Debt Collector

The Hedner’s Face a Strong Headwind in Cypress Texas as Frazier Seeks Second Round KO

Wells Fargo’s chosen Debt Collecting law firm McCarthy Holthus Seeks Judgment on Second Attempt at Expedited Foreclosure

LIT UPDATE & COMMENTARY

MAY 19, JUN 19, 2024

Wells Fargo HCDC 736 (I)

Sep 16, 2022 – Default Judgment signed Dec 5, 2022 (Thuy Frazier for McCarthy)

McCarthy lists property for Mar 7, 2023 auction on the basis of this order.

then Lane Law asks for the Order to be vacated, which court grants on Mar 27, 2023

In the interim, Hedner sues (see below)

Hedner v Wells Fargo

On Mar 3, 2023 in HCDC the homeowners sue as they cannot wait for a judges order reversing the default due to the scheduled non judicial foreclosure in March. After filing this lawsuit requesting injunctive relief, it would be snap removed to federal court on Mar 16, 2023.

Judge Hoyt would be assigned, then recuse. Judge Hittner would be his replacement and that triggered Lane Law’s departure we assume as they have previously had a run-in with an erie guess which the courts got wrong, but no doubt they didn’t want to take the risk….and switched lane to the road outta Rusk St.

For the duration of this litigation and beyond, no further attempts were made to foreclose, despite no injunction present.

On Oct 12, 2023 in federal court, Judge Hittner ruled in favor of WF’s summary judgment and against the (now) pro se homeowners.

Wells Fargo HCDC 736 (II)

Mar 6, 2024 Thuy Frazier for McCarthy and WF file another 736 action.

On May 6, 2024 WF push for foreclosure but there’s no proposed order and nothing showing in the settings page either.

Thuy Frazier is an Associate Attorney and Texas Foreclosure Oversight Counsel with the law firm of McCarthy & Holthus LLP. Frazier has over a decade of experience advising servicing industry clients with a focus on creditors’ rights and a specialty in probate-foreclosure matters in Texas. She is a graduate of the SMU Dedman School of Law in Dallas and completed her undergraduate studies at Baylor University in Waco. As an alumna of the State Bar of Texas Real Estate, Probate, and Trust Law Section’s Leadership Academy, she is active in local and state bar associations encouraging involvement and participation from young lawyers in real estate and creditors’ rights practice areas.

Texas is viewed in mortgage servicing circles as having one of the fastest foreclosure processes in the country.

In most cases, that’s accurate.

For the vast majority of nonjudicial foreclosures, the entire process can be completed within 60-90 days.

Compared to the year or more that is often required in some states, the Texas foreclosure process is downright quick.

However, when a borrower passes away before the underlying mortgage obligation has been satisfied, servicers often find themselves unable to foreclose or otherwise enforce their contractual rights for months, and in some cases, years.

When we talk to default servicing clients, it’s not uncommon to hear that “we don’t have too many issues in Texas … except for deceased borrower foreclosures.”

That perception is certainly a reality for many servicers and is rooted in a few nuanced principles and a body of case law that has developed over the past century.

There are a couple undisputed legal principles that create a paradox for servicers when a borrower has passed away.

The first principle is that debt is not inherited.

Upon an individual’s death, outstanding debts of the deceased are not inherited by the heirs.

The debt becomes part of the deceased individual’s “estate.”

The estate comes into existence at the moment of death, regardless of any further legal action taken, and includes all the decedent’s property.

Any obligations that the deceased had in the moment before death immediately become obligations of the estate … but not obligations of the heirs.

The second principle is that the beneficial interest in estate property immediately passes to the heirs at the moment of death.

When a person dies, the beneficial interest in all of decedent’s property passes immediately to:

(1) the decedent’s heirs, if there is no will (intestate),

or

(2) the devisees named in a valid will of the decedent (testate).

An heir or “distributee” is any person who is entitled to receive a distribution from the estate, whether under the statutes of descent and distribution or a lawful will.

The heirs or distributes may become vested with legal title to the property through a probate administration.

Together, these two principles define the paradox: mortgage debt is not inherited by the heirs, but the heirs are immediately vested with a beneficial interest in the real property encumbered by that mortgage debt.

Stated differently, the heirs inherited real property subject to a mortgage debt they do not owe.

Yet, the security interest in the real property remains unaffected.

It is through administration of the decedent’s estate that the paradox can be reconciled (by satisfying the mortgage obligation and passing clear, legal title to the heirs).

In addition, the Texas Estates Code provides for a four-year period within which the heirs may reconcile the paradox.

Specifically, the code provides that any “interested person” may file an application to commence an administration at any point before the fourth anniversary of an individual’s death.

This allows the heirs or distributees a four-year window from the date of death to initiate an administration, acquire legal title to the estate property and satisfy any obligations of the estate.

Because of this legal framework, foreclosure of real property when a borrower has passed away isn’t necessarily a legal problem for the servicer.

It is a practical problem.

For more than 100 years, Texas courts have consistently held that a properly conducted nonjudicial foreclosure within four years of a borrower’s death is a perfectly legitimate sale.

It is sufficient to pass legal title to the foreclosure sale purchaser.

The power of sale contained within a deed of trust is not suspended merely by virtue of the death of the borrower.

However, there’s a catch.

The Texas Supreme Court has made it crystal clear that if a nonjudicial foreclosure sale takes place within the four-year period, that sale will be voided at the request of a dependent administrator should an administration be timely commenced.

That is the practical problem for the servicer whose borrower has recently passed away.

The servicer is perfectly within its legal rights to complete a nonjudicial foreclosure; title conveyed at foreclosure sale is not void.

However, it is voidable should an interested party choose to contest it.

And because title acquired through a nonjudicial foreclosure sale is voidable within four years of the borrower’s death, the servicer is effectively unable to liquidate the REO asset.

Prospective purchasers are disinclined to purchase real estate knowing that the conveyance could potentially be unwound, and title insurance companies are unwilling to assume the risk that no heirs will step up and initiate a dependent administration.

Now, the death of a borrower doesn’t always automatically mean that the servicer’s enforcement remedies are obstructed for four years.

For example, if the borrower passes away after the foreclosure sale, the validity of the sale will not be affected by the subsequent death of the borrower.

Alternatively, if more than four years have elapsed since the borrower’s death with no administration having been commenced, the foreclosure sale is not subject to challenge on the grounds that the borrower is deceased.

Other scenarios that frequently arise include those in which the heirs have initiated an independent or a dependent administration before the servicer contemplates its enforcement remedies.

In the case of a pending independent administration, the nonjudicial foreclosure remedy is still available to the servicer, albeit with additional notice requirements and prescribed timeframes to allow the independent administrator an opportunity to liquidate the asset.

In the case of a pending dependent administration, the Estates Code outlines a formal and well-defined process for the servicer to establish its claim, and to seek foreclosure of its lien.

It is the scenario where the borrower has passed away within the last four years, and the heirs have taken no action, that creates the greatest obstacle to servicers attempting to enforce their security interests.

This is the scenario wherein the paradox of the beneficial interest passing to the heirs, who have no obligation to satisfy the underlying mortgage debt, can limit the servicer’s practical options.

That isn’t to say that there are no options. There are.

But the nature of the options available is very fact-specific and will be dictated largely by the particular circumstances of any given case.

When a borrower passes away in Texas, a servicer is presented with a variety of scenarios that may be as complex as they are unique.

The paradox inherent in Texas probate law creates challenges and issues for servicers that must be analyzed for each deceased borrower matter based upon its own unique circumstances.

There are a multitude of legal and procedural questions that arise beginning on the date of a borrower’s death and may remain unanswered well after the borrower’s death.

When the situation arises, a servicer is not limited solely to waiting out a four-year period for probate.

There can be a path forward—however, a servicer should proceed cautiously.

It would be prudent to consult an attorney in Texas, and a servicer would be well advised to seek guidance from a probate specialist that can investigate and evaluate the status of the estate and provide options and alternatives that best align with your objectives.

 202414550 –

WELLS FARGO BANK NA vs. HEDNER, SUSAN M 

(Court 334, JUDGE DAWN ROGERS)

MAR 6, 2024
MAY 19 31,
JUN 10 19, 2024

McCarthy Holthus take over for 736 Expedited Foreclosure Case in HCDC

Save the date – June 3, 2024

Date of last update/visit by LIT

Petitioner’s Motion for Entry of Order in Accordance with Tex.R.CIV.P. 736.7

Certificate of Last Known Address

 202259415 –

WELLS FARGO BANK N A vs. HEDNER, SUSAN M

(Court 215, JUDGE ELAINE H PALMER)

SEP 16, 2022

Hedner v. Wells Fargo Bank, N.A.

(4:23-cv-00964)

District Court, S.D. Texas, Judge David Hittner

MAR 16, 2023

The most recent case involving Wells Fargo and Judge Kenneth Hoyt we could locate is:

Hedner v. Wells Fargo Bank, N.A. (4:23-cv-00964) District Court, S.D. Texas which was removed from state court #334. This involved The Lane Law Firm as defense counsel for David and Susan Hedner, and Locke Lord representing Wells Fargo.

Judge Hoyt also recused on the case (see docket in next tab below) and would be replaced by Judge Hittner. So unlike Fifth Circuit Judge Don Willett, who won’t recuse for financial interests in banking institutions, Judge Hoyt is self recusing.

U.S. District Court
SOUTHERN DISTRICT OF TEXAS (Houston)
CIVIL DOCKET FOR CASE #: 4:23-cv-00964

Hedner et al v. Wells Fargo Bank, N.A.
Assigned to: Judge David Hittner

Case in other court:  334th Judicial District Court, Harris County, Texa, 23-14107

Cause: 28:1444 Petition for Removal- Foreclosure

Date Filed: 03/16/2023
Date Terminated: 10/12/2023
Jury Demand: Plaintiff
Nature of Suit: 220 Real Property: Foreclosure
Jurisdiction: Diversity
Plaintiff
David W. Hedner represented by David W. Hedner
16003 Pebble Creek Trail
Cypress, TX 77433
281-961-6788
PRO SEJoshua David Gordon
The Lane Law Firm, PLLC
6200 Savoy Dr
Ste 1150
Houston, TX 77036
713-595-8224
Email: joshua.gordon@lanelaw.com
TERMINATED: 05/25/2023
LEAD ATTORNEY
ATTORNEY TO BE NOTICEDRobert Chamless Lane
The Lane Law Firm
6200 Savoy Drive
Ste 1150
Houston, TX 77036-3300
713-595-8200
Email: notifications@lanelaw.com
TERMINATED: 05/25/2023
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
Plaintiff
Susan M. Hedner represented by Susan M. Hedner
16003 Pebble Creek Trail
Cypress, TX 77433
281-961-6788
PRO SEJoshua David Gordon
(See above for address)
TERMINATED: 05/25/2023
LEAD ATTORNEY
ATTORNEY TO BE NOTICEDRobert Chamless Lane
(See above for address)
TERMINATED: 05/25/2023
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
V.
Defendant
Wells Fargo Bank, N.A. represented by Benjamin David Lee Foster
Locke Lord LLP
300 Colorado Street
Ste 2100
Austin, TX 78701
512-305-4751
Email: dfoster@lockelord.com
LEAD ATTORNEY
ATTORNEY TO BE NOTICEDRobert T Mowrey
Locke Lord LLP
2200 Ross Ave
Ste 2800
Dallas, TX 75201-6776
214-740-8000
Fax: 214-740-8800
Email: rmowrey@lockelord.com
LEAD ATTORNEY
ATTORNEY TO BE NOTICEDElizabeth Kristin Duffy
Locke Lord LLP
2200 Ross Ave
Ste 2800
Dallas, TX 75201
214-740-8673
Email: eduffy@lockelord.com
TERMINATED: 08/25/2023Helen Onome Turner
Locke Lord LLP
600 Travis Street
Ste 2800
Houston, TX 77002
713-226-1280
Fax: 713-229-2501
Email: helen.turner@lockelord.com
ATTORNEY TO BE NOTICED

 

Date Filed # Docket Text
03/16/2023 1 NOTICE OF REMOVAL from 334th Judicial District Court, Harris County, Texas, case number 2023-14107 (Filing fee $ 402 receipt number ATXSDC-29608313) filed by Wells Fargo Bank, N.A.. (Attachments: # 1 Exhibit / Exhibits A – H)(Turner, Helen) (Entered: 03/16/2023)
03/16/2023 2 CERTIFICATE OF INTERESTED PARTIES by Wells Fargo Bank, N.A., filed.(Turner, Helen) (Entered: 03/16/2023)
03/16/2023 3 CORPORATE DISCLOSURE STATEMENT by Wells Fargo Bank, N.A. identifying Wells Fargo & Company as Corporate Parent, filed.(Turner, Helen) (Entered: 03/16/2023)
03/22/2023 4 ORDER OF RECUSAL. Judge Kenneth M Hoyt recused. Case reassigned to Judge David Hittner for all further proceedings.(Signed by Judge Kenneth M Hoyt) Parties notified.(KimberlyPicota, 4) (Entered: 03/22/2023)
03/23/2023 5 ORDER for Initial Pretrial and Scheduling Conference and Order to Disclose Interested Persons. Initial Conference set for 5/18/2023 at 10:45 PM in video before Magistrate Judge Peter Bray(Signed by Judge David Hittner) Parties notified.(JosephWells, 4) (Entered: 03/23/2023)
05/02/2023 6 CERTIFICATE OF INTERESTED PARTIES by David W. Hedner, Susan M. Hedner, filed.(Lane, Robert) (Entered: 05/02/2023)
05/08/2023 7 NOTICE of Resetting. Parties notified. Initial Conference set for 5/18/2023 at 10:45 AM in by video before Magistrate Judge Peter Bray, filed. (JasonMarchand, 4) (Entered: 05/08/2023)
05/15/2023 8 NOTICE of Appearance by Elizabeth K. Duffy on behalf of Wells Fargo Bank, N.A., filed. (Duffy, Elizabeth) (Entered: 05/15/2023)
05/17/2023 9 JOINT DISCOVERY/CASE MANAGEMENT PLAN by David W. Hedner, Susan M. Hedner, filed.(Lane, Robert) (Entered: 05/17/2023)
05/17/2023 10 PROPOSED ORDER – Scheduling Order, filed.(Lane, Robert) (Entered: 05/17/2023)
05/18/2023 11 SCHEDULING ORDER. Trial Term: May/June 2024. ETT: 2 days. Jury trial. Amended Pleadings due by 5/31/2023. Joinder of Parties due by 5/31/2023 Pltf Expert Witness List due by 7/31/2023. Deft Expert Witness List due by 8/31/2023. Discovery due by 11/30/2023. Dispositive Motion Filing due by 12/29/2023. Non-Dispositive Motion Filing due by 12/29/2023. Joint Pretrial Order due by 4/30/2024.(Signed by Magistrate Judge Peter Bray) Parties notified.(JasonMarchand, 4) (Entered: 05/19/2023)
05/24/2023 12 Unopposed MOTION for Robert C. Lane, Joshua D. Gordon, and The Lane Law Firm, P.L.L.C. to Withdraw as Attorney by David W. Hedner, Susan M. Hedner, filed. Motion Docket Date 6/14/2023. (Attachments: # 1 Proposed Order)(Lane, Robert) (Entered: 05/24/2023)
05/25/2023 13 ORDER granting 12 Motion to Withdraw as Attorney. Attorney Joshua David Gordon and Robert Chamless Lane terminated. (Signed by Judge David Hittner) Parties notified.(JosephWells, 4) (Entered: 05/26/2023)
08/01/2023 14 Opposed MOTION for Elizabeth K. Duffy to Withdraw as Attorney by Wells Fargo Bank, N.A., filed. Motion Docket Date 8/22/2023. (Attachments: # 1 Proposed Order)(Duffy, Elizabeth) (Entered: 08/01/2023)
08/25/2023 15 ORDER granting 14 Motion to Withdraw Elizabeth K. Duffy as Counsel. Ms. Duffy is hereby withdrawn as counsel of record for Wells Fargo Bank, N.A. The docket will be amended to reflect Ms. Duffy has withdrawn as counsel for Defendant and no longer needs to be noticed of any pleadings, motions, or other documents filed or served in this case. (Signed by Judge David Hittner) Parties notified.(JosephWells, 4) (Entered: 08/25/2023)
09/18/2023 16 MOTION for Summary Judgment by Wells Fargo Bank, N.A., filed. Motion Docket Date 10/10/2023. (Attachments: # 1 Exhibit A, # 2 Exhibit A-1, # 3 Exhibit A-2, # 4 Exhibit A-3, # 5 Exhibit A-4, # 6 Exhibit A-5, # 7 Exhibit A-6, # 8 Exhibit A-7, # 9 Exhibit A-8, # 10 Exhibit A-9, # 11 Exhibit B, # 12 Exhibit B-1, # 13 Exhibit B-2, # 14 Exhibit C, # 15 Exhibit C-1, # 16 Exhibit D, # 17 Exhibit D-1, # 18 Proposed Order)(Turner, Helen) (Entered: 09/18/2023)
10/12/2023 17 ORDER granting 16 Motion for Summary Judgment. THIS IS A FINAL JUDGMENT. (Signed by Judge David Hittner) Parties notified.(JosephWells, 4) (Entered: 10/12/2023)

 


 

PACER Service Center
Transaction Receipt
05/19/2024 13:09:19
Case (Cause) Number Style File Date Court Case Region Type Of Action / Offense
202414550- 7
Active – Civil
WELLS FARGO BANK NA vs. HEDNER, SUSAN M 3/6/2024 334 Civil Foreclosure – Home Equity-Expedited
202388789- 7
Disposed (Final)
LAKES OF FAIRFIELD NEIGHBORHOOD ASSOCIATION INC vs.
HEDNER, DAVID W
12/29/2023 281 Civil OTHER CIVIL
202259415- 7
Active – Civil
WELLS FARGO BANK N A vs. HEDNER, SUSAN M 9/16/2022 215 Civil Foreclosure – Home Equity-Expedited
202169971- 7
Disposed (Final)
FAIRFIELD VILLAGE COMMUNITY ASSOCIATION INC vs.
HEDNER, DAVID W
10/25/2021 333 Civil OTHER CIVIL
202130148- 7
Disposed (Final)
LAKES OF FAIRFIELD NEIGHBORHOOD ASSOCIATION INC vs. HEDNER, DAVID W 5/20/2021 113 Civil OTHER CIVIL
202068133- 7
Disposed (Final)
HARRIS COUNTY vs.
HEDNER, DAVID W
10/23/2020 270 Civil Tax Delinquency
201886903- 7
Disposed (Final)
CYPRESS – FAIRBANKS INDEPENDENT SCHOOL DISTRICT vs. HEDNER, DAVID W 12/6/2018 334 Civil Tax Delinquency
201777955- 7
Disposed (Final)
HARRIS COUNTY vs.
HEDNER, DAVID W
11/20/2017 061 Civil Tax Delinquency
201424692- 7
Disposed (Final)
HARRIS COUNTY vs. HEDNER, DAVID W. 4/30/2014 151 Civil Tax Delinquency

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The Hedner’s Face a Strong Headwind in Cypress Texas as Frazier Seeks Second Round KO
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