May 23, 2014
Court: Texas Supreme Court
|Docket: 13-0638 May 16, 2014
Areas of Law: Banking, Real Estate & Property Law
Plaintiffs, the recipients of a home equity loan, reached two loan modification agreements with Defendant, which reduced the interest rate and payments. Plaintiffs subsequently brought this class action against Defendant in the United States District Court, alleging that the loan modifications violated Tex. Const. art. XVI, 50, which sets forth requirements for a new home equity loan. The district court dismissed the case for failure to state a cause of action. On appeal, the Fifth Circuit Court of Appeals asked the Supreme Court whether the requirements of Article XVI, Section 50 apply to the type of loan restructuring in this case. The Supreme Court answered that, as long as the original note is not satisfied and replaced, and there is no additional extension of credit, the Constitution does not prohibit the restructuring of a home equity loan that already meets its requirements in order to avoid foreclosure.
Nancy Duffy McCarron, CBN 164780
Attorney, Real Estate Broker, BBB Arbitrator, CA Notary Public
Certified Forensic Loan Auditor, Property Manager
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