What You Actually Need to Know

Skip the legal jargon. Here’s the real situation:

1. Yes, you can sell while in forbearance. But here’s the catch: you need equity, and your lender has to sign off. Don’t expect easy approval if you’re underwater on the mortgage.

2. Those missed payments don’t disappear. They come straight out of your sale proceeds before you see a dime. If you owe $220K and you’re missing $8K in payments, that $8K gets subtracted from what you walk away with. Not from the lender. From you.

3. Timing is everything. Sell before forbearance ends, not after. Once that period ends, your lender starts expecting payment or a plan. The longer you wait, the fewer options you have. Trust me on this.

4. Tell your lender NOW, not later. Don’t wait until forbearance is almost over to call them. A quick email or call saying “I’m planning to sell this property” prevents nasty surprises at closing. Lenders can get stubborn when they feel like you’re hiding something.

What Forbearance Actually Is (And Isn’t)

Let me be straight with you: forbearance feels like relief. It is relief. Your lender is basically saying “we won’t collect from you for a few months.” But it’s not forgiveness. Every dollar you don’t pay now, you still owe later. That’s the part people don’t fully understand until it’s time to deal with it.

How It Actually Works

You call your lender (or they call you) and say you’re in financial trouble. Could be job loss, medical emergency, divorce—whatever. If they approve forbearance, here’s what happens:

  • They pause your monthly payments (usually 3-12 months)
  • Interest might still accrue (depends on your agreement)
  • You don’t make any payments during that period
  • But those payments? Still owed. They’re deferred, not forgiven
  • Your credit might take a hit if payments show as late (depends on lender)

At the end of forbearance, your lender will contact you saying something like “Your forbearance is ending. Here are your options:” Usually it’s repay everything at once (impossible for most people), set up a repayment plan, modify the loan, or sell.

That’s where you need a plan. And that’s what this article is about.

1

Texas Forbearance: The Speed Problem

Here’s what’s different about Texas compared to other states: we allow non-judicial foreclosure. Translation? Your lender doesn’t need a judge to foreclose on you. They can do it fast.

And they will.

The Timeline You Need to Take Seriously

Forbearance ends → Your lender sends notice. Here’s how fast things happen in Texas:

  • Days 1-21: Notice posted on the property
  • Days 21-60: Lender’s attorney advertises the foreclosure sale in the newspaper
  • Day 60+: Property sold at auction (usually on the courthouse steps in your county)

You could literally go from “forbearance ended” to “homeless” in less than 90 days. This isn’t scare tactics. This is how Texas law works.

This is why I’m telling you: don’t wait until forbearance ends to think about selling. You need to be listing the property or accepting a cash offer while you still have leverage and time.

Property Taxes Don’t Stop (And Probably Aren’t Being Paid)

Your property taxes don’t care about forbearance. The county still wants their money. If your mortgage includes an escrow account (almost every mortgage does), your lender collects taxes as part of your monthly payment.

But here’s the trap: if you’re in forbearance and not paying the mortgage, the taxes might not be getting paid either. Call your lender and ask directly: “Are my property taxes current during forbearance?”

If the answer is no, you’ve just discovered another liability you’ll have to deal with at closing. Tax liens are serious. They can foreclose on you too.

HOA Foreclosure Is Real (And Faster Than Mortgage Foreclosure)

If your property is in an HOA and you’re behind on dues, the HOA can foreclose on you faster than your mortgage lender. I’ve seen this happen. Houston and Dallas have tons of HOAs, and many of them don’t hesitate to foreclose.

Check your escrow account right now. If HOA fees aren’t being paid during forbearance, you could face foreclosure from the HOA while you’re still negotiating with your mortgage lender. The HOA forecloses, sells the house at auction for $10K in back dues, and the mortgage lender still gets their payoff from the proceeds—but now you’ve lost control of the situation.

This Actually Happens in Texas

I’ve dealt with forbearance situations where the HOA foreclosed first. Now the homeowner is dealing with two different entities, and they have no say anymore. Get your HOA account status right now. Today. Before you do anything else.

Texas Homestead Exemption Won’t Help You (It Never Does)

Texas homestead laws protect your home from creditors—but NOT from your mortgage lender. Your lender can foreclose on your primary residence just like any other state. Don’t count on the homestead exemption to save you. It won’t.

2

How to Actually Sell (Real Steps, Not Textbook Stuff)

Step 1: Call Your Lender and Get One Number

Call the number on your mortgage statement. Say: “I’m thinking about selling my home. Can you send me a payoff statement?”

That’s it. You’re not committing to anything. You’re just getting information. They’ll send you a document showing:

  • Loan principal balance
  • Deferred/missed payments you owe
  • Interest accrued
  • Fees they’ve charged
  • Total payoff amount (this is THE number)

This number is the truth. Everything else is guesswork. Get it in writing. Keep it.

Step 2: Find Out What Your House Is Worth (Roughly)

Pull up Zillow. Check Redfin. Drive around your neighborhood. Call a local realtor and ask for a free CMA (comparative market analysis—they do this hoping you’ll list with them).

Do basic math: Home value minus payoff equals what you might actually get. If you owe $250K and your home is worth $280K, you’re working with roughly $30K (before closing costs and commissions eat into it). If you owe $250K and your home is worth $240K? You’re underwater and everything gets harder.

Step 3: Decide How You Want to Sell

List with a realtor (traditional sale):

  • You might get $15K-$25K more than a cash offer
  • But you’re waiting 60-90 days, hoping a buyer shows up and gets financing
  • Realtor takes 5-6% commission off the top
  • Closing costs are another 2-3%
  • You’re stressed for 3 months while forbearance is ticking down

Cash offer from an investor (7-14 day close):

  • You get paid fast. Certain. No guessing
  • No financing contingency. No “will they get approved?”
  • BUT—the offer is 15-25% below market because the investor takes on risk and repair costs
  • You make less money, but you’re done in 2 weeks

Example: Listing might net you $265K after commissions and costs. Cash offer might be $235K. The difference is $30K. But if forbearance ends in 60 days and you haven’t sold yet? That cash offer suddenly looks a lot smarter. Time is worth money.

Step 4: Actually Tell Your Lender

Don’t be coy. Send an email (or better, certified mail) that says: “I plan to sell this property. Sale proceeds will pay off the mortgage in full.”

Why? Because at closing, the title company contacts your lender to verify consent. If this is the first time they’re hearing about it, they can cause problems. Lenders get weird when blindsided.

Step 5: Close and Move On

At closing, the title company takes the sale proceeds and pays out in this order:

  • Realtor commission (if applicable)
  • Closing costs (title, escrow, attorney—roughly 2-3%)
  • Your lender’s payoff (principal + deferred payments + interest + fees)
  • Any property tax liens or HOA liens
  • Whatever’s left is yours

You don’t touch the money. Title company handles it. Lender gets paid directly from escrow. You get whatever’s left. Clean break.

3

What If Selling Isn’t Your Best Move?

Loan Modification (Better Than Forbearance)

If your hardship is temporary but you want to stay, ask about loan modification. Your lender changes the terms—lower interest rate, extended term, sometimes even principal forgiveness (rare). It requires application and approval, but it can work if you’re going back to work soon or expecting income to improve.

Repayment Plan (Spread It Out)

Many lenders will let you spread deferred payments over 6-12 months instead of demanding a lump sum. This gets worked out directly with your lender. You must be able to afford both regular payments plus catch-up payments, though.

Get Help From HUD

HUD offers free housing counseling. Go to consumerfinance.gov and find a HUD-approved counselor in your area. They can review your specific forbearance terms and help you understand options. It’s free. Use it.

4

Mistakes People Make (Learn From These)

Waiting Too Long

The biggest mistake: thinking you have time. You don’t. If forbearance ends in 60 days, you’re already in the window where things move fast. Start the process immediately.

Not Getting Payoff Number in Writing

Your lender verbally says “Oh, you owe about $235K.” Then at closing it’s actually $245K with all the fees and interest. Get the payoff statement in writing. In your hands. Not verbal. Not email. Written, signed document from the lender.

Hiding the Sale From Your Lender

Some people think they can sneak this past their lender. They list quietly, hope for a quick offer, surprise the lender at closing. Don’t. Lenders can refuse to cooperate and hold up closing. Tell them upfront.

Forgetting About Property Taxes and HOA

Taxes are coming out of your proceeds. HOA liens are coming out of your proceeds. If you haven’t checked these, you’ll lose money you weren’t expecting to lose. Check them now.

Taking the First Offer

If you get a cash offer, don’t jump on it immediately. Get 2-3 other quotes. Cash buyers know you’re desperate. Shop around. Even a 5% difference matters.

Related Resources for Texas Sellers in Forbearance

Sources & Official Resources

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Disclaimer: This article provides general information about forbearance and selling in Texas. Every forbearance agreement is different. For specific guidance on YOUR forbearance terms, contact your lender directly or call a HUD-approved housing counselor (free through CFPB). This article is informational, not legal or financial advice. Consult professionals before making decisions about selling or loan modifications.