On December 20, 2012, the plaintiffs in Pennington v. Wells Fargo Bank timely filed a request that the U.S. Supreme Court hear their appeal. The petition is here. The issue is whether a lender can induce a Texas home equity borrower into a HAMP trial period plan of payments that don't pay all interest coming due, which certainly looks like a violation of Tex. Const. art. XVI sec. 50(a)(6)(L). The petitioners argue that the HAMP schedule creates a balloon if the lender denies the permanent modification and demands payment of the interest that builds up during the trial period even though the borrower is making the monthly coupon payment (typically, HAMP trial plans have coupons that the borrower gets).

It's always difficult to be granted U.S. Supreme Court review, but this is a special case that involves a federal program (HAMP) that, by definition, cannot work in Texas. Under Tex. Const. art. XVI sec. 50, esp. 50(e), lenders cannot (in my opinion) add arrears into the principal amount of any Texas home loan. Lenders can either add reasonable closing costs, in the case of purchase-money mortgages; or else make a home equity loan, with all the bells and whistles. However, brief, 2-page forms that add tens of thousands of dollars in past-due interest or property taxes to the home loan note are not allowed. That being the case, HAMP undermines the Texas Constitution. What was the point of HAMP if the state with about 10% of all the mortgages in the country can't take advantage of it?