How to Stop Foreclosure in Dallas: 6 Options Texas Homeowners Have Right Now

If you have fallen behind on your mortgage payments and received a notice from your lender, the clock is ticking. Foreclosure in Texas moves faster than in most states, and Dallas homeowners facing this situation need to understand their options quickly. The good news is that foreclosure is not inevitable. Even if you are deep into the process, you have legal rights and practical alternatives that can help you protect your equity, your credit, and your peace of mind.

This guide covers the six most common ways to stop or avoid foreclosure in Texas, explains the specific timeline you are working with, and helps you identify which option makes the most sense for your situation.

How Foreclosure Works in Texas: The Timeline You Need to Know

Texas is a non-judicial foreclosure state, which means your lender does not need to go through the court system to foreclose on your home. This makes the process significantly faster than in judicial foreclosure states. The Texas Property Code governs the foreclosure process, and the timeline generally works as follows.

First, your lender will send a Notice of Default or demand letter after you miss payments, typically after 60 to 90 days of delinquency. This is a formal notification that you are in breach of your mortgage agreement and that the lender intends to accelerate the loan if the default is not cured.

If the default is not resolved, the lender must send a Notice of Sale at least 21 days before the scheduled foreclosure auction. This notice must be sent by certified mail to the borrower, filed with the county clerk, and posted at the courthouse door of the county where the property is located. In Dallas County, foreclosure sales are held on the first Tuesday of each month on the courthouse steps.

From the time you receive the Notice of Sale, you have a minimum of 21 days before your home is sold at auction. In practice, most lenders provide a longer runway before reaching this point, but the legal minimum is tight. Once the auction occurs, the sale is final and your right to the property ends.

Your 6 Options to Stop Foreclosure in Dallas

Option 1: Reinstatement – Catch Up on Missed Payments

The most straightforward way to stop foreclosure is to pay everything you owe in back payments, including late fees and any legal costs the lender has incurred. Under Texas law, you have the right to reinstate your loan by paying the full past-due amount at any time before the foreclosure sale occurs.

This option works if your financial hardship was temporary, a job loss where you have since found new employment, a medical emergency that has been resolved, or an unexpected expense that drained your reserves. If you can come up with the lump sum needed to bring the loan current, reinstatement stops the foreclosure immediately and puts you back on track with your original mortgage terms.

The challenge is that by the time most homeowners reach the foreclosure stage, the past-due amount has grown significantly. Between missed payments, late fees, legal fees, and any property preservation charges, the reinstatement amount can be tens of thousands of dollars.

Option 2: Loan Modification – Restructure Your Mortgage Terms

A loan modification changes the terms of your existing mortgage to make payments more affordable. This can include reducing the interest rate, extending the loan term, adding missed payments to the end of the loan, or in some cases reducing the principal balance. The Consumer Financial Protection Bureau (CFPB) provides detailed guidance on the modification process and your rights as a borrower.

To pursue a modification, you will need to contact your loan servicer and submit a loss mitigation application, which typically includes proof of income, bank statements, a hardship letter, and tax returns. The review process can take 30 to 90 days, and during this time the lender may be required to pause foreclosure proceedings under federal servicing rules.

Loan modifications are not guaranteed. Your lender must agree to the new terms, and approval depends on your current income, the type of loan, and the lender’s loss mitigation policies. If you are pursuing a modification, start the process immediately, waiting reduces your options.

Option 3: Forbearance Agreement – Temporary Payment Pause

A forbearance agreement temporarily reduces or suspends your mortgage payments for a set period, usually three to six months. At the end of the forbearance period, you resume payments and repay the missed amount, either in a lump sum, through a repayment plan spread over several months, or by adding the amount to the end of your loan.

Forbearance is most useful when your financial hardship is genuinely temporary and you expect to be able to resume payments in the near future. It does not reduce the total amount you owe, it simply gives you breathing room. If your financial situation has fundamentally changed and you cannot foresee being able to afford the mortgage going forward, forbearance delays the problem rather than solving it.

Option 4: Short Sale – Sell for Less Than You Owe

A short sale occurs when you sell your home for less than the remaining mortgage balance, with your lender’s approval. The lender agrees to accept the sale proceeds as satisfaction of the debt, even though the amount falls short of what you owe.

Short sales can be effective for homeowners who are underwater on their mortgage, meaning the home is worth less than the loan balance, but they come with significant drawbacks. The process requires lender approval, which can take weeks or months. The lender may pursue a deficiency judgment for the remaining balance in some circumstances. And short sales are reported on your credit, though the impact is generally less severe than a full foreclosure.

Option 5: Deed in Lieu of Foreclosure – Voluntarily Transfer Ownership

With a deed in lieu of foreclosure, you voluntarily transfer ownership of the property to your lender in exchange for being released from the mortgage obligation. This avoids the foreclosure auction and can be less damaging to your credit than a completed foreclosure.

Lenders do not always agree to a deed in lieu, especially if the property has significant liens or if they believe they can recover more through the foreclosure auction. However, if you are in a situation where you simply cannot afford the home and want to minimize the damage to your credit, this option is worth discussing with your lender.

Option 6: Sell Your Home for Cash Before the Auction

For many Dallas homeowners in pre-foreclosure, selling the home to a cash home buyer before the auction date is the most practical option. A cash sale can be completed in as little as seven to fourteen days, which means you can close before the foreclosure sale, pay off the mortgage, and walk away with any remaining equity.

This approach has several important advantages over the other options. You protect your credit from the full impact of a foreclosure, which can lower your credit score by 100 to 160 points and remain on your credit report for seven years. You preserve any equity you have built in the home, which is lost entirely if the property goes to auction and sells for the minimum bid. And you avoid the emotional toll and public nature of a foreclosure sale.

Ninebird Properties has helped many Dallas-Fort Worth homeowners in pre-foreclosure situations. Because they buy properties in any condition for cash, there are no repairs needed, no commissions to pay, and no risk of financing falling through. The process is fast enough to close before the auction date in most cases, and they work directly with lenders and title companies to ensure a smooth transaction.

Which Option Is Right for You?

The best option depends on several factors: how far along you are in the foreclosure process, whether your financial hardship is temporary or permanent, how much equity you have in the home, and how quickly you need to act.

If you can afford to catch up and resume payments, reinstatement or modification gives you the best long-term outcome. If your financial situation has fundamentally changed and you cannot afford the home, a cash sale protects your equity and credit better than letting the foreclosure proceed to auction.

The worst option in almost every case is doing nothing. Homeowners who ignore foreclosure notices, avoid their lender’s calls, and hope the problem resolves itself end up with the worst possible outcome: a completed foreclosure, no equity recovery, and maximum credit damage.

Act Now: Time Is Your Most Valuable Resource

If you are facing foreclosure in Dallas, the single most important thing you can do is act immediately. Every day that passes reduces your options. Whether you pursue a modification, negotiate with your lender, or request a fast cash offer on your home, taking action now gives you the most choices and the best chance of protecting your financial future.

Ninebird Properties offers free, confidential consultations for homeowners facing foreclosure in the DFW area. As trusted local cash home buyers with over 20 years of experience, they understand the urgency of your situation and can provide a fair cash offer quickly enough to stop the foreclosure process. You can also read more about foreclosure avoidance strategies on the Ninebird Properties blog.