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Posted by Bill H on February 28, 2005 at 19:59:23:
In Reply to: foreclosure in TX....what to expect?? posted by RG on February 28, 2005 at 19:19:28:
: i have a home that will probably go into foreclossure soon...had it for two years, divorcing and now cant afford it.....difference between what i owe and the Fair Market Value is about 5K (I think, at least what the houses int the area are selling for)....house is a starter house less than 90k area, not huge...I dont want the house....if it goes into foreclosure what do you all think the bottom line will be in terms of money I'll owe if i cant get the mortgage balance...i understand its only an opinion...also ive heard or read that the appraisal value for the mortgage has something to do with any deficiency judgements, is that true??.....thanks
I seriously doubt that any lender would go after a deficiency judgment for only 5K...however, that said...here is the Texas statutes under Chap 51 covering both non-judicial (Power of sale deed of trust) and Judicial (Court ordered sale)
§ 51.003. Deficiency Judgment
(a) If the price at which real property is sold at a foreclosure sale under Section 51.002 is less than
the unpaid balance of the indebtedness secured by the real property, resulting in a deficiency, any
action brought to recover the deficiency must be brought within two years of the foreclosure sale
and is governed by this section.
(b) Any person against whom such a recovery is sought by motion may request that the court in
which the action is pending determine the fair market value of the real property as of the date of
the foreclosure sale. The fair market value shall be determined by the finder of fact after the
introduction by the parties of competent evidence of the value. Competent evidence of value may
include, but is not limited to, the following: (1) expert opinion testimony; (2) comparable sales;
(3) anticipated marketing time and holding costs; (4) cost of sale; and (5) the necessity and
amount of any discount to be applied to the future sales price or the cash flow generated by the
property to arrive at a current fair market value.
(c) If the court determines that the fair market value is greater than the sale price of the real
property at the foreclosure sale, the persons against whom recovery of the deficiency is sought are
entitled to an offset against the deficiency in the amount by which the fair market value, less the
amount of any claim, indebtedness, or obligation of any kind that is secured by a lien or
encumbrance on the real property that was not extinguished by the foreclosure, exceeds the sale
price. If no party requests the determination of fair market value or if such a request is made and
no competent evidence of fair market value is introduced, the sale price at the foreclosure sale
shall be used to compute the deficiency.
(d) Any money received by a lender from a private mortgage guaranty insurer shall be credited to
the account of the borrower prior to the lender bringing an action at law for any deficiency owed
by the borrower. Notwithstanding the foregoing, the credit required by this subsection shall not
apply to the exercise by a private mortgage guaranty insurer of its subrogation rights against a
borrower or other person liable for any deficiency.
Added by Acts 1991, 72nd Leg., ch. 12, § 1, eff. April 1, 1991.
§ 51.004. Judicial Foreclosure Deficiency
(a) This section applies if:
(1) real property subject to a deed of trust or other contract lien is sold at a foreclosure sale under
a court judgment foreclosing the lien and ordering the sale; and
(2) the price at which the real property is sold is less than the unpaid balance of the indebtedness
secured by the real property, resulting in a deficiency.
(b) Any person obligated on the indebtedness, including a guarantor, may bring an action in the
district court in the county in which the real property is located for a determination of the fair
market value of the real property as of the date of the foreclosure sale. The suit must be brought
not later than the 90th day after the date of the foreclosure sale unless the suit
was not extinguished by the foreclosure, exceeds
the sale price. If no competent evidence of fair market value is introduced, the sale price at the
foreclosure sale shall be used to compute the deficiency.
(d) Any money received by a lender from a private mortgage guaranty insurer shall be credited to
the account of the borrower before the lender brings an action at law for any deficiency owed by
the borrower. However, the credit required by this subsection does not apply to the exercise by a
private mortgage guaranty insurer of its subrogation rights against a borrower or other person
liable for any deficiency.
Added by Acts 1991, 72nd Leg., ch. 361, § 1, eff. June 5, 1991.
Good Luck,
Bill H
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