Revisions to this Blog
In the interest of accuracy, I have revised and deleted prior blog entries that express a legal opinion that modifications of Texas mortgage loans that increase the principal balance of the loan are illegal. With the Texas Supreme Court's decision in Sims v. Carrington Mortgage Services on May 16, 2014, Texas law is now clear that lenders can capitalize past-due sums under the original loan back into the loan, over and over, without limitation. There is no requirement that an existing lender respect the 80% loan-to-value ratio when capitalizing past-due amounts back into the loan. In fact, a loan that met the 80% requirement at closing can be "restructured" a few months later to add the first several months' past-due interest and property taxes into the note, in effect allowing the borrower to borrow more than 80% of the value of the homestead.