The math doesn’t always end at the auction — sometimes it goes the other way.
After a Texas foreclosure auction, one of two things can happen with the money: you could still owe the difference if the home sold for less than what you owed, or you could actually be owed money back if it sold for more. Most homeowners have never heard of the second possibility — worth covering here, alongside everything else on your options facing foreclosure in Houston.
If You Still Owe Money: Deficiency Judgments
If your home sells for less than the remaining loan balance, that gap is called a deficiency, and Texas law allows lenders to sue you for it. Under Texas Property Code §51.003, the lender has two years from the sale to bring that lawsuit. You do have a real protection here: you can request the court determine the property’s actual fair market value on the date of sale, and if that value was higher than what it sold for, the deficiency you owe gets reduced by the difference. One exception: Texas law doesn’t allow a deficiency judgment at all following foreclosure of a home equity loan.
If You’re Owed Money: Surplus Funds
The other side — the one almost nobody knows about — is surplus funds. If the home sells for more than what was owed, which happens more than you’d think in a market like Houston’s, that extra money doesn’t just disappear. After any other liens are paid, the remaining surplus belongs to you, the former homeowner, and you can claim it. Most people never find out this money exists because nobody tells them to look for it. I tell every client to ask — it costs you nothing to check.
Whether you’re facing a possible deficiency or may be owed surplus funds, request the accounting of the sale — the story doesn’t end at the auction. Reach out if you want help understanding a deficiency letter, or revisit your full options facing foreclosure in Houston if you’re still early enough to choose a different path.