S.L.
Hi L.,
I have not been through this but my horrible mortgage lender (rhymes with Race) caused me to become very interested in the topic. Please look up Abigal Field's columns on Dailyfinance.com--she addresses the issue of "lost paperwork," etc. http://www.dailyfinance.com/story/real-estate/making-tria...
Also here is a link to the laws pertaining to foreclosure in your state--not that I'm saying thet'll try to do that! http://www.foreclosure.com/statelaw_TX.html
I include that only because they began pre-foreclosure proceedings on us after I transposed numbers on a check (I shorted them $16.83; they placed the balance in a "suspense fund" and demanded another FULL mortgage payment). I found out my rights and was able to clean things up, but it took a lot of time and worry.
If on the off chance they do something shady and try to tell you you have to be in default to qualify, don't listen to them! Call a federal agency such as HUD or HAMP and they should be able to help you. If the bank tries to tell you they will sell your house (doubtful in this market), demand that they "produce the note" (that proves their ownership of the mortgage). With all of the splitting and selling off of mortgages in the past years, they probably can't.
These are the things they do not want the consumer to know. Good luck!