Home ownership is part of the American dream, but many homeowners are saddled with mortgages, deeds of trust or other security interests on their property. If they fall behind on payments, they risk foreclosure, a process by which the bank or other financial institution holding the mortgage enforces the loan by forcing a sale of the property. The situation becomes worse if the property is overfinanced so that a sale produces insufficient funds to pay off the loan, leaving the debtor on the hook for the balance. At the Law Offices of Cheryl S. Davis, P.C., in El Paso, I have more than 20 years experience helping homeowners fight foreclosures and keep their homes.
There are federal laws placing controls on lenders’ use of the foreclosure process. A mortgage holder must wait 120 days after you default on your loan repayments before initiating a proceeding, unless:
The purpose of the 120-day waiting period is to give you time to work out a way of avoiding the foreclosure. Most Texas mortgages require the holder to send the property owner a notice of default stating that it must be cured within 30 days by bringing the payments up to date. If the mortgage does not have such a requirement, Texas law requires a 20-day notice of default and duty to cure.
Once the 120-day waiting period and the 20- or 30-day notice period have expired, the mortgage holder can declare the entire loan due and commence the foreclosure by sending a notice of sale to each owner by certified mail, posting it on the door of the local county courthouse and filing it with the county clerk. The notice must state the date, time and location of the foreclosure sale, at which the property is sold to the highest bidder. The notice must be sent 20 days in advance of the foreclosure date, which can only occur on the first Tuesday of the month. You then must vacate the property or the new owner can go to court to evict you.
Receiving a notice of default is your last chance to take preventive action by retaining a competent and knowledgeable debt relief attorney.
A foreclosure proceeding is the worst-case scenario. Before it happens, there are numerous ways to deal with the underlying debt problems. One way to stop foreclosure is through bankruptcy, using a Chapter 13 plan. This remedy is designed to help steady wage owners pay off a portion of their debt over an extended time period, usually three to five years. Its most attractive feature is that it allows the debtors to keep their home. I am skilled at crafting Chapter 13 repayment plans that are tailored to clients’ personal situations and needs.
Often, a property in foreclosure sells for less than the amount due on the mortgage. In this situation, known as a short sale, the mortgage holder may sue the borrower for the unpaid balance due on the loan and obtain a deficiency judgment for that amount. For example, if the outstanding loan is $250,000 and the property sells for $150,000, the deficiency is $100,000. However, if the fair market value of the property was only $200,000, the court will limit the deficiency to $50,000, the difference between the fair market value and the sale price. If the fair market value is equal to or more than the deficiency, the mortgage holder is not entitled to any deficiency judgment at all.
When your home or other property is at risk of foreclosure, the Law Offices of Cheryl S. Davis, P.C. has the experience and skill to protect your legal rights. Call 915-320-6226 or contact me online to schedule your consultation in my El Paso office.