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Wease v. Ocwen Loan Servicing, L.L.C.

United States Court of Appeals, Fifth Circuit

January 4, 2019

MICHAEL WEASE, Plaintiff-Appellant
v.
OCWEN LOAN SERVICING, L.L.C.; WELLS FARGO BANK, N.A., Defendants-Appellees

          Appeal from the United States District Court for the Northern District of Texas

          Before KING, HAYNES, and HIGGINSON, Circuit Judges.

          STEPHEN A. HIGGINSON, CIRCUIT JUDGE.

         This Texas mortgage dispute presents contractual, statutory, and equitable issues. We discern ambiguity in the contract's escrow provisions and therefore hold that the district court erred by granting summary judgment to the defendants on claims arising from that ambiguity. Otherwise, we affirm.

         BACKGROUND

         I. Factual

         In 2003, Michael Wease executed a home equity note on his Texas property and secured the loan with a deed of trust. Wells Fargo Bank, N.A., is the current beneficiary of the deed of trust and Ocwen Loan Servicing, L.L.C., the loan servicer.[1]

         Among the promises the parties exchanged was the Escrow Waiver Agreement (the Waiver Agreement), which was appended to the deed of trust. It provided that the lender would "elect[] not to collect monthly escrow deposits to pay real estate taxes" subject to the condition that "[a]ll real estate taxes are paid when due, and evidence is furnished to Lender at that time." The Waiver Agreement warned:

In the event Borrower fails to comply with [the] above condition[], Lender has the right and Borrower agrees to pay sufficient funds to establish a fully funded escrow account and to have the monthly payment adjusted to include a monthly escrow deposit.
This action is an election not to collect escrows at this time and should not be deemed a waiver of Lender's right to do so at some future date.

         Sections 3, 9, and 14 in the deed of trust also contained agreements about escrow. Section 3 explained when and how the lender could establish an escrow. It defined "Escrow Items" to include "taxes and assessments" and explained:

If Borrower is obligated to pay Escrow Items directly, pursuant to a waiver, and Borrower fails to pay the amount due for an Escrow Item, Lender may exercise its rights under Section 9 and pay such amount and Borrower shall then be obligated under Section 9 to repay to Lender any such amount. Lender may revoke the waiver as to any or all Escrow Items at any time by a notice given in accordance with Section 14 and, upon such revocation, Borrower shall pay to Lender all Funds, and in such amounts, that are then required under this Section 3.

         Section 9 provided that if "Borrower fails to perform the covenants and agreements contained in this Security Instrument," then "Lender may do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this Security Instrument." The section defined those actions to include, but not be limited to, "paying any sums secured by a lien which has priority over this Security Instrument."[2]

         Section 14 addressed notice. It required that all notices "given by Borrower or Lender in connection with this Security Agreement" be "in writing." It also provided that "[a]ny notice to Borrower . . . shall be deemed to have been given to Borrower when mailed by first class mail or when actually delivered to Borrower's notice address if sent by other means."

         For seven years, the arrangement functioned amicably. But in April 2010, Wease's loan servicer-then HomEq Servicing-sent Wease a letter advising him that HomeEq had performed an "examination of past due property taxes" which revealed that Wease was "delinquent" on his taxes for the prior year (2009). The letter warned:

The terms of your loan agreement require that you pay all taxes and assessments on your property when due. In accordance with the terms of your Mortgage/Deed of Trust, HomeEq may advance funds to protect its interest in your property if this is not done. If HomeEq advances funds to pay the delinquent property taxes, an escrow account will be established and will remain in effect for the remaining term of your loan. Your monthly payment will increase to reflect the escrow payment due.

         The letter requested that Wease pay the taxes within 30 days of the date of the notice or, if he had already paid the taxes, that he forward proof of payment. Five days later, HomEq sent an identical letter. Wease did not pay his 2009 property taxes until June 30, 2010. The record does not indicate whether HomEq ever advanced or escrowed any money.

         Six weeks later, Wease received a "Notice of Transfer" dated August 11, 2010.This letter informed him that Ocwen would replace HomEq as servicer. The terms of the financing agreement would remain in place. "If you are currently responsible for payment of your real estate taxes," the letter clarified, "you will continue to be responsible for payment of these items after your account transfers to Ocwen." Towards the end of the letter, Ocwen included a paragraph expressly concerning "Section 6 of RESPA (12 USC 2605)." The letter explained that the statute mandates servicers to acknowledge a "qualified written request" within 20 business days of receipt. Then the letter stated, "If you want to send a 'qualified written request' ...


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