Final answer:
Texas operates under the lien theory of mortgage law, where the borrower retains the legal title and the mortgage is considered a security lien. Deeds of trust, involving a trustee, are also commonly used.
Step-by-step explanation:
Texas operates under the lien theory of mortgage law. Under this theory, the legal title of the property remains with the borrower (mortgagor) while the mortgage is a lien on the property as security for the loan. The lender (mortgagee) has the right to enforce the lien and foreclose if the borrower defaults on the loan. Texas does not employ title theory, where the lender holds the title until the loan is paid off, nor does it use intermediate theory, which is a combination of both lien and title theories. Instead, Texas often uses deeds of trust, which serve a similar purpose to a mortgage but involve a third-party trustee who holds the title until the loan is repaid.