In this video, Scott Horne discusses what you need to be aware of as a lender and a borrower when dealing with foreclosures.
Unfortunately, in this industry foreclosures do happen. It is important that we make sure that our borrowers and lenders understand the process of foreclosures, at least here in Texas.
Be proactive! Lenders, you have to stay on top of your borrowers payments! Take the time to call your borrower to see what’s going on, that way you can make decisions quickly instead of getting months and months behind on payments waiting for your loan servicer to send out a late payment notice.
Here at OFN, if a borrower is more delinquent on their payment of more than 10 days, we are going to start the pre-foreclosure process. This is where we get with our attorneys and send out the initial foreclosure notice to cure. Here in Texas, there is a 20-30 day time limit in which the borrower can cure their default payment.
If the borrower does not meet that 20-30 day time limit, that is when you proceed with the foreclosure and we can then accelerate the loan what that simply means is all principal and all unpaid interest and late charges are now due. It is important that you stay on top of the days in which the borrower has to cure their delinquent payment!
After the loan is accelerated, the lender will designate a trustee that will handle the property. The trustee is responsible for auctioning the property to the highest bidder. All interest, note holder reasonable administrative fees, and any attorney or trustee fees that might be incurred will be subtracted from whatever the property was sold for at the auction. That amount of money that is left over belongs to the prior property owner who was foreclosed upon and the trustee will return those funds to them at the last known address or if it was a court ordered foreclosure we call those judicial foreclosures then the trustee will deliver those funds to the court registry.
So guys, stay on top of your borrowers, know when payments are due, and move quickly!
Scott Horne has been a real estate, title attorney, and investor for over 30 years. Over this time, he has purchased, rehabbed, and sold over 7,000 single family homes. Through his companies and law office, he has transacted over 10,000 creative finance deals. Scott’s experience as both an attorney and an investor puts him in a unique position to help you navigate this tricky business every step of the way.
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