Court Dismisses Home Equity Lien Case on Limitations

The recent case of Escobedo v Ocwen Loan Servicing, LLC, 2014 WL 2006580 (W.D. Tex. May 15, 2014) shows that removing a home equity lien dispute to federal court provides an effective forum to dismiss an unwarranted case. The case appears simple on the facts. The loan was taken out in 2005 and the borrower made its claim of non-compliance in 2014 more than nine years after the closing. The court dismissed the case because it was barred under the four year statute of limitations under section 16.051 of the Tex. Civ. Prac. & Rem. Code. The court followed the holding in Priester v JP Morgan Chase Bank, N.A., 708 F. 3d 667, 674 (5th Cir. 2013) cert denied ___ U.S. ___134 S. Ct. 196, 187 L.Ed. 2d 256 (2013) where the Fifth Circuit settled this issue by following Texas court of appeals decisions adopting the four year statute under section 16.051.

No Tolling of Limitations Based on Discovery Rule

The Court also ruled that the plaintiff’s injury accrues at the creation of the home equity mortgage and is not tolled until a plaintiff discovers the legal significance of a section 50(a)(6) violation.