The laws governing mortgages and foreclosures can vary greatly from state to state. Foreclosure rates in Texas are about average, but the state's laws are generally pretty unfavorable toward borrowers throughout the process.

Texas is both a deed-of-trust and two-party mortgage state, meaning that either mortgage arrangement is legal. Deed of trust loans require a third party's participation and a deed of trust, which establishes the third party as a trustee and specifies the terms under which the property is to be foreclosed. The trustee keeps possession of the deed to the property until the loan is paid in full, and if the borrower defaults the trustee is responsible for handling the foreclosure process. Traditional two-party mortgage arrangements are also allowed under state law, but are less common. In a two-party mortgage, a lender must sue the borrower successfully to recover the property upon default.

The foreclosure process in Texas tends to move a lot more quickly than in most other states, with most cases being settled within 60 days. The borrower is also denied what's called “right of redemption”. This rule, which is embraced by many states, allows the borrower to retake possession of a property by bringing the loan current and paying fees and legal costs that the lender has accrued during the foreclosure process.

Texas went from being the at the top of foreclosure statistics in 2006 to about average in 2009. This is because real estate speculation and credit was so rampant in growth states like California, Arizona and Florida, naturally a lot more risky loans were given those states. There were 138,301 homes foreclosed upon last year, and Texas' foreclosure rate was about 5 percent.) The worst county in Texas was Harris, which encapsulates the greater Houston area.