Ocwen Loan Servicing secured a major victory in Texas’ highest court recently, when seven of the nine justices on the Texas Supreme Court ruled that the state’s constitution does not give a homeowner the right to repayment of their home loan amount because a lender did not release its lien on the home in the proper timeframe.
The ruling stems from a lawsuit filed against Ocwen by Teresa Garofolo, who sued Ocwen after the nonbank did not return the canceled note and lien release to her within 60 days despite her loan being paid off, as is required by state law.
Garofolo sued Ocwen, claiming that the nonbank’s delay in providing her with the lien release entitled her to full repayment of all the principal and interest she paid on a $159,700 home equity loan she took out in 2010.
Garofolo’s loan was originated by Ally Bank, but when she paid off the loan in April 2014, Ocwen had become the note holder.
According to court documents, a release of lien was recorded in Texas’ Travis County three weeks after Garofolo paid off the loan, but Garofolo did not receive a release of lien in recordable form as required by her loan’s terms.
Garofolo then notified Ocwen she had not received the document, and Ocwen did not provide that to her within the 60 days that is required by state law. When that didn’t happen, she sued Ocwen, claiming that the nonbank violated the home-equity lending rules contained in Texas’ constitution, as well as breach of contract, and requested forfeiture of the principal and interest she paid on the loan.