How much does it typically cost to foreclose on a property

Question

I have a property that I am owner financing.   I’m the lender on the property and was wondering how much the foreclose fees would be around as just a worst case scenario if I would have take the property back or how much you had to pay to foreclose on someone?  The property is in Texas

Andy Mirza · Answer

@Charles Salim It cost us $2700 to attempt a foreclosure late last year in Fort Bend county late last year. Most of that is in publication fees.

I say attempted because the borrower filed Ch 13 BK to stop the sale. It seems like a high percentage of borrowers these days are filing BK to stop sales.

We get to pay that $2700 again since the stay lifted and we have to do another sale.

Ron S. · Answer

Assuming its not a HELOC (Home equity loan, or Texas A6 transaction), Non judicial foreclosures in Texas start after the 120th day of delinquency and are pretty fast after that. once you hit day 120, send a 30 day breach letter, then file a notice of sale and go to sale no earlier than 21 days after that. When all is said and done, its six months start to finish from the day they quit paying to the day you foreclose, assuming you do everything right. Then you'll have to evict if they don't leave willingly.

All that said, not expensive when compared to judicial or quasi-judicial states. It's been a while since I've done a TX foreclosure but i'd wager a $100,000 home would be $1,500-$2,500 for title work, TSG, publication, trustee fees, recording, and so forth, depending on location and loan balance?

There is no "Break" the borrower may get in Texas on a monetary default foreclosure that is non judicial. No redemption.

Andy Mirza · Answer

@Ron S. A good thing about TX is that the normal trustee sale process is very quick.

In the case I mentioned, the borrower filed Ch 13 BK to stop our December, 2019, foreclosure sale. (In TX, trustee sales are held on the first Tuesday of the month only.) The borrower filed a plan with non-standard provisions, which was confirmed. Their plan gave them 6 months to sell the property and pay us off in full without making any payments.

We believe that the debtor had no intention of selling the property. They had a full four months to sell before COVID related issues and should have been able to sell.

Their plan allowed the stay to lift on 6/3/2020. We had everything ready to go and have a sale date in July.

Ron S. · Answer

Sad but true...

At least in California, we aren't a "restart" state so we can put the foreclosure on hold in case the BK gets dismissed. I tend to put it on hold versus cancel in 13's if it was close to sale when they filed. That assumes I've reviewed their schedule and plan as well. I still get to include my bankruptcy costs regardless and if they reinstate over the period of the plan, i recoup my arrears, my costs, they get to keep their hom and, we are all better off.

I get it if you go for relief and get it, or if its a 7 and they don't reinstate, or default on the 13, you don't get to recover the costs.

Charles Salim · Answer

@Steve Morris@Ron S.@Andy Mirza

Thanks alot!  I really appreciate the response.  That helps give me an idea of the cost and timing of the process.

@Andy That’s a tough situation.  Good luck with that

Steve Morris · Answer

Don't know TX laws, but get an atty or ask his advice for a fee.

It can be judicial (i.e. you need to go to court) or non-judicial (you just need a default and then sorta automatic judgment).

Also, again in OR, they give borrowers all sorts of breaks on getting the property back, even 2 months after they lose it.  So make sure you understand timelines for this.

How much does it typically cost to foreclose on a property

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