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Home Equity Loan Foreclosure

The Law Office of David L. Pritchard represents Clients in Home Equity Loan Foreclosure lawsuits in all counties in Texas.

Our services include:

  • Examine loan documents to determine if loan qualifies as a home equity loan under Section 50(a)(6) of the Texas Constitution.
  • Send Notice of Default along with Right to Cure and Notice of Intent to Accelerate.
  • Prepare Affidavit in support of Order for Foreclosure, Application for Order of Foreclosure, along with all Notices.
  • File Application with Court.
  • Serve Notice of Application on Borrowers, calendar answer date and submit Order after answer date.
  • Obtain entry of Order for Foreclosure.
  • If answer is filed, schedule Hearing and appear at Hearing to obtain Order of Foreclosures.
  • Once Order is received, commence Non-Judicial Foreclosure proceedings.

When the loan is a home equity loan, prior to foreclosure the District Court in the county where the property is located must approve the foreclosure taking place.  This must happen prior to a nonjudical foreclosure taking place.  This process normally takes about three months to complete.  Interestingly, the Supreme Court of Texas sets the rules for a home equity foreclosure.  These guideline must be carefully followed or the Court will not approve the foreclosure sale.   The rules are laid out below:

 

PART VII. RULES RELATING TO SPECIAL PROCEEDINGS

SECTION 1. PROCEDURES RELATED TO FORECLOSURES OF CERTAIN LIENS

RULE 735. FORECLOSURES REQUIRING A COURT ORDER

 

735.1. Liens AffectedRule 736 provides the procedure for obtaining a court order, when required, to allow foreclosure of a lien containing a power of sale in the security instrument, dedicatory instrument, or declaration creating the lien, including a lien securing any of the following:

 

(a) a home equity loan, reverse mortgage, or home equity line of credit under article XVI,sections 50(a)(6), 50(k), and 50(t) of the Texas Constitution;

(b) a tax lien transfer or property tax loan under sections 32.06 and 32.065 of the Tax Code; or

(c) a property owners' association assessment under section 209.0092 of the Property Code.

 

735.2. Other Statutory and Contractual Foreclosure Provisions Unaltered

A Rule 736 order does not alter any foreclosure requirement or duty imposed under applicable law or the terms of the loan agreement, contract, or lien sought to be foreclosed. The only issue to be determined in a Rule 736 proceeding is whether a party may obtain an order under Rule 736 to proceed with foreclosure under applicable law and the terms of the loan agreement, contract, or lien sought to be foreclosed.

 

735.3. Judicial Foreclosure Unaffected.A Rule 736 order is not a substitute for a judgment for judicial foreclosure, but any loan agreement, contract, or lien that may be foreclosed using Rule 736 procedures may also be foreclosed by judgment in an action for judicial foreclosure.

 

RULE 736. EXPEDITED ORDER PROCEEDING

 

736.1. Application

 

(a) Where Filed. An application for an expedited order allowing the foreclosure of a lien listedin Rule 735 to proceed must be filed in a county where all or part of the real propertyMisc. Docket No. 11-9260 Page 3encumbered by the loan agreement, contract, or lien sought to be foreclosed is located or in a probate court with jurisdiction over proceedings involving the property.

 

(b) Style. An application must be styled "In re: Order for Foreclosure Concerning [state:property's mailing address] under Tex. R. Civ. P. 736."

 

(c) When Filed. An application may not be filed until the opportunity to cure has expired under applicable law and the loan agreement, contract, or lien sought to be foreclosed.

 

(d) Contents. The application must:

 

(1) Identify by name and last known address each of the following parties:

(A) "Petitioner" — any person legally authorized to prosecute the foreclosure;

 

(B) "Respondent" — according to the records of the holder or servicer of the

loan agreement, contract, or lien sought to be foreclosed:

 

(i) for a home equity loan, reverse mortgage, or home equity line of

credit, each person obligated to pay the loan agreement, contract, or

lien sought to be foreclosed and each mortgagor, if any, of the loan

agreement, contract, or lien sought to be foreclosed;

 

(ii) for a tax lien transfer or property tax loan, each person obligated to

pay the loan agreement, contract, or lien sought to be foreclosed, each

mortgagor, if any, of the loan agreement, contract, or lien sought to

be foreclosed, each owner of the property, and the holder of any

recorded preexisting first lien secured by the property;

 

(iii) for a property owners' association assessment, each person obligated

to pay the loan agreement, contract, or lien sought to be foreclosed

who has a current ownership interest in the property.

 

(2) Identify the property encumbered by the loan agreement, contract, or lien sought to

be foreclosed by its commonly known street address and legal description.

 

(3) Describe or state:

 

(A) the type of lien listed in Rule 735 sought to be foreclosed and its

constitutional or statutory reference;

 

(B) the authority of the party seeking foreclosure, whether as the servicer,

beneficiary, lender, investor, property owners' association, or other person

with authority to prosecute the foreclosure;

 

(C) each person obligated to pay the loan agreement, contract, or lien sought to

be foreclosed;

 

(D) each mortgagor, if any, of the loan agreement, contract, or lien sought to be

foreclosed who is not a maker or assumer of the underlying debt;

 

(E) as of a date that is not more than sixty days prior to the date the application

is filed:

 

(i) if the default is monetary, the number ofunpaid scheduled payments,

 

(ii) if the default is monetary, the amount required to cure the default,

 

(iii) if the default is non-monetary, the facts creating the default, and

 

(iv) if applicable, the total amount required to pay off the loan agreement,

contract, or lien;

 

(F) that the requisite notice or notices to cure the default has or have been mailed

to each person as required under applicable law and the loan agreement,

contract, or lien sought to be foreclosed and that the opportunity to cure has

expired; and

 

(G) that before the application was filed, any other action required under

applicable law and the loan agreement, contract, or lien sought to be

foreclosed was performed.

 

(4) For a tax lien transfer or property tax loan, state all allegations required to be

contained in the application in accordance with section 32.06(c-l)(l) of the Tax Code.

 

(5) Conspicuously state:

 

 (A) that legal action is not being sought against the occupant of the property

unless the occupant is also named as a respondent in the application; and

 

(B) that if the petitioner obtains a court order, the petitioner will proceed with a

foreclosure of the property in accordance with applicable law and the terms

of the loan agreement, contract, or lien sought to be foreclosed.

 

(6) Include an affidavit of material facts in accordance with Rule 166a(f) signed by the

petitioner or the servicer describing the basis for foreclosure and, depending on the

type of lien sought to be foreclosed, attach a legible copy of:

 

(A) the note, original recorded lien, or pertinent part of a property owners'

association declaration or dedicatory instrument establishing the lien, and

current assignment of the lien, if assigned;

 

(B) each notice required to be mailed to any person under applicable law and the

loan agreement, contract, or lien sought to be foreclosed before the

application was filed and proof of mailing of each notice; and

 

(C) for a tax lien transfer or property tax loan:

 

(i) the property owner's sworn document required under section

32.06(a-l) of the Tax Code; and

 

(ii) the taxing authority's certified statement attesting to the transfer of

the lien, required under section 32.06(b) of the Tax Code.

 

736.2. Costs

 

All filing, citation, mailing, service, and other court costs and fees are costs of court and must be paid by petitioner at the time of filing an application with the clerk of the court.

 

736.3. Citation

 

(a)  Issuance.

 

(1) When the application is filed, the clerk must issue a separate citation for each

respondent named in the application and one additional citation for the occupant of

the property sought to be foreclosed.

 

 (2) Each citation that is directed to a respondent must state that any response to the

application is due the first Monday after the expiration of 38 days from the date the

citation was placed in the custody of the U.S. Postal Service in accordance with the

clerk's standard mailing procedures and state the date that the citation was placed in

the custody of the U.S. Postal Service by the clerk.

 

      (b) Service and Return.

 

(1) The clerk of the court must serve each citation, with a copy of the application

attached, by both first class mail and certified mail. A citation directed to a

respondent must be mailed to the respondent's last known address that is stated in

the application. A citation directed to the occupant of the property sought to be

foreclosed must be mailed to Occupant of [state: property's mailing address] at the

address of the property sought to be foreclosed that is stated in the application.

 

(2) Concurrently with service, the clerk must complete a return of service in accordance

with Rule 107, except that the return of service need not contain a return receipt. For

a citation mailed by the clerk in accordance with (b)( 1), the date of service is the date

and time the citation was placed in the custody of the U.S. Postal Service in a

properly addressed, postage prepaid envelope in accordance with the clerk's standard

mailing procedures.

 

(3) The clerk must only charge one fee per respondent or occupant served under this

rule.

 

736.4. Discovery

 

No discovery is permitted in a Rule 736 proceeding.

 

736.5. Response

 

(a)  Generally. A respondent may file a response contesting the application.

 

       (b) Due Date. Any response to the application is due the first Monday after the expiration of 3 8 days from the date the citation was placed in the custody of the U.S. Postal Service in accordance with the clerk's standard mailing procedures, as stated on the citation.

 

       (c) Form. A response must be signed in accordance with Rule 57 and may be in the form of a general denial under Rule 92, except that a respondent must affirmatively plead:

 

 (1) why the respondent believes a respondent did not sign a loan agreement document,

if applicable, that is specifically identified by the respondent;

 

(2) why the respondent is not obligated for payment of the lien;

 

(3) why the number of months of alleged default or the reinstatement or pay off amounts are materially incorrect;

 

(4) why any document attached to the application is not a true and correct copy of the

original; or

 

(5) proof of payment in accordance with Rule 95.

 

      (d) Other Claims. A response may not state an independent claim for relief. The court must, without a hearing, strike and dismiss any counterclaim, cross claim, third party claim, intervention, or cause of action filed by any person in a Rule 736 proceeding.

 

736.6. Hearing Required When Response FiledThe court must not conduct a hearing under this rule unless a response is filed. If a response is filed, the court must hold a hearing after reasonable notice to the parties. The hearing on the application must not be held earlier than 20 days or later than 30 days after a request for a hearing is made by any party. At the hearing, the petitioner has the burden to prove by affidavits on file or evidence presented the grounds for granting the order sought in the application.

 

736.7. Default When No Response Filed

 

(a)  If no response to the application is filed by the due date, the petitioner may file a

 motion and proposed order to obtain a default order. For the purposes of obtaining a default order, all facts alleged in the application and supported by the affidavit of material facts constituteprima facie evidence of the truth of the matters alleged.

 

         (b) The court must grant the application by default order no later than 30 days after a motion is filed under (a) if the application complies with the requirements of Rule 736.1 and wasproperly served in accordance with Rule 736.3. The petitioner need not appear in court to obtain a default order.

 

          (c) The return of service must be on file with the clerk of the court for at least 10 days before the court may grant the application by default.

 

 736.8. order

(a) The court must issue an order granting the application if the petitioner establishes the basis for the foreclosure. Otherwise, the court must deny the application.

 

(b) An order granting the application must describe:

 

(1) the material facts establishing the basis for foreclosure;

 

(2) the property to be foreclosed by commonly known mailing address and

 Legal description;

 

(3) the name and last known address of each respondent subject to the

order; and

 

(4) the recording or indexing information of each lien to be foreclosed.

 

(b)  An order granting or denying the application is not subject to a motion for rehearing, new trial, bill of review, or appeal. Any challenge to a Rule 736 order must be made in a suit filed in a separate, independent, original proceeding in a court of competent jurisdiction.

 

736.9. Effect of the Order

 

An order is without prejudice and has no res judicata, collateral estoppel, estoppel by judgment, or other effect in any other judicial proceeding. After an order is obtained, a person may proceed with the foreclosure process under applicable law and the terms of the lien sought to be foreclosed.

736.10. Bankruptcy

 

If a respondent provides proof to the clerk of the court that respondent filed bankruptcy before an order is signed, the proceeding under this rule must be abated so long as the automatic stay is effective.

 

736.11. Automatic Stay and Dismissal if Independent Suit Filed

 

(a)  A proceeding or order under this rule is automatically stayed if a respondent files

a separate, original proceeding in a court of competent jurisdiction that puts in issue any matter related to the origination, servicing, or enforcement of the loan agreement, contract, or lien sought to be foreclosed prior to 5:00 p.m. on the Monday before the scheduled foreclosure sale.

 

 

(b) Respondent must give prompt notice of the filing of the suit to petitioner or petitioner's attorney and the foreclosure trustee or substitute trustee by any reasonable means necessary to stop the scheduled foreclosure sale.

 

(b)  Within ten days of filing suit, the respondent must file a motion and proposed

order to dismiss or vacate with the clerk of the court in which the application was filed giving notice that respondent has filed an original proceeding contesting the right to foreclose in a court of competent jurisdiction. If no order has been signed, the court must dismiss a pending proceeding. If an order has been signed, the court must vacate the Rule 736 order.

 

(d) If the automatic stay under this rule is in effect, any foreclosure sale of the property is void. Within 10 business days of notice that the foreclosure sale was void, the trustee or substitute trustee must return to the buyer of the foreclosed property the purchase price paid by the buyer.

 

(e) The court may enforce the Rule 736 process under chapters 9 and 10 of the Civil Practicesand Remedies Code.

 

736.12. Attachment of Order to Trustee's Deed

 

A conformed copy of the order must be attached to the trustee or substitute trustee's foreclosure deed.

 

736.13. Promulgated Forms

 

The Supreme Court of Texas may promulgate forms that conform to this rule.

Comment to 2011 change Rules 735 and 736 have been rewritten and expanded to cover property owners' associations' assessment liens, in accordance with amendments to chapter 209 of the Property Code.  Rule 735.1 makes the expedited procedures of Rule 736 available only when the lienholder has a power of sale but a court order is nevertheless required by law to foreclose the lien. Rule 735.2 makes clear that Rule 736 is procedural only and does not affect other contractual or legal rights or duties. Any lien which can be foreclosed under Rule 736 may also be foreclosed in an action for judicial foreclosure, as Rule 735.3 states, but no lienholder is required to obtain both a Rule 736 order and a judgment for judicial foreclosure. The requirement of conspicuousness in Rule 736.1(d)(5) has reference to section 1.201(b)(10) of the Business and Commerce Code.

 

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