At Howard Law, P.C., our San Bernardino foreclosure defense lawyers represent clients who are trying to fight a foreclosure that is unfair, or that they were pushed into by financial companies that unreasonably opposed efforts to stop it. So we were interested to see a lawsuit in the Fifth U.S. Circuit Court of Appeals arguing that a mortgage was void because the Texas Constitution forbids signing it at the home. In Priester v. JP Morgan Chase et al., John and Bettie Priester sued for a declaratory judgment that their mortgage is void, and that the mortgage holder should forfeit all of the loan's principal and interest. The trial court dismissed, saying they had missed the deadline to sue and there was no fraudulent concealment that could extend it. The Fifth Circuit agreed.
The Priesters took out a home equity line of credit in 2005. They allege that the closing took place at their home, and that they didn't receive a notice of their rights in 12 days, in violation of the constitution of Texas. In 2010, they sent a note to the original lender seeking to cure these alleged deficiencies, and then to Chase, which had bought the loan. Chase took no action, leading the Priesters to sue in October of 2010. They requested a declaratory judgment voiding the loan, and requiring Chase to forfeit further payments because it didn't cure the defects. They also requested damages for defamation because Chase had said they were past due on payments. Chase moved it to federal court and then moved to dismiss under the four-year statute of limitations. After two amended complaints and failed settlement talks, the magistrate eventually recommended dismissal, and the district court adopted it, striking amended complaints that would have prevented diversity jurisdiction.
The Fifth Circuit upheld all of the lower court's rulings. The Texas constitution requires loans to close at the office of a lender, title company or attorney. It also requires a certain notice to be provided within 12 days, or the home should be protected from foreclosure sale. The constitution does not provide a statute of limitations, but the Texas statutes provide a four-year catchall deadline, Texas courts have applied it to this situation, and the Fifth had previously applied the logic to a different section of the constitution. It concluded that the statute of limitations should also apply to the sections at issue in this case. It then concluded that the statute of limitations started running when the Priesters' loan closed--making their claim too late. It dismissed a fraudulent concealment argument from the Priesters, saying neither constitutional problem was concealed and failure to disclose is not concealment. And because the loan was valid, the court said, the Priesters had no defamation case.
Vincent Howard and our Mission Viejo foreclosure defense attorneys are disappointed to see that violations of Texans' constitutional rights are permitted when it takes the victims more than four years to notice. There's no reason for ordinary Texans to know about the 12-day notice requirement or the requirement that closings take place in an office. In fact, because the Priesters allege they were never given the required notice, the lender appears to have deprived them of the legally required chance they should have had to learn about these requirements, thus laying the groundwork for getting away with it. The Fifth dismissed an argument that failure to disclose is a type of fraudulent concealment, but Vincent Howard and our Corona foreclosure defense lawyers suspect it might get better traction elsewhere.
Headquartered in Costa Mesa, Vincent Howard and the team at Howard Law represent clients across California who are fighting a foreclosure they believe the lender drove them into or created with predatory lending. To learn more and tell us about your case, call us today at 1-800-872-5925 or send us a message through our website.