Your Rights as a Homeowner
Understand your federal and Texas-specific legal rights and protections during the foreclosure process.
Federal Homeowner Protections
Several federal laws protect homeowners facing foreclosure, regardless of which state you live in. These protections apply to most residential mortgages.
What It Means:
Under the federal Regulation X (RESPA), mortgage servicers cannot start foreclosure proceedings until your loan is more than 120 days delinquent. This means you must have missed at least four monthly payments before the lender can send a Notice of Default or file a foreclosure lawsuit.
Why It Matters:
This 120-day period gives you time to explore loss mitigation options, apply for loan modifications, or seek housing counseling before foreclosure begins. Use this time wisely.
Legal Citation: 12 CFR § 1024.41(f) - Prohibition on foreclosure referral
What It Means:
You have the right to submit a loss mitigation application to your mortgage servicer at any time. Loss mitigation includes options like loan modifications, repayment plans, forbearance, short sales, and deeds in lieu of foreclosure.
Key Protections:
- 37-Day Rule: If you submit a complete loss mitigation application at least 37 days before a scheduled foreclosure sale, the servicer must stop the foreclosure while they review your application.
- Review Period: The servicer has 30 days to review your complete application and notify you whether you've been approved, denied, or offered an alternative option.
- Appeal Rights: If you're denied, you have 14 days to appeal the decision.
Legal Citation: 12 CFR § 1024.41 - Loss mitigation procedures
What It Means:
"Dual tracking" refers to the practice of moving forward with foreclosure while simultaneously reviewing a homeowner's loss mitigation application. Federal law prohibits this practice.
Your Protection:
If you submit a complete loss mitigation application at least 37 days before a foreclosure sale, the servicer must:
- Stop the foreclosure process
- Review your application in good faith
- Not schedule or conduct a foreclosure sale until they've made a decision on your application
- Give you time to appeal if you're denied
Legal Citation: 12 CFR § 1024.41(g) - Prohibition on foreclosure sale
What You're Entitled To:
- Early Intervention: If you're delinquent, the servicer must contact you (or try to) by the 36th day of delinquency to discuss loss mitigation options.
- Written Notice: By the 45th day of delinquency, the servicer must send you a written notice explaining available loss mitigation options and how to apply.
- Account Statements: You have the right to request information about your account, including payment history, escrow balances, and fees.
- Error Resolution: If you believe there's an error on your account, you can submit a written notice of error, and the servicer must investigate and respond within 30-45 days.
Legal Citation: 12 CFR § 1024.39 (Early intervention), § 1024.35 (Error resolution)
What It Covers:
If a third-party debt collector is attempting to collect your mortgage debt, they must follow the FDCPA. This law prohibits:
- Calling you before 8 AM or after 9 PM
- Calling you at work if you've told them not to
- Harassing, threatening, or using abusive language
- Lying about the amount you owe or their legal authority
- Contacting third parties (like your employer or neighbors) about your debt
- Continuing to contact you after you've requested they stop (in writing)
Legal Citation: 15 U.S.C. § 1692 et seq.
What It Covers:
If you're on active military duty, the SCRA provides additional foreclosure protections:
- Lenders cannot foreclose on your home without a court order while you're on active duty or within one year after your service ends (for mortgages originated before your service began).
- You may be entitled to a reduced interest rate (6% cap) on debts incurred before active duty.
- You can request a stay (postponement) of foreclosure proceedings.
Legal Citation: 50 U.S.C. § 3953
Texas-Specific Homeowner Rights
In addition to federal protections, Texas law provides specific rights and procedures for homeowners facing foreclosure.
What It Means:
Texas law gives you the right to "reinstate" your loan by paying the total past-due amount (not the entire loan balance) to bring your mortgage current and stop the foreclosure. You have at least 20 days after receiving the Notice of Default to exercise this right.
What You Must Pay:
- All missed mortgage payments
- Late fees and penalties
- Costs the lender has incurred (such as attorney fees and posting costs)
Extended Periods for Certain Loans:
- FHA loans: 30 days to reinstate
- VA loans: 30 days to reinstate
- Home equity loans: 30 days to reinstate
Legal Citation: Texas Property Code § 51.002(d)
Notice of Default (Acceleration Notice):
Before foreclosing, the lender must send you a formal Notice of Default that includes:
- The specific amount you owe to cure the default
- A deadline (at least 20 days) by which you can reinstate the loan
- Information about your right to reinstate
- The notice must be sent by certified mail
Notice of Sale:
At least 21 days before the foreclosure sale, the lender must:
- Mail you a copy of the Notice of Sale by certified mail
- Post the Notice of Sale at the county courthouse
- File the Notice of Sale with the county clerk
Legal Citation: Texas Property Code § 51.002
Texas "First Tuesday" Rule:
In Texas, foreclosure sales must occur:
- On the first Tuesday of the month
- Between 10:00 AM and 4:00 PM
- At the county courthouse where the property is located
Why This Matters:
This predictable schedule gives you a clear timeline to work with. If you receive a Notice of Sale dated for a specific first Tuesday, you know exactly how much time you have to explore your options, apply for loss mitigation, or sell your home.
Legal Citation: Texas Property Code § 51.002(a)
What It Means:
Unlike some states, Texas does not provide a "right of redemption" for standard mortgage foreclosures. This means once your home is sold at the foreclosure auction, you cannot buy it back, even if you later come up with the money.
Exceptions:
A right of redemption does exist for:
- Property tax foreclosures (2-year redemption period)
- HOA lien foreclosures (180-day redemption period)
Legal Citation: Texas Property Code § 51.009
What It Means:
If your home sells at the foreclosure auction for more than the total amount you owe (including principal, interest, fees, and costs), you are entitled to the surplus funds after any junior liens (second mortgages, HOA liens, etc.) are paid.
How to Claim:
You have two years from the foreclosure sale date to claim surplus funds. The process typically involves:
- Filing a claim with the county court
- Providing proof of your ownership and entitlement
- Attending a hearing if there are competing claims
Legal Citation: Texas Property Code § 51.003
What It Means:
If your home sells at foreclosure for less than what you owe, the lender may seek a "deficiency judgment" to collect the remaining balance. However, Texas law provides some protections.
Your Rights:
- Two-Year Limit: The lender must file a lawsuit for a deficiency judgment within two years of the foreclosure sale.
- Fair Market Value Defense: You have the right to request that the court determine the fair market value of the property at the time of sale. The deficiency is calculated based on fair market value, not the actual sale price, which can reduce the amount you owe.
- Home Equity Loans: For home equity loans (as defined by the Texas Constitution), lenders cannot pursue a deficiency judgment at all.
Legal Citation: Texas Property Code § 51.003, § 51.005
What It Means:
Texas has one of the strongest homestead exemptions in the nation. Your homestead (primary residence) is protected from most creditors, except for:
Liens That Can Foreclose on Your Homestead:
- Purchase money mortgages (the loan you used to buy the home)
- Home equity loans (if properly structured under Texas law)
- Property tax liens
- HOA assessment liens
- Mechanic's and materialmen's liens (for work done on the property)
- Reverse mortgages
What Cannot Foreclose:
Credit card debt, medical bills, personal loans, and most other unsecured debts cannot result in foreclosure on your Texas homestead.
Legal Citation: Texas Constitution Article XVI, § 50
What Your Lender CANNOT Do
Understanding what your lender or servicer cannot legally do is just as important as knowing your rights. The following practices are prohibited:
Prohibited Actions
- ✗ Start foreclosure before 120 days of delinquency
- ✗ Foreclose while reviewing a timely loss mitigation application
- ✗ Fail to provide required notices
- ✗ Conduct the sale on any day other than the first Tuesday
- ✗ Harass or threaten you
- ✗ Lock you out of your home before the eviction process
- ✗ Charge excessive or unauthorized fees
- ✗ Ignore your requests for information or error resolution
If Your Rights Are Violated
- ✓ Document everything in writing
- ✓ File a complaint with the CFPB (1-855-411-2372)
- ✓ Contact the Texas Attorney General's office
- ✓ Consult with a foreclosure defense attorney
- ✓ Consider filing a lawsuit for damages
- ✓ Report violations to HUD if applicable