Editor: David Reiss
Brooklyn Law School

March 13, 2013

Texas Court of Appeals Holds that Foreclosure Proceedings Do Not Require Production of the Original Note

By Gloria Liu

In Hornbuckle v Countrywide Home Loans, Inc.,  No. 02-09-00330-CV (TX Ct. App. 2, May. 19, 2011), the court affirmed a lower court decision allowing judicial foreclosure. The homeowners purchased home by obtaining an FHA loan from Principal Residential Mortgage, Inc. (PRMI). The homeowners signed a note and deed of trust both dated March 1, 2002. The lender was identified in both documents as PRMI, but the beneficiary in the deed of trust is Mortgage Electronic Registration Systems, Inc. (MERS) as the nominee for PRMI. In late 2003 or early 2004, servicing of the loan was transferred to Countrywide. Nothing in the record shows that the Hornbuckles were informed that PRMI sold the note and deed of trust to Massachusetts Mutual. But a letter to the Hornbuckles from Countrywide shows that the Hornbuckles knew PRMI had transferred servicing of the loan as of at least February 10, 2004 and that they knew Countrywide was the new servicer as of at least March 29, 2004. The homeowners filed a petition for bankruptcy on May 1, 2006 but the petition dismissed on October 11, 2007 without discharging any debts that were outstanding at that time. The court found that initiating foreclosure proceedings did not require production of the original note. A copy of the note containing an endorsement to Countrywide as payee as well as the assignment of the note and deed of trust to Countrywide for the benefit of Massachusetts Mutual, with recording information attached, was sufficient.

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