Avoiding Foreclosure in Texas

Real Estate Agent with Roots & Wings Realty Group / Walzel TREC #702048

No matter how fiscally responsible you are, unexpected calamities like medical emergencies, divorce, or changes in employment can take a heavy toll on your finances and make it difficult to make your mortgage payments on time.  As a result, you could face your home going into foreclosure.  

If you find yourself in this situation, it’s only natural to feel uneasy about losing your home. But the good news is, you may have options available which can help you avoid foreclosure. If you live in the Houston area, read on to learn what these options are.

*** Please note, this information is for informational purposes only and is not intended to be legal advice. If you need legal advice, please contact a real estate or bankruptcy attorney. ***


Refinancing is when you replace your existing loan with a new mortgage which pays off the prior loan in full, including the delinquent amount owed. You might even be able to secure a lower interest rate, which would reduce your monthly payment.   To qualify for a refinance, you’ll need to have a stable income, great credit, and equity in your home. Once you start missing payments on your existing mortgage, it impacts your credit. Therefore, it’s best to try to refinance as early as possible before your home goes into foreclosure.  

Loan Modification  

A loan modification is when changes are made to the existing terms of your mortgage due to your long-term inability to repay the loan. The goal is to reduce your monthly payment, which can be done by lowering the principal loan amount, decreasing the interest rate, converting to a fixed rate, or extending the life of the loan.   To apply for a loan modification, you’ll need to contact your lender explaining why you are unable to make your mortgage payments, fill out the required paperwork, and provide detailed information on your finances.  

Mortgage Forbearance  

If the financial problem putting you at risk of foreclosure is short-term, you may qualify for mortgage forbearance. This is an agreement between you and your lender in which your monthly mortgage payments are temporarily lowered or paused until you are capable of making your payments in full again.  

Mortgage Reinstatement  

To reinstatement your mortgage, you would need to make a lump sum payment which covers all past-due amounts, including late fees and interest, before the specified deadline set forth by your lender. Once you make this payment, it stops the foreclosure process, and your loan is restored to its original state.  

Deed in Lieu  

deed in lieu of foreclosure is a document transferring the title of your home to the bank, typically relieving you of the remaining balance. This is preferable to foreclosure as it is faster, less expensive, and more private. Upon approval of the deed in lieu, you would need to relinquish ownership of the property and relocate.  

Short Sale  

If your home is worth less than your outstanding mortgage balance, your lender may approve a short sale. Short sales are usually initiated by the homeowner when the value of a home drops by 20 percent or more, and all proceeds from the sale would go to the lender.

Renting Out the Property  

If you can rent out all or a portion of your property and use that income to help make your mortgage payments, this is another way to avoid foreclosure. You would be subject to state law requirements for landlords, but your home would remain yours as long as your tenants keep up with their rent payments.  


Filing for bankruptcy is another alternative to foreclosure.  But likely, you’ll only be able to keep your home if you can solve the problem that caused you to fall behind on your mortgage – and do it quickly and to get caught up right away. Otherwise, you will only be delaying foreclosure, not preventing it.  I highly recommend you use a lawyer and not do this DIY. First, the lawyer will tell you the likelihood of this being a long-term solution. Second, you want to make sure things aren't overlooked since your home and credit are on the line.

Sell Your Home  

If you decide to sell your home before it is foreclosed, you may be able to do so by listing it or selling to a cash buyer.  

1. Multiple Listing Service (MLS)  - If you have at least six to sell, although a shorter period may work too, you can list your home on the real estate market. But it’s essential to use an agent that has experience selling homes that are facing foreclosure. Generally, the closer you are to the foreclosure deadline, the more of a discount you’ll need to offer on the selling price, and take into account factors such price range, area, neighborhood, and how long it’s been on the market.  

My team has had great success in selling homes facing foreclosure, including one client who needed his home sold within five weeks. He also needed to sell it in as is condition, as it required substantial repairs.  

Within 48 hours after his home was listed, he received 17 offers. He closed 16 days later with an above asking price cash offer, which allowed him to walk away with about 90% of the equity he had in the home.  

If you need to sell your home due to an impending foreclosure, please contact us with details about your situation. We’ll help you decide the best way to proceed in selling your house fast and keep your information 100% confidential.  

2. Cash Buyer  - If you have only a few weeks to sell your home to avoid foreclosure, selling to a cash buyer is another option, but do so with caution. Once your home hits the foreclosure list, you're going to get phones calls, knocks on your door, and letters from "cash house buyers" – some who are legit, some who are not.  

If you do go this route, make sure the buyer puts down earnest money of one percent and gives you a short option period of preferably five days or less. Only work with a buyer who uses a standard TREC contract, not a one-page document that doesn't protect you as the seller. Ask to see proof of funds that you can verify and research online to check the company’s reputation. If the price they're offering sounds too good to be true compared to other investor offers, they could leave you sitting at the closing table.  

Posted by


Rae Hoffman


Katy Texas Real Estate Agent
Roots & Wings Realty Group
powered by eXp Realty


// SRS, NHCS, e-Pro, RENE, PSA

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