Most Texas foreclosures do not require a court order. That is one of the things that makes Texas so favorable for creditors: if your loan is secured by a properly drafted deed of trust, you can foreclose through the non-judicial process we describe in the ABCs of Foreclosure section.
Home equity loans are the most common exception. Texas home-equity liens generally may be foreclosed only pursuant to a court order. Reverse mortgages secured by Texas homesteads are subject to similar court-order requirements.
Why Home Equity Loans Are Different
Texas has strong constitutional protections for homeowners. Under the Texas Constitution, a home-equity loan (often called a cash-out loan) secured by a Texas homestead generally may be foreclosed only through a court-authorized process. You cannot take it to the courthouse steps the way you can with a standard deed-of-trust loan.
The reason goes back to the history of Texas law, which has always treated the family homestead as something requiring extra protection. The rules for home equity lending in Texas are strict, and the foreclosure process reflects that.
How It Works Instead
To foreclose a Texas home-equity loan, the creditor typically files an application under Texas Rule of Civil Procedure 736 in a court with jurisdiction in the county where the property is located. This is a streamlined court proceeding rather than a full-blown lawsuit, but it does require court involvement and a judge’s order before the sale can proceed.
This process is governed by the Texas Rules of Civil Procedure and is designed to move fairly quickly when the default is straightforward. We handle these applications regularly.
Once the court issues the order authorizing the sale, the foreclosure itself proceeds much like a standard non-judicial sale: the substitute trustee posts notice, schedules the sale for the first Tuesday of a month, and conducts the bidding at the courthouse.
Reverse Mortgages Follow the Same Path
Reverse mortgages on Texas homesteads are also subject to the same court-order requirement. If you hold a reverse mortgage and the borrower has passed away, vacated the property, or otherwise triggered the conditions of default under the loan, you will need to go through the court process before a sale can occur. We handle these matters as well.
What This Means for Your Timeline
The court application process takes longer than a straight non-judicial foreclosure. The borrower and any other required respondents must be served, given an opportunity to respond, and the court must authorize the foreclosure before the sale can be scheduled.
If you are not sure whether your loan is a home equity loan subject to this requirement, we can review the documents and advise you. It is better to know before you start than to discover mid-process that your notices were legally insufficient.
In this section: ABCs of Foreclosure · Step 1: Default · Step 2: Notice
Frequently Asked Questions
How do I know if my loan is a home equity loan requiring the court process?
The key question is whether the loan was secured by a Texas homestead and whether the purpose of the loan was to extract equity, a cash-out refinance or home equity line of credit, rather than a purchase-money or construction loan. The deed of trust itself will often contain specific language referencing the Texas Constitution provisions that govern home equity lending. If you are not sure, we review the documents and advise you before you take any step.
How much longer does the court process take compared to a standard foreclosure?
In an uncontested case, where the borrower does not respond to the application, the court process typically adds two to four weeks to the timeline. If the borrower contests the application and requests a hearing, the process takes longer. As a practical matter, from engagement to courthouse-steps sale on a home equity loan foreclosure typically runs 60 to 90 days rather than 45 to 60.
Can the borrower contest the court application?
Yes. The borrower can file a response to the application for foreclosure order. If they do, the court schedules a hearing. The hearing is not a full trial, it is a relatively streamlined proceeding focused on whether the default occurred and whether the foreclosure should be authorized. Most uncontested applications are granted without a hearing.
Do the same 21-day notice requirements apply to home equity loan foreclosures?
Yes. Once the court order is obtained authorizing the sale, the same Texas Property Code notice requirements apply to the actual foreclosure sale, 21-day posted notice, certified mail to the borrower, and all the other steps we follow in a standard non-judicial foreclosure.