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Texas Passes Law on Procedure to Rescind Acceleration of Mortgage
Author: Jeremy Overbey
On June 17, 2015, Texas enacted procedures to rescind and waive acceleration of the maturity date of liens on real property. This law was passed in response to the growing issue of large amounts of time passing while servicers are attempting to work with borrowers on loss mitigation or other delays to foreclosure in combination with conflicting caselaw on exactly how to rescind acceleration and restore the loan to its original acceleration date. As a result of these factors, there has been a rash of litigation over whether servicers and lenders have foreclosed within the four year statute of limitations, which begins to run after a loan is accelerated.
Now located at Texas Civil Practice & Remedies Code Section 16.038, this new law provides a specific mechanism to rescind/waive acceleration. Rescission or waiver of acceleration is effective if made by written notice of a rescission or waiver by first class or certified mail to each debtor who is obligated to pay on the debt. This notice may be sent by the lienholder, the loan servicer, or attorney representing the lienholder and is effective upon depositing it in the U.S. Mail, postage prepaid and addressed to each debtor’s last known address. Once served, the acceleration is deemed rescinded and waived and the maturity date of the loan is restored as if no acceleration had occurred. Section 16.038(e) specifies that this is not the exclusive method for waiver and rescission.