The mortgagors signed a home equity note (the “note”), which the mortgagee held, secured by a deed of trust (the “security instrument”). The prior mortgagee assigned the note to a different mortgagee. The new mortgagee held legal ownership of the note and was entitled to receive payments under the security instrument. If the mortgagors failed to make payments, the note and security instrument allowed the mortgagee to enforce the note by foreclosing on and selling the property. After one of the mortgagors died, the other mortgagor failed to make payments. The mortgagee filed suit seeking a declaration that it was the lawful holder of the note, entitled to enforce the security instrument, qualified as a mortgagee under Texas Property Code § 51.0001(4), and was authorized to enforce the power of sale in the security instrument. The mortgagee moved for summary judgment.
In Wells Fargo Bank, Nat'l Ass'n v. Fuentes, No. SA-24-CV-01132-XR, 2025 WL 2946624, 2025 U.S. Dist. LEXIS 137972 (W.D. Tex. July 18, 2025) (unpublished opinion), the court granted the mortgagee’s summary judgment claim. The court held that the mortgagee was the valid owner of the note and security instrument. Since the prior mortgagee properly transferred the note to the current mortgagee, the court concluded the current mortgagee could benefit under the security instrument. Further, the court held that the mortgagee qualified as a mortgagee under Texas Property Code § 51.0001(4)(C) because it was "the last person to whom the security interest has been assigned of record." Tex. Prop. Code § 51.0001(4)(C). Furthermore, the mortgagee had standing because it was the holder of the note and therefore entitled to enforce the sale of the property under the security instrument. Additionally, the court held the mortgagee could proceed with a non-judicial foreclosure because it met all the elements to foreclose under a security instrument power of sale: (1) the mortgagor was in debt; (2) the debt was properly secured under Texas law; (3) the mortgagor had defaulted; and (4) the mortgagee had sent proper notice. Singleton v. U.S. Bank Nat’l Ass’n, No. 4:15-cv-100-A, 2016 U.S. Dist. LEXIS 53019, 2016 WL 1611378, at *7 (N.D. Tex. Apr. 20, 2016). Furthermore, because Texas law treats foreclosure as a “contractual remedy,” the security instrument allowed for the mortgagee to collect attorney’s fees. See Wease v. Ocwen Loan Servicing, L.L.C., 915 F.3d 987, 994-95 (5th Cir. 2019). Therefore, the court granted summary judgment in favor of the mortgagee.
By Charlie Cole [email protected]
Edited By Olivia Lewis [email protected]
Edited By Hayden Mariott [email protected]