Under important recent cases in Texas federal courts, there's no statute of limitations on bringing a lawsuit to confirm that a home equity lien has been invalidated by lender misconduct under Tex. Const. Art. 16 Section 50. However, a very recent case indicates that as to the companion penalty under Section 50, forfeiture, there is a four-year statute of limitations. Therefore, if a lender fails to cure a Section 50 defect, it not only loses the lien on a home; it not only loses all future payments from the borrower. It also loses as much as the previous four years of payments, which it must pay back to the borrower! Content may continue . . .
Since Texas home equity loans are "no-recourse," which means that a lender may not pursue a borrower for any deficiency following a foreclosure sale, why doesn't everyone who worries that defaulting on their home loan could threaten them at some point in the future go out and get a home equity loan? Borrowers acting in good faith would never be on the hook for a deficiency judgment if they default!Content may continue . . .