Texas Foreclosure Law

Does Texas foreclosure law allow deficiency judgments? Many borrowers may think that after they sell their home in a short sale or at a foreclosure auction, they do not have to worry about the outstanding amount on their mortgage payment if the short sale or foreclosure auction does not cover a borrower’s outstanding mortgage debt.

Before waiting to receive that lawsuit in the mail, perhaps brush up on Texas foreclosure law via the internet. Your former mortgage lender only has two years to act if the auction or sale does not cover what you owe. The only way you may be safe from a lawsuit is if you have a clause in the conditions of the short sale stating you are not liable if the deficiency on the outstanding mortgage is not covered. If it has been more than two years since the foreclosure or short sale, you can rest easy and breathe a sigh of relief. You are under no obligation to make up the default if it has been more than two years.

Should I panic if Texas foreclosure laws say you can be sued for the full mortgage Amount?

Did you know that you might be able to get a reduction on the full amount that you owe, if a short sale or auction did not cover the cost? How do you use the Texas foreclosure laws to your advantage? If a court determines that the fair market value of your house is more than the sale price, you may be able to only pay the difference between the values. For example, if a short sale says that the value of your house is $200,000, but you owe a lender $300,000, you may be able to skip out of paying most of the $100,000, if an expert can determine the value of the short sale was wrong. What if the value of your home is really $275,000, instead of $200,000? You may only be liable for the difference between the two amounts, $25,000.

If your lender can sue, it is best to assume you will get a lawsuit in the mail. In reality, your lender may not be suing you at all. According to the Texas foreclosure laws, having the right is no guarantee you will have to pay anything back to your lender. It does not mean you have to live in fear of a lawsuit; it is just best to know your options. A lender may not pursue a delinquency judgment because it is expensive to do so, and they may not want to go to the effort.

Are you facing a foreclosure? We may be able to help you. Before you receive your letter notifying you of the sale of your real estate property, give us a call. We can help you find the best foreclosure solution to solve your individual problem. Call us at 512-789-2833; we can discuss your options.


Please note:  The information on this page is not meant to construe legal advice.  We are not attorneys, but during our years helping homeowners we’ve learned important facets of how foreclosure proceedings and lenders work. While we recommend contacting us for guidance to stop or avoid foreclosure, we also strongly advise you to consult a lawyer if you need specific legal advice or a second opinion about legal aspects of the options for saving your home.

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