homeowners just like you find out your options on getting out of the situation you’re in right now. Please don’t wait until its too late…most of the time there is an option of how to stop foreclosure in San Antonio and other parts of Texas.
You aren’t the first person to go through a foreclosure… and won’t be the last. So don’t feel ashamed. It happens.
The best thing you can do right now is to educate yourself on your options. For some people selling your home in foreclosure is the best option (we’ll make a fair all cash offer on your house today), sometimes we’re able to help homeowners STOP FORECLOSURE completely, and sometimes there are other options.