Lien Released and Rescission???

[emoney]

Can a lender rescind a released lien on a homestead in Texas by filing a Rescission of Lien Release.

The details are: there were two debts, one from judgement and the other was a home equity loan. The home equity loan was paid off with refinancing. The closing and funding was handled thru a major title company. The title company requested a payoff statement from the lender for the home equity loan balance and one was recieved. All terms and conditions were carefully followed including a slight overpayment of the sums due; but the loan payoff statement did not incude the amount necessary to payoff the judgment. The lender returned the small overpayment in a few weeks, and near the end of thirty days after the payoff they filed a release of lien in the real property records in the county wher the property is located.

A few weeks later their attorney filed an affidavit claiming that the lien was mistakenly release and about a month later the lender also filed a Rescission fo Release of Lien.

The lender is now threating to file foreclosure becasue of the unpaid balance of the judgment Can a rescission of a released lien be cancelled?
Thanks for any information.
Regards,
emoney

[bige1030]

First of all, what is the judgment for? If it was for a balance due under the home equity loan, you likely can't get rid of the lien - technically, it wouldn't be a judgment lien because it was a lien that you gave them with the home equity loan agreement.

If not, is there some cross-collateralization involved? Cross-collateralization is more typical of credit unions than banks, but that involves a clause in the agreement creating the security (in this case, the home equity loan) stating that the collateral serves as collateral for past and future loans through them, as well.

If the judgment is for another loan, and there is cross-collateralization, I'm not sure if you can get rid of the lien. I hope someone else can help you here!

If they're trying to rescind the lien release simply to get around having to put a judgment lien on the house (absent the cross-collateralization mentioned above), well, they can neither do that nor can they put a judgment lien on your homestead. First of all, to secure a judgment, they have to get a judgment lien. Secondly, in Texas, your homestead is exempt (up to 1 acre in town, or 100 outside of town).

If that is the situation, you do have a couple of options. You could go to state court and fight it - arguing that your home equity loan is paid off and that they're trying to attach an exempt asset to secure a judgment. In bankruptcy, you can file a Motion to Avoid Lien and argue that the lien has turned into a judgment lien, and it impairs an exemption.

In any case, I would highly urge you to have your lawyer (or hire one) to deal with this. It's quite dangerous to try to go it alone when it comes to liens on your home. I know that money is tight for all of us here, but such money is well-spent, especially if it means you avoid foreclosure.

[HHM]

Yeah, it would help if you explained what the judgment was for and who it is in favor of?

[emoney]

The best news for me is that I am reprensented by a very good attorney. From this forum I am trying to gather from anyone with experience and the usually great ideas from this forum.
The judgement is for attorney fees is a lawsuit I filed aginst my lender and lost. The Texas Constitution for home equity loans does not allow for cross actions of money owed for other debts. These debts are related but not connected as we see it. The secutity agreement calls for attorney fees to collect and enforce the orginal debt, but not defend it which was what my lawsuit was about.
Other points for us are, in the pay-off statement they promised a release of lien when the balance of the loan was paid as it was. The lender also issued letter that the loan had a zero balance. Then of course they relesed the lien as promised in the payoff statement.
Regards,
emoney

[bige1030]

It seems like they're trying to assert a lien where they have no authority or agreement to do so. State court would probably be the best place to fight the rescission.

Judgment liens are avoidable in bankruptcy, but it would be a fight to show that the lien is being used to collect a judgment.

[HHM]

You can get this taken care of in BK court if you so desire. As for the re-issuance of the lien, the judgment was entered by a court of law, so regardless of the security agreement, the judgment creditor has the right to lien your property. But it would be a lien that could be easily avoided in BK court. The tricky issue is the "re-issuance" of the lien. Based on what you said, that was probably the wrong way for the judgment creditor to go about it, but they would have the right to lien your real property as any judgment creditor would.

[emoney]

A judgement creditor in Texas does not have the right to "lien your homestead". They are clasifed as a general or unsecured creditor. New liens homesteads after purchase in Texas can only be done for limited issues such as: IRS, home equity loans, imporvments on home, and real estate taxes. Government (IRS), real estates taxes and liens with joint consent of the parties are valid here.

When the depression hit the US is the 1830's may farmers moved to Texas and placed signs in their windows "GTT". That means gone to Texas. Wages only for only child support and IRS can be garnished in Texas. We were the last state to allow home equity loans which started in 1998.
Thanks,
emoney

[HHM]

Then it sounds like the attorney is trying to do an end run around the Texas lien restriction (sorry, I did not realize you were in TX). However, if the court has approved the release rescission already, I think you're screwed. Are you doing anything to defend against the recession. Have you filed a response?

[emoney]

No court has ruled on the filing of the lien rescission. The timeline is this:
Correct amount sent to pay off loan from their payoff statement on June 28
They filed release of lien on July 27
Their attorney filed notice that release was filed by mistake on August 9
I file BK 7 on August 10
Lender files rescission of lien of September 6
We believe that even if they can connect judgment with security aggrement, that connect in now severed by the filing of the release of lien after correct payoff amount was sent and accepted by lender.
Any ideas or thoughts???
Regards
emoney

[sisterfunkhaus]

emoney-I was going to say that they shouldn't be able to do a lien on your house in Texas except for non-payment of houses and home equity loans/line of credit. I wish I had some advice for you.

[HHM]

No court has ruled on the filing of the lien rescission. The timeline is this:
Correct amount sent to pay off loan from their payoff statement on June 28
They filed release of lien on July 27
Their attorney filed notice that release was filed by mistake on August 9
I file BK 7 on August 10
Lender files rescission of lien of September 6
We believe that even if they can connect judgment with security aggrement, that connect in now severed by the filing of the release of lien after correct payoff amount was sent and accepted by lender.
Any ideas or thoughts???
Regards
emoney

Yeah, but that is kinda of the point of the Rescission, to take back the Release that they entered. So, I don't think its a great argument to say, "that they should not be able to rescind the release of lien, after they released the lien", again, that is the whole point of the rescission. Without knowing what exactly is in the attorney's affidavit regarding the rescission, its really hard to say one way or the other. And for that mater, no one here is going to be an expert on lien law in TX. This is a bit too technical an issue for this forum to really be of much use.

[emoney]

The primary theme in his affdavit is that release was a mistake. They considered them as two seperate debts and until after the the secured lien was released. They had not tried to connect two which now was one debt from the judgment. In their pay off letter they contractual agreed to release the securied lien, which they did. Nothing was said about the debt from the unsecured judgment.
Thanks,
emoney