The Fifth Circuit Court of Appeals recently ruled that in a Texas foreclosure, if a mortgage company had previously rescinded the acceleration of a mortgage note, in order to conduct a valid foreclosure they must send a new "demand" or notice of intent to accelerate. In this case, The Robs owned a home in the Austin, Texas area. They had stopped payments, and a previous holder of their loan had accelerated the loan, i.e. called it all due. In Texas, to validly foreclose on a residence, a lender must first give "notice of intent to accelerate" the loan, before they can call the entire loan balance due, since acceleration is such a harsh remedy.

After Wilmington Trust, N.A. took over their loan, they rescinded or cancelled the acceleration. They then filed suit against the Robs to foreclose in U.S. district court, and stated that by their suit that they were accelerating all sums due. But they had not given a new demand or new notice of intent to accelerate. They were granted summary judgment against the Robs for foreclosure, and the Robs appealed to the 5th Circuit. 

Since this was an unsettled area of Texas law, the 5th Circuit answered an "Erie question" and decided that if the Texas Supreme Court were to consider the question, they would find that it was necessary for Wilmington Trust to send another notice of intent to accelerate before they could accelerate the mortgage note. So the 5th Circuit dismissed the lawsuit, and the Robs get another opportunity to try to retain their home. Wilmington Trust, N.A. vs. Rob, 5th Cir. 2018. 

Do you think this case was decided correctly? Should borrowers get "another bite at the apple" if a lender has accelrated once before? Please leave your comments or questions below.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization
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