{"id":2607,"date":"2021-03-16T08:34:59","date_gmt":"2021-03-16T08:34:59","guid":{"rendered":"https:\/\/crestnetwork.com\/?p=2607"},"modified":"2022-03-18T07:14:41","modified_gmt":"2022-03-18T07:14:41","slug":"texas-mortgage-documents-give-unlawful-power-to-lenders","status":"publish","type":"post","link":"https:\/\/crestnetwork.com\/texas-mortgage-documents-give-unlawful-power-to-lenders\/","title":{"rendered":"Texas Mortgage Documents Give Unlawful Power to Lenders"},"content":{"rendered":"\n<div class=\"wp-block-columns are-vertically-aligned-center is-layout-flex wp-container-core-columns-is-layout-1 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-vertically-aligned-center is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-image\"><figure class=\"alignright size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"320\" height=\"400\" src=\"https:\/\/crestnetwork.com\/wp-content\/uploads\/2022\/03\/Mechele-Dickerson.jpg\" alt=\"\" class=\"wp-image-2608\" srcset=\"https:\/\/crestnetwork.com\/wp-content\/uploads\/2022\/03\/Mechele-Dickerson.jpg 320w, https:\/\/crestnetwork.com\/wp-content\/uploads\/2022\/03\/Mechele-Dickerson-240x300.jpg 240w\" sizes=\"(max-width: 320px) 100vw, 320px\" \/><\/figure><\/div>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-vertically-aligned-center is-layout-flow wp-block-column-is-layout-flow\">\n<p>By Mechele Dickerson<\/p>\n\n\n\n<p><em>This article originally appeared on the Op-Ed page of the Fort Worth Star-Telegram. It is reprinted here with permission of the author.<br><\/em><\/p>\n\n\n\n<p>Imagine this:\u00a0 you\u2019ve missed two mortgage payments, you come home from work and realize someone changed the locks on your front door and installed a lockbox on the doorknob.\u00a0 Think this could never happen to you?\u00a0 Think again.\u00a0 It happens all across the country, and it could happen in Texas.<\/p>\n<\/div>\n<\/div>\n\n\n\n<p>A common provision in mortgage loan documents, generally known as a \u201cproperty preservation\u201d clause, gives lenders the right to lock homeowners out of their own homes if the homeowner misses mortgage payments and is in default, or if the lender concludes that the borrower has abandoned a house.<\/p>\n\n\n\n<p>The Supreme Court of the state of Washington recently examined one of these clauses in a recent case. The court<a href=\"https:\/\/www.courts.wa.gov\/opinions\/pdf\/920818.pdf\">concluded<\/a> that these clauses are unenforceable because, contrary to state law, they let lenders take possession of a borrower\u2019s home before a foreclosure sale.<\/p>\n\n\n\n<p>Perhaps Texas lawmakers ought to take notice.<\/p>\n\n\n\n<p>Like most homeowners, the plaintiff in the Washington state caseborrowed to buy her home. The mortgage loan was secured by a deed of trust with a property preservation clause.&nbsp; The clause gave the lender the right to rekey locks and to winterize or generally preserve the value of the borrower\u2019s home if the lender felt the home was abandoned.&nbsp; The homeowner missed two mortgage payments and went into default. Two months later, and without prior notice or warning, the mortgage servicer, named Nationstar, sent someone to the borrower\u2019s home to remove the existing lock and install a lockbox.<\/p>\n\n\n\n<p>Nationstar\u2019s representative left a notice for the homeowner that stated that her home was &#8220;unsecure or vacant&#8221; and that the locks were changed to prevent \u201cunauthorized persons\u201d from entering the home.&nbsp; Jordan was only able to get back inside her home to retrieve her belongings after she called a phone number listed on the notice and received a code to get the key from the lockbox.<\/p>\n\n\n\n<p>The Washington Supreme Court rejected the claim that locking an owner out of her house did not constitute \u201cpossession.\u201d Instead, the court held that rekeying locks constitutes control over, and possession of a property and that lenders did not have the right to possess the home until after a foreclosure sale.<\/p>\n\n\n\n<p>Given the similarities between Washington state laws and Texas <a href=\"http:\/\/www.statutes.legis.state.tx.us\/DocViewer.aspx?DocKey=PR%2fPR.51&amp;Phrases=mortgage&amp;HighlightType=1&amp;ExactPhrase=False&amp;QueryText=mortgage\">property law<\/a>s, Texas courts should also refuse to enforce these clauses.<\/p>\n\n\n\n<p>Texas, like Washington, follows the \u201clien theory\u201d of mortgages. &nbsp;Under this theory, lenders have a financial interest in property that secures a mortgage loan but have no ownership interest until the home is sold at foreclosure.&nbsp; As is true in Washington, Texas case law also indicates that lenders do not own a borrower\u2019s home and do not have the right to take possession of that home before default and until the home is sold at foreclosure.<\/p>\n\n\n\n<p>The Texas Property Code details the rights homeowners and lenders have when a home is scheduled to be sold at foreclosure and those rights do <em>not<\/em> include the ability to lock homeowners out of their homes before a foreclosure sale.<\/p>\n\n\n\n<p>Obviously, borrowers should repay their loans.&nbsp; And lenders need to be able to protect their financial interests to prevent damage to collateral that secures their loans.&nbsp; The problem with property preservation clauses, however, is that they let lenders contractually give themselves rights that are not allowed by state law, i.e., evict people from their homes before a court overseeing the foreclosure process sorts out who is entitled to possess the home.<\/p>\n\n\n\n<p><a><\/a><a><\/a>Simply put, unless and until homeowners lose their houses in a foreclosure sale, lenders should not be able to include provisions in private contracts that are inconsistent with or circumvent Texas law simply because those state laws do not give them the power they want.&nbsp;<\/p>\n\n\n\n<p>Texas legislators have created a foreclosure process that is designed to protect the interests of both lenders and homeowners. If Texas lawmakers believe that lenders should have the right to lock homeowners out of their homes once they miss a few mortgage payments, then they should rewrite Texas law to clearly warn homeowners of that risk.<\/p>\n\n\n\n<p>MDickerson@law.utexas.edu<\/p>\n\n\n\n<p><em>Mechele Dickerson is a professor in the School of Law at The University of Texas at Austin.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Mechele Dickerson This article originally appeared on the Op-Ed page of the Fort Worth Star-Telegram. It is reprinted here with permission of the author. Imagine this:\u00a0 you\u2019ve missed two mortgage payments, you come home from work and realize someone changed the locks on your front door and installed a lockbox on the doorknob.\u00a0 Think [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":2608,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"","limit_modified_date":"","last_modified_date":"","inline_featured_image":false,"footnotes":""},"categories":[45],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Texas Mortgage Documents Give Unlawful Power to Lenders | CREST Real Estate Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/crestnetwork.com\/texas-mortgage-documents-give-unlawful-power-to-lenders\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Texas Mortgage Documents Give Unlawful Power to Lenders | CREST Real Estate Network\" \/>\n<meta property=\"og:description\" content=\"By Mechele Dickerson This article originally appeared on the Op-Ed page of the Fort Worth Star-Telegram. 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