Can a lending company deny the sale of a home that is in foreclosure because the home was listed as for sale by owner in Texas?

If you get a contract for sale on your house that is set to close before the foreclosure sale, it makes no difference how you got it. You need to make sure that the closing agent understands that foreclosure is coming, so that the payoff proceeds can be paid to the lender from the sale proceeds before the foreclosure is final.

A lender cannot refuse to allow the sale of a home unless it also has title somehow or some special agreement exists. It would be most unusual for a lender to have control over the method of the sale of the property securing the loan. Titleholders control ownership not lienholders in general (of course a lienholder can force a change in ownership by foreclosing on the property). A lender that refuses to cooperate in providing a payoff amount for example in order to encourage you to sell the home using a broker is in violation of the law or contract more than likely. An attorney would need to review the documents to be sure of the situation here. A lender generally does not care how you sell your home so long as their loan is paid first with the proceeds of the sale. Most of the time a lender is not willing to merely allow you to transfer (or assign) the old loan to a new owner of the property but instead requires you to pay off the loan at the closing table (this is often referred to as the due on sale clause and there are some exceptions). If they don't get paid off after the sale they could declare the entire loan due immediately and start foreclosure until they are paid in full by the current owner or the purchaser at the foreclosure sale.

It is becoming quite common for property owners to sell property themselves and pay only to have the property listed on MLS or some other website to avoid paying a broker fee (although it will increase your chances of selling the property if you agree to pay the buyer's side of the broker fee). In the past a seller would pay a six percent broker fee -- three percent to the seller's broker and three percent to the broker representing the buyer. Nowadays seller brokers are agreeing to cut their fees substantially to get the listing so if you think you need a broker to help sell property you might negotiate over the seller's broker fee. The is general information only and not intended to be legal advice. If you want legal advice, consult with a lawyer directly.

You are typically free to sell your home as you see fit. However, I'm wondering if you are trying to do a "short sale" on your house. (A short sale is a sale in which the lender accepts a percentage of the total amount owed and releases the lien on the house.) If so, the lender has the option to reject the lesser amount. They typically don't care how the house is sold. However, if you are trying to beat a foreclosure, I'd suggest your using an agent familiar with the process, as their are traps for the unprepared.