The Law Office of J. Patrick Sutton

Another mortgage invalidated on limitations grounds

In another case out of the Houston Court of Appeals (1st Dist.), a borrower has invalidated a mortgage lien. See Residential Credit Sols., Inc. v. Burg, No. 01-15-00067-CV, 2016 WL 3162205, at *1 (Tex. App. - Houston [1st Dist.] June 2, 2016). There are now two such cases out of that court that follow the same reasoning (Burg relies on Hardy v. Wells Fargo Bank, N.A., No. 01–12–00945–CV, 2014 WL 7473762 (Tex. App.—Houston [1st Dist.] 2014, no pet.).

Burg and Hardy cases are a different fact pattern from the Landers case in which my client recently prevailed.

That said, I do have a virtually identical case pending in the U.S. Court of Appeals for the 5th Circuit,
Justice v. Wells Fargo Bank, N.A., No. 15-20615. Just as in the two Houston cases, the lender reserved all its rights to foreclose while extending some variety of forbearance payment plan to the borrower (in the Justice case, actually, the plan was merely a recapitulation of various terms in the loan, such as the borrower's right to reinstate after acceleration). The lender, however, argues that acceleration was abandoned once it accepted partial payments, even though the lender was simultaneously reserving its right to foreclose at any time if anything less than full reinstatement was paid. In essence, then, the lender is arguing that limitations does continue to run unless allowing that would later turn out to harm the lender, in which case the lender's emphatic insistence that limitations always ran is ignored so that the borrower does not get the benefit of limitations!
The Law Office of J. Patrick Sutton