The Law Office of J. Patrick Sutton
statute of limitations

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 . . .

Mortgage lien invalidated on statute of limitations grounds

Today, the Texas Supreme Court refused to disturb a decision by the Tyler Court of Appeals invalidating a mortgage lien. See Landers v. Nationstar Mortgage, LLC, 461 S.W.3d 923 (Tex. App. - Tyler 2015, pet. denied). This was a case I handled at all levels of trial and appeal. The Texas Supreme Court had requested full briefing on the merits, so all the arguments were before the high court. Ultimately, the rule of law prevailed over strong lender protests that applying the statute of limitations was unfair.

The lender and servicer, Nationstar Mortgage LLC, sued the Landers, a family in Athens, Texas, to foreclose. However, the lender's suit was filed more than four years after the lender accelerated the loan. The lender argued that an injunction in a prior lawsuit that had barred a nonjudicial foreclosure sale for a few weeks had also prevented the lender from filing a lawsuit to foreclose. The 3-judge panel of the Texas Court of Appeals in Tyler unanimously rejected that argument and declared the lien void. Nationstar asked the Texas Supreme Court to reverse the Tyler Court of Appeals, but the Texas Supreme Court declined that invitation.
Landers is now good law and stands as one of the very few modern cases in Texas voiding a mortgage lien on limitations grounds. Content may continue . . .

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