Jackson & Elrod, LLP lawyers achieved a favorable result for a client in a four-year statute of limitations case earlier this month. In Texas, lenders must conduct a residential foreclosure within four years of accelerating the loan balance. The issue before Federal District Judge Keith Ellison in Swoboda v. Ocwen Loan Servicing, LLC, (Civil Action No. 4:13-cv-02986) was whether the lender abandoned acceleration of the loan balance during the four years that passed after the initial acceleration. The lender argued that it abandoned the initial acceleration by entering into a loan modification agreement with Mr. Swoboda, re-accelerating the loan a year after the initial acceleration, and/or by merely offering Mr. Swoboda a loan modification.
The federal court rejected all of the lender’s arguments and reversed its prior decision granting summary judgment for the lender. With regard to the bank’s re-acceleration of the loan, the court said permitting a loan fully-due and payable to be accelerated again would "make a mockery of the statute of limitations." Swoboda v. Ocwen Loan Servicing, LLC, Civil Action No. 4:13-cv-02986, Doc. 100 at 3 (S.D. Tex. Aug. 10, 2015). With regard to the lender’s offering of a loan modification, the court said, “an offer of a loan modification agreement is at most a conditional abandonment: if the borrower does not accept the loan modification, then the status of the loan does not change and the prior acceleration remains intact.” Id.
The court found that Mr. Swoboda never actually entered into any loan modification agreement with the lender during the four years after acceleration, and that the lender produced “no evidence in the record that the bank sent [Mr. Swoboda] any mortgage statements . . . to show that he could become current on the loan by paying less than the full balance of principal and interest.” Id.
The scenario in Mr. Swoboda’s case is not uncommon – particularly when it comes to Texas home equity loan foreclosures. Homeowners and practitioners should remain vigilant in protecting clients’ rights under the statute of limitations. The court’s Memorandum and Opinion in Swoboda v. Ocwen Loan Servicing, LLC can be viewed by clicking here.