The Law Office of J. Patrick Sutton
foreclosure statute of limitations

Don't Blame the Borrower When the Lender Mishandles the Loan

I take on strong challenges to mortgage foreclosure in situations where the lender has not foreclosed many years after calling in ("accelerating") a loan. Some of the cases I've handled have involved a decade of inaction by lenders, with borrowers either having abandoned their houses long ago or else having lived in them under a cloud the whole time. In litigation, lenders argue against having the statute of limitations being enforced on the basis that the borrowers have gotten a free ride.
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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!Content may continue . . .

Foreclosure Statute of Limitations Cases Update

My clients have had recent wins and losses challenging foreclosures on the basis that the statute of limitations expired after the lender accelerated the loan. The Landers v. Nationstar case is being briefed in the Texas Supreme Court following the invalidation of the lender's lien by the Court of Appeals. The Texas Supreme Court has not yet decided whether to actually review the case; it simply asked the parties for briefs. Nationstar filed its brief on November 10, 2015; the Landers' brief goes in on November 13, 2015.

However, in a hotly-contested case,
Justice v. Wells Fargo Bank, a federal district court in Houston held that the lender's strong disclaimer of abandonment of acceleration was of no effect — the borrower's payments made under the penumbra of the bank's disclaimers still resulted in the bank's abandonment of acceleration. The case is now on appeal in the 5th Circuit U.S. Court of Appeals. No briefing schedule has been set as of this writing.
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Thoughts on foreclosure statute of limitations

Big win on statute of limitations barring foreclosure

My clients have prevailed in asserting the statute of limitations as a defense to a foreclosure, leaving the lender with only a claim for rescission (unwinding the loan transaction and refunding everything to my client) upon remand to the district court. This is one of the very few recent cases of this type where a Texas borrower has prevailed because a lender let more than 4 years pass after accelerating the loan. The case is Landers v. Nationstar Mortgage, LLC, No. 12-14-00261-CV (Tex. Ct. App.-Austin April 8, 2015). A copy of the decision is HERE. I expect it will get some good press because of the exceedingly clear appellate opinion and the result in favor of the borrowers. Content may continue . . .
The Law Office of J. Patrick Sutton