Texas's Major Pandemic-Era Foreclosure Program

In 2021, the American Rescue Plan Act created the federal Homeowner Assistance Fund, and Texas received an allocation of roughly $842 million, which the state administered as the Texas Homeowner Assistance Fund (TXHAF) through the Texas Department of Housing and Community Affairs (TDHCA). TXHAF offered up to $65,000 per household to help cover past-due mortgage payments, property charges, insurance, and utilities for homeowners who experienced a COVID-19-related financial hardship after January 21, 2020 and before April 10, 2023.

While TXHAF distributed more than $200 million to over 20,000 households before closing to new applications once funds were fully committed, the underlying foreclosure-prevention infrastructure remains in place.

HUD-Approved Housing Counseling

The first and most flexible resource for any Texas homeowner worried about foreclosure is a HUD-approved housing counseling agency. These nonprofit agencies offer free foreclosure prevention counseling, including:

Reviewing the homeowner's income, expenses, and mortgage terms
Communicating directly with loan servicers on the homeowner's behalf
Evaluating loss mitigation options like forbearance, repayment plans, and loan modification
Screening for any state, local, or nonprofit financial assistance programs that may apply

A directory of HUD-approved counselors is available through HUD's website and TDHCA's foreclosure prevention resources page.

Texas State Affordable Housing Corporation

The Texas State Affordable Housing Corporation (TSAHC) offers a Foreclosure Prevention Program that connects struggling homeowners with counselors, legal aid, and educational resources. TSAHC also maintains the Texas Financial Toolbox, an online resource that helps Texans locate foreclosure prevention counseling in their area.

Loss Mitigation Options From Loan Servicers

Mortgage servicers are required by federal regulations and investor guidelines to evaluate homeowners for loss mitigation before moving forward with foreclosure. Common options include:

Forbearance: a temporary pause or reduction in mortgage payments
Repayment plan: past-due balance spread over a number of months
Loan modification: permanent change to loan terms to lower monthly payments
Partial claim: deferred, zero-interest balance paid when the loan ends (FHA loans)
Short sale or deed in lieu of foreclosure: alternatives when keeping the home is not feasible

Homeowners should contact their servicer as soon as they anticipate a payment problem, since options narrow as the loan falls further behind.

Property Tax and Insurance Challenges

Many Texas foreclosures begin not with missed mortgage payments but with unpaid property taxes or lapsed insurance. Key resources include:

County tax offices offer installment plans and deferrals; Texas law provides strong property tax protections for seniors (65+), people with disabilities, and disabled veterans.
Tax deferrals can pause collection for qualifying homeowners, though interest accrues and the balance becomes due when the property is sold.
If insurance has lapsed, working with a licensed agent quickly to reinstate coverage avoids force-placed insurance through the lender at higher cost.

Legal Aid

Legal aid organizations, including Lone Star Legal Aid, Texas RioGrande Legal Aid, and Legal Aid of NorthWest Texas, provide free legal representation to qualifying low-income homeowners facing foreclosure. These organizations can help identify illegal practices, defend against wrongful foreclosure, and negotiate solutions.

Avoiding Foreclosure Scams

Homeowners in distress are a common target for scams. Warning signs include:

Demands for upfront fees
Requests to sign over the deed to a third party
Promises of a guaranteed foreclosure rescue
Pressure to stop paying the mortgage or avoid contact with the servicer

Legitimate housing counseling and legal aid are free, and homeowners should confirm the counselor or attorney is affiliated with a known nonprofit, HUD-approved agency, or bar association.

What Texas Homeowners Can Do Today

Even without an active mass grant program like TXHAF, Texans facing mortgage trouble have concrete steps to take:

Contact the loan servicer before missing payments
Reach out to a HUD-approved housing counselor for a free review
Ask county tax offices about installment plans or deferrals
Contact TSAHC or TDHCA to learn about current programs
Consult legal aid if foreclosure paperwork arrives or the homeowner suspects wrongful treatment

Taking action early often expands the range of options available and reduces the risk of losing the home.

Texas Homeowners Foreclosure Support and Relief Programs