The New CFPB Rules: Increasing Transparency

By: E. Jason Billick


The Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) are now even more powerful in protecting consumers in their dealings with lenders and creditors. As of July 21, 2011, the rulemaking authority under the act was transferred to the Consumer Financial Protection Bureau (CFPB), the brainchild of Sen. Elizabeth Warren (D-Mass) (created through the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2011.) The CFPB was created to adopt regulations that may contain additional requirements or clarifications that are necessary to effectuate the purposes of RESPA and TILA.

Effective January 10, 2014, the CFPB re-codified 12 C.F.R. part 1026, commonly known as “Regulation Z”, with the intent to add quality, accuracy and transparency between a homeowner and their mortgage servicer.(See 12 C.F.R. 1026.1). RESPA, known as “Regulation X” was also re-codified as 12 C.F.R. part 1024 (See 12 C.F.R. 1024.1).

There is a lot to digest in the new CFPB rules, but there are a few items worth highlighting here from the perspective of the homeowner, most notably the error-resolution procedures. The real “golden nugget” for consumer advocate attorneys lies with how the new rules regulate communication between the homeowner and servicer. Specifically, the homeowner is now presented with two very powerful tools to obtain transparency with their mortgage servicer regarding their loan:

1.)    The Notice of Error. If a homeowner believes an error was committed by the servicer regarding his or her loan, he or she may submit a written request to the servicer demanding that the error be fixed. Once received, the servicer has five (5) days to acknowledge receipt and then thirty (30) days to issue a substantive response. Failure to follow these deadlines may result in a private cause of action against the servicer and/or suspension of a foreclosure sale.

2.)    The Information Request. The written Information Request acts like an informal discovery tool for the homeowner to gather information on their loan, such as a full accounting and/or specific information pertaining to the mortgagee. The same deadlines for a Notice of Error apply to an Information Request.

These two tools only scratch the surface of what the new rules can do for a homeowner. Many of these changes are designed to require a servicer to keep a homeowner apprised of significant changes on the loan. The “early intervention” rule, for example, requires servicers to make a reasonable, good faith effort to make “live contact” with a borrower by the 36th day of the initial time of delinquency.

Over the next two months CenTexFD will make the new CFPB rules the focus of their monthly CLE seminars. Interested attorneys should contact the Gammon Law Office, PLLC for more details. For more information on the rules, visit

Is It Time for a Complex Litigation Docket for Texas Foreclosures?

Article Written By: E. Jason Billick


The Texas court system has seen a dramatic increase in foreclosure litigation since the financial crisis of 2008. The good news is Texas foreclosures are currently on the decline as the housing market slowly recovers. However, history is quick to remind us the market’s cyclical nature, and therefore, it is likely the demand in this area of law will persist for years to come.

Foreclosure litigation is costly, time consuming and convoluted. Opinions are issued almost daily, but yet fail to fully clarify and/or provide guidance to judges tasked with making the initial determinations.

There is a lot to consider when a foreclosure case is placed on a judge’s docket. A typical non-judicial foreclosure issue (we’ll ignore home equity loans for now) is usually bifurcated into two parallel proceedings. The right to possession is often fought in the justice courts where the homeowner is usually the Defendant.

Justice of the peace courts and, on appeal, county courts, have jurisdiction of forcible-detainer suits, Tex. Prop. Code Ann. § 24.004 (Supp. 2011); Tex. R. Civ. P. 749. The sole issue in a forcible-detainer action is which party has the right to immediate possession of the property. The merits of the title shall not be adjudicated, Tex. R. Civ. P. 746.

Chinyere v. Wells Fargo Bank, N.A., 2012 Tex. App. LEXIS 5678, at 3-5 (Tex. App. –Houston [1st Dist.] July 12, 2012, no pet.)

As for the merits of title, those challenges must be brought by the homeowner in District or Federal Court. At first blush, it may not make economic sense to litigate two separate cases essentially involving the same parties and property. To understand the madness, we must first examine the intent behind it. “The Legislature has expressly provided by forcible entry and detainer proceedings a summary, speedy, and inexpensive remedy for the determination of who is entitled to the possession of premises, without resorting to an action upon the title. Brucker v. Tax Assessor Collectors, 2011 U.S. Dist. LEXIS 21972 (W.D. Tex. Mar. 4, 2011) (citing Scott v. Hewitt, 90 S.W.2d 816 (Tex. 1936) (emphasis added).

This model creates problems. What if possession can’t be determined without figuring out the merits of title? Is it equitable to kick someone out of their home when a legitimate title dispute exists? Texas courts have recognized the two can become intertwined “….so as to preclude adjudication of the right to possession without first determining title.” Mitchell v. Armstrong Capital Corp., 911 S.W.2d 169, 171 (Tex. App.—Houston [1st Dist.] 1995, writ denied).

In those situations, the justice and county courts on appeal lose jurisdiction. So, what does it mean? At what point do these two issues become “intertwined?” What is the burden of each party at the forcible detainer hearing? What evidence is sufficient, if any? Do we examine the deed of trust? Is there some other operative agreement? Is abatement proper, or should the justice court judge simply dismiss the case if he or she finds the two cases to be “intertwined?”

If the Judge is still awake, you may be able to get these questions answered in your hearing, but it will not be easy. I’ve seen judges throw their hands in the air and issue a ruling as if they just flipped a coin. I’ve seen judges walk out of hearings while the other side presents the counter-argument. It’s obvious that most judges do not care for these cases.

Smaller jurisdictions are even tougher. Justice Court Judges in these geographic areas are accustomed to hearing relatively simple family, criminal and landlord/tenant issues day-in-day-out. It’s rare when a contested foreclosure case falls on their desk, but when it does, the head scratching commences.

If done properly, a forcible detainer action may only take 5-10 minutes for a plaintiff to prove up its case. Now, enter a defendant challenging title and your 5-10 minutes quickly turns into hours. I recently had a forcible detainer “trial” that lasted three full days, expert testimony and everything. As you can imagine that “trial” was anything but “speedy.”

The argument for a complex litigation docket has been raised before, but the Texas legal community hasn’t given the idea the attention it deserves. Unfortunately, as a state that elects its judges, internal politics could pose a problem. Some states have seen success. See Connecticut’s Complex Litigation Docket,; See also North Carolina’s Business Court (

In the end, I don’t see a complex litigation docket in Texas anytime soon, but practitioners need to start having the discussion. Foreclosure defense involves intensive judicial case management, geographically dispersed parties and complex subject matter.

Introduction to Central Texas Foreclosure Defense Group (CenTexFD)

Central Texas Foreclosure Defense Group (CenTexFD) is an association of dozens of consumer-advocate attorneys who represent homeowners and investors involved in the foreclosure process. Its interest lies in promoting understanding and proper application of Texas foreclosure law, and the regular and predictable application of statutes and rules governing the process.

CenTexFD hosts monthly CLE (Continuing Legal Education) seminars in areas of real estate litigation, including foreclosure defense. If you are an attorney interested in joining our list serve, please e-mail Ambra Bourne-Dumas at [email protected].