Preferred Forum for Litigation in Home Equity Lien Cases
Preferred Forums. For the bankruptcy debtor or trustee, the preferred forum in determining the validity of a home equity lien is the bankruptcy court. For the lender the preferred forum should be state court because of a new case from the Texas Supreme Court that allows for the recovery of legal fees against the borrower who seeks to invalidate a home equity loan under the Texas Declaratory Judgment Act. Wells Fargo Bank, N.A. v. Murphy, 458 S.W.3d 912 (Tex. 2015). The cottage industry of debtors attacking home equity liens and remaining in the property during the long involved judicial proceedings for years free of charge or the worry of paying the lender’s legal fees except as in rem against the real property appear to be coming to an end.