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The Fifth Circle confirmed that unconstitutional mortgages on owner-occupied homes are invalid and that there is no limitation period for a silent title action asserting such infringements.
Fifth Circle recently affirmed that lenders and/or service providers cannot increase the limitation period as a defence if borrower allege that a home equity loan does not conform to the Texas Constitution. At Ocwen Loan Servicing by Robert M. Berry, the Fifth Circle overturned and remitted a summative ruling in favour of Ocwen Loan Servicing ("Ocwen") in respect of a Texas home loan.
Robert Berry took out a home loan with Overland Mortgage, L.P. ("Overland") in 2007. Later Ocwen bought Overland's shares in the loan. Berry was notified in 2010 of the delay and the intention to accelerate the acceleration after she forgot to make payment. Berry was sent a notification of acceleration in June 2013 after failing to fix a failure.
Ocwen brought a suit in September 2014 to seek foreclosure of the title to the loan that secures the loan. Berry, however, responded to the suit by claiming that Ocwen's interest in the loan's collateral was not enforceable because there were several breaches of Section 50(a)(6) of the Texas Constitution - the Section of the Texas Constitution that governs home equity loan's.
Then Ocwen went to an expedited procedure in which he claimed that Berry's defence was timebarred by the limitation period and the Tribunal issued an expedited procedure in Ocwen's favour. Fifth District overturned the court's order, relying on the Texas Supreme Court's Texas Supreme in Wood v. HSBC Bank USA, N.A. In Wood verdict, which was rendered after the courts issued a summative verdict in Ocwen's and Berry's favor, and the Texas Supreme court ruled that there was no limitation period on a silent security claim by a debtor who claimed that a pledge secured on a home equity loan was in breach of Section 50(a)(6) of the tex due to breaches of Section 50(a)(6) of the tex.
Such cases are a good memory to remember that before granting a home equity loan and before foreclosure of a home equity loan, lenders and service providers should certify that the home equity loan meets all of the requirements of Section 50(a)(6) of the Texas Constitution.