When you miss a few mortgage payments in Texas, the lender has the option of seizing your home and selling it to pay your outstanding debt. The lender does not have to go to court before foreclosing, but it does have to follow a strict notice-and-wait procedure to give you plenty of time to get caught up with your payments. Most times, it will be at least six months before the property is sold at auction. No one is permitted to throw you out until this process is finished and the new owner comes for the keys.
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A Bit About Texas Foreclosures
Foreclosures don't happen overnight in Texas. If you miss a few mortgage payments, the bank will send several warning letters and may call you to see what's going on. The bank can't send the first official "breach" or "demand" letter until you are 120 days delinquent on payments, so there's plenty of time to figure out a loan modification or payment plan so you can avoid foreclosure. The demand letter will give you 30 days to bring your loan current. If you haven't agreed to a plan by the end of the 30-day cure period, the lender can foreclose and sell your home at auction.
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Once the Property's Gone, It's Gone
You'll get notice of the time, date and location at least 21 days before the foreclosure sale. At the auction, one of two things will happen — either the property will be sold to the highest bidder or it will revert to the bank as "REO" or real estate owned property. Texas has no statutory right of redemption. This means you have no way to get the property back after the auction, even if you manage to come up with the money. At this point, you likely are still in occupation of the property. No one has the legal power to evict you until the property is sold or becomes REO.
Doing a Cash-for-Keys Deal
With cash-for-keys, the new owner or the bank will offer you cash in exchange for you moving out quickly. For the new owner, this usually is much faster and cheaper than going to court for an eviction order. There are clear advantages for you, too. In Texas, you are liable to pay any shortfall between the debt you owe and what the property sold for at auction. So, if you owe $150,000 and the property sold for $130,000, the bank can come after you for the deficiency of $20,000. Agreeing to a cash-for-keys deal means you can make some inroads into that debt. Some banks might write off the whole amount in exchange for you leaving the property without any fuss.
Evicting the Judicial Way
If you don't agree on a cash-for-keys deal, the new owner will sue you in court for an eviction order and things move pretty quickly at this point. By Texas law, the new owner only needs to give you a three-day notice to vacate. After that, she can file for eviction — a lawsuit she almost certainly will win because there's really no justification for you staying on the property once it has been legally foreclosed. Once the order is granted, you have five days to pack up and move out. If you don't leave willingly, the sheriff will forcibly remove you and stack up your belongings on the curb.