If you have a Texas home equity loan that JPMorgan Chase, Nationstar, or Bank of America modified to include interest-only payments or a balloon payment, you may already be protected by a pending class action. Your statute of limitations is the one for all class members, which relates back to the date the various class actions were filed. The class actions were filed in 2012 and 2013, protecting class members back to 2008 and 2009.

Don't assume your claim is too late if you fit within one of the class actions I have filed. Call me to discuss, and include your loan modification.Content may continue . . .

In a setback for the cause, a federal district court judge in Austin has dismissed our claims in the proposed JPMorgan Chase class action. That case has now gone up on appeal alongside the Sims v. Carrington Mortgage Services case from a federal court in Fort Worth. The judge for the Western District of Texas held, among other things, that interest-only schedules of payment are allowable. That runs directly counter to the express wording of the regulation that the judge cited but did not quote. I feel very strongly that the case was wrongly dismissed, and I am hopeful that the appeal will be successful.

At a minimum, Judge Sparks acknowledged that one of the plaintiff's balloon-note modifications was illegal, but the court then appeared to impose a new form of pre-suit notification on the plaintiff such that a Texas home equity borrower cannot bring a lawsuit to enforce Section 50 unless and until the borrower has given the lender advance notice of the suit and a right to cure. Section 50 itself contains no such pre-suit notice requirement, and several cases have held that a Section 50 lawsuit itself constitutes proper notice of the claim. Again, I don't agree with the decision, and I am hopeful the pre-suit notice requirement will also be reversed.

Hang in there, Texas home equity borrowers. It's still early in the game.Content may continue . . .

I've gotten a spate of phone calls from borrowers who entered into agreements to modify their Texas home equity loans but have recently been told by their lenders that either (1) the modification was never completed, or (2) the lender is simply canceling the modification. In every case, the borrower made payments under the modification agreement, and the lender accepted the payments. In some cases, the modification agreements were without doubt formally executed by both parties. I take this as a sign that the lenders are now trying to cut down the sizes of the classes in the cases we've brought by declaring that many modifications never happened. Good luck with that.Content may continue . . .

Under the 2012 settlement between the federal government and 49 states, on the one hand, and the major home loan servicers, on the other, the big servicers agreed to give principal reductions to borrowers. How do they do it? Well, in the case of one of the biggest servicers, I reviewed a loan file where the servicer took past-due interest and other charges totaling tens of thousands of dollars, added it back into the loan as NEW principal, then "forgave" that "principal." The servicer then stated it was reporting the principal forgiveness to the IRS on behalf of the borrower since the principal forgiveness amounts to income for the borrower! A redacted copy of that document is HERE. An important point to note in this example is that the lender had previously added past-due interest and other charges into the loan, so this new modification was piling additional increments onto principal on top of what had already been added previously.Content may continue . . .

I've recently been seeing modifications of Texas home equity loans that recite an interest-only schedule of payments, usually for 1-5 years. The Texas Constitution, at Article 16 Section 50(a)(6)(L), in my view, makes such modifications illegal. That law provides that a Texas home equity loan must be paid in substantially equal installments that pay all accrued interest as of each payment date. The accompanying interpretive regulations make clear that some principal must also be paid, or else the loan isn't amortizing -- i.e., principal isn't getting paid down. If a modification of a Texas home equity loan recites a schedule of payments without principal -- even for a month -- it isn't amortizing, and the borrower has a strong legal case that the lien is invalid. Content may continue . . .