Legal Question in Real Estate Law in Texas

Re: Should I let my investment property to foreclose?

Probably. Besides adversely affecting your credit, the bank could get a deficiency judgment against you if they take a loss on the house. They could then perfect the lien in any state they think the lien might attach. It would be better to find a broker who specializes in short sales and get rid of the house before it forecloses. Good luck.

Re: Should I let my investment property to foreclose?

You should review not only the loan documents on your Fort Worth property, but also on the other two for at least two reasons:

1. It is possible (though not entirely likely) that the security documents on the Fort Worth property contained a grant of a security interest in your other properties (meaning that, if you default on the Ft. Worth loan, not only could the lender foreclose on that property, but also on any other properties referenced in the loan documents, as well as any other types of collateral such as furniture, fixtures and equipment, depending on how the security language reads); and

2. The loan documents on the other two properties might contain language that independently creates a default if you default on a different loan, such as the Ft. Worth obligation (meaning the Ft. Worth foreclosure could place your other properties in jeopardy with the other lenders).

One alternative if you're not certain you want to let the Ft. Worth property foreclose would be to contact your lender to see about a workout. Lenders are quickly becoming accustomed to extending payment terms, etc. because the real property and credit markets are seizing up.

It might, therefore, be worth your while to contact the lender to see if you can obtain a forbearance or modification of the repayment terms that would permit you to avoid a foreclosure and buy you some time to either lease or sell the property.