MARTIN HAYDEN AND MAJORIE HAYDEN v. FEDERAL HOME LOAN MORTGAGE CORPORATION ROCKET MORTGAGE LLC AND NATIONSTAR MORTAGE LLC MR COOPER (2026)

SUBSTITUTE MAJORITY OPINION

The Texas Constitution provides “a litany of exacting terms and conditions” governing home equity loans. Garofolo v. Ocwen Loan Servicing, L.L.C., 497 S.W.3d 474, 477 (Tex. 2016); Tex. Const. art. XVI, § 50. This appeal focuses on one of those requirements: that a home equity loan must be closed “at the office of the lender, an attorney at law, or a title company[.]” Tex. Const. art. XVI, § 50(a)(6)(N). If a lender fails to comply with that or other requirements, it has a 60-day window to correct that failure; if it does not, it could be required to “forfeit all principal and interest” on the loan. Tex. Const. art. XVI, § 50(a)(6)(Q)(x); Garofolo, 497 S.W.3d at 479.

Plaintiffs Martin and Majorie Hayden executed a home equity loan with Defendants Federal Home Loan Mortgage Corporation, Rocket Mortgage, LLC, and Nationstar Mortgage LLC d/b/a Mr. Cooper in the principal amount of $204,496.¹ The loan was closed at an office leased by a law firm in a co-working space. As part of the closing, Plaintiffs executed a Texas Home Equity Affidavit and Agreement averring that “[t]he Extension of Credit is being closed,” meaning “I am signing the loan documents,” at “the office of the Lender, an attorney at law, or a title company.” Approximately four years later, Plaintiffs sent a letter as formal notice to Defendants alleging that the home equity loan did not comply with the Texas Constitution's closing location requirement, but Defendants took no action in response.

Plaintiffs sued Defendants and asserted claims for declaratory judgment, quiet title, and breach of contract, seeking forfeiture of all principal and interest on their home equity loan. Plaintiffs admitted during discovery that they are current on their loan payments and they have not received any notices of default. The trial court granted Defendants' plea to the jurisdiction, and Plaintiffs timely appealed.

We issued our original memorandum opinion in this case on May 21, 2026. We withdraw the previous opinion, vacate our previous judgment, and issue this substitute majority opinion. We affirm as to Plaintiffs' declaratory judgment claim and reverse as to Plaintiffs' breach of contract and quiet title claims.

ANALYSIS

Plaintiffs assert the trial court erred in granting Defendants' plea to the jurisdiction. We review only the ripeness and standing arguments made in the plea to the jurisdiction; we do not decide today the threshold question of whether Defendants violated the Texas Constitution, which was presented in a motion for summary judgment that the trial court denied.

A. Standard of review and governing law

We review a plea to the jurisdiction de novo. Nettles v. GTECH Corp., 606 S.W.3d 726, 731 (Tex. 2020). When a plea to the jurisdiction challenges the pleadings, we determine if the pleader has alleged facts that affirmatively demonstrate jurisdiction, construing the pleadings liberally in favor of the plaintiffs and looking to their intent. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227-28 (Tex. 2004). When a plea to the jurisdiction challenges the existence of jurisdictional facts, we consider relevant evidence submitted by the parties when necessary to resolve the jurisdictional issues raised. Id. at 227. This standard generally mirrors that of a summary judgment: we take as true all evidence favorable to the plaintiffs and indulge reasonable inferences in their favor. Alamo Heights Indep. Sch. Dist. v. Clark, 544 S.W.3d 755, 771 (Tex. 2018). If the jurisdictional challenge implicates the merits of the plaintiffs' claims and creates a fact issue, then a court may not grant the plea and the fact issue will be resolved by the fact finder. Miranda, 133 S.W.3d at 227-28.

Standing and ripeness are components of subject matter jurisdiction. Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 851 (Tex. 2000). Standing requires a concrete injury to the plaintiff and a real controversy between the parties that will be resolved by the court. Heckman v. Williamson Cnty., 369 S.W.3d 137, 154 (Tex. 2012). Much like standing, ripeness requires a concrete injury that has occurred or is likely to occur, rather than being contingent or remote. Robinson v. Parker, 353 S.W.3d 753, 755 (Tex. 2011); United Fire Lloyds v. Tippin ex rel. Tippin, 396 S.W.3d 733, 735-36 (Tex. App.—Houston [14th Dist.] 2013, no pet.).

B. Declaratory judgment

Plaintiffs requested a declaration that the home equity loan was void because (1) it violated the Texas Constitution, (2) Defendants did not correct the constitutional violation, and (3) Defendants' time to correct it has expired. But jurisdiction over this claim is foreclosed by the supreme court's decision in Garofolo, 497 S.W.3d at 474, and our application of its principles in Estate of McMahon v. Federal National Mortgage Association, No. 14-23-00707-CV, 2024 WL 5051215, at *3 (Tex. App.—Houston [14th Dist.] Dec. 10, 2024, pet. denied).

In Garofolo, the plaintiff did not receive a release of lien from the lender when she paid off her home equity loan, as required by the loan's terms and the Texas Constitution. 497 S.W.3d at 476 (citing Tex. Const. art. XVI, § 50(a)(6)(Q)(vii)). She sued in federal court, seeking forfeiture of all principal and interest. Id. The case proceeded to the Fifth Circuit Court of Appeals, which asked the supreme court via certified question whether a constitutional forfeiture remedy was available to the plaintiff. Id.

The supreme court said no. Id. at 479. The court observed that section 50(a) does not say that all home equity loans must comply with its terms. Id. at 478. Rather, it addresses one thing: “what a home equity loan must look like if a lender wants the option to foreclose on a homestead upon borrower default.” Id. Accordingly, section 50(a) is a defense to foreclosure and “simply has no applicability” outside of that context. Id. at 479. There was “no constitutional violation” stemming from the defendant's failure to deliver a release of lien because the defendant was not seeking to foreclose on the plaintiff's home. Id.; see also Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542, 551 (Tex. 2016) (citing Garofolo and concluding that “[a] declaratory-judgment action based on a constitutional right to forfeiture is not available to access the forfeiture remedy”).

This court applied that principle in Estate of McMahon under facts almost identical to those presented here: the plaintiff sued the owner and servicer of his home equity loan because the closing documents were not signed at a lender's office, title company, or attorney's office, seeking a declaration that the loan violated the Texas Constitution. 2024 WL 5051215, at *1, *3 (citing Tex. Const. art. XVI, § 50(a)(6)(N)). We addressed subject matter jurisdiction sua sponte and concluded that, under Garofolo, the plaintiff's declaratory judgment claim “presents no justiciable controversy because foreclosure had not occurred nor had Lenders attempted foreclosure.” Id. at *3. Accordingly, the plaintiff's declaratory judgment claim was not ripe for adjudication. Id.

So too here. Plaintiffs attempt to use what was designed as a shield against foreclosure as a sword for forfeiture. But well-established precedent forecloses this argument. See Garofolo, 497 S.W.3d at 478-79; Estate of McMahon, 2024 WL 5051215, at *3; Dill v. Fed. Home Loan Mortg. Corp., No. 21-20533, 2022 WL 1532634, at *1 (5th Cir. May 16, 2022) (section 50 “does not serve as a weapon for refinancing homeowners who are not in default or threat of foreclosure to get a free loan”). We affirm the dismissal of this claim.

C. Breach of contract

Plaintiffs also assert a breach of contract claim stemming from the home equity loan's alleged failure to comply with section 50(a)(6)(N), the Constitution's closing location requirement that was incorporated into the loan documents. We agree with Plaintiffs that this claim survives Defendants' plea to the jurisdiction.

Again, we're guided by Garofolo. There, as here, the plaintiff's loan incorporated section 50(a)(6)(x), which provides that a lender or noteholder forfeits all principal and interest if it fails to comply with its constitutional obligations, like the closing location requirement, and then fails to perform one of six corrective measures within 60 days after receiving notice of its failure:

[E] xcept as provided by Subparagraph (xi) of this paragraph, the lender or any holder of the note for the extension of credit shall forfeit all principal and interest of the extension of credit if the lender or holder fails to comply with the lender's or holder's obligations under the extension of credit and fails to correct the failure to comply not later than the 60th day after the date the lender or holder is notified by the borrower of the lender's failure to comply by:

(a) paying to the owner an amount equal to any overcharge paid by the owner under or related to the extension of credit if the owner has paid an amount that exceeds an amount stated in the applicable Paragraph (E), (G), or (O) of this subdivision;

(b) sending the owner a written acknowledgment that the lien is valid only in the amount that the extension of credit does not exceed the percentage described by Paragraph (B) of this subdivision, if applicable, or is not secured by property described under Paragraph (H) of this subdivision, if applicable;

(c) sending the owner a written notice modifying any other amount, percentage, term, or other provision prohibited by this section to a permitted amount, percentage, term, or other provision and adjusting the account of the borrower to ensure that the borrower is not required to pay more than an amount permitted by this section and is not subject to any other term or provision prohibited by this section;

(d) delivering the required documents to the borrower if the lender fails to comply with Subparagraph (v) of this paragraph or obtaining the appropriate signatures if the lender fails to comply with Subparagraph (ix) of this paragraph;

(e) sending the owner a written acknowledgment, if the failure to comply is prohibited by Paragraph (K) of this subdivision, that the accrual of interest and all of the owner's obligations under the extension of credit are abated while any prior lien prohibited under Paragraph (K) remains secured by the homestead; or

(f) if the failure to comply cannot be cured under Subparagraphs (x)(a)-(e) of this paragraph, curing the failure to comply by a refund or credit to the owner of $1,000 and offering the owner the right to refinance the extension of credit with the lender or holder for the remaining term of the loan at no cost to the owner on the same terms, including interest, as the original extension of credit with any modifications necessary to comply with this section or on terms on which the owner and the lender or holder otherwise agree that comply with this section.

Tex. Const. art. XVI, § 50(a)(6)(Q)(x).

These six corrective measures “clarif[y]—and limit[ ]—the forfeiture remedy.” Staub v. BBVA USA, ___ S.W.3d ___, 2026 WL 1500941, at *8 (Tex. May 29, 2026) (quoting Garofolo, 497 S.W.3d at 483). Namely, forfeiture of a loan—an “unquestionably harsh” remedy—is available only if the lender is faced with an opportunity to actually correct its constitutional violation in one of those six ways but nonetheless refuses to do so. Garofolo, 497 S.W.3d at 482. A plaintiff seeking forfeiture of all principal and interest under section 50(a)(6)(x) must therefore show (1) a home equity lender failed to comply with its obligations, and then (2) failed to perform one of six corrective measures within 60 days, (3) after receiving notice of its failure, and (4) one of those six corrective measures would have actually corrected the violation. Because none of the measures actually corrected the alleged failure to deliver the lien release in Garofolo, the plaintiffs could not seek forfeiture. Id. at 482-83.

This principle is best illustrated by examples. One of the corrective measures in the Texas Constitution, described in subsection (a), allows the lender or noteholder to refund the homeowner an amount equal to an overcharge he paid. But if the lender has not overcharged the homeowner, then there is no amount to refund, and subsection (a) doesn't actually correct a different alleged violation. Subsection (b) allows the lender to cure by sending the homeowner a written acknowledgement that the lien is valid only if the principal amount of all of the home's encumbrances does not exceed 80 percent of its fair market value. But this written acknowledgment would be beside the point if the lender is alleged to have violated the constitution in a way other than by extending credit in an excessive amount. If the other corrective measures likewise don't correct the alleged violation, then the lender cannot be subject to forfeiture for not taking them.

Here, none of the specific corrective measures listed in section 50(a)(6)(Q)(x) “actually correct” Defendants' alleged failure to close Plaintiffs' loan at the office of the lender, an attorney at law, or a title company. See id. at 482-84. The alleged failure wouldn't be corrected by paying back to Plaintiffs an overcharge (as provided by subsection (a)), or by sending Plaintiffs a written acknowledgement about the amount of the lien (subsection (b)), or by modifying the amount of the loan (subsection (c)), or by delivering Plaintiffs new loan documents (subsection (d)), or by abating interest accrual (subsection (e)). Defendants could perform “any or all” of those measures “yet still not correct the underlying deficiency.” Id. at 481 (emphasis in original).

Nor can Plaintiffs fall back on subsection (f)'s corrective measure, which allows a lender to offer to refinance and pay the borrower a lump sum of $1,000. Like here, it was undisputed in Garofolo that none of the specific corrective measures could correct the lender's failure to deliver the release of lien. But the plaintiff argued that the lender could have offered a $1,000 refund and a refinancing under subsection (f), and its failure to do so resulted in forfeiture. The dissenting justices agreed; they would have held that every constitutional violation could result in forfeiture because every constitutional violation can at least be cured by the catch-all measure in subsection (f). Id. at 487 (Boyd, J., dissenting).

But the supreme court held otherwise: although subsection (f)'s refinancing cure is “arguably open-ended,” it “cannot apply to every deficiency not addressed by the other five corrective measures” because forfeiture “still assumes” that performance will “actually correct” the underlying complaint. Id. at 483 (emphasis in original); see also Staub, 2026 WL 1500941, at *5. Neither of the two measures required by subsection (f) would have actually corrected the lender's constitutional violation: offering to refinance would be futile because the loan had already been fully paid, and giving the plaintiff a $1,000 refund “does nothing to provide her with a release of lien.” Garofolo, 497 S.W.3d at 484. Forfeiture was therefore not available. Id. Here too, giving Plaintiffs $1,000 does nothing to change where the home equity loan was closed four years ago. Defendants' alleged failure to do so therefore cannot result in a complete forfeiture of the home equity loan.²

Plaintiffs argue that Garofolo doesn't control here because they still owe on their loan. We decline to cabin Garofolo in that way. Indeed, the Southern District rejected forfeiture under exactly the circumstances here in Houston v. Federal National Mortgage Association, No. 25-CV-0538, 2026 WL 407958, at *6 (S.D. Tex. Feb. 13, 2026). An after the fact payment of $1,000 and offer to refinance cannot cure “the original failure” to close the loan at a proper location, even when the plaintiffs still owed on their loan. Id. The Fifth Circuit likewise rejected a forfeiture claim for the wrong closing location—even when the plaintiff still owed on her loan—because section 50(a)(6)(N) is not “an offensive means to receive a free home.” See Dill, 2022 WL 1532634, at *1 (citing Garofolo, 497 S.W.3d at 482). We agree with those opinions applying Garofolo. The supreme court's analysis calls on us to weigh the problem against the corrective measures—not simply to determine whether the plaintiff has paid off his home equity loan.

However, as in Garofolo, Plaintiffs can still bring a breach of contract claim if they are able to show some actual damages caused by the alleged constitutional violation here—other than forfeiture. See 497 S.W.3d at 484. Accordingly, they should be afforded an opportunity to amend their pleadings to attempt to make that showing. See Miranda, 133 S.W.3d at 226-27. If they cannot, then their breach of contract claim should be dismissed.

D. Quiet title

Finally, Plaintiffs pleaded a quiet title claim asserting that Defendants' lien is “void and unenforceable due to uncured violations of the Texas Constitution.” To prevail on this claim, Plaintiffs must prove that (1) they have an interest in a specific property, (2) a claim by Defendants affects title to the property, and (3) Defendants' claim, though facially valid, is invalid or unenforceable. Kapur v. U.S. Bank Nat'l Ass'n, 691 S.W.3d 663, 667 (Tex. App.—Houston [14th Dist.] 2024, pet. denied). Again, we review only for ripeness and standing, not for Plaintiffs' eventual ability to prove a quiet title claim.

Defendants argue that Plaintiffs' quiet title claim isn't ripe because they have not initiated foreclosure. But this argument ignores section 50(c), which states that “[n]o ․ lien on the homestead shall ever be valid unless it secures a debt described by this section[.]” Tex. Const. art. XVI, § 50(c) (emphasis added). Interpreting this section in Wood, the supreme court held that “[a] lien that was invalid from origination remains invalid until it is cured.” 505 S.W.3d at 551; see also Tex. Co. v. Davis, 254 S.W. 304, 309 (Tex. 1923) (“since the injury from a cloud on the title to real estate is continuing, the cause of action for its removal is likewise continuing”); Rueda v. Fed. Home Loan Mortg. Corp., Civil Action No. 4:24-CV-04253 (S.D. Tex. Mar. 31, 2026) (slip op.) (“The existence of an allegedly invalid lien on real property constitutes a present, justiciable controversy.”). Accordingly, Plaintiffs' quiet title claim is ripe for adjudication even in the absence of a foreclosure. See, e.g., Wood, 505 S.W.3d at 551.

CONCLUSION

We affirm the trial court's order granting Defendants' plea to the jurisdiction with respect to Plaintiffs' declaratory judgment claim. We reverse the trial court's order with respect to Plaintiffs' breach of contract and quiet title claims and remand for further proceedings in accordance with this opinion.

CONCURRING OPINION TO THE SUBSTITUTE MAJORITY OPINION

I concur with the court's judgment because we are following our precedent. I write separately to question whether the Texas Supreme Court effectively overruled our precedent in Staub v. BBVA USA, — S.W.3d —, 2026 WL 1500941 (Tex. 2026). This is what appellants argue on rehearing and the majority does not directly address the issue.

In Staub, the Supreme Court gave an example ¹ of how subsection (f) could cure a constitutional violation. The court noted:

For example, Section 50(a)(6)(M)(i) requires a twelve-day cooling off period between application and closing. The refinancing cure in (f) provides a breaching lender the ability to start over with the loan and comply with the twelve-day cooling off period.

Id. at *5.

Appellants argue that there is no material difference between the twelve-day cooling off period and the requirement of closing at a lawyer's office. Appellants then argue that this example in Staub shows that subsection (f) does apply to the failure to close at a lawyer's office. Appellees try to distinguish the two constitutional requirements, but I cannot see any material difference. Both are pre- origination requirements. Both are designed to protect the borrower. Both could arguably be cured by starting over with a new closing.

But the example in Staub does not contain any details—key to the example is how long the “start over” provision could truly provide a meaningful cure: within a few weeks, within a month, over four years after the loan? Certainly a borrower who has not made a payment yet might want to have a “start over” to reconsider the loan. At that point in time, the money is easy to repay to the lender and new terms might be added to the loan or the borrower could decide not to proceed with the loan.

But under the facts of our case, where the notice was sent four years after the loan, how could the “start over” provide any meaningful cure? The borrowers have had the advantage of the loan for four years. They have timely made payments. The borrowers in our case do not want a new loan—in fact their interest rate was much lower at the time of the initial loan than it was when they sent their notice of violation. They did and do want their $1000 payment in (f). Having failed to get that when they sent notice, they now seek forfeiture.

Is that what the example in Staub really means? Maybe it does, but I am not sure and therefore follow our own court precedent and conclude that the start over provision in (f) cannot provide a cure four years after the loan.

CONCURRING OPINION TO THE SUBSTITUTE MAJORITY OPINION

This case presents a question never decided by the supreme court. We think the answer is governed by the court's holding in Garofolo v. Ocwen Loan Servicing, L.L.C., 497 S.W.3d 474, 479 (Tex. 2016)—recently reaffirmed in Staub v. BBVA USA, __ S.W.3d __, 2026 WL 1500941, at *4 (Tex. May 29, 2026)—and we have endeavored to apply those precedents faithfully. Nonetheless, the question is of such importance that I write separately to urge the court to grant a petition for review, if one is filed, to consider it.

FOOTNOTES

1.   Federal Home Loan Mortgage Corporation is the current owner of the loan. Rocket Mortgage, LLC was the original loan servicer; Nationstar Mortgage LLC d/b/a/ Mr. Cooper is the current loan servicer.

2.   The supreme court issued its opinion in Staub, 2026 WL 1500941, shortly after we issued our previous memorandum opinion. It concluded that the Texas Constitution's forfeiture remedy was not available for a breach of contract claim stemming from a violation of the loan agreement's terms; rather, forfeiture is available only for constitutional violations and only if one of the six corrective measures listed in the constitution would “actually correct” the violation. Id. at *3-4 (quoting Garofolo, 497 S.W.3d at 483). It also reiterated Garofolo's holding that subsection (f) “ ‘cannot apply to every deficiency not addressed by the other five corrective measures.’ ” Id. at *5. Because subsection (f) does not actually correct the alleged violation here, forfeiture is not available to Plaintiffs.

1.   This holding was not essential to the result in Staub and could be considered judicial dicta. However, we are required to follow Supreme Court judicial dicta.

Katy Boatman Justice