Ok, you’re a few days or maybe a week or more, late with your mortgage payment and your worrying that you may lose your home. Well STOP because there are things you can do. First you should take a deep breath because if you go on to the second step it will all be alright. Second and most importantly, contact your lender, contact your lender, contact your lender, and just in case you missed it, contact your lender because if you let it go to long it’s may be too late. And third of all, keep reading.

Many people have experienced that feeling of panic that their lender will show up and knock on the door and tell them that they are there to take the house because they missed a payment. Well it’s not that simple.  Although it is difficult and emotionally draining when you realize that you can’t make this month’s mortgage payment on time, it does not mean that you will be homeless by the end of the month. Things just don’t work that fast.

There are several steps that the lender (mortgagee) must follow before they can come knocking on your door. The more aware you are of these lender responsibilities the better equipped you will be in trying to retain your home.

First you need to understand the three parts to a home loan.

There’s the Real Estate Lien Note: This is one of the documents that you signed at closing which states the amount of money owned and the terms for repayment.

Then there’s the Deed of Trust: This gives the lender security in the real estate that’s being purchased. Basically this gives the lender a legal ownership in the home. It also outlines the consequences should the terms of the Real Estate Lien Note not be followed.

And lastly there’s the relevant Texas Statutory and Case Law: This comes into play if certain issues regarding the foreclosure of a Texas real estate property is not covered in the Deed of Trust or if an issue conflicts with Texas law.

Word of warning: There is no mandatory Texas Deed of Trust. Each lender has their own version of it so certain issues may or may not be covered in the one securing your home. Therefore it would be in your best interest to have a copy of yours. You should have received one at closing but in case you don’t have it, then you can obtain a copy of it from the county clerk’s office in the county in which the property is located.  You wouldn’t sign any other contract without knowing what’s on it or without your own copy, so why is this any different.

To trigger a foreclosure you must first have violated one of the terms of the Real Estate Lien Note. Since you are late or have missed a payment then it’s probably safe to say that you have violated one of these terms. However some notes will give you anywhere between 3 and 10 days grace on a late payment before setting off the foreclosure wheels. So check you Real Estate Lien Note for that provision.

If you are already beyond the grace period on your payment then the lender can accelerate the remaining balance on the note. This is called the Acceleration Clause. It means that the lender can require that the whole remaining balance becomes due and payable and not just the periodic payment that you are behind on.

Ok so don’t panic yet!

Texas law requires that if the loan is secured by a residence then the lender must give you written notice, sent by certified mail, that you have 20 days to cure the default amount before they can demand the full amount of the loan. What that means is that rather than you being a few days late and the lender comes and demands full payment of the remaining amount owed you are given 20 days to come up with just the amount of the payment you missed. If you can do that then the foreclosure wheels stop. That’s right. They stop right in their place and you can get back on the right track.

If however you can’t come up with the missed payments within the 20 days as given by the lender, then the lender can demand full payment of the total amount owed. They will request that the trustee as designated in the Deed of Trust begin the foreclosure process.

This process has several legal requirements that must take place for a foreclosure to be valid.

The trustee must post a required 21 days notice of foreclosure at or close to the door of the court house in the county in which the property is located. The day the notice is posted is counted as the first day. The same notice that is posted must also be filed with the county clerk’s office in the county in which the property is located and this notice must be sent by certified mail to each debtor as listed on the deed of trust to their last known address.

Although receiving one of these notices in the mail may tempt you to just give up and start packing, this is still not the time to panic. You may be thinking that if you can’t come up with the payments in default how on earth can your lender think that you can come up with the total amount of the loan. Well the truth is, the lender knows that you can’t pay it. They know that if you had the money to pay the total amount then surely you won’t have missed a payment in the first place. But they also know that if they don’t follow the foreclosure steps as required by Texas law then they will forfeit their right to claim. So what the lender is doing is protecting themselves and their interest in the property.

The lender is not as you may be feeling just trying to take your home from you. They don’t want your house. They most likely have more vacant houses in their portfolio than is financially wise. What they want is their money. It costs more money for the lender to foreclose on you then it does for the lender to work with you.

So instead of packing and panicking, sit down and take a long hard look at your finances, another deep breath, and be realistic in what you receive and in what you spend. Then contact your lender. Call them up, keep calling until you get to the right person, someone who can actually make a decision on your account. Times have changed and many lenders are more than willing to work with you to try and keep you in your house.

So be calm, organized and accurate in your facts and call your lender. If you don’t get the answer or the support you need then try again. Once your lender realizes that you are trying to work with them and not just avoiding the issue then they will be more willing to work with you.