The U.S. Department of Housing and Urban Development conveyed the property to the debtor through a special warranty deed. The debtor then executed a note promising to pay the original principal amount to the lender. The lender endorsed the note, and the servicer held the note on behalf of the bank. The special warranty deed signed by the debtor reserved a vendor’s lien in the property to secure repayment of the loan. The debtor also signed a deed of trust pledging the property as collateral for the loan. Later, the debtor defaulted, and the servicer sent notice of default and intent to accelerate if the default was not cured. The debtor made no further payments and was notified of the loan acceleration and the foreclosure sale date. The day before the foreclosure sale, the debtor filed a suit against the servicer and the bank (collectively the “defendants”) for breach of contract, wrongful foreclosure, and to quiet title. Specifically, the debtor alleged the defendants failed to respond to a qualified written request with requested information or an accounting. The defendants filed an answer and counterclaim for a declaratory judgment and judicial foreclosure. Following the removal of the case to federal court, despite his own counsel's efforts, the court had not heard from the debtor. The defendants filed a motion for summary judgment.
In Perez v. Specialized Loan Servicing, LLC, No. 3:23-CV-1356-L-BW, 2025 WL 1355151, 2025 U.S. Dist. LEXIS 67778 (N.D. Tex. Feb. 24, 2025) (opinion not yet released for publication), the magistrate judge recommended that the defendant's motion for summary judgment be granted. The court first addressed the debtor’s breach of contract claim. The defendants argued that the bank complied with the contract because it had provided proper notices of default, acceleration, and foreclosure, and that the loan documents did not require the bank to respond to the debtor’s late information request or provide an accounting. The court found that the debtor “fail[ed] to provide any evidence tending to show that [d]efendants were obligated to respond to [the debtor’s written request] and provide an accounting before foreclosure.” Additionally, the debtor alleged fraud based on the bank's supposed promise to delay the foreclosure. Again, the court found that the debtor provided no evidence that the promise had ever been made and did not specify any loss or damages. Regarding the wrongful foreclosure claim, the debtor halted the foreclosure by obtaining a temporary restraining order. Therefore, because there had been no foreclosure, there was no wrongful foreclosure. Finally, the bank and noteholder provided evidence that it legally retained the right to foreclose on the property because the deed reserved a superior lien in favor of the lender. Therefore, the magistrate judge recommended granting the defendant’s motion for summary judgment and authorizing non-judicial foreclosure.
By Alexa Popovich [email protected]
Edited By Conor Doris [email protected]
Edited By Hayden Mariott [email protected]
Edited By Kristin Meurer [email protected]