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Avoid Foreclosure in Houston


How to Stop Foreclosure Houston

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When you need to avoid foreclosure, selling your house might be your best bet to save your credit.

Oftentimes homeowners don’t realize that selling is an option when they default on a loan.

Foreclosure is a heartbreaking process that can make people feel vulnerable and helpless. However, it is not a hopeless situation. As they look for solutions for their problem, people often wonder, “Can I sell my home in foreclosure?”

The short answer is yes, you can. Up until the house sells at auction, you can rescue your credit by selling your home and paying off what you owe.

What Is Foreclosure?

The foreclosure process begins when the lender issues a notice of default after you miss several payments. This process can take anywhere from six months to a year or more. In part,, this depends on the negotiations between you and your lender. Learn more about the process and the truth about pre-foreclosure.

Ways to Avoid Foreclosure:

Houston Homeowners Have Options

If you are behind on payments, there are a few options that your lender may be able to offer you to help you avoid foreclosure. Before making a decision, make sure you understand the full implications of your choice. Consider seeking legal advice from a local Houston attorney if you are in doubt.

Loan Modification

Mortgage lenders have the option to adjust the terms of your loan as a means of bringing your loan current. Oftentimes, this method lengthens the period of your loan in exchange for a lower interest.

Short Sale

When your lender allows you to sell your house for less than the outstanding amount, we call it a short sale. In this option, they allow you to sell the house and forgive any remaining debt. However, they also keep all the proceeds from the sale. Here you have the option to work with a local real estate agent who understands short sales or a professional Houston home buyer.

Refinance with a “Hard Money” Loan

Unfortunately, a hard money loan comes with high rates and fees. However, it may buy you the time you need to sell your Houston house and avoid foreclosure. Oftentimes, these loans come from private lenders or individuals, meaning you must negotiate the terms.

Short Refinance

In a short refinance, your lender forgives some of your loan and refinances the remaining balance into a new loan. This was commonplace in the aftermath of the mortgage crisis. For most homeowners, it may no longer be an option.

Payment Plan

When your financial setback is short term, your lender might agree to let you pay off the missed payments. This is a good option when you had temporary expenses that drained you financially. For example, perhaps a medical emergency or car accident put a strain on your finances.

Deed-in-Lieu of Foreclosure

Another way to avoid foreclosure is a deed-in-lieu of foreclosure. With this option, you turn over your home to your lender. This allows you to avoid foreclosure by handing over your property voluntarily. Occasionally, this option allows you to forego payments on the remaining loan balance.

However, this depends on the rules of your lender as well as the state you live in. Luckily, Texas allows this process, so homeowners can convey their property back to the lender in exchange for debt cancellation. Before you request a deed-in-lieu of foreclosure, ask your lender whether they will waive any deficiency on your balance.

Sell to a Professional Real Estate Investor

This option entails selling your home, but unlike a short sale, selling to a cash investor allows you to pocket any difference between what you own and what you sell for. This option enables you to save your credit, and potentially even make some money to help start the next chapter.

Reasons People Face Foreclosure

Oftentimes, those who find themselves attempting to avoid foreclosure in Houston are there due to unforeseen circumstances. Any number of reasons can cause someone to lose track of or miss mortgage payments.

Loss of job or unexpected income loss

A death in the family

Divorce or the loss of their partner’s income

An inability to afford adjustable interest rates that increase

Balloon payments

Demotions or denial of promotions

Excessive debt

Unexpected medical costs

Home maintenance costs

No matter what has left you facing foreclosure, it’s important to understand that you have options. Talk with your lender and seek legal council to determine how much time you have. Then make a plan to either pay off the debt or sell the house to prevent the foreclosure from impacting your credit and ability to purchase in the future. If you choose to sell, consult a member of our team for a cash offer in a flash. These quick offers allow you to sell your house fast and pay off your loan before foreclosure.

The Consequences of Foreclosure

The main consequence is the loss of your house. When they are unable to avoid foreclosure, Houstonians face the forced sale of their house and eviction. They have to find a new place to live, and the process is often a major source of stress

The foreclosure process is also quite expensive. When you stop making payments, your lender tags on late fees. Moreover, you may be stuck with legal fees from trying to avoid foreclosure. Houston homeowners that have the opportunity to stop the foreclosure process should explore all their options.

Fees added to your loan increase your debt to your mortgage lender. After the auction of your home, you might still owe money to them if the proceeds do not cover your loan.

Additionally, a foreclosure deals a heavy blow to your credit score. A foreclosure appears on your credit report a month or two after the process begins and stays on it for seven years. With this on your report, you might have a hard time borrowing money to purchase another home. Moreover, it makes attaining other affordable loans more difficult. This damage to your credit score can follow you to other parts of your life as well.

Filing a Lawsuit to Avoid Foreclosure:

Houston Homeowners in Court

When you lender utilizes the nonjudicial process to foreclose on your property, you can attempt to avoid foreclosure by filing a lawsuit to challenge the foreclosure. Typically, this tactic is not fruitful for homeowners because by the time of the auction, you have not had a chance to be in court.

To utilize this method and avoid foreclosure, Houston homeowners have to prove to the court that the foreclosure should not take place. You must try to prove one of the following.

  • The bank cannot prove that it owns the promissory note (your promise to repay).
  • Your lender did not comply with the state mediation requirements.
  • The bank violated a state law.
  • Your lender did not follow the required steps of the foreclosure as laid out in Texas law.
  • The bank made a grievous error in beginning the foreclosure process.

The main downside of trying to sue your lender is that if you cannot prove your case, you only delay the process briefly. Additionally, lawsuits are expensive. When you don’t have a reasonable base for your claim, you might find yourself stuck with your lender’s attorney fees and court costs on top of the balance owed.

Be Careful of Foreclosure Rescue Scams

Unfortunately, there are people who masquerade as housing counselors. These scammers often target vulnerable homeowners and take advantage of them.

As you work through your mortgage problems, stay skeptical of great deals and seek out transparency. The warning signs of a scam include organizations that ask for advance payment or offer a guaranteed fix to your foreclosure woes.

Moreover, keep an eye out for offers of loan modification via the federal HAMP Program. This federal loan modification program expired at the end of 2017. In the past, frauds told homeowners that the program approved them in order to trick them into sending money.

At Flash Realty Solutions, we believe in helping homeowners out of difficult situations. When we buy houses, we act with transparency and integrity to offer you the respect and dignity you deserve.

When you can’t afford mortgage payments, our professional home buyers can help you find the best solution for you. We strive to help homeowners find the happy resolution they need. If you need to avoid foreclosure and save your credit, give Flash a call today.

Sell Your Foreclosed Home After the Process Starts

Up until the house sells at auction or the bank takes possession of it, you have the option to sell your house. People often refer to this period as “pre-foreclosure,” and you have the opportunity to settle your debts with the lender.

One option to avoid foreclosure is to sell your home and net enough money to pay off what you owe. When you get a decent offer, this can include back payments, penalties, and fees. While you won’t own your house anymore, it won’t foreclose, saving you serious damage to your credit and enabling you to find a new place with your intact credit.

Should you decide to sell your Houston home, let your lender know your plan. Whether you want to sell to a Houston home buyer or list with an agent, tell them you plan to use the money to pay off your mortgage. Some lenders will offer to postpone any auctions or sales to give you time to find the right buyer.

The sooner you make the decision to sell, the better your chances of avoiding foreclosure. Moreover, it takes the pressure off of you and allows you to negotiate a better price for the property. When you choose this option, be sure to ask your lender how long you have before the house goes to auction. This will give you a much better timeline to work with.

A Short Sale Can Help You Avoid Foreclosure

Your lender hates foreclosures as much as anyone. Even for them, the process is a legal and financial headache. When you can avoid foreclosure, they might agree to a “short sale.” This means that you sell your home for less than everything you owe them.

However, this is a desperate action on their part. They don’t want to lose money on mortgages, but they also don’t want to deal with the property. It costs banks money to foreclose on a house, so you may be able to persuade them that a short sale is the best option for everyone.

Through a short sale, you can avoid foreclosure as well as a huge impact on your credit score.

Avoid Foreclosure FAQ’s

How do foreclosure work?

While some states offer longer grace periods, the foreclosure process in Texas moves swiftly. Oftentimes, the final sale of property occurs within 6 weeks of the Notice of Default. To avoid foreclosure, Houston residents must act quickly. When your lender considers your loan “in default,” it triggers the following process.

Notice of Default and Intent to Accelerate

Texas law requires that your lender send you a notice of default and intent to accelerate. Moreover, they must provide a grace period of at least 20 days for you to avoid foreclosure. Houston homeowners may make their late payments during this period.

The notice includes the amount due as well as the due date. In this period, your home is in what is called pre-foreclosure. This means you still have a chance to halt the foreclosure process by bringing your loan current, selling your Houston home, or working out a solution with your lender.

Notice of Sale

Should you fail to pay your debt within the grace period, your lender sends a notice of sale. Typically, this notice arrives at least 21 days before the foreclosure. Moreover, they will post the notice with the county courthouse and file it with the county clerk. This notice includes the date, time, and location of the sale.

Foreclosure Sale

Oftentimes, the foreclosure sale is on the first Tuesday of the month between the hours of 10am and 4pm and takes place at the county courthouse. At the foreclosure sale, they auction the property to the highest bidder.

During the auction, it is common for the lender to bid on the house. If they win the auction, ownership of the house reverts to them. At this stage the property becomes Real Estate Owned.

Deficiency Judgment

In certain cases, you might owe your lender money after the foreclosure. This happens when the property sells for less than what you owe on your loan. In Texas, lenders have two years to sue a non-judicially foreclosed owner for the deficiency. Some banks forego the lawsuit and simply accept the loss.

What types of foreclosures happen in Texas?

In the State of Texas, there are two types of foreclosure available to lenders. The type depends on the particulars of your mortgage agreement. The two types are Judicial and Nonjudicial foreclosure.

What is a Judicial foreclosure? How does it work?

In a judicial foreclosure, the lender goes through the state court system to receive approval from a judge before they foreclose on a property. While this type of foreclosure is available in all 50 states, Texas does not require it. The process begins when your lender sends a letter of intent to foreclose.

However, your lender files a lawsuit with the court requesting the right to sell the home and apply proceeds to the debt. Moreover, the lender can request a deficiency judgment at this stage. Afterwards, you are served with a summons that notifies you of the lawsuit against you.

You have the opportunity to respond to the lender’s complaint and make your case before the court. Alternatively, you can use this time to settle the delinquent payments. Should the court decide in favor of your lender, they continue with the sale of your home.

How does a Nonjudicial foreclosure work?

Oftentimes, foreclosures in Texas are nonjudicial, also known as power-of-sale foreclosures. This means that your lender does not go through the court system. With a power of sale clause in the mortgage agreement or deed of trust, they have pre-authorization to sell your property and pay off the balance of your loan when you can’t afford mortgage payments.

To avoid foreclosure, Houston residents have the option to file a lawsuit and seek judicial review of the case. However, you are responsible for all legal fees.

How long is the foreclosure process in Houston?

The majority of foreclosure cases across Texas are nonjudicial foreclosures. This means that the timeline for the process is typically around 60 days. This countdown begins at the time you receive a Notice of Default from your lender.

In a judicial foreclosure, the timeline varies. This is because the timeline depends on the length of any court cases involved. However, to avoid foreclosure, Houston homeowners should act as soon as possible. Consult your lender as well as a lawyer for guidance.

As you explore your options, remember that selling your house is an option to avoid foreclosure. Houston residents are able to sell their house in pre-foreclosure to settle their debt with their lender.

How can I stop the foreclosure process in Houston?

When the foreclosure process starts, you only have a certain amount of time to halt it. While it is best to avoid foreclosure, Houston homeowner find themselves in difficult situations. Below are a few options that might be available to you.

Speak to Your Mortgage Company

Contact your lender as soon as possible. It’s important to see whether your lender is open to an agreement that will stop the foreclosure process.

Sell Your Home

When you cannot reach an agreement with your lender, you can try to sell your Houston house before they take it to auction. Your lender has to consider offers on the property up until this time. If the offers are below the amount you owe on your loan, your lender may still decide to accept.

File for Bankruptcy

When you file for Chapter 13 bankruptcy, it might be a way to keep your home and avoid foreclosure. After you file, the court issues an automatic stay on any debt collection. This includes any foreclosure proceedings.

When you file Chapter 13, it offers you a 5-year catch-up plan so that you can come current on your loans. So long as you make payments through the trustee, you might be able to prevent the foreclosure of your home.

Another option is Chapter 7 bankruptcy to stop the process. Ultimately, you still have to become current on payments to keep your property. However, the potential of foreclosure remains in both options when you can’t make payments.

What is foreclosure Redemption?

Foreclosure redemption is a less common way to avoid foreclosure. Houston residents achieve this by redeeming their house before the foreclosure auction. In order to redeem your property, you must pay off the entire debt plus interest and any other costs incurred through the foreclosure process.

Foreclosure redemption requires you to request a payoff quote from your mortgage provider. In the state of Texas, you can redeem your house at any point in the foreclosure process. Some states provide homeowners with the right of redemption for a certain period of time after the sale at auction.

However, Texas does not offer this option. When a mortgage foreclosure leads to the official sale of your house, you have no legal avenues to redeem the property. Moreover, it is important that you understand that “foreclosure redeemed” will appear on your credit report.

While this is an option, it is truly uncommon because it requires Houston homeowners facing foreclosure to make payments they cannot afford.

What happens if I can’t avoid foreclosure in Houston?

When they cannot avoid foreclosure, Houston homeowners see their homes sold at auction to the highest bidder. Ownership transfers immediately to a new owner. If you still live in the foreclosed house, you become a tenant subject to the new owner. Similarly, this applies in cases where the lender acquires the property.

At times, you can negotiate a deal with the new owner. Whether you want to buy the property again or remain as a tenant, the decision is theirs. As the new owner of the home, they might also decide to evict you immediately.

In the eviction process following a foreclosure sale, they send you a written notice to vacate the property. In Texas, county constables serve eviction notices, which come with a date in court for an eviction hearing.

If you decide to go to court and the judge rules that you must move, you have 5 days to leave the property or appeal the decision. After these 5 days, the county constable posts a notice on the front door of the property. Per this notice, you have 24 hours to vacate the property.

Should you fail to leave, they have the option to physically remove you and your belongings from the house.

Should I file for bankruptcy to avoid foreclosure in Houston

When trying to avoid foreclosure, Houston homeowners should consider bankruptcy a last-ditch effort. Filing for this is an incredibly important decision that generally shouldn’t be made hastily.

When the auction is about a day away, filing for bankruptcy might stop the sale in its tracks. When you file for bankruptcy, it puts an “automatic stay” in effect. This prohibits the bank from foreclosing or otherwise attempting to collect the debt.

However, it’s important to understand that your bank has the option to file a motion for relief. This is an attempt to seek permission from a court to continue with the foreclosure. If the court grants their request to proceed with the foreclosure, it delays the process for a month or two. This might give you the time you need to explore alternatives with your bank.

Should I apply for a loan modification?

Absolutely! When you have the option to keep your home and want to, try to work with your bank. Applying for a loan modification can delay the process if not avoid foreclosure altogether. This is because of something known as “dual tracking.”

Dual tracking is when your lender proceeds with the foreclosure process while you have a loss mitigation application pending. Ultimately, if they approve the modification, it stops the foreclosure process. From there, you have to keep up with the newly determined payments.

What is a mortgage violation?

A mortgage violation is an illegal tactic that some lenders take. These predatory lending practices leave many homeowners in a bad state. If you recognize any of the following situations, you might want to speak to a lawyer about your lender’s mortgage violations.

  • Did you lender send you a notice threatening to foreclose before your mortgage was placed in a default status?
  • Has your lender failed to comply with USDHUD guidelines that require borrowers of government back loans be provided with assistance and counseling designed to avoid foreclosure?
  • Did your lender give you inaccurate information about your obligations under the loan terms, including actions with the potential to result in foreclosure or default?
  • Have they failed to provide you with information about borrower assistance programs for your specific loan type?
  • Did they failed to gather information that could qualify you for borrower assistance program or mislead you about lender requirements?
  • Did they delay the processing of your application for a loan modification/short sale or lose your materials in whole or part, disqualifying you?

In filing a lawsuit, you might be able to avoid foreclosure. Houston homeowners have rights, and it’s important to work with an attorney who will advocate for you.

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