Texas Foreclosure Law

In Texas it is illegal to ever have a deficiency judgement filed against you if you follow the letter of the law. Example: Jim has a house with a market value of 100,000. he owes 85,000.00 House is sold a foreclosure sale for 70,000. Per Texas law the bank cannot sue for a deficency as the house was sold under market value. Example two: Jim house has a market value of 100,000 he owes 105,000. Forslosure sale of 70,000 Bank can sue for 5,000 amount over market value Here is the staute read for yourself Added by Acts 2003, 78th Leg., ch. 554, § 1, eff. Jan. 1, 2004. § 51.003. DEFICIENCY[0] 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[0], any action brought to recover the deficiency[0] 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 cashflow 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[0] is sought are entitled to an offset against the deficiency[0] 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[0]. (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[0] 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[0].