Texas Foreclosure Law Primer – Part 2

So you are a Texas home owner and you received a foreclosure posting – what do you do next?

This article is the second in a series of articles designed to help Texas home owners who face the threat of foreclosure.

Texas is a non-judicial foreclosure sale for non Texas equity mortgages. That is, the Trustee can conduct the sale on behalf of the lender without any court intervention. This means that the foreclosure time line is accelerated and can be completed well within 60 days if the calendar fall right.

Texas equity loans do require a court order and that process is longer.

Texas law provides that your mortgage lender must adhere to certain notice requirement contained in Texas Property Code, Section 51.002. The notices in Section 51.002 are keyed to the status of the property as a residential property, as opposed to a non-owner occupied property. Properties that serve as a primary residence receive an additional 20 day notice to cure.

While these tips are designed to Texas home owners, its helpful to home owners in other states as well. Home owners in states other than Texas are cautioned to consult their own state law.

You’re now on the clock. You must take action. This is one of those times you need to speak to someone – a confidant, a trusted family member, an attorney, a CPA, a minister – someone that will listen to you and help you through this difficult decision.

Emotions seem to taint a lot of real estate decisions. You need to speak with someone so you can bounce ideas off of them, listen to their feedback. Believe it or not, the decision you make here may not also save your home, but you may be able to save some money in the process. Each day you delay cuts down on your options and increase the costs of that decision.

Key Point 1 – Calm down and understand that you can salvage the situation. You’ve got some difficult decisions here but you can take of this situation.

So what are some of the options you should be considering?

Try to work something out with you lender.

Key Point 2 – Anything you agree to with your lender must be in writing. Do not believe a phone representative’s claim that the foreclosure will be stopped if you make a payment. It will not be stopped and you’ll lose the opportunity to save this situation. Don’t trust the lender in this situation.

File an Application for a Temporary Restraining Order

Key Point 3 – Assuming you have no other financial problems, this may be a consideration. But, the legal fees are expensive and you must provide a bond to the court. More importantly, there is no guarantee that your application for a Temporary Restraining Order will be granted. This risk-reward payoff here is not good. Texas judges are more likely to rule that bankruptcy court is a more proper forum for this action.

File Bankruptcy.

Key Point 4 – Absolutely the best option available for most people. Just get you case filed. It will give you at least 60 days breathing room, even if you filing is kicked back for some reason. It also seems to get the attention of the lender to allow you to work some out with them.

Do nothing and abandon you home.

This sounds harsh but it may be the right thing to do if you have no equity in the property. Save your money and lock up a rental before the foreclosure.

Key Point 5 – Lenders are not pursuing deficiency judgments now. Take care of your old home, don’t remove fixtures, clean it up, and make it easy for the lender to take over the property.

Under Texas law, lenders have the option of pursuing a judgment, if they so desire. This is not happening with regularity right now, but it is something that you should be aware of.

Also, under Texas law, a foreclosure of a Texas equity loan is judicial process. Also keep in mind that there is no personal liability on a Texas equity loan.

You may receive a 1099 from the lender for forgiveness of the debt. Consult with a tax professional to consider the impact on your personal return.

Foreclosure is a tough process for your entire family. Educate yourself as to your options.

Nebraska Foreclosure Laws

Nebraska is one of the states where foreclosure must be followed through a judicial or in court method. The process begins when the bank files a law suit called a complaint with the court against the homeowner who is having trouble making his payments. The objective of this lawsuit, is to get the court to officially declare the homeowner in default. When this has been accomplished the process of moving toward the sale of the house can begin. The court will decree the amount that the homeowner must pay and give them a short time frame in which to pay that money. If the homeowner cannot do this, the clerk of the court will issue an “order to sale” and then advertise the sale of the home. In some cases Nebraska allows for a portion of the property to be sold off to satisfy the debt.

After this judgment or official declaration of default has been made by the court, the sale date or order of sale can be delayed as much as an additional nine months. To accomplish this, the home owner must file a written request for a delay with the clerk of the court. This request must be filed within the first twenty days following the courts decision to find the homeowner in default. If this request for delay is not filed within these first twenty days, the order commanding the sale of the property will be issued by the clerk of the court. At anytime during this lawsuit, the homeowner may cure the default by coming up with the total amount of the delinquent payments and all costs and interest that have accrued up to the time that the money is paid. If the homeowner has cured this default and then goes into default again at some time in the future, the court can enforce the decree of foreclosure and sale. In other words the original decree of foreclosure and sale remain in affect and the bank can proceed with a sale of the home without getting another court ordered sale date.

Should the sale of the property still be moving ahead, the place and time of the sale must be publicly posted by the sheriff of the county where the home is located. This notice of sale, must be physically posted on the door of the court house of the county where the home is located. This same notice must also be posted in five other public places in this same county. This notice of sale must also be advertised or published in a newspaper with general circulation in the county where the home is located. This ad must be run once a week for four weeks, leading up to the scheduled sale date.

When the sale finally takes place, the court is required to confirm the sale. The former homeowner has no right of redemption in Nebraska. This means that once the home has been sold at auction, the former homeowner has no time frame in which to regain ownership of the property.

Deficiency judgments are not permitted in Nebraska. Deficiency judgments allow a bank to seek more money than was generated from the sale of the home. If the amount of the highest bid on the house is still less than the amount of the loan, the difference between the two amounts can be sought from the former homeowner in states that allow deficiency judgments. This option is not available to banks in this state.

A typical foreclosure time line in Nebraska, from beginning to end is 180 days.

There are is always the possibility to stop foreclosure.

Arizona Foreclosure Law – What Happens With My Second Mortgage When The First Mortgage Forecloses

Its no secret that thousands of people around the country and in Arizona are losing their homes to foreclosure. One of the biggest issues I deal with as an Arizona real estate lawyer handling foreclosure-related cases is the question of what happens with a second mortgage or home equity line of credit after the first mortgage forecloses. The answer to this question requires an analysis of each individual’s specific situation, including the terms of their loan agreement, the circumstances of when they obtained the loan and what the funds were used for, and the distribution of funds upon the foreclosure sale of the property. Although most homeowners would be wise to speak with an Arizona foreclosure lawyer about their situation, the following article provides a general framework of the Arizona laws that affect a second mortgage lender’s ability to collect a deficiency balance owed after the first mortgage lender has foreclosed.

As an initial matter, it should be understood that this discussion only applies to loans secured by properties located in Arizona. Arizona’s laws regarding a lender’s ability to collect a deficiency balance are substantially different from the laws of other States, and if you have a loan on a property in another State, you must obtain the correct information from that jurisdiction.

One of the primary distinctions of Arizona law as it relates to a second mortgage lender’s ability to collect a deficiency balance is found in Arizona Revised Statute Section 33-729(A), which limits the lender’s ability to seek a deficiency if the money loaned “is given to secure the payment of the balance of the purchase price” provided the property is a single one-family or two-family home and consists of two and one-half acres or less. In other words, if the loan was “purchase money” used to buy the home, the lender’s only choice is to foreclose in the event of non-payment. If the lender cannot foreclose because the primary lender already has, it has no further recourse.

Of course, many Arizona homeowners facing foreclosure find themselves with second mortgages taken out after they bought their homes, with the funds used to make home improvements, pay off other debt, take vacations or purchase other items, or even used as down payments on other homes. In cases like these where the funds cannot be traced back to the original purchase of the property, the protections of Arizona law will likely not apply.

Tracing back to the original purchase is an important exercise for many lenders and homeowners, because so many second mortgages are the product of one or more refinances and/or sales and assignments by the lenders. Fortunately, Arizona Courts have made it clear that a refinanced loan retains its original character for purposes of the anti-deficiency statute, so a refinance will not affect the protection a homeowner may have under Section 33-729(A).

Because many refinances involved both purchase money and non-purchase money elements, however, homeowners should understand that some second mortgage lenders will seek to recover at least the non-purchase money portion of the loan. There are defenses available to such claims, and homeowners facing demands from lenders should seek the advice of an experienced Arizona foreclosure lawyer to discuss how to respond to such a lender’s demands.

Unfortunately, it is impossible to address every situation in a short article, and any homeowner facing foreclosure should seek additional guidance regarding tax implications, how to handle the HOA, and how your specific loans will be treated under Arizona law after a foreclosure.

Foreclosure Laws in Oklahoma

Both judicial, or in-court and non-judicial, out of court, foreclosure processes are followed in Oklahoma. The deciding factor in which process will be used is the power of sale clause. Should the mortgage or deed of trust contain power of sale clause, then the bank can pursue the foreclosure process without going before a judge. The banks will always follow this option if they have it, because it saves them both time and money to do so. Most mortgage or deeds of trust have power of sale clause written into them. So this means that most foreclosures will be conducted in the out of court way.

To follow the judicial process of foreclosure, the bank must file a lawsuit to obtain court order to foreclose, in order to move on to the auction of the house.

The auction is commonly referred to as the trustee sale.

One little interesting point of Oregon law is that the borrower has waived the right to an appraisal in the mortgage, then the property must be appraised before it can be sold at the trustee sale. The amount of this appraisal sets the bar, in how much the home can be sold for. The house cannot be sold for anything under two thirds of that appraised value.

Power of sale clauses can specify the time, place and terms of the trustees sale. If this is the case, then those instructions must be followed. Most cases are not micromanaged in this way, however. In the majority of out of court foreclosures, the process begins with a written notice of intent to foreclose being mailed to the home owner who is in default on his loan. This letter must be sent to the last known address of the home owner.

This letter must describe the defaults of the borrower. This letter also announces that this homeowner has thirty five days from the date the letter was sent to come current on the loan. If the home owner can do this the foreclosure sale will be stopped. If, however, this is the third time the homeowner has been in default, then the bank is not required to send this letter again.

Additionally, if there have been four defaults in the past twenty four months, no additional notices are needed or required to be sent.

A letter called the notice of sale must be recorded with the county in which the home is located sometime before ten days have past, since the expiration of the thirty five day time frame stated in the letter.

This notice of sale must be advertised in a local paper with circulation in the county where the home is located. This ad must be run once a week for four consecutive weeks. The first of these ads must start being placed no less than thirty days before the scheduled sale date. This ad or notice, must include the names of the bank, the homeowner and the place and time of the sale. It must also include a description of the property including the street address.

The home will be awarded to the person offering the highest bid at the auction. Anyone who is the winning bidder at the sale must have cash or certified funds equal to ten percent of the winning bid amount. If the person making the highest bid does not have those funds with them at the sale, the home will then be awarded to the next highest bidder.

A Summary of Alabama State Foreclosure Law

Alabama State conducts Judicial as well as Non-judicial foreclosure, but Non-judicial foreclosure is more common.

What is the processing period for foreclosure in Alabama?

Normally it takes 50-74 days (approx 1.5 to 2 months) for processing.

What is sale publication period in Alabama for foreclosure?

Sale publication period is 21 days.

Is there any right of redemption in Alabama for foreclosure?

Yes, Redemption period is of 1 year.

Are deficiency judgments permitted in Alabama?

Yes, Deficiency judgments are permitted in Alabama.

Which law provision governs foreclosure in Alabama?

In Alabama Code (1975), foreclosure sales are covered in Title 35 (Property) Articles 1, 1A, 2, 3 ยง35-10-1 et. seq.

What happens during Judicial Foreclosure in Alabama?

It involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage/deed of trust. However, in such case lenders may choose to avoid filling a lawsuit and foreclose by selling the property, as mentioned in the “Guidelines for no power of sale foreclosure “.

Guidelines for No Power of Sale Foreclosure

If no power of sale is contained in a mortgage/deed of trust, the lender, or any assignee thereof, may either file a lawsuit to foreclose or foreclose by selling the property to the highest bidder for cash at the courthouse door of the county. Such sale can take place only after notice of the time, place, terms and purpose of the sale has been published for four (4) consecutive weeks in a newspaper published in the county wherein said lands, or a portion thereof are situated.

What happens during Non-Judicial Foreclosure in Alabama?

A “power of sale” clause is the clause in a deed of trust/mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan if they are not able to pay. In such cases, the authority is given to the lender to sell the property which may be executed by either the lender or member selected by lender. You can find more information in “Guidelines for power of sale foreclosure”.

Guidelines for power of sale foreclosure

Power of sale foreclosure must be carried out at specified time, place within the terms of sale mentioned in deed of trust/mortgage. But if it does not specify any time, place or terms of sale, then a foreclosure sale may take place at the main door of the courthouse of the county where the property located, after default of the deed of trust/mortgage, for cash to the highest bidder. The sale can only take after 30 days of the last published notice.

Sale notice must be given in publication once a week for four (4) successive weeks in a newspaper published in the county or counties in which the property is located. If the property is under mortgage in more than one county, the publication is to be made in all counties where it is located. The notice of sale should mention the time, place and terms of said sale, with details of the property. If no newspaper is published in the county where the lands are located, the notice shall be placed in a newspaper published in an adjoining county for four (4) successive weeks.

This is legal information; it should not be treated as legal advice.