Sell Your Lubbock House When the Mortgage Is More Than You Can Carry

The short answer

You can sell a Lubbock house you can no longer afford. If the price covers the payoff, it is an ordinary closing. If you owe more than it is worth, the lender has to agree to release its lien for less than the balance — a short sale, and its call. A payment that jumped without a rate change is a different problem: escrow, often fixable without selling.

A fixed rate does not mean a fixed payment

Rate never moved, payment did? That is escrow — taxes and insurance. In Lubbock the tax half starts in one office, not the one most people call.

Lubbock County’s Property Tax Collections page says the Lubbock Central Appraisal District “issues the annual property tax bills, receives payments for property taxes, processes Homestead Exemptions, and considers protests and appeals.” Chief appraiser Tim Radloff, 806-762-5000. The county’s Tax Assessor-Collector handles “all your motor vehicle needs.” Wrong line.

Three things to check first

• Your homestead exemption. It does not carry over from the last owner, and it switches on the Tax Code Sec. 23.23 cap, which under Sec. 23.23(c) “takes effect as to a residence homestead on January 1 of the tax year following the first tax year the owner qualifies the property for an exemption under Section 11.13.” No exemption, no cap.
• The appraised value. Sec. 41.44(a)(1) sets the protest deadline — “except as provided by Subsections (b), (c), (c-1), and (c-2)” — at “not later than May 15 or the 30th day after the date that notice to the property owner was delivered … whichever is later.”
• The escrow analysis. Ask for it in writing. A one-year shortage is not a permanent increase.

Owing more than it is worth: what a short sale really is

A short sale is a sale for less than the payoff where the lienholder releases its lien anyway. Everyone with a recorded lien has to agree — first, second, HELOC, HOA, a contractor, the IRS, an old judgment. One holdout stops it.

So the first move is not calling a buyer. It is finding what is recorded against your address. The Lubbock County Clerk’s index is free: erecord.lubbockcounty.gov, and the clerk warns that “The County Clerk’s office will not conduct searches over the phone.” Surprised? Read selling a Lubbock house with liens.

A short sale package is a loss mitigation application under federal servicing rules. Under 12 C.F.R. Sec. 1024.41(g), once a servicer has made the first notice or filing required by law to start a judicial or non-judicial foreclosure, a complete loss mitigation application submitted after that point but “more than 37 days before a foreclosure sale” means the servicer “shall not … conduct a foreclosure sale” — unless it has told you that you are not eligible and the appeal process does not apply, you did not appeal in time, or your appeal was denied; or you reject every option offered; or you fail to perform under one you accepted. A signed contract from a buyer who can actually close is a large part of what makes a package complete. Anyone quoting you an approval rate is inventing it.

Will they come after me for the difference?

They can. Texas Property Code Sec. 51.003(a) says any action to recover a deficiency after a Sec. 51.002 foreclosure sale “must be brought within two years of the foreclosure sale.”

Sec. 51.003(b) lets you ask the court to determine the property’s fair market value as of the date of the foreclosure sale, found by the finder of fact “after the introduction by the parties of competent evidence of the value.” Beat the auction price and Sec. 51.003(c) gives an offset for the excess, less any lien the foreclosure did not extinguish — then adds the sentence everyone drops: “If no party requests the determination of fair market value or if such a request is made and no competent evidence of fair market value is introduced, the sale price at the foreclosure sale shall be used to compute the deficiency.” Somebody has to ask.

One exception: a home equity loan under Art. XVI, Sec. 50(a)(6) must be “without recourse for personal liability against each owner and the spouse of each owner, unless the owner or spouse obtained the extension of credit by actual fraud.” Your purchase-money mortgage is not.

Why you probably cannot refinance out of it in Texas

The ceiling is constitutional, not personal. Art. XVI, Sec. 50(a)(6)(B) requires a home equity loan’s principal, added to “the outstanding principal balances of all other indebtedness secured by valid encumbrances of record against the homestead,” not to exceed “80 percent of the fair market value of the homestead on the date the extension of credit is made.” Sec. 50(f)(2)(C) applies the same ceiling to refinancing one. Above that line there is no room.

Most Texas mortgages are foreclosed without a lawsuit, under the deed of trust’s power of sale. A Sec. 50(a)(6) equity loan is not: it is “secured by a lien that may be foreclosed upon only by a court order.”

Handing back the keys: the Texas trap in a deed in lieu

Property Code Sec. 51.006, the only Texas statute on deed in lieu, reads as a warning. Sec. 51.006(b) lets a lender “void a deed conveying real property in satisfaction of the debt before the fourth anniversary of the date the deed is executed and foreclosed under the original deed of trust” if both are true: you failed to disclose a lien or encumbrance before executing the deed, and the lender “has no personal knowledge” of it.

Sec. 51.006(e) goes further: a holder who accepts a deed in lieu “may foreclose its deed of trust … without electing to void the deed,” and that lien’s priority “shall not be affected or impaired.” Nothing releases the debt. Get that in writing.

The 1099-C nobody warns you about

Forgiven debt can be income. The IRS says “the creditor may send you a Form 1099-C, Cancellation of Debt showing the amount canceled and date of cancellation.”

Read the exclusion wording. The IRS lists it as covering “cancellation of qualified principal residence indebtedness that is discharged before January 1, 2026, or discharged subject to an arrangement that is entered into and evidenced in writing before January 1, 2026.” Most cash-buyer sites still say it simply applies. Other exclusions exist — insolvency is the common one — claimed on Form 982. See irs.gov/taxtopics/tc431, then a CPA.

How much time you actually have

Longer at the start than people expect, shorter at the end. Under 12 C.F.R. Sec. 1024.41(f)(1) a servicer “shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process” unless the loan is more than 120 days delinquent, the foreclosure is based on a violation of a due-on-sale clause, or the servicer is joining the foreclosure action of a superior or subordinate lienholder. Texas adds its own notices after that.

Sec. 51.002(f-1) makes counties post filed notices of sale online “without charge or registration.” Lubbock County’s clerk does — a running Notice of Trustee Sales list, dozens most months. For the rest, see selling a home in foreclosure in Texas.

When a cash offer is not your best move

• The problem is escrow and it is fixable. Selling a house you could keep is an expensive fix for paperwork.
• You have real equity and time. List it — a financed buyer usually pays more. See our comparison.
• You are a payment behind and the income came back. Ask about reinstatement.
• Several lienholders and deeply underwater. An hour with an attorney beats a month of paperwork.
• Our number leaves you with nothing. Then it is not a solution, it is a transaction. We will say so.

Two sources that do not want your house: the Texas State Law Library’s foreclosure guide and the CFPB’s search of HUD-approved counselors, “often at little or no cost to you.”

How it works if you do sell to us

Tell us the address, how far behind you are, whether there is a second lien, and whether anything has been filed. We look at the house as it sits — no repairs, no photos — and put a number in writing. If it covers your payoff, that is the conversation. If not, the lender has to approve a short sale. With your authorization we request the payoff, work the file with the servicer, and close at a Lubbock title company. See how we buy houses.

We cover all closing costs on purchase. You pick the closing date. When speed matters we can close in as little as 7 days on the right deal, and when you need longer we work to your schedule.

Sometimes we buy with our own money; sometimes we bring in another buyer. You will know in writing which, before you sign. Jarrod Frankum holds a Texas real estate license, and when we buy from you we are the buyer — we aren’t acting as your agent.

Questions people actually ask

Tell us what is going on

Call 806-630-0875 or email jarrod@electrumtexas.com. Tell us the address, what you owe, and what has been filed. We will tell you what we can pay, whether a short sale looks realistic, and when to keep the house.

Related: back property taxes, relocating, and every way to sell a house fast in Lubbock. Outside the city we buy in Wolfforth, Slaton and Idalou.