CHAPTER 5 What Happens at a Foreclosur eclosure Auction? uction?
If you are in default of your mortgage, your lender or their representative (called the “trustee”) will arrange a date for the house to be sold at a foreclosure auction (also sometimes called a “trustee sale.”) Your house will be sold at a public auction to the highest bidder, who must pay the full amount of the bid. The buyer then receives a trustee’s deed as soon as the sale is complete. This makes them the official owner of the home. The County Recorder’s Office records the Notice of Trustee’s Sale (NTS) and notifies you of the sale. The auction is likely to be held in the trustee’s office, on the foreclosed property itself, at a convention center, or even on the steps of the county courthouse. Notifications are also posted on the property and in the legal advertising section of the local newspaper. Many states give you — the homeowner (borrower) — the right of redemption, which means that you can halt the foreclosure process right up to the time of the auction if you can come up with the cash to pay the outstanding amount. You must research your state’s laws to determine whether this applies in your situation. Spoiler alert... Texas does not have redemption rights. Once the house is sold at auction, it is lost. At the auction, the highest bidder might purchase the home for cash. Relatively few buyers can pay cash on the spot, so the lender could enter into an agreement to take back the property from you, the borrower, in exchange for wiping out your debt. This agreement is known as a deed in lieu of foreclosure, and we’ll 28
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