The Ultimate Texas Real Estate Guide – Foreclosure
Welcome to the Ultimate Texas Real Estate Guide! Today we will show you how to set yourself up to successfully overcome foreclosure.
I know two things:
- Foreclosure is the worst possible financial position to be in and you want to avoid it at all costs.
- You have options (whether you know it or not!) and you made the best decision possible to come here.
The purpose of this guide is to help you avoid foreclosure at all costs. We will do that by teaching you about all your options. YES! You DO have options! This guide is going to walk you through all the potential solutions that your banks, real estate agents, and lawyers know and ones they may not even know about.
At any time if you have questions we are EASY to reach
What Exactly is Foreclosure and Why Does It Happen?
Definition: Foreclosure is the legal process by which a lender takes control of a property, terminating previous ownership rights, and sells the home because the homeowner is unable to make full principal and interest payments on his or her mortgage, as stipulated in the mortgage contract.
A lender, usually a bank, goes through this process when someone has stopped on-time payments on their mortgage. The lender then takes the property from the mortgagor (you, the borrower) and sells it at a foreclosure auction to get back the money they loaned in the first place. The bottom line is the lender only cares about getting their money back and uses foreclosure to cut their losses!
Types of Foreclosure
- Judicial foreclosure = the lender goes through the court system for approval to seize and sell the property
- Non-judicial foreclosure = no need for the lender to go through the courts because the “power of sale” clause in the contract gives the lender the ability to foreclose
It is important to remember that foreclosures vary from state to state and are governed by state laws.
In Dallas, as all of Texas, most of the foreclosures are non-judiciary. This is important because it means that foreclosure can happen very quickly! The first notification to the sheriff showing up and kicking you, your family, and all your belongings to the curb can happen in as little as 41 days!
Notice of Default (NOD)
This is the first of only TWO notifications that a lender is required to send you before foreclosing on you. By Texas state law this notice of default and intent to accelerate must be sent by certified mail and provide you the borrower at minimum 20 days to cure (bring payments up to date including late fines and fees) before being called due.
The Notice of Default is recorded with the County Clerk and legally opens your personal information to the public anywhere on the internet (which is how everyone is finding out you are in foreclosure and mailing you all kinds of postcards and letters).
Notice of Substitute Trustee Sale/Foreclosure Sale Notice
This is the second and LAST notice that a lender must legally send you. There might be other letters or phone calls but this notice and the NOD are the only legally mandated ones. This notice must be sent at least 20 days after the NOD and at minimum 21 days prior to the date of sale. In Dallas, the sale is held on the first Tuesday of the month on the north side of the George Allen Courts Building facing 600 Commerce Street.
Important note: It does NOT matter if you receive the notice or are even aware of it! The law requires the notice to be properly SENT by certified mail, that’s it.
Why is it important to learn any of this?
Because foreclosure is the worst-case scenario for your financial life.
They are a terribly traumatic experience for you and your family. If you ultimately get dragged through the process then your life is profoundly negatively impacted. Your credit score is destroyed and it will be infinitely more difficult to get loans, find places to live, and even gain certain job positions.
To make things worse, foreclosures are confusing!
Hopefully, you haven’t been through one before and unless you are a lawyer, financial professional, or government worker in this niche this is something you haven’t had to know about.
How do I know all this and why do I care so much?
Because I have been through this process. It pains me greatly to admit that I watched multiple members of my family deal with life alternating foreclosures. It has left such a deep and lasting impression that I dedicated my life to learning about foreclosures and helping the good people of Dallas. I want to be the person that could have helped out my family.
What Should You Expect If You Go Through Foreclosure
The first thing that you can expect when going through foreclosure is a LOT of communication. The lender only had to legally provide you with just two notifications in the mail. However, you can expect a flood of letters, emails, and phone calls from the lender reminding you they want their money. People calling you could be the lender, the bank, a third-party loan service company, it could even be a private individual if that is who loaned you the money for the mortgage in the first place.
Listen to and review those communications carefully, because they won’t be just the normal monthly payment. There is likely to be additional late fees and fines tacked on that you’ll need to pay off to bring the loan current. And remember, once you get that second notification you can have as little as 21 days left.
Of course, it will be hard to find the official communications from your actual lender because once that Notice of Default is filed with the Dallas County Clerk your information is available to the public. Real estate investors, attorneys, moving companies, and a bunch of other professionals will be pounding down your door with letters and postcards.
Have you ever gone car shopping and given your phone number to a website to get you the best car deal? Then the site blasts your phone number to the nearest thousand car dealerships who then have salespeople call you every 10 mins? Don’t be surprised if this is a similar situation. But how do you know who to trust? How do you even know if someone is worth talking to?
Myths, Frequently Asked Questions, Common Misconceptions, and the TRUTH
Myth: You cannot sell a house going through foreclosure.
Reality: Absolutely false! Until the foreclosure is fully executed you are the legal owner of that property and have the right to sell it.
Myth: I am underwater on this house (you owe more than it is worth) and that means I cannot sell it.
Reality: You CAN absolutely sell a house that is underwater. The problem is, what happens to the balance that is left over? How are you going to pay for that gap between what you owe and what the house sold for? Especially when you realize that selling a house COSTS money as well. That’s right, there are closing costs, REALTOR fees, inspections… ect. That is why I’d rather you work with me so that I can pay all the closing costs. More on that later.
Myth: I didn’t see a certified letter in the mail to notify me I was being foreclosed on so I’ll get extra time.
Reality: The lender will only have to prove that they mailed the letter, not that you received it. Even if it is true that you didn’t receive the letters for whatever reason you are very unlikely to get more time. That is why I say to call us early!
Myth: I can just file for bankruptcy to prevent foreclosure.
Reality: Filing for bankruptcy is one of the WORST things you can do during a foreclosure. Declaring bankruptcy might get other kinds of debt discharged, but mortgage debt is NEVER forgiven by bankruptcy. It doesn’t matter what kind you file (i.e. personal chapter 13, chapter 7 or business chapter 11). You will always still owe the unpaid balance to the lender. The BEST case scenario is a short delay in the foreclosure, but even then, it will do nothing to forgive the loan. What you get in return is at LEAST 7 years of financial hardship.
Myth: I can just refinance.
Reality: You have to QUALIFY to refinance. Do you have enough equity in your house? Is it worth more than you owe? What is your debt-to-income ratio? What is your current credit score? Can you prove a steady stream of income? Are there additional liens on the house? Is there a second mortgage? Are your home insurance payments current? Can you afford the closing costs (loan origination fees, appraisal fees, title fees, credit check fees, property tax prepayment)?
If you are already behind on payments that are likely to disqualify you immediately. Is your credit good? Is your income stable? Are your debts under control?
Myth: I can just get a loan modification.
Reality: Maybe. It is up to the bank and their willingness to work with you on your particular situation and their specific standards.
Can you prove that your situation qualifies as an enduring hardship? Are you out of cash reserves and other assets? Can you prove that with a loan mod you’ll be able to stick to the payment schedule with documented income?
Another factor is, when did you request the loan modification? I run into people all the time that say they don’t need my help because they started the loan mod process when they got a foreclosure notice, only to come back to me further down the line because requesting to START the process and signing the AGREEMENT to the loan modification are two VERY different things. Call me even if you started the loan mod, I’d be happy to be your backup plan!
Myth: I can just short sale.
Reality: Maybe. Just like the loan modification, it is up to the lender if they want to accept a short sale. Admittedly, this is something that haunts me, personally. My family attempted to short-sale properties during the last housing market crash. They COULDN’T. The bank didn’t accept the property back. This is especially true if what you owe on the house is more than what it is worth. Remember the banks are not in the real estate business! They are in the money-loaning business. They don’t want the house back and it is very difficult to persuade them it’s better than foreclosing on you.
That being said… this is an option we can explore together. I have the right team to pull off short sales.
Myth: My house is under foreclosure so I need to leave immediately.
Reality: No, you don’t have to leave just because you are going through a foreclosure. The point where you do have to legally leave is once evicted. There is a process for that and it is heartbreaking when you are given 24 hours of warning then the sheriff shows up to remove you, your family, and whatever you can carry. I beg you, don’t let it get to that point. Let me help first. During foreclosure, I would recommend that you start making arrangements for a new place to stay but otherwise, just getting a notification doesn’t mean you need to leave. Let me know if you need help with this.
Myth: Texas has no statutory right of redemption.
Reality: Actually, this one is true. There is no redemption period. Once your house is sold at auction it is gone and you don’t have the ability to repay and get it back.
Myth: I might as well give up… I have no options left and I’ll just go through the foreclosure, then eviction, and be done with it. I might as well rip the band-aid off.
Reality: This is the single WORST choice of all! You DO have options. There IS a solution. I WILL help you. Foreclosure is just the beginning of a multi-year NIGHTMARE! Your finances are crushed. Your credit score is decimated. Your ability to get credit cards, take out loans, find a place to live, and even hold certain jobs vanish. If foreclosure happens, your options are GONE. The good news is, if you act now you have options.
Even the worst-case options are better. Foreclosure is worse than a deed in lieu (cash for keys), bankruptcy, or a short sale. ANY other option benefits your life and your family more than foreclosure. I know that because I watched my family go through foreclosure. I remember the dread every time the doorbell rang. I remember having to lie when people called the house looking for my parents. It is TERRIBLE. I remember how it felt and I don’t want that for you or your children. Imagine how that feels to live with pain and frustration if you don’t act right now.
Refinance/Loan Modification/Deed in Lieu/Short Sale
I am lumping these four options together because they are essentially working with your bank/mortgage lender to create a compromise.
Refinancing and loan modification are the two paths that keep you in the house.
With the Deed in Lieu of Foreclosure and Short Sale strategies, you will have to give away your property.
Checking with your loan provider is a great start, however, the problem with all these strategies is that it is up to the bank/mortgage lender and their willingness to work with you on YOUR particular situation under THEIR specific standards.
- Can you prove that your situation qualifies as an enduring hardship?
- Are you out of cash reserves and other assets (you might still need to bring money to the table)?
- Can you prove that with a refinance or loan mod you’ll be able to stick to the (potentially even higher) monthly payment schedule AND prove it with documented income?
- Was your inability to pay a short-term problem? What has changed that now you CAN make payments?
- Time is running out. When did you request any of these? What is your backup plan when the bank says no?
Finally, be aware that there is a difference between requesting one of the above options to be reviewed by your lender which STARTS the process, and getting APPROVED with a written agreement.
You can still, very much, be at risk of facing foreclosure and losing your house while going through the process. You can still do all the right things and be denied, or not qualify, or be put on hold without a solution. At that point, you are worse off from when you started, only with less time. Do you really trust your bank to save you?
Declaring bankruptcy is the second worst outcome next to allowing the foreclosure to happen. Here is the most important fact about bankruptcy you should know. No matter what kind of bankruptcy you file, your mortgage debt will NOT be forgiven.
Bankruptcy is designed to forgive certain types of unsecured debt only. These can include credit cards, personal loans, and some lines of credit. Your mortgage is not considered an unsecured debt because the loan is secured by the property.
If you do file for bankruptcy, then you might just pay a ton of money to lawyers and damage your credit (for 7 years!) to put a short pause on foreclosure. Here is the problem, you’ll STILL end up owing the balance of your loan, THEN you lose the house because bankruptcy does not prevent foreclosure! Doesn’t sound fair, does it?
Sell Your House Retail
If you can pull this off, then it really is the best-case scenario. It is a common process and you’ll get the most money for your house. Sounds great right? Here’s the catch, there are three major problems with selling retail that you should consider first:
- Retail buyers
- Retail financing
- Retail timeline
Retail buyers mean that you are going to have to deal with a lot of people. First, you’ll interview a number of Realtors to decide on who is the right fit to sell your house. Then the many retail buyers will walk through your home during open houses and showings and will decide if your house is the right fit for them. The sheer number of people walking in and around your house looking around and judging all your stuff isn’t a comfortable process for everyone. Another consideration in this time of COVID is if this is even a safe option. Is your house HGTV ready for these retail buyers? Expect that they will find everything wrong with your home. Retail buyers have no imagination and no skill to see the great potential of your house! Every crack in the tile, every stain on the carpet, and every imperfect cabinet door alignment is another dollar they want to negotiate off your retail price. Do you really want to deal with the emotional buying process that retail buyers go through when debating on buying your place?
Retail financing means getting banks or lending institutions involved. The retail buyer is not paying cash. They are going to have to qualify for a mortgage loan (more difficult recently), put the paperwork in, and go through that often lengthy process to get approved. Then the bank is going to send out an appraiser (to protect their lending interests) and find everything wrong with your property to come up with a very conservative value for your house. Do you really want your financial situation to depend on someone else’s? Retail financing also means that you, the seller, need to pay closing costs. Broker fees, Realtor commission, taxes, title, insurance… ect. Do you have the money to bring to closing?
The retail timeline encompasses both the buyers and financing above. Recently, the total Days on Market in Dallas has increased and we are seeing approximately 81 days. Do you have that much time? Remember, you could be forced out in as little as 41 days. Something else to think about is that those Days on Market are the “lucky” houses, the ones that closed and got sold. That number does not take into account anything that is still sitting on the market, people who listed their houses and are still waiting for someone who wants to buy. How much further behind will you be on payments before someone else goes through this whole process to buy your house?
Sell Your House to a Cash Buyer
We buy houses for cash!
However, here is when we are not a good fit:
- You do have the time and can continue paying the mortgage indefinitely until you get a retail buyer
- Your house doesn’t need any repairs or updates and is ready for photos, staging, and picky buyers because it is the nicest one on the block
- Your house is already listed in the MLS, you love your Realtor and it’s under contract with a new buyer
If the above doesn’t apply to you, that’s OK.
Here’s how I can solve your problem:
Think about all the downsides of putting your house on the MLS and waiting for the right (retail) person to come along to buy. Why go through all the heartache when I can just pay you cash quickly and easily?
If I buy your house, there are no Realtors/brokers (or commissions to pay)! There is no army of people walking through your home. There are no inconvenient open houses and uncomfortable showing appointments.
If I buy your house, there is no appraiser or bank in the background! Statistically, more than a third of closings are delayed (costing you time you don’t have) and nearly half the time it is due to the retail buyer having problems getting financing in place.
If I buy your house, you do not have to fix anything! Retail buyers will have a home inspector come in and put together a list of things YOU need to fix before the sale. I won’t do that. I’ll take the property as is, hassle-free, and at the price we agreed upon.
If I buy your house, we are still going to close everything transparently and legally! Closing will be at a reputable title company with lawyers that review all documents. It will be simple and easy, and that is if you even want to attend the closing! Not only that, we’ll close when it is convenient for your timeline. To sweeten the deal, I’ll even pay for the closing costs so you don’t have to come out of pocket! How can you beat that?
Get An Offer Today, Sell In A Matter Of Days...
Bonus Option: Leaving Your Mortgage in Place
Would it help you if, from now on, you just didn’t have to pay your mortgage every month? That is actually a very real, legal, and possible option! Think about how much you are behind on back payments, taxes, and insurance. What if you didn’t have to pay those anymore either? What if you could just walk away completely and lift those burdens from your shoulders?
When you call me let’s talk about it and see if being free from your payments is the right option for you.
Why You Need to Act Quickly To Prevent Foreclosure
Time is NOT your friend. The sooner you act and contact us the sooner we can start creating your custom solution.
Two notices a little more than 20 days apart is all Dallas County needs to kick you out of your home.
Depending on where you are in the foreclosure process determines the path we can go down.
Don’t be fooled by the false security of a bank SAYING they will work with you. If it isn’t a written and approved plan, it isn’t worth anything. Even then, that plan is what is best for THEM.
Why not have a backup plan? Let’s at least talk.
No matter what happens next, you need somewhere to live right?
- If you choose the wrong path you’ll waste time and that could ultimately make your life a nightmare. Make no mistake you have very little time to find a solution.
- The bank wants their money and they want it yesterday.
Foreclosure laws are state-specific, but more importantly, there are certain things that are specific to your personal situation. Let me help you.
Bottom line, you don’t have to go through a foreclosure.
- Imagine how much better your life can be if someone with the right resources, experience, and network could take this burden from you.
- Even if you’ve got a loan modification started, a lawyer on the side, or something in the works, why not talk to me as a backup plan?
- How much better would you feel with MULTIPLE options? The bank has a lot of options (loan mod, foreclose, not foreclose, delay, sell your loan off) why shouldn’t YOU?
Our conversation is absolutely FREE to you and you will be treated with the respect of a human being, not just another loan number at the bank. This COSTS you nothing but may just SAVE you everything.
The Super Four “S” Guarantee
(ok, three “S” and an important “$”)
We’ll make it make SENSE (walking you through the options, assisting you with getting forbearance to give us more time)
We’ll make it SAFE (full mask and social distancing or virtual walkthrough, sign paperwork electronically)
We’ll make it SIMPLE (no tours of MLS buyers in your home every day risking you with virus exposure)
We’ll make it worth it! $$$ (cash in your pocket, a fair price, and peace of mind)
That’s it! That’s everything! This guide has prepared you more than 99.999999% of people who have ever owned a house!
I hope that I have provided you with valuable information. I hope that I have answered some burning questions. I hope that you avoid foreclosure.
I wrote this guide because it didn’t exist when I watched my family get foreclosed on. We didn’t have answers to questions. We didn’t have allies to give us options.
We had banks calling asking for their money but never asking how they could help us.
We lost the house. It was terrible. It felt terrible. It still feels terrible thinking about it. I never want you to feel that way.
I am at your service, eager to help. Please contact me today.