Why Foreclosures are Fast in Texas.


Comparatively speaking, Texas has an exceptionally quick foreclosure process (approx. 60 days). When stood beside other, northern states like Illinois, for example, where the average time is 300 days to a year, it can move so fast your head will spin.

I work with REO clients who deal with both ends of the spectrum. One, from whom I receive a small volume only because they have very little at any given time. Actually, we talk more on Facebook about our ongoing Yankees-Red Sox rivalry than through office emails regarding construction-related topics. I’ll call from time to time and ask how the Colorado asset is going, or the New York asset. Six to eight months later, we’re still talking about it.

In Texas, this has never occurred for me. In fact, I’m rarely given the opportunity to speak with my Texas clients about foreclosure time. That’s because it circulates very quickly.

A Non-Judicial Process.

One reason for this fast-paced process is the absence of legal proceedings attached in most cases in Texas. In 23 other states, the lender has to file suit against the borrower in court. A judge has to oversee proceedings and review documents. The legal system can bring things to a crawl. And, the judge must give approval before the homeowner is evicted.

Texas uses a non-judicial process in which no court proceedings are involved. A courtroom is rarely seen. A judge does not typically review documents or give approval for eviction. A judge is involved in only a few instances, such as when the homeowner is in bankruptcy or represented in foreclosure by a lawyer.

This quickened pace gives delinquent individuals less time to live mortgage-free in homes that will eventually foreclose. Even in Texas, as I have been called to service vacant properties, neighbors will discuss with me how they knew the now-evicted individual was living off the system. In these cases, I see the benefit of an accelerated process.

On the other hand, having approximately 60 days to cure a significant debt puts someone who is ill, recently unemployed, or basically in an unseasonably hard spot in a difficult position. With extended time afforded through judicial hearings, the borrower might have more time to come up with funds to pay. To be fair, though, even with this short time in Texas, options are available through communicating with the lender to prevent foreclosure.

A Pre-Authorized Sale.

Another reason the foreclosure process is more streamlined in Texas is that when the borrower signs their original loan documents, they pre-authorize the lender to sell the house if they become seriously delinquent. Like signing a prenuptial agreement, the homeowner is made well aware of the possible hazards ahead of time and gives the lender the right to relinquish and resell the house.

Of course, the lender cannot just sell a house under a homeowner without any warning. In Texas, the lender must first send the borrower a notice of default. This letter lets the borrower know that she must pay overdue mortgage payments within 20 days or face foreclosure proceedings. This is where REO businesses like Integrity REO Solutions usually come into play. As an added service above caring for the asset after the delinquent borrower has evicted, REO companies typically are asked to act as bank representatives to deliver letters, post notices, verify occupancy, gather personal information form the homeowner, and even offer cash for keys agreements to motivate a hospitable move.

After the 20 days’ notice has expired, a foreclosure notice is filed with the clerk at the county courthouse, and a copy is mailed to the borrower. In Texas, a lender must also post this notice on the door of the county courthouse.

Because the process in Texas is very quick, foreclosure attorneys argue that this encourages errors on the lender’s part. It is noted that unreasonable fees are attached to defaulted mortgages making it almost impossible for the delinquent party to catch up. Also, because a judge is not present to review documentation, important paperwork is missed or filed incorrectly.

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