This dispute has a long and sinuous history, first starting out in state court, then removal, and continuing with a flood of motions in the district court. We will first recount facts significant to this appeal. In 2006, when the Haases obtained a home equity loan from New Century Mortgage (“New Century”), New Century received a security interest in the Haases’ home in Missouri City, Texas, a suburb of Houston. The parties executed the home equity security interest (“Security Agreement”) and a corresponding agreement to repay the loan (“Note”) in the amount of $173,600. New Century, at the outset of the loan, was both the lender/mortgagee and the loan/mortgage servicer, but by November 2006, Countrywide Home Loans (“Countrywide”) gave notice to the Haases that it would be servicing their loan in the future.
Particularly relevant to the issues before us, the Haases’ Security Agreement contained a provision requiring that the Haases maintain property insurance on the home. If the Haases failed to keep the insurance on their home current, the provision gave the lender the option to obtain insurance coverage at the Haases’ expense. If the lender exercised this option, any amounts expended in acquiring the policy would become additional debt on the Haases’ loan.
In August 2007, Countrywide refused to accept the Haases’ regularly scheduled monthly loan payment. The Haases contacted Countrywide, inquiring about the refusal, and Countrywide explained that the monthly payment had increased because the Haases had failed to maintain homeowners’ insurance after the expiration of their policy in April 2007. Nevertheless, Countrywide agreed to credit the lower payment, but warned the Haases that future payments would be accepted only if in the higher amount. Further, when the Haases could provide evidence of sufficient insurance, Countrywide would credit the Haases the amount of insurance premium leftover. Shortly after receiving this information, the Haases obtained their own insurance and sent the proof of coverage to Countrywide. Countrywide credited the Haases’ account for the unused portion of the home insurance premium.
Judge(s): E. Grady Jolly
Jurisdiction: U.S. Court of Appeals, Fifth Circuit
Related Categories: Bankruptcy , Business Organizations , Civil Procedure , Civil Remedies , Contracts , Finance / Banking , Insurance , Property , Torts , Wills / Trusts / Estates
|Circuit Court Judge(s)|