Foreclosure Litigation Defense Attorney in Katy, Texas
People facing foreclosure need a strong advocate against the bank
In my more than 35 years as a real estate litigation attorney in Katy, Texas and the surrounding areas, my firm, Martin M. Hokanson, Attorney at Law, has represented many foreclosure clients. I have represented lenders in litigation when I worked for other law firms, so I am familiar with how lenders view litigation with borrowers. I give each client my individual attention, negotiating hard with the lender with the goal of achieving a fair outcome for you.
What happens during the foreclosure process?
Your mortgage is the loan you have taken out to pay for your house. The bank or other financial institution that loaned you the money typically requires you to repay it (with interest) every month. When you do not make these monthly payments, the lender starts foreclosure proceedings. Because the lender does not want to own your house, but instead wants the loan repaid, the purpose of the foreclosure is to sell your house for at least the amount of the loan, with the loan amount going to the lender.
The foreclosure process is somewhat different in Texas than in many other states. Texas foreclosure laws make it relatively easy and fast for a lender to foreclose. There are two types of foreclosures:
- Out-of-court. Most mortgage contracts include a power-of-sale clause that allows the lender to sell the property when the borrower defaults. No court hearing is needed.
- In-court. When the contract lacks a power-of-sale clause, the lender sues the borrower in order to receive a foreclosure judgment. This requires a court hearing. The lender will also need to go to court in order to obtain court approval for a foreclosure of other types of loans such as home equity loans and reverse mortgages.
Most foreclosures are the out-of-court type. Here is a summary of the main steps in the out-of-court process:
- The lender mails a formal notice to the borrower, giving the borrower at least 20 days (or 30 days depending on the language of the Deed of Trust) to repay the default.
- If the borrower repays the default amount within the required time, there is no foreclosure. If the borrower does not pay, the lender provides written notice to the borrower that the entire mortgage balance (not just the default amount) is due and that the property will be foreclosed.
- The lender posts the notice of the foreclosure sale at the county courthouse where the property is located and provides formal notice of the foreclosure sale to the county clerk and the borrower 21 days before the scheduled sale date.
- On the scheduled date, the property is sold to the highest bidder at a public auction.
In Texas, a typical foreclosure does not take long — as few as three months.
An attorney can help stop foreclosure
A real estate attorney can help defend you against foreclosure. One step, which should not be taken lightly, is to file for bankruptcy, which allows you to restructure your debt. By reducing the amount you owe to other creditors or by increasing the repayment time of your other loans, bankruptcy may enable you to have the cash flow to continue making your mortgage payments. Declaring bankruptcy may be difficult emotionally for you and your family, and it harms your credit rating.
A less drastic approach is to negotiate with the lender. Remember that the bank or mortgage company does not want to own your real estate. The lender simply wants the loan repaid. Foreclosing on a property has costs for the lender, such as attorney’s fees and filing fees. There is no guarantee that the lender will recoup the loan balance at the auction. These are some of the reasons that the lender may be willing to negotiate a repayment schedule or consider refinancing the mortgage for a longer term or at a lower rate (depending on current mortgage rates). A real estate attorney experienced with foreclosure litigation can be a powerful negotiator for you with the lender.
Alternately, you may have grounds for a successful lawsuit if your lender did not follow the proper notification procedures or is otherwise at fault in trying to foreclose. Filing a suit can stop the foreclosure proceedings until the suit is resolved, so that you can remain in your house. It can prevent the lender from providing negative information about you to the credit reporting agencies. If the court finds that the lender was at fault, you may even be awarded damages.
What happens to my lease in a commercial foreclosure?
A foreclosure on an office building or a retail property is a commercial foreclosure. The process for commercial foreclosures is similar to the residential foreclosure process.
If you are a tenant in a commercial property under foreclosure, you may be concerned about the impact on your business. It depends on your lease agreement. A commercial lease should include a subordination, non-disturbance and attornment agreement (SNDA) clause in which the new owner agrees to continue the terms of the lease for you as long as you comply with the lease and continue your rent payments. It is in your best interest to hire an experienced real estate attorney who can review your lease, advise you of any impact the foreclosure may have on your business, and work to protect your rights with the new owner.
Schedule a consultation to discuss your foreclosure concerns
I have represented many commercial and residential clients in foreclosure litigation, and am available for a consultation with you. My regular office hours are Monday through Friday from 8 a.m. to 5 p.m., and I am available evenings and weekends as well. My office is conveniently located on the Katy Freeway, with easy access from the Grand Parkway. Or, we can meet at a location convenient for you. To schedule your free consultation, call me now at 832-919-7670 or contact me.