Posted on Oct 05, 2018

In a recent bankruptcy court case, a Houston, Texas woman had filed chapter 13 bankruptcy after Ocwen Loan Servicing, LLC (motto: Helping Homeowners is What We Do) foreclosed on her home. She filed a lawsuit in bankruptcy court, asking the bankruptcy judge to declare the foreclosure invalid. Ocwen counter-claimed for rent, damages and attorney fees. Her allegations were that she called Ocwen before the foreclosure sale requesting a loss mitigation package, and that the representative assured her that her home was not set for foreclosure but they foreclosed anyway. A third party called Ovation Rentals, LLC bought her property at the foreclosure sale. In re Thierry, Case No. 17-03439, Bankr. S.D. Texas 2018.

U.S. Bankruptcy Judge Jeffrey Norman ruled that the foreclosure could not be avoided or canceled under Sections 522(h) and 544(a)(3) of the Bankruptcy Code because a hypothetical purchaser would have made an inquiry into whether the deed of trust on the property was paid or not, and thus would be on inquiry notice of the foreclosure sale, so the sale could not be avoided, even though the substitute trustee's deed had not been filed.

Ms. Thierry had also sued for damages against Ocwen under promissory estoppel. But the court ruled that there was no written agreement that Ocwen would not foreclose on the property, and promissory estoppel cannot overcome the statute of frauds requirement that any such agreement concerning real estate be in writing.

Finally, Ms. Thierry sued for common law fraud, but the court threw out that argument also, because the plaintiff failed to respond to certain Requests for Admission, so they were now deemed admitted that Ocwen did not make any promises that the foreclosure sale was postponed.

After the judge ruled for Ocwen and Ovation and issued a judgment and opinion, the court vacated the judgment because the courter-claim was still pending. The court set a trial date on the courter-claim. So it is possible this lady will not only lose her house but have a judgment against her for past due rent, damages and attorney's fees.

Moral to the story: If Ocwen or another mortgage company tells you the foreclosure of your home is postponed or will be passed, at the very least get something from them in writing. Without that, you are probably going to be out of luck if they do go forward with the foreclosure.

Or, file chapter 13 before the foreclosure, that will stop it for sure, assuming you qualify. If you're facing a foreclosure in the Houston, Texas area or surrounding counties and you are considering chapter 13 to stop it, contact our office at 713-772-8037 or toll free 888-707-1233.


Read More About Houston woman: Ocwen took home after told me no foreclosure...

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