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Alexander v. American Home Mortgage Servicing, Inc.

Court of Appeals of Texas, Fourth District, San Antonio

September 13, 2017

Danny ALEXANDER & Sarah Alexander, Appellants
v.
AMERICAN HOME MORTGAGE SERVICING, INC. as Servicer for Deutsche Bank National Trust Co., Trustee for Soundview Home Loan Trust 2006-OPT5, Asset-Backed Certificates Series 2006-OPT5, Appellee

         From the 198th Judicial District Court, Bandera County, Texas Trial Court No. CV-12-0000281 Honorable M. Rex Emerson, Judge Presiding

          Sitting: Sandee Bryan Marion, Chief Justice Karen Angelini, Justice Patricia O. Alvarez, Justice

          MEMORANDUM OPINION

          SANDEE BRYAN MARION, CHIEF JUSTICE

         Danny Alexander and Sarah Alexander appeal a summary judgment granted in favor of appellee American Home Mortgage Servicing, Inc. as Servicer for Deutsche Bank National Trust Co., Trustee for Soundview Home Loan Trust 2006-OPT5, Asset-Backed Certificates Series 2006-OPT5, which allowed the appellee to judicially foreclose on property owned by the Alexanders. In the underlying cause, the parties filed competing motions for summary judgment. The trial court granted the appellee's motion and denied the Alexanders' motion. The Alexanders contend the trial court erred in denying their motion because the evidence conclusively established that the home equity loan underlying the foreclosure violated the Texas Constitutional requirements prohibiting a home equity loan from: (1) being secured by non-homestead assets; and (2) exceeding 80% of the market value of the homestead property securing the loan. The Alexanders also contend the trial court erred in sustaining the appellee's objections to the Alexanders' summary judgment evidence. We affirm the trial court's judgment.

         Background

         In 2006, the Alexanders executed a home equity note in the principal amount of $280,000 which was secured by a deed of trust. In the loan documents, the Alexanders represented that the property pledged to secure the lien was homestead property.

         After the Alexanders defaulted on the note in 2011, the appellee accelerated the debt. In 2012, the Alexanders filed the underlying lawsuit seeking a declaration that the appellee lacked standing to foreclose on the note and an injunction to stop any foreclosure. The appellee answered and filed a counterclaim seeking a judicial foreclosure. The appellee subsequently filed its first motion for summary judgment. By order dated November 18, 2014, the trial court granted summary judgment in favor of the appellee concluding the appellee had standing to foreclose. The trial court's order also dismissed the Alexanders' claims with prejudice, but did not grant summary judgment on the appellee's counterclaim for judicial foreclosure.

         On May 31, 2015, the Alexanders filed a supplemental amended petition adding a claim entitled "Home Equity Loan Irregularities," alleging the following:

28. In addition to the Texas Fair Debt Collection Practices Act, the Plaintiffs plead that the note upon which Defendant bases its rights and duties is void as not in compliance with State statute. The Defendants judicially admit and the Plaintiff did plead that the loan upon which this suit is based is a Texas Home Equity loan. Such a note is a creature of statutory construction and not amendable to alteration or deviation.
29. The Defendants compelled the Alexander Plaintiffs to include additional property lots 17, 18 and 19 which are not part of the Alexanders' homestead. These lots appear in the legal description used by both parties and previously attached as "A." Each of these lots has a nonexempt commercial dwelling or rental property which faces the local waterway and is used for vacation rental income.
30. Texas law does not permit the inclusion of additional equity beyond the Debtors' homestead in a Home Equity Loan. Such inclusion invalidates the loan and removes Defendant's rights to collect debt and additional remedies including foreclosure. The lots are each platted separately and taxed separately by the State and Local County Authorities.
31. The irregular and illegal practices described herein are a sole proximate cause of the damages claimed for which the Plaintiffs sue.
32. All prerequisites necessary have been performed by the Plaintiffs who are entitled by statute to the recovery of reasonable and necessary Attorney's fees and costs for which they seek herein.

         On July 29, 2015, the appellee's attorney sent a letter to the Alexanders' attorney to cure any non-compliance with the Texas Constitution. The letter acknowledged that the appellee's lien did not ...


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