Foreclosure Process

Real Estate Broker/Owner with Texas Five Star Realty, Plano Texas


Foreclosure Process


What is a foreclosure?
Foreclosure is a process that allows the lender to take over the property when a homeowner defaults or falls behind on mortgage payments.  This can be due to hardship or strategic default, which is defined below: 

Hardship: can include (but not limited to) job loss, reduce working hours or pay rates, unexpected large bills (e.g. medical bills),  heath, divorce, some unexpected events, etc

Mortgage Trouble, Not able to pay the Mortgage(picture from CDPE materials)

Strategic default: is the case when the homeowner may be able to pay the mortgage but simply chooses to walk-away from the mortgage. This is often done when the homeowner owes more on the home than it’s worth.     

Behind Mortgage Payment (picture from CDPE materials)

The Foreclosure Process:  Foreclosure is a process and not a product (e.g., it is not a house, nor a land, etc.). There are three phases of foreclosure from the time a homeowner defaults to the time the lender or Bank sells the property. These phases are pre-foreclosure, foreclosure at court-step, and post-foreclosure also known as REO (Real Estate Owned by bank).

Three Phases of Forclosure

Pre-foreclosure Process (Phase 1): Notice of Sale   Judicial Foreclosure Conduct of Sale OR  Non-Judical Foreclosure Auction
When a homeowner falls behind on mortgage payments, the lender will send a series of notices to the homeowners allowing them to correct the problems, otherwise its’ intention to sell the property at auction. Each State has different rule and regulations regarding the minimum number of days that the bank needs to notify homeowner before it forecloses the property and how to conduct foreclosure sale. Click to see the rules for foreclosure timelines and conduct of sale for state of Texas.

Foreclosure Process (Phase 2):  Conduct of Sale       
If the problem has not been resolved between the lender and homeowner prior to the date and time of the sale, the property will be auctioned and awarded to the highest bidder. Each State has different rule and regulations regarding selling the types of foreclosure (e.g., Judicial or Non-Judicial), how, when and where to sell foreclosure properties, Right of Redemption, etc. Click  to see specific rule and regulations regarding time lines requirements, when, how and where foreclosure properties in Texas are being sold.

Post-foreclosure Process (Phase 3): Property goes back to Bank, Real Estate Owned (REO)
If the property is not sold in auction, as described above, it goes back to the lender or Bank. After that point, the property will be known as REO (Real Estate Owned by bank or lender) and will be listed in MLS, by an authorized licensed real estate agent, to be sold. This is the type of property that most of purchasers, by mistake, refer to as foreclosure.
Click to see how banks sell their foreclosure properties.


List of Foreclosure (REO) Properties in North Texas
For the most up-to-date list of foreclosures (REOs) in North Texas, please visit

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Bahman Davani, CM at Texas Five Star Realty, Plano, TX (214) 457-7055

Homes for Sale in Plano, Frisco, Prosper, Allen TX
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