Foreclosure is the legal process where lenders take back property secured through a loan. However, you are able to sell your Houston house in foreclosure. It mainly occurs when the borrower defaults in payment. There is a process involved in foreclosure. Lenders who plan on acquiring the property through foreclosure can do it in one of two ways. Either way, for the foreclosure process to begin, the number of missed payments is 3-6 months. Normally, the lender usually sends numerous cases informing you that you are behind in your payment before they can initiate the process in court.
Foreclosure under judicial sale
The mortgage lender usually files the suit in court, and you receive a court order demanding payment. If the loan is valid, you have a grace period of 30 days to deliver the payment to avoid foreclosure.
If the payment is not made during the given period, the lender can move to court and request the judge to allow for the sale of the property usually through auctioning.
Once the property is sold, you will receive an eviction notice from the sheriff forcing you to vacate the property immediately.
Foreclosure under power of sale
You will be served papers by the mortgage lender demanding payment of the overdue amount. Although the courts are not necessary for this process, it will have to be subject to judicial review.
After the grace period expires, there will be drawing of a deed of trust and the property control will be transferred to a trustee. The trustee can then sell the property for the mortgage lender through auctioning.
Anyone who has an investment in the property must be notified during the foreclosure. Banks and contractors who are owed by the lender are entitled to collect their debt from the proceedings of the auction.
What happens if the proceeds from the auction are not enough to pay the loan?
There are times when the sale at the auction is not enough to cover the loan. When this happens, a deficiency judgment can be issued against you. The amount owed in a deficiency judgment is limited in some states to the value of the property when the sale was being made. In other states, the full loan amount will be assessed against you.
It is advisable to avoid foreclosure at all costs. Most lenders prefer negotiating discounts with borrowers for the amount they owe to avoid having to go through the foreclosure process.
Contacting experienced investors can be beneficial since they can negotiate directly with the banks and ask them to lower the amount owed during the sale. In some cases, the lender can even eliminate it and end up selling your Houston home for a price lower than what you owe them. To sell your Houston house through foreclosure does not have to be a difficult process. Once you understand the whole process, the rest will be easy since you will know what to do to get the best deal.