Wednesday AM December 9th, 2009

Unique to Texas, lenders must get court permission to conduct a non-judicial foreclosure of a home equity loan. Lenders are generally successful in mortgage-related litigation because by the time a case gets to court, it has been through a long process. Ed Mayberry reports.

Lenders would rather be in the lending business than the real estate business.  Lindsay Lambert is a partner with Hughes Watters Askanase.

“And they are doing everything they can to work with borrowers and work out problems, you know, before it ever gets to that point.  So many of the cases that I see are actually ones where they’ve been unable to work it out.  The lender has posted the property for foreclosure, whether it’s a home equity loan or not.  And that’s when the homeowner files a lawsuit.  You know, sometimes they have a very legitimate basis and sometimes they are really just, I mean it’s their home.  They’re doing what they can to save their home.”  

Lambert says if the home could have been saved, it probably would have been long before it got to court.

“A lot of these lenders also have, you know, their own processes and procedures where they will try to work with a borrower — even outside of the regulatory framework — and say ‘look, we can modify the loan doing this or that.’  It just, it depends case by case.  If somebody’s out of work, that’s one scenario.  If somebody has been out of work for a few months but now they have a job again and they’re getting back on their feet, that’s a different scenario.  Lenders do not want the houses back.  That’s really a last resort for them.” 

Lambert says the days of teaser interest rates are gone.  Lenders tend to put promissory notes into securitized pools like a collateralized mortgage obligation, and no one’s currently buying them.