H.B. 2067: A Statutory Method for Unilateral Rescission

July 16, 2015

In a move greatly benefiting lienholders and loan servicers, Texas Governor Greg Abbott recently signed H.B. 2067, amending the Texas Civil Practice and Remedies Code to allow for the unilateral rescission of the acceleration of a debt. Under Texas law, a lender has four years from the loan’s acceleration to either file suit or conduct a non-judicial foreclosure sale. Although common law principles of abandonment existed prior to H.B. 2067, there was no statute providing specific guidelines for rescission, which created a large burden on lenders in light of increasing loss mitigation obligations and servicing transfers. Lenders now have an established path to unilateral rescission.

Section 16.038 of the Texas Civil Practice and Remedies Code codifies a procedure to unilaterally rescind or waive an acceleration by written notice. Rescission or waiver of the acceleration is effective if the notice is mailed by the (1) lienholder, (2) servicer of the debt, or (3) attorney representing the lienholder on each debtor. The statute does not authorize the attorney of a servicer to serve the notice of rescission unless that attorney also acts as counsel for the mortgagee.

Service of the notice must be made by first-class or certified mail to the debtor’s last known address, and is complete when mailed. As with notices of acceleration, an affidavit that service was complete is prima facie evidence of service − proof of receipt is not required for the rescission or waiver to be effective.

Subsection (c) clarifies this is not a lienholder’s exclusive method for waiving or rescinding an acceleration, leaving agreed rescissions and other unilateral rescission mechanisms supported by common law as possible alternatives. H.B. 2067 is effective immediately, but does not allow a rescission after the four-year limitations period has run.