LIT COMMENTARY
The Texas Foreclosure Manual – co-authored by foreclosure mill lawyer Tommy Bastian of BDF Group, Addison, Texas is used by the judiciary to expedite foreclosures in Texas.
A co-author, Marty Novack was sued by a client for cheating and his firm settled. Tommy Bastian and his foreclosure mill law firm, BDF Group in Addison is so ingrained into the Texas Bar and Texas Supreme Court, he practically wrote the expedited foreclosure rules – as admitted herein.
These legal rats, mainly working on behalf of themselves as rogue debt collecting law firms or as agents for Banks and Wall St., are hard at work ensuring Texas homeowners do not have a fair hearing in court when these aggressive creditor rights lawyers start [il]legal foreclosure proceedings.
LIT has plenty of evidence to prove it’s bold claims of judicial corruption in Texas – it’s right here on LIT.
LISA M. TATUM
PRESIDENT
Direct Correspondence to:
LM TATUM, PLLC
111 SOLEDAD ST., STE. 358 SAN ANTONIO, TX 78205 TEL: (210) 299-7616
FAX: (210) 299-7716
LTatum@Tatum-Law.com
The State Bar of Texas is proud to publish this third edition of the Texas Foreclosure Manual. Originally published in 1991, this manual continues the tradition of being the premier resource for Texas lawyers whose practice includes foreclosures. It broadens the number of topics covered in the second edition, particularly in light of mortgage securitization.
Our sincere thanks are given to the editors, Bill Locke, Marty Novak, and Tommy Bastian, and the contributing authors who have labored diligently in bringing this expanded edition of the manual to fruition. The Bar is grateful for their generosity and commitment in producing this valuable contribution to the practice of law.
Lisa M. Tatum
President, State Bar of Texas
The State Bar of Texas, through its TexasBarBooks Department, publishes practice books prepared and edited by knowledgeable authors to give practicing lawyers and judges as much assistance as possible. The competence of the authors ensures outstanding professional products, but, of course, neither the State Bar of Texas, the editors, nor the authors make either express or implied warranties in regard to the use or freedom from error of this publication. In the use or modification of these materials, each lawyer must depend on his or her own expertise and knowledge of the law.
IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that (1) this written material was not intended or written by the author(s) to be used for the purpose of avoiding federal penalties that may be imposed on a taxpayer; (2) this written material cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer; (3) this written material cannot be used in promoting, marketing, or recommending to another party any tax-related transaction or matter; and (4) a taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
The use of the masculine gender in parts of this manual is purely for literary convenience and should, of course, be understood to include the feminine gender as well.
International Standard Book Number: 978-1-938873-06-5 International Standard Book Number: 978-1-938873-34-8 (2015 Supplement) International Standard Book Number: 978-1-938873-53-9 (2018 Supplement) International Standard Book Number: 978-1-938873-75-1 (2019 Supplement)
Library of Congress Control Number: 2014935946
© 1991, 2006, 2008, 2010, 2012, 2014, 2015, 2018, 2019 State Bar of Texas
Austin, Texas 78711
All rights reserved. Permission is hereby granted for the copying of any part of this publication by a photocopy or other similar process or by manual transcription, by or under the direction of licensed attorneys for use in the practice of law. No other use is permitted that will infringe the copyright without the express written consent of the State Bar of Texas.
Printed in the United States of America Third Edition, 2014
TEXAS FORECLOSURE MANUAL
Third Edition
WILLIAM H. LOCKE, JR.
Bill Locke is a shareholder with Graves, Dougherty, Hearon & Moody, A Professional Corporation, in Austin, Texas.
He earned both his B.A. and J.D., with honors, from the University of Texas and was admitted to the bar in 1972. He is a twenty-year maintaining member of the College of Law of the State Bar of Texas; fellow member of the Texas Bar Foundation; director of the Real Estate, Probate and Trust Law Council; and a founding director of the Texas College of Real Estate Lawyers.
He is a former president of the Corpus Christi Bar Association. He is listed in The Best Lawyers in America for real estate, Who’s Who in America, and Who’s Who in American Law, is a fellow of the American College of Real Estate Lawyers, is a frequent speaker for continuing legal education programs, and is the author of numerous articles relating to real estate law.
He is board certified in commercial real estate, residential real estate, and farm and ranch real estate law.
In addition to conceiving and bringing to fruition this book, which is an outgrowth of experiences in the economic downturn of the 1980s and his desire to help other practitioners avoid traps for the unwary, he regards the following as accomplishments: establishing the Palmer Drug Abuse Program in Corpus Christi in 1979 and in Austin in 2000 as programs helping teens and young adults recover from alcohol and drug abuse; conceiving of obtaining designations of the Corpus Christi Aquarium as the official aquarium of the state of Texas and the Mexic-Arte Museum of Austin, Texas, as the official Mexican and Mexican American fine art museum of Texas; and conceiving and participating in the implementation as chairman of the Corpus Christi Zoning and Planning Commission of the neighborhood zoning plan process for the city of Corpus Christi.
RALPH MARTIN NOVAK, JR.
Marty Novak recently retired. Formerly, he was a real estate attorney in the Office of the General Counsel at the University of Texas. Before joining the University of Texas System, he was a partner at Brown McCarroll L.L.P., Hilgers and Watkins, P.C., and Kleberg, Dyer, Redford and Weil, P.C. He is board certified by the Texas Board of Legal Specialization in commercial real estate and is a mem- ber of the College of the State Bar of Texas.
Over the years he has been a frequent speaker for continuing legal education programs offered by the State Bar of Texas, the University of Texas School of Law, and the University of Houston Law Center.
In addition to being coauthor of the Texas Foreclosure Manual, he has contributed to the mechanic’s lien section of the Texas Collections Manual published by the State Bar of Texas and is the author of Christianity and the Roman Empire: Background Texts, a widely praised work on early Christian history that has been used as required reading at a number of universities in the United States and abroad.
Mr. Novak holds a Bachelor of Arts in History and Anthropology, with honors, from Rice Uni- versity (1973); a Masters Degree in Roman History from the University of Chicago (1975); and a Doctor of Jurisprudence, with honors, from the University of Houston (1982). He is married to Amy Novak and has two children, Becky and Michael.
TOMMY BASTIAN
Tommy Bastian, board certified by the Texas Board of Legal Specialization in residential real estate law, focuses his practice on mortgage banking issues related to title, real estate, probate, and class-action litigation, as well as legislative matters.
He is the author of more than fifty articles and publications, including a chapter in the Texas Practice Series, Texas Foreclosure: Law and Practice. He has served as a frequent lecturer on both state and national issues related to mortgage banking.
Mr. Bastian is a graduate of Howard Payne University, Texas Tech Law School, the U.S. Army Command and General Staff College, and the U.S. National Defense Security University.
He is actively involved in the Texas Mortgage Bankers Association, American Land Title Association Education Committee, Mortgage Banking Association, and Texas Land Title Association. In 2006, he served on the Residential Foreclosure Task Force mandated by Texas House Bill 1582 and was the course director for the State Bar’s Advanced Real Estate Law Course.
Mr. Bastian served as the principal drafter for the three Texas Supreme Court Task Forces responsible for creating Rules 735 and 736 dealing with foreclosure of home equity, reverse mortgage, home equity line of credit, and transferred tax liens.
He received the Texas Mortgage Bankers Distinguished Service Award in 2010. He enjoys cultivating roses, which he then uses to illustrate many of his CLE presentations.
STATE BAR OF TEXAS
2013–2014
LISA M. TATUM, President
CINDY TISDALE, Chair of the Board
GARY NICKELSON, Chair, Board Professional Development Subcommittee
DEBORAH J. BULLION, Chair, Continuing Legal Education Committee
MICHELLE HUNTER, Executive Director
SHARON SANDLE, Director
JILL HOEFLING, Assistant Director
DAVID W. ASHMORE, Project Publications Attorney
ELMA E. GARCIA, Publications Attorney
SUSANNAH R. MILLS, Publications Attorney
JAMES W. NORMAN, Publications Attorney
VICKIE TATUM, Publications Attorney
MICHAEL AMBROSE, Senior Editor
COURTNEY CAVALIERE, Editor
ROGER SIEBERT, Editor
TRAVIS RIDDLE, Production Supervisor
JENNIFER TOWNSEND, Production and Editorial Assistant
CYNTHIA DAY, Meeting Coordinator
LARA TALKINGTON, Marketing Coordinator
CONOR JENSEN, Website Manager
JENNIFER KARLSSON, Web Content Specialist
JENNIFER PEREZ, Web Content Specialist
ANISSA SAMANIEGO, Sales Coordinator
Contents
VOLUME 1
Letter from the President of the State Bar of Texas Preface
Acknowledgments Summary of Contents
How to Download This Manual Introduction
- Attorney-Client Relations
- Getting Started—Information Required
- Evaluating the Options for Collecting the Debt
- Preforeclosure Title Concerns
- The Note in Foreclosure
- The Deed of Trust
- Consumer Debt Collection Laws
- Demand for Payment, Notice of Intent to Accelerate, and Notice of Acceleration
- Collection of Rent by Lender before Foreclosure
- Borrower Challenges to Foreclosure and Lender Responses
- Trustees and Substitute Trustees
- Notice of Foreclosure Sale
- Bid Evaluation
VOLUME 2
- Conducting the Sale
- Postsale Considerations
- Consequences of Wrongful Foreclosure
- Suits for Deficiency
18–19 reserved
- Judicial Foreclosure
- Residential Foreclosure Process
- Commercial Foreclosure Process
- Tax Consequences of the Foreclosure Process
- Foreclosures Resulting from Ad Valorem Taxation
- Property Tax Loan Foreclosure Process
- Deceased Mortgagor Foreclosure Process
- Condominium Foreclosures
- HEL/HELOC Foreclosure Process
- Manufactured Housing Unit Foreclosure Process
- Property Owners Association Foreclosure Process
- Reverse Mortgage Foreclosure Process
- USDA Farm, Ranch, and Housing Loan Foreclosures
- Servicemembers Civil Relief Act
- Residential Evictions Following Foreclosure
- Environmental Issues Affecting the Foreclosure Process
- Federal and State Foreclosure Assistance Programs
- Miscellaneous Topics
Appendix A—IRS Collection Advisory Group Addresses and Counties by Areas Appendix B—Texas County Foreclosure Resources
Statutes and Rules Cited Cases Cited
List of Forms by Title Subject Index
Preface
While representing numerous clients during the savings and loan and foreclosure crisis of the late 1980s and early 1990s, Bill Locke and Marty Novak recognized the need for a lawyers’ guide to Texas foreclosure practice.
For the last twenty-three years, beginning in 1991, Mr. Locke and Mr. Novak have devoted countless hours to writing, editing, and supplementing two editions of the State Bar’s Texas Foreclosure Manual.
Except from a harried lawyer who knew little about foreclosure but breathed a sigh of relief and a silent “thank you” when discovering the treasure trove of materials in the Texas Foreclosure Manual, Mr. Locke and Mr. Novak have worked on the manual with little fanfare or recognition.
Because securitization has radically changed mortgage banking and brought with it radical changes to foreclosure practices, Mr. Locke and Mr. Novak recognized the need for a new edition of the Texas Foreclosure Manual that melded the still relevant presecuritization materials from the first two editions of the manual with the new developments in foreclosure law caused by the mortgage banking meltdown and foreclosure crisis that began in 2008.
The mechanics of conducting a foreclosure (that is, the demand, cure, acceleration, notice of sale, and public sale process outlined in the previous two editions) have remained the same.
But the answers to questions like who has the authority to foreclose, whether the law pertaining to the note or the deed of trust controls the foreclosure process, the effect of the mortgage servicer replacing the owner or beneficiary of the note in foreclosure, the role of MERS in the foreclosure process, and the merits of new legal theories and defenses have changed significantly since the second edition of the manual was published.
This new third edition of the Texas Foreclosure Manual updates the current body of foreclo- sure law and practice and continues the tradition of serving as one of the premier guides on how to conduct a Texas foreclosure.
While Mr. Locke and Mr. Novak remain active as editors and contributors to the production of a new edition of the manual, the authorship and format of the third edition have changed significantly.
Adopting the motto that “a team that divides its tasks multiplies its success,” twenty-one lawyers with hands-on, down-in-the-trenches experience in prosecuting or defending foreclosures on a daily basis agreed to contribute their foreclosure expertise by updating and drafting new chapters for the third edition of the Texas Foreclosure Manual.
Consequently, anyone using the new edition of the manual will be guided by lawyers whose contribution to the manual is the result of actually handling hundreds of matters related to their area of foreclosure specialization.
Besides the introduction of new contributing authors to the manual, the format of the third edition has also changed.
The first seventeen chapters provide a general overview of the various elements that are important to consider in conducting a foreclosure.
The subsequent chapters compose the “how-to-do” section of the manual.
In the final eighteen chapters, subject matter experts guide the reader through how to conduct a residential or commercial foreclosure and the more esoteric foreclosure areas like property owners association liens, reverse mortgages, and property tax loan foreclosures, and they address changes in specific areas of law, such as environmental issues affecting foreclosure, the Servicemembers Civil Relief Act, and the role of Mortgage Electronic Registrations Systems, Inc.
The objective of the third edition of the Texas Foreclosure Manual is to make it the best source of foreclosure expertise available.
Lawyers—being lawyers—may not agree with the editors’ and contributors’ opinions on the law or how to handle certain aspects of a foreclosure.
In this regard, we believe Thomas Jefferson’s maxim:
“An error in opinion can be tolerated if reason or methodology is free to correct the opinion.”
With this premise in mind, any reader may contact the editors with a written rejoinder so that any necessary clarification or correction can be made at TexasBarBooks, State Bar of Texas, P.O. Box 12487, Austin, Texas 78711-2487, books@texasbar.com.
Tommy Bastian, General Editor
Acknowledgments
When it comes to foreclosures, superior performance depends on superior learning, and it is hoped that the new third edition of the Texas Foreclosure Manual will provide superior learning for any lawyer seeking to provide superior foreclosure legal services for the lawyer’s clients or employer.
Twenty-one contributing authors made this new edition possible. The editors would like to acknowledge and thank all the persons named below who participated in the mammoth project of rewriting the third edition, which is still a work in progress.
Tommy Bastian | Bill Locke | Marty Novak
Contributing Authors
NATHAN T. ANDERSON
McGlinchey Stafford, PLLC
Update by LIT;
Nathan Anderson is now Vice President, Assistant General Counsel at Goldman Sachs. “I lead Goldman Sach’s consumer and small business lending products on all legal issues arising under servicing and collections. Part of my duties involve providing guidance on UDAAP, ECOA, TILA, FCRA, the FDCPA, as well as state specific laws pertaining to fair lending, collection and deceptive trade practice laws. Additionally, I assist in investigations initiated by state and national regulatory and enforcement agencies, as well as civil litigation matters.”
Savrick, Schumann, Johnson, McGarr, Kaminski & Shirley, LLP
LIT Update: Now working at Stavros & Kelly, a foreclosure mill in Austin.
ROBERT D. FORSTER, II
Barrett Daffin Frappier Turner & Engel, LLP
CHALISE R. FREITAG
Vantium Capital, Inc.
LIT Update;
Chalise Freitag is now VP, Regulatory Compliance Counsel at Freedom Mortgage, Monument, Colorado, United States
LESLIE S. JOHNSON
Winstead, PC
LIT Update;
Leslie Johnson is now VP, Texas State Counsel at WFG National Title Insurance Company
CHARLES KRAMER
CLIFFORD LITTLEFIELD
Upton, Mickits & Heymann, L.L.P.
EDWARD LOPEZ, JR.
Linebarger Goggan Blair & Sampson, LLP
RICHARD MELAMED
BRIAN T. MORRIS
MANUEL H. NEWBURGER
BRADY E. ORTEGO
Roberts Markel Weinberg Butler Hailey, PC
DEAN RIDDLE
JASON L. SANDERS
Locke Lord LLP
MICHAEL J. SCHROEDER
LEE STEVENSON, JR.
DAVID TOMEK
CONNIE J. VANDERGRIFF
Barrett Daffin Frappier Turner & Engel, LLP
DOMINIQUE MARSHALL VARNER
EDWARD F. WALKER
Cramer Weatherbie Richardson Walker, LLP
LIT Update;
Now attorney at Edward Walker.
LAWRENCE YOUNG
Contributing Authors 2015 Supplement
MARC D. CABRERA
Locke Lord LLP
LIT Update;
Marc D. Cabrera is now a Shareholder at Polsinelli.
BRADY E. ORTEGO
Roberts Markel Weinberg Butler Hailey, PC
JASON L. SANDERS
Locke Lord LLP
LIT Update;
Jason L. Sanders is now Founding Member at Sanders Collins PLLC
Contributing Authors 2018 Supplement
BRIAN BELLAMY
Savrick, Schumann, Johnson, McGarr, Kaminski & Shirley, LLP
MARC D. CABRERA
Locke Lord LLP
LIT Update;
Marc D. Cabrera is now a Shareholder at Polsinelli.
CHARLES FLOYD
Capital One Services, LLC
LIT UPDATE;
Charlie Floyd is now Associate General Counsel at Gateway First Bank.
ROBERT D. FORSTER, II
Barrett Daffin Frappier Turner & Engel, LLP
TRAVIS GRAY
CLIFFORD LITTLEFIELD
Upton, Mickits & Heymann, L.L.P.
EDWARD LOPEZ, JR.
Linebarger Goggan Blair & Sampson, LLP
BRIAN T. MORRIS
JACK O’BOYLE
BRADY E. ORTEGO
Roberts Markel Weinberg Butler Hailey, PC
JUAN M. PEQUEÑO, JR.
Jones, Galligan, Key & Lozano, L.L.P.
DEAN A. RIDDLE
RUDY SALINAS, JR.
Jones, Galligan, Key & Lozano, L.L.P.
JASON L. SANDERS
CONNIE J. VANDERGRIFF
Summary of Contents
A detailed chapter table of contents immediately follows the tab divider for each chapter.
Introduction
Description of the manual and how to use it
1 Attorney-Client Relations
Discussion of the regulation of lawyers and law practice and accountability for professional responsibility, with emphasis on foreclosure practice
2 Getting Started—Information Required
Practice notes and forms for obtaining the necessary information and documents that pertain to the debt in default so that the attorney may fully understand the agreements between the borrower, the mortgagor, and the lender concerning the debt and the collateral
3 Evaluating the Options for Collecting the Debt
Practice notes and forms that explore the alternatives to foreclosure
4 Preforeclosure Title Concerns
Practice notes and forms for identifying title-related matters that can affect foreclosure
5 The Note in Foreclosure
Practice notes discussing the enforcement of a promissory note secured by a deed of trust
6 The Deed of Trust
Practice notes discussing the deed of trust as a contract between the mortgagor, the trustee, and the mortgagee
7 Consumer Debt Collection Laws
Discussion of the federal Fair Debt Collection Practices Act and the Texas Debt Collection Act as they apply to the foreclosure process
8 Demand for Payment, Notice of Intent to Accelerate, and Notice of Acceleration
Practice notes and forms addressing the processes involved in giving notice of default, notice of intent to accelerate, and notice of acceleration
9 Collection of Rent by Lender before Foreclosure
Practice notes and forms for use by the mortgagee in perfecting its claim to preforeclosure rent and collecting rent from the mortgagor
10 Borrower Challenges to Foreclosure and Lender Responses
Discussion of the jurisdiction and forum issues applicable to foreclosure actions, common claims borrowers assert seeking to invalidate liens or contest foreclosure, and lender responses and defenses
11 Trustees and Substitute Trustees
Practice notes and forms addressing the role, power, and duties of the trustees and substitute trustees during the foreclosure process
12 Notice of Foreclosure Sale
Practice notes and forms addressing the process involved in giving the requisite notices of the foreclosure sale
13 Bid Evaluation
Practice notes and forms addressing the factors relevant to determining the mortgagee’s bid at a foreclosure sale
14 Conducting the Sale
Practice notes and forms addressing how to conduct a valid foreclosure sale
15 Postsale Considerations
Practice notes and forms addressing matters that arise after a foreclosure, including distribution of sale proceeds, the purchaser’s right of possession, and third-party interests such as tenants and taxes
16 Consequences of Wrongful Foreclosure
Practice notes addressing the basic legal remedies available to the mortgagor for the mortgagee’s wrongful foreclosure
17 Suits for Deficiency
Practice notes and forms addressing the calculation of the deficiency, parties who may be liable, the statutes governing the recovery of a deficiency, the bringing of the deficiency suit, and the recovery of costs and expenses
[chapters 18 and 19 reserved]
20 Judicial Foreclosure
Practice notes and forms for use in a judicial foreclosure pursuant to rule 309 of the Texas Rules of Civil Procedure
21 Residential Foreclosure Process
Practice notes addressing the nonjudicial foreclosure process of residential real property
22 Commercial Foreclosure Process
Practice notes addressing the nonjudicial foreclosure process of commercial real property
23 Tax Consequences of the Foreclosure Process
Practice notes and forms addressing the federal income tax consequences to a taxpayer who receives an IRS Form 1099-A or 1099-C from a lender because of foreclosure or debt cancellation
24 Foreclosures Resulting from Ad Valorem Taxation
Practice notes and forms addressing the processes of assessment and imposition of taxes on nonexempt property and the process of foreclosure by local taxing units if the taxes are not timely paid by the property owner
25 Property Tax Loan Foreclosure Process
Practice notes and forms for use in a property tax loan foreclosure
26 Deceased Mortgagor Foreclosure Process
Practice notes and forms for use in a foreclosure after the death of the mortgagor
27 Condominium Foreclosures
Practice notes and forms for use in a condominium foreclosure
28 HEL/HELOC Foreclosure Process
Practice notes and forms for use in a home equity loan or home equity line of credit foreclosure
29 Manufactured Housing Unit Foreclosure Process
Practice notes addressing the foreclosure process involving a manufactured home
30 Property Owners Association Foreclosure Process
Practice notes and forms for use in a property owners association foreclosure
31 Reverse Mortgage Foreclosure Process
Practice notes and forms for use in a reverse mortgage foreclosure
32 USDA Farm, Ranch, and Housing Loan Foreclosures
Practice notes addressing the foreclosure process involving a USDA program loan
33 Servicemembers Civil Relief Act
Discussion of the Servicemembers Civil Relief Act as it applies to the foreclosure process
34 Residential Evictions Following Foreclosure
Discussion of the residential eviction process following foreclosure
35 Environmental Issues Affecting the Foreclosure Process
Discussion of state and federal environmental laws as they apply to the foreclosure process
36 Federal and State Foreclosure Assistance Programs
Discussion of the different types of state and federal assistance programs created to help homeowners whose loans are in default or at risk
37 Miscellaneous Topics
Discussion of the different topics that may arise in connection with foreclosure proceedings including receiverships, residential foreclosure consultants, fraudulent conveyances, and Americans with Disabilities Act compliance
Appendix A—IRS Collection Advisory Group Addresses and Counties by Areas
The two IRS Technical Service Group addresses in Texas with the counties composing each service group
Appendix B—Texas County Foreclosure Resources
Foreclosure sale sites and Internet resources for all 254 Texas counties
Juan M. Pequeño, Jr.
JUAN M. PEQUENO, JR. was born and raised in Brownsville, Texas. He graduated from Hanna High School’s Medical Program in 2003. In 2008, Juan graduated from the University of Texas San Antonio where he earned his degrees in Business Management and History with honors. While at UTSA, Juan completed the UTSA Summer Law School Preparation Academy where he earned a Certificate of Legal Reasoning and was an active member and chair of the Phi Alpha Delta pre-law fraternity. He received his J.D. from St. Mary’s School of Law in 2011. He was admitted to the bar and joined the Firm that same year.
Juan is a member of the Hidalgo County Bar Association, the Cameron County Bar Association and the Phi Delta Phi legal fraternity. His major areas of practice are litigation, creditor’s rights and commercial collections.
Fraud On The Fifth Circuit by Mnuchin and Co.? – https://t.co/bLC5T9KAaB pic.twitter.com/IQidzdtgb2
— LawsInTexas (@lawsintexasusa) October 21, 2020
3 SAMPLE REFERENCES TO THE TEXAS FORECLOSURE MANUAL IN TEXAS COURT OPINIONS AND ORDERS
The Texas Foreclosure Manual (and case authority cited therein) provides an explanation that is noteworthy here and—not only does it seem focused on nonjudicial foreclosure sales—but it is more clear conceptually than the rather old cases cited above. It states that the purchaser of real property at a deed-of-trust foreclosure sale “succeeds to the position of the mortgagee” (i.e., acquiring its equitable title).
The manual states that the trustee is not necessarily required to concurrently execute and deliver the foreclosure sale deed, because the purchaser is deemed to have equitable title after the sale. The execution of the actual trustee’s deed (perhaps occurring later) transfers only the interest that the mortgagor had in the property at the time of the execution of the deed, which would be considered inferior and unenforceable vis-a-vis the superior rights of the purchaser.
See WILLIAM H. LOCKE, JR., ET AL., TEXAS FORECLOSURE MANUAL 14–16 (3d ed. 2014). This seems consistent with the statements of the Fifth Circuit in Glenn , to the effect of, “mere delivery of the deed would unite the legal title with the equitable and superior title already vested in the [purchaser].” Glenn , 80 F.2d at 557.
Jones v. Wells Fargo Bank, N.A. (In re Jones), 573 B.R. 665, 673-74 (Bankr. N.D. Tex. 2017)
See William H. Locke, Jr., et al., Texas Foreclosure Manual, § 11.5 (3rd ed. 2014) (“Conventional wisdom, based on case law, is that there is no necessity to report and send new notices of the scheduled foreclosure sale date if a new trustee is appointed after the original notice of sale was mailed to the obligor of the debt, filed with the county clerk, and posted at the courthouse…. However, under Texas Property Code section 51.0075(e), failure to provide the borrower with twenty-one days’ notice of the name and address of the newly appointed trustee who will conduct the sale may create an unwanted litigation risk … To prevent litigation risks, new foreclosure sale notices with the name and address of the newly appointed trustee should be mailed and reposted so as to give the borrower twenty-one days’ notice of the newly appointed trustee.”)
George W. 59 Inv., Inc. v. Williams (In re George W. 59 Inv., Inc.), 526 B.R. 650, 660 n.55 (N.D. Tex. 2015)
Our research indicates we are not the first to wonder about the Lee opinion. See Baggett, Maturity of Debt and Real Property Foreclosures, in STATE BAR OF TEXAS, DEBT COLLECTION (1987), at G-136-37 (“Apparently the fact that the foreclosure was pursuant to the federal Ship Mortgage Act confused the court. . . . The long line of cases requiring an irregularity causing grossly inadequate consideration may not have been argued; or, the court may have reasoned that foreclosure under the Ship Mortgage Act would be governed by a different standard. . . . In any event, the clear Texas authority indicates that mere inadequacy of consideration alone will not invalidate an otherwise proper foreclosure.”) (citing Musick ); see also Locke Novak, Texas Foreclosure Manual, in STATE BAR OF TEXAS, 2 ADVANCED REAL ESTATE LAW (1988), at Z-135-36 (also viewing Lee as aberrant).
Georgetown Associates, Ltd. v. Home Federal Savings & Loan Ass’n, 795 S.W.2d 252, 255 n.2 (Tex. App. 1990)
The Greatest Theft of Housing Is Executed by the Judicial Branch Acting Maliciously and Corruptly
This hard won Equitable Subrogation case is another Twist on Real Estate Loans and Lien Laws and which the Courts tried to apply as a Sword.
Texas Supreme Court Affirms Time-Barred Foreclosure Decision in Landmark Bank Loss
Bandit Appellate Lawyer Mark Hopkins was relegated to second chair at Supreme Court oral argument as his case crumbled before the court.
Mackie Wolf: Stop Litigation Elder Abuse is the Clear Message to the Wolves in Supreme Court Opinion
LIT founder is suing Mackie Wolf, creditor rights law firm for elder abuse by commencing a wrongful foreclosure against an 85 yr-old widower.
The Fifth Circuit’s Dismissal of the Burkes 2019 Judicial Complaint Has Now Been Proven to Be Error, in Law https://t.co/LlW6FJF3y9 @Suffolk_Law @QSteenhuis @HerbertRamy @StephenSCody @Colarusso @ValpoLaw @vanderbiltlaw @ChicagoKentLaw @LoyolaLaw @UNLVLaw @SLULAW @EmoryLaw #Judge pic.twitter.com/Y2aGY5dxyS
— LawsInTexas (@lawsintexasusa) October 25, 2020
Texas Foreclosure Manual Co-Author Marty Novack included in 8 attorneys sued for cheating. A $2.9M settlement reached in legal malpractice case
Originally Published; Feb 9, 2006 | LIT Republished Oct 25, 2020
Eight former members of Austin law firm Hilgers & Watkins PC — including seven current attorneys at Austin firm Brown McCarroll LLP – have settled the last of several legal malpractice cases against them for $2.9 million.
The Travis County District Court case alleged the former Hilgers & Watkins attorneys aided a now-defunct, high-risk loan operation in cheating an Austin plaintiff and his two companies out of $4.5 million.
Hilgers & Watkins merged with Brown McCarroll in 2003. Brown McCarroll wasn’t a defendant in the lawsuit.
In 2003, Michael McCarthy and his Austin companies, Gowron LLC and MGM Holdings Inc., sued Hilgers & Watkins and attorneys Marty Novak, Tom Watkins, Mark Chouteau, Robert Reetz, David Rodriguez, Ben Hathaway, Bradley Stein and Albert Lin. The allegations included legal malpractice, negligence, breach of fiduciary duty, common law fraud, and civil conspiracy.
The settlement dismisses the McCarthy suit and all claims between the parties. It also marks the end of several other smaller lawsuits — all stemming from Hilgers & Watkins’ representation of Thomas Caufmann and his company, Capital Advantage.
The $2.9 million settlement nearly depletes the remainder of a $5 million liability insurance policy held by Hilgers & Watkins that was used to paid out to settle and defend the claims, says the plaintiffs’ attorney, Joe Webber of Austin.
Capital Advantage touted 14 percent to 18 percent returns on interest-only real estate loans, according to court documents filed by the plaintiffs.
Caufmann couldn’t be reached for comment.
“If Hilgers & Watkins had not vouched for Capital Advantage and told my clients that they would represent them as investors, my guy wouldn’t have invested a dime,” Webber says.
The defendants’ attorney, Sam Johnson of Scott Douglass & McConnico LLP in Austin, says his clients were paid a flat fee to prepare loan documents – the plaintiffs claim they were for investors and the defendants claim they were for Capital Advantage, “and it wasn’t our duty to investigate the transactions.”
McCarthy’s attorney, Webber, says: “The investors … were led to believe that they were represented by Hilgers & Watkins.”
Johnson says the settlement doesn’t show the defendants were liable in the case.
“We don’t agree with [the plaintiffs’] claims, but there were litigation risks and attorneys’ costs involved,” Johnson says. “The bottom line is they made us a settlement offer, and we took it.” Johnson says Capital Advantage wasn’t one of Hilgers & Watkins’ major clients — representing only about $200,000 in billings over a span of a year and a half.
