Janos Farkas v. Wells Fargo Bank, N.A. And Brice Vander Linden & Wernic, P.C. N/K/A Buckley Madole, P.C.

ACCEPTED

03-14-00716-CV

4954793

THIRD COURT OF APPEALS

AUSTIN, TEXAS

4/20/2015 2:40:14 PM

JEFFREY D. KYLE

CLERK

No. 03-14-00716-CV

_____________________________________ FILED IN

3rd COURT OF APPEALS

AUSTIN, TEXAS

In the Third Court of Appeals 4/20/2015 2:40:14 PM

JEFFREY D. KYLE

_____________________________________ Clerk

JANOS FARKAS,

Appellant,

V.

WELLS FARGO BANK, N.A. AND BRICE, VANDER LINDEN & WERNICK, P.C.

N/K/A BUCKLEY MADOLE, P.C.,

Appellees.

_____________________________________

On Appeal from Cause No. D-1-GN-11-003692

201st District Court, Travis County, Texas

Hon. Lora J. Livingston, Judge Presiding

BRIEF OF APPELLEE WELLS FARGO BANK, N.A.

Susan A. Kidwell Robert T. Mowrey

State Bar No. 24032626 State Bar No. 14607500

skidwell@lockelord.com rmowrey@lockelord.com

B. David L. Foster LOCKE LORD LLP

State Bar No. 24031555 2200 Ross Avenue, Suite 2200

dfoster@lockelord.com Dallas, Texas 75201

John W. Ellis 214-740-8000 (Telephone)

State Bar No. 24078473 214-740-8800 (Facsimile)

jellis@lockelord.com

LOCKE LORD LLP

600 Congress Avenue, Suite 2200

Austin, Texas 78701

512-305-4700 (Telephone)

512-305-4800 (Facsimile)

ATTORNEYS FOR WELLS FARGO BANK, N.A.

TABLE OF CONTENTS

Page

Index of Authorities ..................................................................................................iv

Statement of Facts ...................................................................................................... 1

Summary of the Argument......................................................................................... 4

Argument.................................................................................................................... 6

I.  The Trial Court Did Not Abuse Its Discretion in Overruling Farkas’s

Objections to Wells Fargo’s Summary-Judgment Evidence........................... 6

A.  The trial court did not abuse its discretion in overruling

objections to the declaration of Michael Dolan. ................................... 7

B.  Farkas waived any complaint about the remaining declarations. ....... 11

C.  Conclusory assertions cannot establish harm...................................... 12

II.  The Trial Court Did Not Err in Granting Summary Judgment on

Farkas’s Claim for Violations of the Texas Constitution. ............................. 14

A.  The requirements of § 50(a)(6) only apply to “new extensions

of credit.” ............................................................................................. 14

B.  Farkas’s constitutional claims fail, as a matter of law, because

the alleged “breaches” of the DOT are not alleged

constitutional violations. ..................................................................... 17

C.  The trial court’s judgment may also be affirmed on no-evidence

grounds. ............................................................................................... 22

III.  The Trial Court Did Not Err in Granting Summary Judgment on

Farkas’s Claim for Violations of the Texas Debt Collection Act. ................ 24

IV.  The Trial Court Did Not Err in Granting Summary Judgment on

Farkas’s Fraudulent-Lien Claim. ................................................................... 27

ii

Prayer ....................................................................................................................... 31

Certificate of Compliance ........................................................................................ 33

Certificate of Service ............................................................................................... 33

iii

INDEX OF AUTHORITIES

Page(s)

CASES

Anderson v. Nat’l City Mortg.,

No. 3:11-CV-1687-N, 2012 WL 612562 (N.D. Tex. Jan. 17, 2012) ................... 8

Bierwirth v. BAC Home Loans Servicing, L.P.,

No. 03-11-00644-CV, 2012 WL 3793190 (Tex. App.—Austin Aug. 30,

2012, pet. denied) (mem. op.) ............................................................................. 29

Cornish v. Washington Mut. Bank, FA,

No. 02-06-400-CV, 2007 WL 2285478 (Tex. App.—Fort Worth Aug. 9,

2007, pet. denied)................................................................................................ 11

Farkas v. Aurora Loan Servs., LLC,

No. 05-12-01095-CV, 2013 WL 6198344 (Tex. App.—Dallas Nov. 26,

2013, pet. denied).................................................................................................. 9

First Am. Title Ins. Co. v. Strayhorn,

169 S.W.3d 298 (Tex. App.—Austin 2005), aff’d 258 S.W. 3d 627

(Tex. 2008) .......................................................................................................... 22

Golden v. Wells Fargo Bank, N.A.,

557 Fed. App’x 323 (5th Cir. Feb. 20, 2014) ..................................................... 28

In re J.P.B.,

180 S.W.3d 570 (Tex. 2005) ................................................................................ 6

Jaimes v. Fed. Nat’l Mortg. Ass’n,

930 F.Supp.2d 692 (W.D. Tex. 2013) ................................................................ 28

Jones v. JP Morgan Chase Bank, N.A.,

No. 4:13-CV-456, 2014 WL 2996673 (E.D. Tex. July 3, 2014) ........................ 28

Kerlin v. Arias,

274 S.W.3d 666 (Tex. 2008) ............................................................................ 8, 9

LaSalle Bank Nat’l Ass’n v. White,

246 S.W.3d 616 (Tex. 2007) ........................................................................ 16, 20

iv

Lassberg v. Barrett Daffin Frappier Turner & Engel, L.L.P.,

No. 4:13-CV-577, 2015 WL 123756 (E.D. Tex. Jan. 8, 2015) .......................... 28

Liberty Mut. Ins. Co. v. Griesing,

150 S.W.3d 640 (Tex. App.—Austin 2004, pet. dism’d w.o.j.)......................... 26

Marsh v. JPMorgan Chase Bank, N.A.,

888 F. Supp. 2d 805 (W.D. Tex. 2012) .............................................................. 30

Perdomo v. Fed. Nat’l Mortg. Ass’n,

No. 3:11-CV-734-M, 2013 WL 1123629 (N.D. Tex. Mar. 18, 2013) ............... 28

Pickett v. Tex. Mut. Ins. Co.,

239 S.W.3d 826 (Tex. App.—Austin 2007, no pet.) .......................................... 22

Rockwall Commons Assocs., Ltd. v. MRC Mortg. Grantor Trust I,

331 S.W.3d 500 (Tex. App.—El Paso 2010, no pet.) ........................................ 25

Seaprints, Inc. v. Cadleway Props., Inc.,

446 S.W.3d 434 (Tex. App.—Houston [1st Dist.] 2014, no pet.) ...................... 11

Sims v. Carrington Mortg. Servs., L.L.C.,

440 S.W.3d 10 (Tex. 2014)...............................................................14, 15, 20, 23

Star-Telegram, Inc. v. Doe,

915 S.W.2d 471 (Tex. 1995) .............................................................................. 22

Steptoe v. JPMorgan Chase Bank, N.A.,

No. 01-14-00813-CV, 2015 WL 1263128, at *3 (Tex. App.—Houston

[1st Dist. Mar. 19, 2015, no pet. h.) ........................................................18, 19, 26

Stringer v. Cendant Mortg. Corp.,

23 S.W.3d 353 (Tex. 2000)...........................................................................14, 20

Superior Energy Servs., Inc. v. Sonic Petroleum Servs., Ltd.,

328 S.W.3d 623 (Tex. App.—Eastland 2010, no pet.) ......................................... 8

Tex. Dep’t of Transp. v. Able,

35 S.W.3d 608 (Tex. 2000)................................................................................... 7

Vincent v. Bank of Am., N.A.,

109 S.W.3d 856 (Tex. App.—Dallas 2003, pet. denied).................................... 16

v

Voice of the Cornerstone Church Corp. v. Pizza Prop. Partners,

160 S.W.3d 657 (Tex. App.—Austin 2005, no pet.) ..............................22, 24, 29

Wells Fargo Bank, N.A. v. Robinson,

391 S.W.3d 590 (Tex. App.—Dallas 2012, no pet.) ..............................16, 17, 23

CONSTITUTIONAL PROVISIONS

TEX. CONST. art. XVI, § 50 ...................................................................................... 14

TEX. CONST. art. XVI, § 50(a)(6) ......................................................................passim

TEX. CONST. art. XVI, § 50(a)(6)(D) .............................................................3, 16, 18

TEX. CONST. art. XVI, § 50(a)(6)(I) ......................................................................... 16

TEX. CONST. art. XVI, § 50(a)(6)(Q)(x) .............................................................15, 22

TEX. CONST. art. XVI, § 50(k) ................................................................................. 18

TEX. CONST. ART. XVI, § 50(t) ............................................................................. 2, 18

STATUTES

TEX. CIV. PRAC. & REM. CODE § 12.001(d) ............................................................. 28

TEX. CIV. PRAC. & REM. CODE § 12.002............................................................ 28, 30

TEX. CIV. PRAC. & REM. CODE § 12.002(a) ............................................................. 29

TEX. CIV. PRAC. & REM. CODE § 12.002(a)(2) ........................................................ 30

TEX. FIN. CODE § 31.002(a)(34)............................................................................... 15

TEX. FIN. CODE § 392.001. ....................................................................................... 25

TEX. FIN. CODE § 392.403(a)(2)............................................................................... 27

vi

RULES

TEX. R. APP. P. 38.1(i).............................................................................................. 25

TEX. R. APP. P. 38.2(1)(B) ......................................................................................... 1

TEX. R. APP. P. 44.1 ................................................................................................... 7

Tex. R. Civ. P. 166a(c).........................................................................................7, 25

TEX. R. CIV. P. 166a(f) .......................................................................................7, 8, 9

TEX. R. CIV. P. 735.1 ................................................................................................ 18

TEX. R. CIV. P. 735.3 ................................................................................................ 18

TEX. R. CIV. P. 736 .........................................................................................3, 18, 26

TEX. R. CIV. P. 736.11(a) ........................................................................................... 4

TEX. R. CIV. P. 736.11 (c) .......................................................................................... 4

TEX. R. EVID. 801(d) .................................................................................................. 7

vii

TO THE HONORABLE THIRD COURT OF APPEALS:

After defaulting on a home-equity loan, Appellant Janos Farkas filed the

underlying lawsuit to prevent Appellee Wells Fargo Bank, N.A., from obtaining an

expedited court order to foreclose on his property. Although he succeeded in

delaying foreclosure, he was unable to withstand summary judgment.

Farkas’s brief essentially repeats his response to Wells Fargo’s motion (and

his objections to some of Wells Fargo’s summary-judgment evidence). Those

arguments were properly rejected by the trial court, so they provide no basis for

relief on appeal. The trial court’s judgment should be affirmed in its entirety.

STATEMENT OF FACTS

Farkas’s “statement of undisputed facts” is incomplete. It also contains a

number of inaccurate characterizations about documents in the record.

Accordingly, Wells Fargo provides its own statement. See TEX. R. APP. P.

38.2(1)(B).

On January 11, 2007, Farkas executed an Account Agreement (CR:47-61)

and a Texas Deed of Trust (CR:70-81) securing a home equity line of credit in the

principal amount of $103,441.00. The Account Agreement and the Deed of Trust

will be collectively referred to as the “Loan Documents.” The Loan Documents

define the “Borrower” as “Janos Farkas” and the “Lender” as “Wells Fargo Bank,

N.A.” (CR:47, 70.) In accordance with Texas law, the Loan Documents state that

they relate to “an extension of credit as defined by section 50(a)(6) and 50(t),

Article XVI of the Texas Constitution.” (Id.)

The Deed of Trust (“DOT”) securing the loan provides that “Borrower will

be in default if (1) any payment required by the Debt Instrument or this Security

instrument is not made when it is due . . . .” (CR:78.) In the event of a default, the

DOT requires Wells Fargo to provide Farkas with notice before invoking remedies

of acceleration and foreclosure. (CR:78-79.) The notice must specify: “(a) the

default; (b) the action required to cure the default; (c) a date, not less than 30 days

from the date the notice is given to Borrower, by which the default must be cured;

and (d) that failure to cure the default on or before the date specified in the notice

will result in acceleration of the sums secured by this Security Instrument and sale

of the Property.” (CR:79.) In accordance with Texas law, the DOT also states that

“[t]he lien evidenced by this Security Instrument may be foreclosed upon only by a

court order.” (Id.)

On April 21, 2011, Wells Fargo, through its foreclosure counsel (Brice,

Vander Linden & Wernick, P.C.), sent Farkas a “Notice of Default and Intention to

Accelerate.” (CR:87.) In accordance with the DOT, the notice states that (a) “the

loan is in default for failure to make the regular monthly payments required by the

2

Note and Deed of Trust”; (b) the amount required to cure the default1 and the

address to which payment should be made; (c) the default must be cured “within

thirty (30) days of the date of this notice”; and (d) if the default is not cured by that

date, “the Note will be accelerated and all sums secured by the Deed of Trust will

be declared to be immediately due and payable.” (Id.)

Instead of curing his default, Farkas sent a letter “request[ing] a validation of

debt under the Fair Debt Collection Practices Act stating the owner of the debt

(creditor) with its address.” (CR:200.) Wells Fargo provided Farkas with the

current amount to cure the default ($19,604.23), the current amount to pay off the

loan ($123,127.31), and the lender’s name and address. (CR:89, 203-04.) Farkas

did not remit either amount, so on June 23, 2011, Well Fargo’s foreclosure counsel

sent Farkas notice that the debt was being accelerated. (CR:90.)

In September 2011, as permitted by the DOT (CR:79) and Rule 736 of the

Texas Rules of Civil Procedure, Wells Fargo applied for an expedited “court order

allowing foreclosure of a lien under Tex. Const. Art. XVI, Section 50(a)(6)(D).”

(See CR:92.) But, before Wells Fargo could obtain an order, Farkas filed the

underlying lawsuit challenging Wells Fargo’s ability to foreclose. (See CR:3.)

Farkas’s filing of an independent lawsuit automatically stayed Wells Fargo’s Rule

1

As of March 22, 2011, the amount was $2,013.30. (CR:87.) However, the notice states that

“the amount required to cure the default on the day you choose to pay may be greater.” (Id.)

3

736 proceeding, which was subsequently dismissed See TEX. R. CIV. P. 736.11(a),

(c).

Wells Fargo moved for traditional and no-evidence summary judgment on

all of Farkas’s claims. (See CR:15.) Brice, Vander Linden & Wernick, P.C.

(“Brice”), which was also named as a defendant, did the same. (CR:343.) Farkas

filed his own motion for partial summary judgment, and attached many of the same

documents filed in support of Wells Fargo’s motion. (See CR:173.) He also

objected to some of Wells Fargo’s summary-judgment evidence. (CR:505.)

After considering the motions, the responses, the pleadings, the arguments of

counsel, and “all other matters properly before the Court,” the trial court granted

Wells Fargo’s and Brice’s motions, denied Farkas’s motion, overruled Farkas’s

objections to the evidence, and entered a final judgment that Farkas take nothing

on his claims. (CR:604-05.) This appeal ensued. (CR:608.)

SUMMARY OF THE ARGUMENT

1. Objections to Summary-Judgment Evidence: Farkas cannot cite any

legal authorities to support his contention that the trial court abused its discretion in

overruling groundless objections to some of Wells Fargo’s summary-judgment

evidence. So he relies on unsupported assertions that run afoul of the following

principles:

 Statements in a business-records affidavit are not “hearsay”;

4

 A judgment cannot “turn” on “irrelevant” statements, so complaints

about them cannot establish reversible error;

 Statements based on personal knowledge need not be confirmed by

documentary evidence;

 “Inconsistencies” between the amounts required to cure a default and the

amounts required to pay off a loan at different points of time do not require striking

the evidence;

 Generalized objections – unsupported by arguments based on legal

authorities or citations to the record – are insufficient to preserve error; and

 Conclusory assertions that unproven errors “probably resulted in an

improper judgment” are also insufficient to preserve error.

2. The Constitutional Claim: Farkas’s claim that Wells Fargo violated

Article XIV, § 50(a)(6) of the Texas Constitution is premised on a false theory.

None of the alleged “violations” relate to any constitutional requirements, so

Farkas’s claim fails as a matter of law. The trial court’s judgment may also be

affirmed on no-evidence grounds.

3. The Texas Debt Collection Act Claim: Farkas failed to negate all

grounds for summary judgment on his TDCA claim. That, by itself, requires that

the judgment be affirmed. Farkas also waived any complaint on this issue by

failing to provide a cognizable legal argument supported by citations to authority

5

and the record. Finally, even if considered, Farkas’s argument should be rejected

as contrary to the record and unsupported by the law.

4. The Fraudulent Lien Claim: Farkas makes little effort to salvage his

fraudulent-lien claim. His two-page “argument” contains no citations to the

record, no legal argument supported by authorities, and fails to negate all grounds

for summary judgment. His argument also fails on the merits. A notice of default

is not a “lien,” and Farkas’s hyper-technical complaints about statements in the

notice neither constitute fraud nor caused any damages. Because his fraudulent-

lien claim fails as a matter of law, it comes as no surprise that Farkas cannot cite to

any evidence to support multiple elements that were challenged below.

In short, the judgment should be affirmed in its entirety as demonstrated

more fully below:

ARGUMENT

I. The Trial Court Did Not Abuse Its Discretion in Overruling Farkas’s

Objections to Wells Fargo’s Summary-Judgment Evidence.

Farkas reveals the weakness of his appeal by leading with an argument that

the trial court erred in overruling objections to some of Wells Fargo’s summary-

judgment evidence. (See Br. at 9-17.) But, by simply repeating the same

arguments the trial court rejected, Farkas fails to show how the trial court abused

its discretion. See In re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005) (reviewing

evidentiary rulings under abuse of discretion standard). Nor do his conclusory

6

assertions about harm show how “the judgment turns on the particular evidence

excluded or admitted,” as required for relief on appeal. See Tex. Dep’t of Transp.

v. Able, 35 S.W.3d 608, 617 (Tex. 2000); TEX. R. APP. P. 44.1. Farkas’s first

argument should be summarily rejected.

A. The trial court did not abuse its discretion in overruling

objections to the declaration of Michael Dolan.

In scattershot fashion, Farkas lodges various attacks on the business-records

declaration of Michael Dolan. (See Br. at 12-15.) None have any merit.

Farkas first asserts that the Dolan declaration “contains inadmissible

hearsay.” (Br. at 12.) However, “‘[h]earsay’ is a statement, other than one made

by the declarant . . . offered in evidence to prove the truth of the matter asserted.”

TEX. R. EVID. 801(d) (emphasis added). Statements by a declarant in a business-

records affidavit do not fall within this definition. That is why such affidavits are a

valid and commonly-used form of summary-judgment proof. See TEX. R. CIV. P.

166a(c), (f).

Unable to back up his novel theory of “hearsay” with any citation to

authority, Farkas’s argument quickly morphs into unsupported assertions about the

factual accuracy of two isolated statements in the affidavit. (See Br. at 12-13.) He

first complains that Dolan’s statement that “home equity loan and lines of credit

were ‘available through Wells Fargo Home Equity Group’ is misleading and

irrelevant to this proceeding.” (Br. at 13 (emphasis added).) But, because the

7

judgment cannot “turn” on an “irrelevant” statement, Farkas’s first complaint does

not concern reversible error.

Farkas also asserts that there is “zero documentation”2 to support Dolan’s

statement that “‘Wells Fargo Home Equity’ is a division of Wells Fargo Bank,

N.A.” (Br. at 13.) But Farkas cites no authority requiring statements based on

personal knowledge to be supported by documentary evidence as well. To the

contrary, the personal-knowledge requirement is satisfied when, as here, an

affidavit (i) states that it is based on personal knowledge and the facts in it are true

and (ii) shows the basis for the affiant’s personal knowledge. See TEX. R. CIV. P.

166a(f); Kerlin v. Arias, 274 S.W.3d 666, 668 (Tex. 2008).

Dolan states that he has “personal knowledge of each of the matters stated

herein, and they are true and correct.” (CR:43.) In addition, he explains the basis

for his knowledge: “I am employed as a Research and Mediation Manager for

Wells Fargo Bank, N.A. (‘Wells Fargo’). I am also the custodian of the records of

Wells Fargo. I have also personally reviewed Wells Fargo’s records regarding the

2

The record, in fact, does contain documentation to support Dolan’s statement. A letter from

“Wells Fargo Bank, N.A. Home Equity Group” states that Farkas contacted “Wells Fargo Home

Equity regarding [his] account.” (CR:64.) In addition, the Account Agreement identifies the

account as a “Wells Fargo Home Equity Account.” (CR:47.) That evidence confirms the

undisputable relationship between Wells Fargo Bank and one of its divisions, the Wells Fargo

Home Equity Group. “A division of a corporation is not a separate legal entity but the

corporation itself.” Superior Energy Servs., Inc. v. Sonic Petroleum Servs., Ltd., 328 S.W.3d

623, 631 (Tex. App.—Eastland 2010, no pet.). Similarly, a lender and a division of the lender

are “the same entity for all intents and purposes.” Anderson v. Nat’l City Mortg., No. 3:11-CV-

1687-N, 2012 WL 612562, at *1 n.1 & n.3 (N.D. Tex. Jan. 17, 2012).

8

mortgage debt at issue in the above-captioned lawsuit (the ‘Loan’).” (Id.) Dolan

also states “I am familiar with Wells Fargo’s lending and mortgage servicing

practices, including the various groups and divisions within Wells Fargo

through which it carries out those practices.” (CR:45.) These statements

are plainly sufficient to satisfy the applicable legal standard. See T EX. R. CIV.

P. 166a(f); Kerlin, 274 S.W.3d at 668.

Farkas reveals nothing but desperation when he tries to question Dolan’s

credibility. (See Br. at 13.) Dolan’s statement that he has been “employed by

Wells Fargo and its predecessor institutions” (i.e., banks acquired by Wells Fargo

through various mergers) for “28 years” (CR:44) is not a claim that he started

working for Wells Fargo more than 160 years ago, as Farkas tries to suggest. (Br.

at 13.) Moreover, nothing in Texas law requires a business-records custodian to

specify the exact number of years he has worked for his employer. See TEX. R.

CIV. P. 166a(f); Kerlin, 274 S.W.3d at 668. Thus, contrary to Farkas’s belief, the

absence of such information does not cast any doubt on Dolan’s personal

knowledge.

The Dallas Court of Appeals recently rejected similar challenges to a similar

affidavit in a similar appeal filed by Farkas. Farkas v. Aurora Loan Servs., LLC,

No. 05-12-01095-CV, 2013 WL 6198344, at *3 (Tex. App.—Dallas Nov. 26,

2013, pet. denied). There, as here, “Farkas d[id] not cite to any evidence in the

9

record controverting the appellees’ evidence.” Id. There, as here, his

“unsupported assertions that [an] affidavit is factually inaccurate [were]

insufficient” to show reversible error. Id. And there, as here, the trial court

properly considered the challenged affidavit as summary-judgment evidence. See

id.

Farkas demonstrates utter confusion in arguing that Dolan’s declaration

contains “inconsistencies when compared to . . . other [summary-judgment]

evidence.” (See Br. at 14 (emphasis added).) The alleged “inconsistencies” are

simply differences between the “amount required to cure Plaintiff’s default” on

March 22, 2011 ($2,013.30) versus June 20, 2011 ($19,604.23), and differences

between those amounts and the amount required to pay off the entire loan

($123,127.31 as of June 20, 2011). (Compare CR:45, with CR:87, 203, 204.)

Farkas appears to assume that the “amounts owed” should have remained

constant over time. But he ignores the distinction amounts to cure the default and

amounts to pay off the loan. He also ignores the impact of interest and other

expenses (such as property taxes and attorneys’ fees related to foreclosure

proceedings) that accrue over time. In short, the longer Farkas waited to cure his

default, the more expensive any available cure became. That Farkas would point

to these alleged “inconsistencies” as evidence of reversible error only confirms that

he has no viable grounds to challenge the trial court’s ruling.

10

B. Farkas waived any complaint about the remaining declarations.

Resorting to hyperbole, Farkas transforms the alleged “inconsistencies” into

“wildly varying accounts as to the amounts allegedly owed.” (Br. at 15.) Then,

without any citation to the record or supporting legal authorities, he claims that

“[t]he conflicting portions of all of these declarations should be struck due to

inconsistencies.” (Id. (emphasis added).3) This two-sentence “argument” has

multiple defects, any one of which is fatal:

First, Farkas’s generalized objection to “all of these declarations” (Br. at 15)

“fails to identify specific objectionable portions of the [declarations] or explain

why any particular passages should be disregarded as [conflicting].” See

Seaprints, Inc. v. Cadleway Props., Inc., 446 S.W.3d 434, 442 (Tex. App.—

Houston [1st Dist.] 2014, no pet.); see also Cornish v. Washington Mut. Bank, FA,

No. 02-06-400-CV, 2007 WL 2285478, at *3 (Tex. App.—Fort Worth Aug. 9,

2007, pet. denied) (“the part[y] objecting to an affidavit must identify the specific

statements in the affidavit that are objectionable and state why they are

objectionable”). Farkas’s complaints about unidentified but allegedly “conflicting

portions” of the declarations are “inadequate” and, therefore, insufficient to

preserve error. See Seaprints, 446 S.W.3d at 442.

3

This statement appears to be referencing the Declarations of Sammy Hooda (CR:84) and B.

David L. Foster (CR:150).

11

Second, the declarations do not contain any “conflicting” statements.

Although Farkas complains about “wildly varying accounts as to amounts

allegedly owed,” neither the Hooda nor the Foster declaration includes any

statement about amounts allegedly owed. (See CR:84-86, 150-51.) Only the

Dolan declaration contains such statements, so there is not conflict between “all of

these declarations.” Moreover, the amounts referenced in the Dolan declaration,

which states that “[t]he amount required to cure Plaintiff’s default on the Loan as

of March 22, 2011 was $2,013.30” and “[t]he amount required to cure Plaintiff’s

default on the Loan as of July 25, 2011 was $4,002.64” (CR:45) are consistent with

documentary evidence in the summary-judgment record. (CR:87&148; CR:69.)

Third, although the documentary evidence attached to the declarations

shows variations in the amounts required to cure the default and the amounts

required to pay off the loan at different times, those variations have already been

explained. Farkas’s unfounded assumption that the “amounts owed” should have

remained constant over time is unsupported by the record and defies common

sense.

C. Conclusory assertions cannot establish harm.

Recognizing his burden to show that the alleged error “probably resulted in

an improper judgment,” Farkas asserts that, “[i]f the Declaration of Michael Dolan

were struck, Wells_Bank’s MSJ would have to be denied.” (Br. at 15.) But Farkas

12

later concedes that the ruling on his objections “is not necessary nor dispositive of

any ruling on Wells_Bank’s and Brice’s summary judgment motions concerning

TDCA claims.” (Br. at 27.) And he never explains why the ruling is “necessary

and dispositive” of his other claims. Nor could he.

Wells Fargo presented multiple grounds for traditional and no-evidence

summary judgment. (See CR:19-40.) Obviously, Wells Fargo did not have to

present any evidence to prevail on its no-evidence grounds. For that reason alone,

the judgment does not “turn” on the evidentiary rulings and, therefore, Farkas

cannot show that the trial court’s rulings constitutes reversible error.

In addition, Farkas cannot show that any of the traditional grounds require

proof of the allegedly “disputed” (and entirely immaterial) facts over which Farkas

obsesses. As explained more fully below, they do not. A judgment cannot turn on

immaterial facts.

Finally, even if the Dolan affidavit were stricken in its entirety, evidence

attached to his affidavit is duplicated elsewhere in the record.4 Because those

documents are sufficient to support Wells Fargo’s traditional grounds, Farkas

cannot show that striking the Dolan declaration would have had any effect on the

outcome.

4

For example, the Account Agreement appears at CR:116 and CR:272, and documents

establishing various reinstatement and payoff amounts appear at CR:140-43 and 198-213.

13

To sum up: Farkas has not shown that the trial court abused its discretion by

denying his objections to some of Wells Fargo’s summary-judgment evidence.

Nor has Farkas shown how the alleged error was harmful. His complaints about

the trial court’s evidentiary rulings provide no basis for reversal.

II. The Trial Court Did Not Err in Granting Summary Judgment on

Farkas’s Claim for Violations of the Texas Constitution.

Farkas’s theory that Wells Fargo violated the Constitution by breaching

terms in the Loan Documents (Br. at 17-23) is pure fiction. The alleged

“violations” do not involve conduct that is regulated by the Constitution, so they

could never support a constitutional claim. Nor is there any evidence to support

Farkas’s repeated assertions that Wells Fargo failed to comply with the Loan

Documents. False assertions about imaginary “violations” cast no doubt on the

trial court’s judgment.

A. The requirements of § 50(a)(6) only apply to “new extensions of

credit.”

“[H]ome equity loans are subject to the requirements of Article XVI, Section

50 of the Texas Constitution.” Sims v. Carrington Mortg. Servs., L.L.C., 440

S.W.3d 10, 11 (Tex. 2014). “Section 50(a)(6), in its totality, establishes the terms

and conditions a home-equity lender must satisfy to make a valid loan.” Stringer

v. Cendant Mortg. Corp., 23 S.W.3d 353, 356 (Tex. 2000). The detailed

14

constitutional requirements, however, only apply to “new extension[s] of credit.”

Sims, 440 S.W.3d at 17.

The term “extension of credit” refers to “‘direct or indirect advances of

money . . . to a person that are conditioned on the obligation of the person to repay

. . . .’” Id. at 16 n.22 (quoting TEX. FIN. CODE § 31.002(a)(34)). If a transaction

does “not involve the satisfaction or replacement of the original note, an

advancement of new funds, or an increase in the obligations created by the original

note,” then “it is not a new extension of credit that must meet the requirements of

Section 50.” Id. at 17.

If, in making a new extension of credit, a lender fails to comply with section

50, it has 60 days to cure its failure by taking specified actions that include

returning any overcharges paid by the owner, sending written confirmation that the

loan terms (e.g., interest rates) are only valid to the extent they comply with

constitutional requirements, or modifying the loan agreement to comply with

constitutional requirements. See TEX. CONST. art. XVI, § 50(a)(6)(Q)(x). Because

the constitutional requirements only relate to new extensions of credit, the methods

of cure necessarily involve taking actions to ensure that the extension of credit at

issue, i.e., the initial loan agreement, complies with the law. See id. If a lender

“fails to correct [its] 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,” then

15

the lender or holder “shall forfeit all principal and interest of the extension of

credit.” Id.

For example, § 50(a)(6)(I) “prohibits home-equity loans from being ‘secured

by homestead property designated for agricultural use.’” LaSalle Bank Nat’l Ass’n

v. White, 246 S.W.3d 616, 619 (Tex. 2007) (quoting TEX. CONST. art. XVI, §

50(a)(6)(I)). Thus, a home-equity loan secured by property designated for

agricultural use violates the Constitution and is subject to forfeiture. Id.

The Constitution also “requires that a home equity note be secured by a lien

that may only be foreclosed by court order.” Wells Fargo Bank, N.A. v. Robinson,

391 S.W.3d 590, 595 (Tex. App.—Dallas 2012, no pet.) (discussing TEX. CONST.

art. XVI, § 50(a)(6)(D)). However, as long as a deed of trust requires a court order

for foreclosure, it complies with constitutional requirements. Id. In cases

involving complaints about how foreclosure was conducted, the constitutional

remedy of forfeiture is not appropriate. See id.

In short, “forfeiture is only available for violations of constitutionally

mandated provisions of the loan documents.” Vincent v. Bank of Am., N.A., 109

S.W.3d 856, 862 (Tex. App.—Dallas 2003, pet. denied). “A borrower’s recourse

for a lender’s failure to abide by the terms of his loan agreement is to assert

traditional tort and breach of contract causes of action,” not claims for violations of

Article XVI, § 50(a)(6) of the Texas Constitution. Robinson, 391 S.W.3d at 595.

16

B. Farkas’s constitutional claims fail, as a matter of law, because the

alleged “breaches” of the DOT are not alleged constitutional

violations.

The fatal problem that condemns Farkas’s constitutional claim is that Farkas

does not complain about any alleged violations of constitutional requirements.

Instead, he repeatedly asserts that Wells Fargo violated the DOT. (See Br. at 17-

21.) However, as a matter of law, alleged breaches of contract are not actionable

under the Constitution. See Robinson, 391 S.W.3d at 595. Moreover, Farkas’s

hyper-technical complaints about statements in a notice of default do not violate

any terms in the DOT, much less rise to the level of a constitutional violation.

1. Farkas has not alleged any constitutional violation.

Farkas has never challenged the validity of the Loan Documents. Nor has he

ever taken the position that Wells Fargo failed to satisfy any of the constitutional

requirements to make a valid loan. Instead, he bases his “constitutional” claim on

allegations that the notice of default refers to a “wrong” loan number, mentions

“non-judicial foreclosure,” and demands that Farkas cure his default “within 30

days” of the notice rather than “not less than 30 days” from the notice. (Br. at 19-

20.) There are two fundamental problems:

(i) Farkas’s complaints are groundless.

The loan number: Farkas repeatedly asserts that the notice references the

“wrong” loan number. However, the summary-judgment evidence shows that the

17

“Loan Number” on the notice of default (0999617061) is an “internal reference

number” used by Wells Fargo and Brice for their own, internal purposes. (CR:46,

86.) The undisputed fact that the notice of default makes no reference to either the

“Account Number” (650-650-4349999-1XXX) or the “reference Number”

(20063367500009) shown on the DOT is immaterial, because neither the

Constitution nor the DOT require a notice of default to include any reference to a

loan number.

The reference to “non-judicial foreclosure”: The Texas Constitution

requires a lien on a home-equity loan to “be foreclosed upon only be a court

order.” TEX. CONST. art. XVI, § 50(a)(6)(D) (emphasis added). From that

language, Farkas assumes that the reference to a “court order” means a lender is

required to pursue a “judicial foreclosure.” His assumption is false.

“Rule 736 [of the Texas Rules of Civil Procedure] provides the procedure

for obtaining a court order, when required, to allow foreclosure of a lien containing

a power of sale in the security instrument . . . securing . . . a home equity loan,

reverse mortgage, or home equity line of credit under article XVI, sections

50(a)(6), 50(k), and 50(t) of the Texas Constitution.” TEX. R. CIV. P. 735.1. A

Rule 736 court order permitting a non-judicial foreclosure is not a judicial

foreclosure. See TEX. R. CIV. P. 735.3; see also Steptoe v. JPMorgan Chase Bank,

N.A., No. 01-14-00813-CV, 2015 WL 1263128, at *3 (Tex. App.—Houston [1st

18

Dist.] Mar. 19, 2015, no pet. h.) (recognizing distinction between judicial

foreclosure and Rule 736 proceeding to obtain court order “to proceed with a non-

judicial foreclosure”). When, as here,5 the “home-equity lender has contracted for

the right of non-judicial foreclosure under a power of sale provision, [it] may

choose to pursue the special procedure found in Rule 736 to obtain an order

allowing it to proceed with a non-judicial foreclosure under the Texas Property

Code.” See Steptoe, 2015 WL 1263128, at *3. That is exactly what Wells Fargo

did when it initiated a Rule 736 proceeding to obtain the requisite court order

permitting non-judicial foreclosure. (See CR:92.) But Farkas obstructed Wells

Fargo’s efforts by filing this lawsuit and complaining about non-existent

constitutional “violations.” (See CR:3.)

The deadline: Farkas’s hyper-technical suggestion that requiring payment

within 30 days violates the DOT provision requiring payment “not less than 30

days” from notice is semantic nonsense. (See Br. at 20.) Because a 30-day

deadline is both “within” 30 days of notice and “not less than” 30 days of notice, it

complies with the DOT as a matter of law.

5

The DOT provides: “The lien evidence by this Security Instrument may be foreclosed upon

only by a court order. Lender may, at its option, follow any rules of civil procedure promulgated

by the Texas Supreme Court for expedited foreclosure proceedings related to the foreclosure of

liens under Section 50(a)(6), Article XVI of the Texas Constitution . . . .” (CR:79.)

19

(ii) Farkas’s complaints are not actionable under the

Constitution.

As explained, the Constitution focuses on the terms of the initial loan

agreement, not the manner in which a lender may enforce that agreement in the

event of a borrower’s default. See TEX. CONST. art. XVI, § 50(a)(6); Sims, 440

S.W.3d at 16 n.22. Thus, there is no language in § 50(a)(6) that pertains to notices

of default, much less any language that:

 requires a lender to include any particular type of “loan number” on the

notice (or prohibits foreclosure counsel from including its own internal

reference number on the notice);

 requires a lender to specify the type of foreclosure remedy that will be

conducted (or prohibits a lender from stating that it was asked to pursue a

“non-judicial foreclosure in accordance with the terms of the Note and

the Deed of Trust and applicable law”); or

 requires a lender to demand payment “not less than 30 days from the date

notice [of default] is given” (or prohibits a lender from demanding

payment “within 30 days of the date of this notice”).

(Contra Br. at 19-22.)

“When interpreting the Texas Constitution,” the Texas Supreme Court

“‘rel[ies] heavily on its literal text and must give effect to its plain language.’”

LaSalle Bank, 246 S.W.3d at 619 (quoting Stringer, 23 S.W.3d at 355). Applying

that principle, the Court “decline[s] to engraft [unwritten] prohibition[s] onto the

constitutional language.” Id. This Court should do the same. Because nothing in

the Constitution prohibited Wells Fargo from referencing an internal loan number,

20

pursuing non-judicial foreclosure, or demanding payment within 30 days, Farkas’s

complaints about the notice of default cannot support a constitutional claim.

2. Farkas has not even alleged facts that would support a

claim for breach of contract.

Unable to identify any constitutional requirement that was potentially

violated, Farkas asserts that Wells Fargo failed to comply with the DOT. (See Br.

at 17-21.) That unpleaded claim is not at issue. In any event, the notice of default

establishes – on its face – that it includes all information required by the DOT.

(Compare CR:79 (DOT requirements), with CR:87 (notice).) Contrary to Farkas’s

apparent belief, nothing in the DOT:

 required Wells Fargo to include any particular type of “loan number” on

its notice of default (or prohibited foreclosure counsel from including its

own internal reference number on the notice);

 required Wells Fargo to specify the type of foreclosure remedy that

would be conducted (or prohibited foreclosure counsel from making a

reference to a “non-judicial foreclosure in accordance with the terms of

the Note and the Deed of Trust and applicable law”); or

 required Wells Fargo to demand payment “not less than 30 days from

the date notice [of default] is given” (or prohibited foreclosure counsel

from demanding payment “within 30 days” of the date the notice of

default was given.

Consequently, Wells Fargo (through foreclosure counsel) could not have

“breached” the DOT by referring to an internal loan number, stating that it had

been “requested to pursue a non-judicial foreclosure,” or demanding payment

“within 30 days.” (CR:87.) As the trial court correctly concluded, Farkas’s faulty

21

constitutional theory and groundless allegations are insufficient to survive

summary judgment.

C. The trial court’s judgment may also be affirmed on no-evidence

grounds.

Implicitly recognizing his burden to negate all grounds for summary

judgment,6 Farkas falsely contends that “Wells-Bank fails to challenge specific

element of complaint regarding liability under TEX. CONST. ART. XVI,

§50(a)(6)(Q)(x).” (Br. at 23.) But again, Farkas fails to support his “argument”

with any citation to legal authorities or the record. And again, his “argument” is

premised on an invalid theory of liability.

Section 50(a)(6)(Q)(x) is the provision that specifies methods to cure a

failure to comply with requirements applicable to new extensions of credit. None

of those methods have any application here, because Farkas has never complained

that the initial extension of credit violated section 50. Although he contends that

“there is no support” for an argument that “the constitutional obligation to fulfill

the terms of extension of credit” only applies to “origination of the extension of

credit” (see Br. at 22), he ignores the Texas Supreme Court’s recent decision in

6

This Court has repeatedly recognized that, “[w]hen the trial court does not specify the basis for

its summary judgment, the appealing party must show it is error to base it on any ground asserted

in the motion.” Pickett v. Tex. Mut. Ins. Co., 239 S.W.3d 826, 840 (Tex. App.—Austin 2007, no

pet.) (citing Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995)); accord First Am.

Title Ins. Co. v. Strayhorn, 169 S.W.3d 298, 303 (Tex. App.—Austin 2005), aff’d 258 S.W.3d

627 (Tex. 2008); Voice of the Cornerstone Church Corp. v. Pizza Prop. Partners, 160 S.W.3d

657, 671 (Tex. App.—Austin 2005, no pet.). If the appellant fails to meet this burden, “the

summary judgment must be affirmed.” Voice of the Cornerstone, 160 S.W.3d at 671.

22

Sims, 440 S.W.3d at 17. That decision makes it amply clear that the requirements

in section 50 only apply to “new extensions of credit.” Id. Farkas thus spins in

circles when he asserts that “Wells_Bank had ample opportunity to cure” but

“chose not to cure.” (See Br. at 21.) Absent a violation, there is nothing to cure.

Farkas is also wrong in asserting that Wells Fargo did not allege specific no-

evidence grounds relating to his faulty constitutional theory. In its motion for

summary judgment, Wells Fargo argued:

Plaintiff has no evidence that the loan was invalid at the time of

origination or somehow later became invalid. Moreover, Plaintiff has

no evidence that any alleged violation was not cured, as no non-

judicial foreclosure sale occurred.

(CR:37.)

Farkas cannot overcome his failure to allege and present evidence of a

constitutional violation by asserting that Wells Fargo failed to cure an imaginary

violation. Farkas presented no evidence of violation in response to Wells Fargo’s

motion in the trial court, and he cites none on appeal. For this additional reason,

the trial court’s summary judgment on the constitutional claim should be affirmed.

To sum up: Farkas has never identified any constitutional requirement that

was allegedly violated. When, as here, the terms of the original extension of credit

comply with the Constitution, there is no constitutional violation. See Sims, 440

S.W.3d at 17; Robinson, 391 S.W.3d at 595. As the trial court correctly concluded,

Farkas’s “constitutional” claim fails as a matter of law. (See CR:604-05.)

23

III. The Trial Court Did Not Err in Granting Summary Judgment on

Farkas’s Claim for Violations of the Texas Debt Collection Act.

Farkas’s four-page issue on his Texas Debt Collection Act claim wrongly

assumes that the only dispute is “over whether Wells_Bank’s actions were

wrongful.” (See Br. at 24.) To the contrary, Wells Fargo moved for traditional

summary judgment on two grounds: (i) the “factual allegations” on which Plaintiff

bases his TDCA claim are conclusively disproven by the summary judgment

evidence and, therefore, “fail as a matter of law”; and (ii) “Plaintiff’s TDCA claim

is barred by the economic loss rule.” (CR:28-29.) In addition, Wells Fargo

moved for no-evidence summary judgment on multiple grounds, including two that

are particularly relevant on appeal: (i) “Plaintiff has no evidence that Wells Fargo

threatened to take action prohibited by law”; and (ii) “Plaintiff has no evidence that

the alleged violations of the TDCA caused him damages.” (CR:37-38.)

Farkas attempts to show “error” by relying on conclusory assertions that

Wells Fargo “threatened an act prohibited by law.” (Br. at 24.) He also contends

that there is “ample evidence of the conduct actionable under [the TDCA].” (Br. at

25.) But there are multiple, fatal problems with his approach.

First, when, as here, the appellant fails to negate all grounds for summary

judgment, “the summary judgment must be affirmed.” Voice of the Cornerstone,

160 S.W.3d at 671.

24

Second, Rule 38.1(i) of the Texas Rules of Appellate Procedure requires an

appellant’s brief to “contain a clear and concise argument for the contentions

made, with appropriate citations to authorities and to the record.” TEX. R. APP. P.

38.1(i). Farkas’s “argument” on the TDCA claim contains no citations to the

record – and no meaningful citations to any legal authorities.7 When, as here, a

brief fails to comply with the requirements of Rule 38.1(i), a party waives the

appellate points intended for the court’s consideration. Rockwall Commons

Assocs., Ltd. v. MRC Mortg. Grantor Trust I, 331 S.W.3d 500, 509 (Tex. App.—El

Paso 2010, no pet.).

Third, Farkas’s conclusory “argument” is contradicted by the record and the

law. His TDCA claim appears to be premised on the same unsupported allegations

he used in trying to salvage his constitutional claim – allegations that (i) “Wells

Fargo Bank, N.A.” “misrepresent[ed]” itself as “Wells Fargo Home Equity

Group”; (ii) Wells Fargo “misrepresented” the amount of Farkas’s debt; and (iii)

Wells Fargo “threatened non-judicial foreclosure of the property.” (See Br. at 26.)

The first two allegations are contradicted by the record, which may be why Farkas

omits any citations to it:

7

He does make generic references to “Tex. R. Civ. P. 166a(c)” and “TEX. FIN. CODE § 392.001,

et seq.” (See Br. at 25.)

25

(i) “‘Wells Fargo Home Equity’ is a division of ‘Wells Fargo Bank, N.A.’

and is not a separate legal entity.” (CR:45; see also CR:64 (letter from “Wells

Fargo Bank, N.A.; Home Equity Group”).) There is no competent evidence to the

contrary. Unsupported assertions are insufficient for relief on appeal. Liberty Mut.

Ins. Co. v. Griesing, 150 S.W.3d 640, 648 (Tex. App.—Austin 2004, pet. dism’d

w.o.j.).

(ii) The variations in “the amount of debt” reflect differences between the

amounts required to cure Farkas’s default versus the amounts requires to pay off

Farkas’s entire loan. (See, e.g., CR:45, 62-63, 87, 203-06.) These differing

amounts also varied over time. (See id.) There is no evidence to show support

Farkas’s theory that these variations somehow amount to “misrepresentations.”

As explained (supra at 18-19), Texas law expressly permits a lender “who

has contracted for the right of non-judicial foreclosure under a power of sale

provision [to] choose to pursue the special procedure found in Rule 736 to obtain

an order allowing it to proceed with a non-judicial foreclosure . . . .” See Steptoe,

2015 WL 1263128, at *3. Thus, the statement that foreclosure counsel “has been

requested to pursue non-judicial foreclosure process in accordance with the terms

of the Note and Deed of Trust and applicable law” (CR:87 (emphasis added)) is, as

a matter of law, not a threat to do something in violation of the law.

26

Fourth, because the “threatened” foreclosure never occurred, Farkas cannot

cite any evidence showing that he sustained actual damages as a result of the

alleged violation, as required to recover on a TDCA claim. See TEX. FIN. CODE §

392.403(a)(2).

For any or all of these reasons, the trial court’s summary judgment that

Farkas take nothing on his TDCA claim should be affirmed.

IV. The Trial Court Did Not Err in Granting Summary Judgment on

Farkas’s Fraudulent-Lien Claim.

Farkas’s final argument is largely pasted from his response to Wells Fargo’s

motion for summary judgment. (Compare Br. at 29, with CR:555.) As a result, it

suffers from some of the same fatal defects that plague his other arguments: it

contains no citations to the record, and it contains no argument, supported by

citations to legal authorities, negating all grounds for summary judgment. Those

defects, alone, are enough to condemn his point. But there are additional

problems, the most fundamental of which is that Farkas’s argument is premised on

another false theory. In short, he assumes that any document relating to a home-

equity loan (e.g., a notice of default) is a “lien” and, therefore, any alleged

“misrepresentation” in the “lien” (e.g., a reference to the “wrong” loan number)

makes the lien “fraudulent.” It is hardly surprising that he cites no legal authority

to support this remarkable proposition.

27

Under Chapter 12 of the Texas Civil Practice and Remedies Code, a “‘[l]ien’

means a claim in property for the payment of a debt and includes a security

interest.” TEX. CIV. PRAC. & REM. CODE § 12.001(d). In the mortgage context, a

deed of trust is a lien; a notice that a borrower is in default is not. See Lassberg v.

Barrett Daffin Frappier Turner & Engel, L.L.P., No. 4:13-CV-577, 2015 WL

123756, at *5 (E.D. Tex. Jan. 8, 2015); Jaimes v. Fed. Nat’l Mortg. Ass’n, 930

F.Supp.2d 692, 697 (W.D. Tex. 2013)); see also Jones v. JP Morgan Chase Bank,

N.A., No. 4:13-CV-456, 2014 WL 2996673, at *8 (E.D. Tex. July 3, 2014)

(agreeing that “the assignment, appointment of substitute trustee, and foreclosure

notices are not liens, and section 12.002 is not applicable to this case.”); Perdomo

v. Fed. Nat’l Mortg. Ass’n, No. 3:11-CV-734-M, 2013 WL 1123629, at *5 (N.D.

Tex. Mar. 18, 2013) (collecting cases holding that an a lender’s use of an

assignment, notice of foreclosure, or substitute trustee’s deed are not actionable

under Chapter 12); but see Golden v. Wells Fargo Bank, N.A., 557 Fed. App’x 323,

327 (5th Cir. Feb. 20, 2014) (unpublished) (recognizing a split in authority as to

“whether a document assigning a deed of trust constitutes a ‘lien or claim’ under

Section 12.002,” and noting that the “majority of federal district courts have held

that a document assigning a deed of trust does not qualify as a ‘lien or claim’ under

Section 12.002”) (citations omitted).8

8

As this Court has recognized: “Federal authority is persuasive here because a great amount of

28

The statute further provides, in relevant part, that:

A person may not make, present, or use a document or other record

with:

(1) knowledge that the document or other record is a fraudulent court

record or a fraudulent lien or claim against real or personal property or

an interest in real or personal property;

(2) intent that the document or other record be given the same legal

effect as a court record or document . . . evidencing a valid lien or

claim against real or personal property or an interest in real or

personal property; and

(3) intent to cause another person to suffer . . . financial injury . . . .

Id., § 12.002(a).

Without any citation to the record, Farkas accuses Wells Fargo of

“shirk[ing]” its “obligation to disprove an element” of Farkas’s claim. (See Br. at

29.) But Wells Fargo’s motion set forth several reasons – all supported by

citations to legal authorities – why Farkas’s fraudulent-lien claim fails as a matter

of law. (See CR:30-34.) Any one of those grounds is a sufficient basis upon

which to uphold the judgment. Farkas negates none, and that is fatal. See Voice of

the Cornerstone, 160 S.W.3d at 671.

As in the trial court, Farkas has no answer to Wells Fargo’s arguments that,

as a matter of law, complaints about documents used to foreclose on a lien are not

home-mortgage litigation in Texas is tried in its federal courts, applying Texas foreclosure law.”

Bierwirth v. BAC Home Loans Servicing, L.P., No. 03-11-00644-CV, 2012 WL 3793190, at *1

n.3 (Tex. App.—Austin Aug. 30, 2012, pet. denied) (mem. op.).

29

actionable under Chapter 12 if the underlying note and deed of trust are valid. (See

CR:555 (citing authorities).) So he attempts to divert the Court’s attention with

assertions that “the statute does not require recordation of a document but rather

merely making, presenting, or using the document,” and that “[e]ven a lis pendens

is actionable under TEX. CIV. PRAC. & REM. CODE § 12.002.” (Br. at 29.) But

those assertions are meaningless when, as here, the documents that allegedly

provide the basis for a Chapter 12 claim do not falsely “evidenc[e] a valid lien or

claim against real or personal property.” See TEX. CIV. PRAC. & REM. CODE

§ 12.002(a)(2). Because Farkas does not contest the validity of the underlying note

or DOT, his Chapter 12 claim fails as a matter of law. Marsh v. JPMorgan Chase

Bank, N.A., 888 F. Supp. 2d 805, 813 (W.D. Tex. 2012).

Farkas also fails to negate Wells Fargo’s no-evidence grounds for summary

judgment. Assertions about burden-shifting are no substitutes for evidence. And,

as in the trial court, Farkas cannot cite any evidence that even remotely suggests:

 “a fraudulent lien or claim [was] made, presented, or used by Defendant”;

 “Defendant had knowledge that a lien or claim made, presented, or used

was fraudulent”;

 “Defendant made, presented, or used a fraudulent lien or claim with

intent that it be given the same legal effect as a valid lien or claim”; or

30

 “Defendant made, presented, or used a fraudulent lien or claim with

intent to cause Plaintiff injury.”

(CR:38-39.)

There is no such evidence because Farkas’s fraudulent-lien claim is

premised on a false theory. For any or all of the above reasons, the trial court’s

summary judgment on the fraudulent-lien claim should be affirmed.

PRAYER

For these reasons, Appellee Wells Fargo Bank, N.A. prays that the trial

court’s take-nothing judgment be affirmed in its entirety. Wells Fargo also prays

for any additional relief to which it may be entitled.

Respectfully submitted,

LOCKE LORD LLP

By: /s/ Susan A. Kidwell

Susan A. Kidwell

State Bar No. 24032626

skidwell@lockelord.com

B. David L. Foster

State Bar No. 24031555

dfoster@lockelord.com

John W. Ellis

State Bar No. 24078473

jellis@lockelord.com

LOCKE LORD LLP

600 Congress Avenue, Suite 2200

Austin, Texas 78701

Telephone: (512) 305-4700

Facsimile: (512) 305-4800

31

Robert T. Mowrey

State Bar No. 14607500

rmowrey@lockelord.com

LOCKE LORD LLP

2200 Ross Avenue, Suite 2200

Dallas, Texas 75201

Telephone: (214) 740-8000

Facsimile: (214) 740-8800

COUNSEL FOR APPELLEE WELLS FARGO

BANK, N.A.

32

CERTIFICATE OF COMPLIANCE

I certify that the foregoing Brief of Appellee Wells Fargo Bank, N.A.

contains 7, 265 words (excluding the sections excepted under Texas Rule of

Appellate Procedure 9.4(i)(1)).

/s/ Susan A. Kidwell

Susan A. Kidwell

CERTIFICATE OF SERVICE

I certify that on April 20, 2015 a true and correct copy of the foregoing was

served by EfileTx.gov upon the following:

Mr. William D. Davis Mr. Luke Madole

bdavis@capital-ip.com luke.madole@buckleymadole.com

DAVIS & ASSOCIATES BUCKLEY MADOLE, P.C.

P. O. Box 1093 14841 Dallas Parkway, Suite 425

Dripping Springs, Texas 78620 Dallas, Texas 75254

Counsel for Appellant Janos Counsel for Appellee Brice, Vander

Farkas Linden & Wernick, P.C. (n/k/a Buckley

Madole, P.C.

/s/ Susan A. Kidwell

Susan A. Kidwell

33

HYPERLINKED MATERIAL

CAUSE NO. D-1-GN-11-003692

JANOS FARKAS, § IN THE DISTRICT COURT OF

Plaintiff, §

§

V. § TRAVIS COUNTY, TEXAS

§

WELLS FARGO BANK, N.A. AND BRICE, §

VANDER LINDEN & WERNICK, P.C., §

Defendants. § 201 ST JUDICIAL DISTRICT

DECLARATION OF MICHAEL DOLAN

STATE OF CALIFORNIA §

§

COUNTY OF LOS ANGELES §

I, Michael Dolan, hereby declare the following:

1. "I am of sound mind, over the age of twenty-one (21) years, and capable of

making this Declaration. I am fully competent to testify to the matters stated herein. I have

personal knowledge of each of the matters stated herein, and they are true and correct.

2. I am employed as a Research and Mediation Manager for Wells Fargo Bank, N.A.

("Wells Fargo"). I am also a custodian of the records of Wells Fargo. I have also personally

reviewed Wells Fargo's records regarding the mortgage debt at issue in the above-captioned

lawsuit (the "Loan").

3. The Loan Records attached hereto are kept by Wells Fargo in the regular course

of business, and it was the regular course of business of Wells Fargo for an employee or

representative of Wells Fargo, with knowledge of the act, event, condition, opinion, or diagnosis

recorded to make the records or to transmit information thereof to be included in such records;

and the records were made at or near the time or reasonably soon thereafter.

EXHIBIT

DECLARATION OF MICHAEL DOLAN PAGEl OF4

AUS:0567447/00358:551946v2 1

43

4. Attached hereto and incorporated by reference, are true and correct copies of the

following records.

• Exhibit 1-A is a true and correct copy of the Wells Fargo Home Equity Account

Agreement and Disclosure Statement executed on or about January 11, 2007 by Janos

Farkas.

• Exhibit 1-B is a true and correct copy of the Reinstatement Quote for the Loan at

issue in this suit that is good through November 1, 2013.

• Exhibit 1-C is a true and correct copy of the Payoff Statement for the Loan at issue

in this suit that is good through November 1, 2013.

• Exhibit 1-D is a true and correct copy of a letter dated February 7, 2011, sent to

Plaintiff Janos Farkas concerning the Loan at issue in this suit.

• Exhibit 1-E is a true and correct copy of relevant portions of Wells Fargo's internal

loan notes concerning the Loan at issue in this dispute.

5. The attached records are the originals or exact duplicates of the originals.

6. As a Research and Mediation Manager for Wells Fargo Bank, N.A., part of my

job responsibilities include researching the facts of mortgage loans associated with litigation for

which Wells Fargo acts or acted as the mortgagee and/or mortgage servicer. I have gained

personal knowledge of the facts stated herein through my experience in the mortgage industry,

my job duties and responsibilities, my personal investigation, and my review of the Loan

Records. Prior to serving as a Research and Mediation Manager for Wells Fargo, I have been

employed by Wells Fargo and its predecessor institutions and held various positions, including

the position of vice president in charge of portfolio retention and operations analyst. During my

tenure as vice president of the portfolio and retention group, I managed a team that included all

of the loan servicing functions of the company. During my 33 years of experience in the

mortgage industry, including 28 years as an employee of Wells Fargo and its predecessor

institutions, I have created, reviewed, and analyzed hundreds of loan records, including

DECLARATION OF MICHAEL DOLAN PAGE20F4

AUS:0567447/00358:551946v2

44

amortization schedules to determine total principal and interest payments owed based on the

terms of the loan. I am familiar with Wells Fargo's lending and mortgage servicing practices,

including the various groups and divisions within Wells Fargo through which it carries out those

practices. I am also familiar with Wells Fargo's accounting systems and methods of calculating

and loan payoff and reinstatement quotes. I am familiar with Wells Fargo's record keeping

system. I have had access to and reviewed various corporate and business records of Wells

Fargo, and have had the opportunity to review the business records and account information

related specifically to the Loan at issue in this case. All statements made herein are true and

correct and based upon my personal knowledge.

7. The Loan Records reflect that Wells Fargo Bank, N.A. began acting as the Loan's

mortgage servicer on or around January 11, 2007 and continues to be the mortgage servicer.

8. "Wells Fargo Home Equity" is a division of"Wells Fargo Bank, N.A." and is not

a separate legal entity. Home equity loans and lines of credit were available through Wells

Fargo Home Equity Group. Wells Fargo Home Equity assisted with the account management of

the Loan at issue in this dispute.

9. Plaintiff has not made a payment on the Loan since August 2010.

10. The amount required to cure Plaintiffs default on the Loan as of March 22, 2011

was $2,013.30.

11. The amount required to cure Plaintiffs default on the Loan as of July 25, 2011

was $4,002.64.

12. Because of Plaintiffs default on the Loan, Wells Fargo, through its foreclosure

counsel, filed an Application for Court Order Allowing Foreclosure of Lien Under Tex. Const.

DECLARATION OF MICHAEL DOLAN PAGE30F4

AUS:0567447/00358:551946v2

45

WeDs fargo Banlc, N.A,

AGREEMENT DATE: OI-11-2Cill7

ACCOUNT#: 650..~1998

REFERENCE##; 20063367500009

h~

t'\.j ' I....

- ptt\811'

.

1

Wells Fargo Home Equity Account Agreement

and Disclosure Statement (the "Agreement")

lbt-__

-

l

THIS IS AN EXTENSION OF CREDIT AS DI!PJNED BY SECTION SO(a)(6) and (t), ARTICLE XVI OF THE

TEXAS CONSTITUTION.

Borrower NU~e: 1ANOS FARKAS

Pnper&y Addrus: 6315 FARMDALE .LN, AUSTIN, TEXAS 78749

MaiUag Addretl for BUIIna Purposet (If different): PO BOX 180383, AUSTIN, TX 787t8

Credit Line Lfmlt1 103.441.00

SECfiON J: MY ACCOUNT AGREEM£NT

!n thit Agreement, lhe words. "1,'' "me," "my," and "Borrower" (which also means "we," "us," "our," and

'Borrowers," if more than one customer signs flolow) rofet to eacb person who sipa this Aa-ment. Tho words

"you," ''your," "Lender," and "the Bank" rercr to Wo1l11 Fargo Bantc. N.A. and any successor or assign or

subsequent holder of this Aareemenl. This Agreement governs my Wd/& F11'1q HolM Epi(V .4cuurtt (the

"Account'') with lire Bank. If moro chan OIMI person lllp1 Ibis Aafeement, we arejolatly aacl individually bound

by its cenns. We ue separately llable co lhtt Bank for the entire a1D011nl owed on Cbc AAx:ount. We are each

.

liable as a principal and 1101 merely as a auaranror, even if one or more: ofudoea 1101 use the Aoc:ounL

This Agreement is made whhout r«~ co olher asscr.s of any owoer ofdre property securing this Agreement

or any owner•a spouae, unless dte owner or ownet'8 spouse oblatneclllte loan evidenced by thit Agreement by

a~uaJ fraud. lfl or any person or enlily acting on my direction or will! my lcllowlcdge or oonseat commits ac1ua1

ftaud in oonneclion wllh lho loan appllcatioo procas or die documents executed In co!Diection wilb lhis

A,reement, I will be lblly and personally liable under lhi& Agreement. ··

SECfiON 3: SECURITY INTEREST

This Agreement is inteuded 10 evidei!Ge en "Exlension of Ctcdit" as lhat term Is defined by Section SO(al(6) and

(t). Articlo XVI oftbe Texas Constihllion, and is sec:ured by a deed of trust including all modlftcacions, addellda

and amendments thereto (tho "Seourity Jnmumcnt''), signed the same date as lhi.s Agreement. The Security

IIJslnlment pves you a security intcmt In my homeslcad located atlhe address abown abow (the "Propmy").

SECfiON 3: MY WBLLS FARGO BOMB HIJUITY ACCOCINT

My Account ls a revolving account. My credit limit fs shown above and will be displayed oo each of my billing

statements. During !he Draw PCII'iod {del(;n"bcd below}, my available credf& will be my Clfoclit limit minus the

sum of all W198id AdvantcS posted to my AecounL During the Draw Period. as I Rpllf the principal balance J

owe on my Account, my available c:redic will be replenished. (~not to request an Advance Chllt would oause

1/15

~entt~OI-09~7,13:44:53

50118221

47

my balance to exceed my credit limiL If at any time lhe balance ofmy Account. exceeds MY CRdit limit,! agree to

immediately repay the amount lhat exceed. my credit Umil.

SECTION 4: MY ACCOUNT DURING THE DRAW PERIOD

DBA'Y PERIOD

My Account has a Dtaw Period of 10 ytat& and one month from the date of this Agreement during which I may

~est Advance.,. At the end of tbe Dnsw Period, I may requostlhaf the Bank renew the Draw Period for an

addilionalJO year& and one month. The Bank may, at lts option, approve my request ro extond the Draw Period.

I may not obtain Advances after tho Draw Period ends.

Whon the Draw Period ends, the OUUialldln& unpaid Una of Credit Advances will convert to a Final Fi~ted Rate

Advance as detailed below in Section S, MY ACCOUNT DURING THE REPAYMI!NT PP.R.IOD.

ADVANCES DQBJNG DIE DRAW PIRIOD

Tbere are ltypas oC Advances on my Account:

• UneofCm!itAdwnees

• Fixed Rato Advances

Tho Bank must llonor my request for Line of Credit Aclveccs aod FjKecJ Rate Advances (collec:tlvely,

''Advances..) • Ions as I am Ill compliance with alltenns or thi.~ Agreeruent, including all modit1c:allons,

addenda and amendmentsiO 11, and the Seourity lnalnlmel\t.

As I liSe my Aceo1111t, my a\llilable oredit will be rny credit limit millu the sum of all unpaid AdvanC811. As I

~ th~ principii balance J owe on my Account, my available credit will be Rplenished. I will not request an

Advance 1hat would lliiUse lhe balance in ruy. Account 10 eJCoeed my credit limit, or which would violate the

terms oftfds Apeen1ent or any law. If J do CKceed my credit limit, lasree to immediately repay tho amount that

e~eceeda my credit limit.

I understand that the Baok may refuse to allow any Advance if the Advanca does not comply with eveey

requirement or thi.o: Agreement. The Bank may choose at its solo discretion to make an Advance Chat does not

comply. The Bank may allow any Advances in any sequence convenient 10 the Bank.

The Bank is authorized to make en Advance &om my Account when it receives a request pvoa by any person

who hu signed this Asreement. If there are conflicting dcmaruls made by any ofua who signed lbi$ A.pcment,

die Bank lias tho option to Rlbse to make any Advance lbal has not been reqlltMed by all of u togelber. The

Bank will not be liable for any loss, expe~~R, or c:osl arising out of any telephone request, including any

fi'auduleat or lllllllthorizcd telepftone te~tuest, when the Bank acts upon such matructloJIB believing tbem to be

genuine.

Section 50(t), Arfiele XVI or tile Texas Constitution Omits rhe maximum principal a1110unt oqtstandlog

and debits and ad¥anetJ apbast tile Account aader ctrt..n tk&!UD!Stamlft. I anderstand that the Baok

may rel\tse co aRow any Advantt If th• Asb'•nse dog not tSJI!PIY with §esdon 9ft), ArJislt XVI of the

Texa' <:oll!tltp!lsn.

LINE OF CUPIT AQVANCE§

Each Lfnet ofCredit AdV811Ce I roq,uest will be In the amount of$4,000.00 or greater.

LINE OF CUDf[ ADVMCJMETWJD§

Wbire my Account is not in default. closed, or siiSpcnded, I may obtain a Line of Credit Advance by:

Req~atlng a Line of Credit Advance In person at any Bank bnmoh

Req~~et~ti118 a Line ofcredit Ad~ by phone

Tfansfc:nins fimcfs by uslns We& Fareo Online"" •

In other wayx the Bank authorizes ftom time to time, and BS permitted by§ SO(t) Article XVI, of the 1 exas

Coastitucion.

2115

Docamcllls Proossed 01..09·2007. 13:~;53

48

LINE Of WDrr AIWAJilCIS PERIQDlC 'INANC§ CHABCIS

Finance clla'les begin to accme on Uno of C~it Advances immediately when fUnds an~ advanced. The

periodic FINANCE CHARGE for a billiJig ~:ycle is the sum of the poriqdic FINANCE CHARGE for each day

in dae bDiiDg cy.. l'o determine the periodic FINANCE CHARGE for a day in the blUing t;yclc, multiply the

Daily Periodic Rite by tha daily balnlce for Une of Credit Mvances (including current lriDsaclions) each day.

To dctennlne the daily balance, take the Line of Cn:clit Advanaes balance at abe beJillllina of each day

(excluding any unpaid FJNA'NCE CHARGES or olhor c1u1rp1c provided for aDder this Apeement), add any

new Uno of Cmlit Advab~:CJ~~, and subtract any paymeJIIs or oredilll that apply to the repayment of Line of

Cm!it Advances. Tile J'e8Ult i& the daBy balaneo.

The Daily Periodic Raro for Line or Cfedit Advances is equal to t/365 (1/366 durin& leap years) of an tndex

plue a Marain. The Index is the hipat Prime Rale as published iJIIho Western Edicion of 'llle Wall SJretJI

Jout7Ull ''Money Rates" table. ~e Marafn, the fnltfal Daily Periodic Rato, and tho initial ANNUAL

PERCENTAGE RATE, are cacb disclosed below. Tbo Margla wiD lncrcaso if the Alllomatic Payment feature

described mSeclfon 6 below is tennllllted for lillY msoJt. Tho ANNUAL PERCENTAGE-RATE dOe$ not

include costs other than intOJeSI.

The Daily Periodic Rate 4Rd eomspond,ina ANNUAL PERCSNTAGE RATE on my Line of Credit Advances

will be acUuatcd on the ftmt day of every billing cyofe, a sin& the lase Index Yatue publithecl darina the precedins

billiDJ cycle. Therefbrc. the Daily Periodic: Rate for Lino of Credit Advances may cbanp (increase or decRase)

• often aa once each billing cycle bwd on change~ in fltc Index. llllllfenlland that any Jmreuo may clluae me

to make larger monthly pa)'Ments.

W!mME RATE CAP FOR Y~E or cu;mT APYANC£S

DaUy Periodic Rate for Line ofCredit AdYIIt\teS wBiuever exceed 0.049315% (correspondblg ANNUAL

PBRCENTAG8 RATE of J8.00%). Thia is lhe Llfotimo Rato Cap for Uno ofCredit Advances.

LIFETIME llA'rt; fLOOR FOR LINE OF CUPIT .ADVANCE$

The Daiay Periodic Rate for Line of Credit Advances wiU never fall below O.OJ1616% (conespondiq

ANNUAL P.BRCENTAG£ RATEof 4.240%). This is the Llfi:timc: Rate Floor for Line ofCnldit Advances.

MY INWAL ftAD !OR LINI OF QEDITADVANCf.S

As diSClUued abo~. my Dally Periodic Rate is based on the: value of the lmfeJ~ plus a Maraln. Tile lolrial Index

value thai appttea ao my Ai:cowu will be tlte value of the Index oa the day I open my Accouat. The JVUowlng

disclosures ate based on Clio value ofthe Index In e«ect on 01..(19-2007. I UlldemaruJ that ifl open my Acoounc

after this dace, my act~~allndex value, Dally Periodic Rate aud conapondlng ANNUAL PERCENTAGE RATE

may be hialler or lower tllan the£~'" dlaclosed below. ·

My Margin for Une ofCmiit Advances Is equal to NEGAnVE FIVE HUNDRED TEN THOUSANO'lliS Of

ONE PERCENTAGE POINT percentage points (-O.SJO%). As &IUIIlt, unleas the Lif'olime Race Cap for Line of

CredltAdvanees or Lifetime Race Floor for Line of Credit Advances require. the Bant to apply a different rate to

my Acoouot, my Initial Dally Periodic Rate 1&0.021205% (cozmpondiiiJ ANNUAL PERCENTAGE KATE of

7.740%).

JdNE OP CBJDIT ADVANCE$ MINIMyM MONTULY PAYMENT

During the Draw Periocl, my Minimum Monthly Payment for Une ofCreclit Advances shall be equal to:

Tbe twm ofall accmedand unpaid periodic FINANCE CHAROES on Line ofCredit Advances, plus credit

iM\11111\Co premiums, Ifany.

£1XEQ MD ARV,ANCIS DURJNGTHE I)MW PERIOD

I haw lhe oplion 111 convert outstanding 1111J1aid Line of Credit Actv.nces to Fixed Rate Advances during the Dra!'

Period based on cmlic limit availability. The minimum Fl~ted Rate' Advance during tbf) Draw" Period .IS

S 10,000.00. I may ~ueat up co 2 FiXed Rate Advallce& esch year. For~ of this nd~. tho. ftiSt )'ear" wtll

beain on the <late of tbfs Apemellt. Subsequent~ will begin on each aunlvcreary date ofthiJ Agree111ent. I

may .bave no more than 3 Fixed RatoAdva!K:C$ oiiiStanamg at any one lime. I must sctcot the repaymen' tenn for

3115

DocllmealS Processed 01-09·2007. 13:-14;53

49

lhct Fixed Rate Advance at tbe time J~uest the Fixed Rate AdviiiiCe.

1Dtel'flt·ODI9 Paymtat Option:

If I seteotlhe lntatst-only pa~elll optloa fOI' a fixed Rate Advance during tha Draw P~od (see the Reclion

below titled "fiXfiD RAT£ ADVANCF.S MINIMUM MQNTHLY PAYMENT PYIUNG T1B DRAW

PEBIOJ"), tha repayment term must be at lea&l ono year and not more than the lesser ot J0 yean; or 1he

remainihl tenn otthe Draw Period miRlls one monlh. At the etUI oflhe term, the balance will convert co a Line

of Credit Advance.

Full)' A1110rtizlna PaJntent Optfon:

If I Hlcct the fUlly amortizing payment option for a Fixed Rate Advan~ durinJ the Draw Period (sec tbe secllon

below lftled "EIIIiiR BAD ADVANCf.S MINJMPM MONIJU,X PAYMENT DURING THE DBAW

RBJQJl"), tbct RPII)'mllll term must bt at leas& one year and not more tban the IC~Sfer of 10 years or the

remaining term oftbe Draw Period minus one month.

FIXED BATE ADVMJCE METHODS DUBJNGTIIE DBt\W PgiOD

While my Acc:ountlll not In dcfllult,closed, or saspencled, I may obtain a Fixed Rate Advance by:

•R.equutlna a Fixed Rate AdVIInoe In penon at any Bank branch.

·Requesting a Fixed Rate Advance by phone.

fiXED BAD A~I!S PERIQDIC fiNANCti CQARQIS DYBING THE PBAW PEBIOD

fixed Rare AdVIRm will acc:ruo periodic FINANCE CHARGES beglnnl111 co the: day lhlt the Bank convens any

Uae of Credit Advances to a Fixed Rate Advance. I will bo charged a periodic FINANCE CHARGE on all

ouls1Mdina unpaid Fixed Rate Advances eacb day al a fixed Daily Periodic Rate. To determine lhe periodic

fiNANCE CHARGE for a day In the bOling c~le, mullip!y thtl Dally Periodic Rare by the dally balance for the

Filed Race Ad\IIJIIle (includlq current transactions) each day. To dctennl~ the dally balallce for die fixed

Rete Advance. take the F'IXed Rate Advance balance at the bcginnina of each day (oxoludin& any llnJNiid

FINANCE CIIARGEs·or other dllrges provided for undor Ibis Agreement), and :lllblriiOt any payments or

credi1& that apply co the repaymeat of the Fixed Rate Advance. The ralllt i• tbeclaily balanca.

The Dally Periodic Rate for Fixed Race Advanoes is C4ual to 1136S (11366 dlllina leap ytartl) or an Index plus a

Marsin. The lndu Is the highest Prime Rate as published fo tbe Western Edition of The Wall Sttwl Journal

..MOM)' Rates" table. The Bank will use the valw or the lndox in efttc:t on the last bus IMP clay prec:edin& the day

tbe Bank n:ceivee my request for a Fixed Rate Advuce. The Margba for Fixed Rate Advancte I& eight

poroemase points (8.000%). The Bank may, In its sole dlscmion. apply a Jowor Meq:in. The GOJRSPI)nding

ANNUAL PERCENTAGE RATE for Fixed Rate Advances will ucver be mote thaa the Ufetimo Rate Cap for

Fixed Rate Advances shown below. The ANNUAL PERCENTAGE RATE does 110t include costs other than

interest. •

The Mar&in for any oxi&ling Fixed Rare Advai1Ce$ will iucrease by onu quarter of one percentage poilll (0.25%)

if tbe Automatic Payment feature ralmninaled, as described ill SecliOA 6, below. Therefore. tbe Daily Periodic

Rate for Fixed Rate Advances may also increiiK 11 lease o~~ee during the Aocount based en an incroese in dto

Margin wben the Automatic Paymeol fe~ture is tenninated. Any euah increase wfJI RSUit in an increase in the

then outstandlna Fixed Rate Adv•nce Minimum Montllly Payments. If I selected the intmlst-only paymont

optlcn f'or a Fixed Rate Advame, the Fixed Rate Advance Minimum Monthly Payment for that AdvaJU:o will

equal Ole sum of all acc:nu:d and unpaid periodic FINANCE CHARO.ES on the remaining blllmce of the ~ed

Rate Advance at the Increased COJmpandina ANNUAL PERCENTAGE RATE. If I selected thct fUlly

amortizing payment opefon for a Fixed Rate Advance, tha Fixed Rate Advance Minimum MonthlY Payment for

that Advance will be nset at an amount suffieientto repay the remainina balance of the applicable Fixed Rate

Advance widlln its applicable term In $UbstantiaDy equal, fidly amoJtizing monthly payments at its increased

corraspon41ng ANNUAL PERCENTAGE RATE.

YEIJ'IME RATECAf FOR fiXED RATE ADVANCES PURINGTBij pRAW PIRJOD

The Dally Periodic: Rite for Fixed Jt.te Advances wiU oot excad 0.049315% (corresponding ANNUAL

PERCENTAGE RATE of 18.000%). This is the Lifetime Rate Cap for Fixed Rate Advances.

4115

DacummiS ~sad OI.Ct-2001. 13:44:53

50

II'JXEp RA1] ADVANCE AT ACCOUNT OP£NING

I have requested anlnJdal fixed Rale Advance at Account oponlng in the amount ofS 103,441.00, and for a tenn

of 120 mot'ltbs. My Dally Periodic Rate on tllis initial Fixed Rate Advance Is 0.0198% (<:One.qponding

ANNUAL PERCENTAGE RATE of7.Z40'.4). lllave selected the fully am011lzing paymmt option.

fiXED BAD APYNlQS MINIMUM MQNTHLX PAYMENT DYRINGTHEDMW PERIOJ!

I may select one of lhe following minimum payment options whm I reqUCSJ a F"IXcd Rate Advance duriJig the

Draw Period:

lnterett.Oaly Payment Option: If I select lhls option, my Minimum Monlhly Payment for lbe Fixed Rate

Advance during the Dtaw Period wUI be equal to the sum of all llCCJIIed and unpaid periodic FINANCE

CHARGES on tho Fixed Rate Advance.

· Fully Amortizing Payment Opt!Dn& If 1 solect Ibis option. my Minimum Monthly Payment for the Fixed

Rete Advance will be equal co the amount of principal plus periodic FINANCE CHARGE suiJ'iciom to repay

Che Fixed Rate AdvaiiGo within fiS apJJioabfe tcnn in substantially equal, ftllly amonlzing monthly payments

at the applicable corresponding ANNUAL PERCENTAGE RATE. Thill usumea lhat all pa.y.monts Will be

made on their due dltCt, wbich will be lhe same at tbe due dates for my Une of Credit Advances Minimum

Monthly Payment described above. If my paymcn1s Ql'e not conslstenUy macto when due, lhe fixed Rate

Advance: Minimum Monthly Payment may not fUlly repay the Fixed Ralet Advance over its term 1111d my final

pa)'lllcml may be hJp.

Durin& the: Dtaw Period, my avallablocredit for new Line of Credit Advance& will be repklnished by tho amount

or prineipal 1 repay on my Fixed Rate Advanoet.

~l{ TOTAL PAVMBNf Dl,lE Dt!RING THE DRAW PERIOD

Will receive monthlY. bllllnJ statements from lhe Bank. J must pay at least the amount of the Total Payment

Due by tile Date Due, u sllown on each montbfy billitla sllltemcnt.

The "Total Payment Due" durint the Draw Period eoJUJisiS of my l.lne of Credit Advances Minimum Monthly

Payment plus my Fi~~tod Rate Adllllnce Minimum Monthly Payment(&) togotbcr With all past due amount.'! and

overlimll amounts and aU 01hc:r charaes clue.

SECTION 5: MY ACCOUNTDVRING THE REPAYMENT P.ERIOD

BJPAYMEN1 rHJ.Q»

I understand tbat I may not receive new Advances after the Draw Period ends. At that lime. r wiU br.gin the

Repayment Period, wblch wiU continue until tJ. Maturity Date de~cribed below, but in no event moftl Chan 30

years.

aEl"AfMENIQf EJNAL fiXED WE ADVANCE

Al the end of the Draw Period, lhe ouiStanding unpaid Line of Credit .Adv1111ces balance will be eonverted into a

Final Fixed Rate Advance. The Final Fixed Rare Aclvanco will have a renn of JS years if my total Final fixed

Rate Advance balance is less than S20,00D, or 30 years if my FinaJ F"llled Rate Advance balance ia $20,000 or

more.

The Final Fixed Rate Ad"anec Minimum Mondlly Payment will be the pater of S100 or an amo11n.t sufficient

to repay the Fi111l Fixed Rate .Advance balanc" by tbe end of the scbeduted cenn in ~tantially equal, fii.RY

amortizing monthly pa)IMellts of principal and periodic FINANCE CHARGE at the applacabtc corresponcbng

ANNUAL PERCENTAOE RATE.. If my payments are not consistendy made wheo due. the Final Fixed Rate

Advanco Minimum Monthly Payment may not fully rep~~y tile Final Fixed Rate Advanoe over Its ~ and my

fin., paymClll fbr the Final Fixed Rate Advauoo may be lllsJ!er. The Bllllk will notify mo In advance of any

obanges to my Tolal Paymmt Due as a result of !he Final Fixed Rato Aci91111Ce Minimum Monthly Payment. ·

PERIODIC F~giARGJON fiNAL fiXED RATEADYANC£ B,y,ANC£

Periodic FINANCE CHARGES on my Fimal fixed Rate Advance balance Will begin to accrue on lite first day or

-·

5115

Wells FIIJO tfome Equily A«oollll Agceemenl OlxwlMms Processed Ol-09·2007, 13:44:»

51

lhe Repayment Period. 1 will be charged a periodic FINANCE CHARGE based on the unpaid Final fixed Rate

AdVIIICo baladce at tbc end of each day 11 a fixed Daily Periodic Rate.

The Daily Periodic Rate for lhe Final Fixed Rate Advance ls equal to ti36S (Jilfi6 durioaleap years) of an l'adex

plus a Margin. Tho Index is lhe highest Primo Rate u publl&hed in the Wmem Edition or The Wall St~et Journal

"Money RileS" table. 1bo Bank will use \he Index value publi.lfle4 on the lasl busiti0$S day duritis tile Draw

Period. 1'he Margin for the final Fixed Rate Advance is ei&ht pen:entage points (8.000%). The Bank may, in its

10le discretion, apply a lower Mar&in. The corresponding ANNUAL PERCENTAGE RATE on my Final Fixed

Rate Advance will never be m~ than the Lifetime Race Cap for my final fixed Rate Advance shoWD &elow.

The ANNUAL PERCENTAOE RATE does not include costs otbtr than IIUerest.

The Margin lbr 1116 Final Fixed Rate Advance will incre~~Se by one quarter or one percentage point (0.25%) if the

Aucomalfc Payment feature is terminated, as deM!ibed in Section 6, below, duriiiJ tho Repayme~~l Period.

Therefore, lhe D11ily Periodic Rate Cor the final Fixed Rate Advance may also increase at least o~ durins the

Repa)'Jilent Period based on an iiiCIUSC in lhe Margin when the Automatic Payment feature fs temdnated. Any

such fncrease will result in an increase fn the then outstanding Final Fixed Rate Advance Minimum Monthly

Pa)'lnCIIt, which will bo reset at lito woater of$100 or the amount sufliaicnt to repay the rcmalnins balance of the

Final Fi1C.ed Rate Advance witmn fts applicable tenn in substantially equa~ fully amqJtizing monthly paymenta at

it& applicable coneapondlug ANNUAL PERCENTAGE RATE.

LlfUWE 8AD C«\f FOR. MY ITI~AL FIXED MATE ADVANCE

The Dally Periodic Rate for my Final FIIICd Rate Advance will not exceed 0.049315% (COJre8$10Uding

ANNUAL PERCENTAGE RATE of 18.00G%). This is the Lifetime Rate Cap fbr my Final Fixed Rate

Advance.

MY TOTAL PA\'MENJ QUE DURINQ THE R§PAVMENT PERIOD

1 mu&t pay at least the an•ount of tho TOtal Payment Due by the Date Duo, as shoWII on each monthly biDing

lltatcment.

The "Total Pa)'ftlenr Due" during the Repayment Period ir the Final Fixed Rate Advance Minimum Monthly

Payment as described above. together with all past due amounts and overJimil amounts and all other cllarees clue.

MAJtJBITY QATE

Tbe Mahlrity Date on my Account shall be lhe maturity date of the f'inall'lxed Rate Advance, &ut in no ewnt

more chan 30 years from the end oflho Draw Period. At !hat lime, any remaining balucc must bo paid in full.

SECTION 6: AUTOMATIC PAYMENT DISCOUNT

I have cltosen to make Aucomatic Paytnents as specified in lhc Aulhorizaclon for Automatic Transfer. I Jlave

receive4 11'4 illtereac rate: di«<ounr for makina this choice. I unllers1alld that tho ANNUAL PERCENTAGE

RATE and dlo Margin clult apply to my Line ot Credit Advanoes, as desmbed in Section 4 above. reflect a

discount you aave me for ellis Authorization fOr Automatic T.amrcr. Jftho Automatic Payments are tctml~ted

for any J'C8$01\ at any time during 1M Draw Period by anyone, lite Marsin that applies to my Une of ~dit

AdviiiCea, as set fbl1h in Soction 4 above, wiii.IJsBu by ono q~~a~Wr of one percentage point (0.2S%) emouve

the day cbc Automatic Payments are terminated. If l!le Margin increases, the Dally Periodic Race and

corresponding ANNUAL PERCENTAGE RATE applicable to my Line or Credit Advances, and my Line of

Cn~dit Advances Minimum Monthly Paymcnt, may also incrcuc. My monthly billing Slalemcnt wm show me

my new Daily Periodic Rate. comspondiDJ ANNUAL PERCENTAGE RATE and Line of Credit Aclvances

Minimum Monthly Payment as aJllllicable.

SECTION 7: OTHER FINANCE CHAltCES

In addition ro paying periodic FINANCE CHARGES, as described In Sections 4 and 5 above, J also agree to pay

the followiA8 addili011al fees. eacb of which Is a FINANCE CHARGE:

6/JS

Oocwnents Processed 01-ot-20111. 13:44:53

52

NIA

SECfiON 8: CLOSING COSTS

I asrcc to pay to the Bank the (ollowing closing COSIS at lhc opening of my Account:

NfA

• This amount Is an eslimate. The actual recording/tiling fee is shown on lh& HUD Settl~ent Statement that is

atcached to and incorporated into tllis AgreemcnL

The folloWins closing costs are .lllNANCE CHARGES:

N/A

SECTION 9: ADDMONAL FEES, COSTS AND CHARGES

lo addidon co the FINANCE CHARGES and etoaing costa desoribed abo\'0. 1 agt'ee to pay lhe following non·

reftlnlfablc feBS, c:osta and charaes, wbiob w1U be owccl once obarged to my AccounL

LATE CHARGE§

Durin& the Draw Period, I will pay alate charge equal to the greater of five dollm ($5.00) or rrve perc;ent ($~)

of the Une ofCrcdil Minimum Monthly Payment if my payment i$ mo~ than 10 days J)88t due.

DurJns the Repayment Period, I win pay a late charge equal to lhe greater of five dollars ($5.00) or five percent

(5%) of' the sum of all Fixed Rate Advam:e Mfnllllllm MoDthly Payme.~~tll If~ payment is more than 10 days

past duo.

PRJPA\'MENT FEI

There is no prepay.mmt fee on my Accoun1.

OTQER WARGJiS . .. .

To lbe extent allowed by law, I ape to pay tbu following fees ifll'e4Uest or aulhorize theae additional services:

(a) ll!..fu: Tho Bank will charge a tax fee In die amount of$10 ifl request or aulltorize Other$ to request any

document or letter to be b'all&milted by facsimile (fax) machin~J.

(b) Regarslt Fee end Pllotpmpy fee: The Bak wiJI c:Jtargc a mearcbfpbotocopy ree In the amount ofSS per

pbotoaopy if I n~q~~~~at or autllorizo oth~ to request that tJte Batik RSCIIII2h my Aocount or provide

photocopieB of Aocollftt dooWnents tor any P1J1PO$e o1bcr than a billing error inquiry,

(o) Reconycygu or S!!lsfastlpP rus Tlle Bank wiU charge reconveyance and satisfaction fees as 411owcd

by applicable law.

(d) Slop PfW!IJCDl Fu: The Bank will ch;nae a stop payment fco in the amount of$25 lfl m~uest or authorize

otbels to rtqllOSltbat the Bank Slop payment on a draft 1 have used to requost a Uae ofCmlit Advm:o.

(c) Betom Qmkfu: ·The Bank will obaEJc a return clteck fee In Ike amount of$25 if I m1b a payment with

a check Chat Ia dishonond for any reason.

(I) OVerlmlt ru: The Bllllk will charae an overfimit fc:e In the amount of$25 fbr each billia& oycle in which

I hvc ox~ my credit limit or have nquested an Advance thai would l!ave caused me to exceed my

credit limit.

(&) Reapq t\dnnst CfJU' Fee &wmcltnt ru•ds): The Bllllk will e~~Jrae a ~etum advance check lee in the

amount of S:l' for each ~~1: or draft ultd 10 fC4lUOSI a Line of Credit Advance C11at is retumed unpaid

(dishonored) by lhe Bank due to lbr: Rquested Advance11ot mccllna all requhemeuta of this Asreement.

SECTION 10: COLLECTION COSTS AND ATTORNEY'S FEES

If I am in default. I will pay lha Bank's collectio.a CO!Ilt, attomey's rccs ancl o1bet expenses of enforelng the

Baok's ri&hts under this AgRement and the Security Ins11'11Dlent, uulcss probibltcd by applicable law.

1115

Dlrcumer'll$~01..()9.2007,13:44:S3

53

SECTION 11: METHOD OF PAYMENT

The Bank will provfdc me with a monthly billiag statement and auromat~ly charge my qualified 4cposlt accolllll

(UDder the terms of a separate Wlillell AuthorizatiOn for Alllomalic Tmnsfer) for the T01al Paya~em Due. If I owe

0\hcr charges (other than cmfillnsUIIIIICc: promiums and annual fees), I must pay lhem separately. If I owe past due

amounts on my Account, the Bank wm 1101 collect thw; amo1111ts by using u Automatic Pa)'Dtent, and I JJlllllt pay

litem sepuatoly.

SECTION 12: SCHEDVLEDPAYMENTDUEDATE

My monthly payment due dale f'or my Total Payment Due Is the 15TH day oreach and every month d1arillt both

the Draw and Repayment Periods.

SECTION 13: MY PROMISE TO PAY

I promise to pay lo the order of the Banlc the total of all Advances which I rGCeive or which I authorize to bo

mado from my AccoUD.t. t promise to pay the total of any FINANCE CHARGE, plus all amounts past due,

overlimit amounts, and any late cbiiJICS, fees, other chatBes and olber obligations charatll to my Aceount under

thiR Aareemenl or the Securiry lllstnlment. All payments made under this Apment wiD be made In u.s.

Dollan~. I will not mall any casb payments to the Baftk, I may not usc .Adv.uu:e request checks 10 make

paymenrs 011 my Acc:ount.

The Bank may. at its diaorctlon, withhold a ponlon or the IWallable credit on my A<:count up to tlte amount or

any payment duo in order to assute that my check or olher paymentlnstnlment is 1t011ored.

I will make payments at 1he Bank'$ adcltess fbr receiving a f!llymenl, as indicated on my payment coupon and

billbag atalement, unless another payment melbod Is authorillCd by the Banlc. Each aon-electro.nic payment I

maltc will be accomp~~~~led by the nmiltanco portion of my billing statement.

I unclersrand tbal pa)'llmlts I make by mail to the address indicated on my bOling statement or payment coupon

will be ~mtited to my ,A(:90unt .as of the date ,!'CCejvcd (inC~Ildilll Saturday-. Stlllda)l$, and bolida,p) If the Baslk

receives the payment prior to 5 p.m. local limo for the paymmttaddtut.

J>aymoaus I make ftom a qualified account ("Automatic Payments'? pursuant to an Authorization for Automatic

Transfer will bo c:rcdllecl to my Account on the date received (inctudfna Saturdays, Sundays. and holidays).

Payments 111111b at o Bank b~h and rocei"Wd prior to established cur-offtimos wiD be credited to my Account

oc the busint$11 day tho paynumt'is ~by the Bank. For puxposes of chis rulo, a business day includea any

day other than Saturdays, Suaclays,lllllf Ballk observed holidays. Payments made at a Banlc branch rec:dved on a

Saturday, Sunday, or Bank obilltVed holiday or after estabHshed cut-orr rimes will be credited as of lho next

btL'Ilness day.

PaymcnfS I maJce online, by ATM, by telephone, or by any other means the Bank may make available to me an_d

receiVed prior to atabllshed cut-oiT times will be credited to my ~nl on the bu6iness day the paymmt as

received by th• Bank. For pvtposes of this rule, a bu$1ncas day includes any day other lban Sahlrdays, Sundays,

and federal holidays. Payments made online. by ATM. by telepbOae, or by any other means Che Bank may lllaJce

available to me received on a Saturday, Sunday, or fedend holiday or after eatablislted cut-ofT times Will be

credited a11 of the na~t business day.

I wilt not make payment or autbonze olbms to make payment for me by means of a slnaJo annspted payment.

which includes paymenfS for this AIXO\IIll and any other ac:eount(s), uaJcss tho payment is made In comp1iance

with the Bank's requlramCiliS for multiple account payments.

The Bank may ~~ Jate payments, partial payments, post-dated Qhed<$, or any fQnn of payment c:oneafni~JS a

restrictive endofl!Cment wlthout losing any of the Bank's righiS under Ibis ~eat. The Bank•• acceptance

of checks or money orders labeled "payment In full," or words ro that effect. will not couslitute an accord and

8115

'Dacumenls~OI..09-lll07.13:44:53

54

satisfaction nor a walvor of any ri&bts lito Bank has to receive full payment. JrJ intend to condition a payment,

pay 1M Account fa filii with less !han lito total amount owed, or give payment insb'IIC1lons, I will clearly set out

such intenliOD, conditions enlf fmtructloas in a ~~~to leiter accompanylna my payment, and mail bolh to

Wells Fargo Bank, N.A., P.O. Box 2993, Portland, OR 97208.

SECFION 14: TAX DEDUCTmiLITY

J undcratand that I should COIISUit a cax advlsouegarding the d~uctibllityofintettst and obar&eS Ullder my

Account.

SI:Cl'ION 1St REEVALUATION OF CREDIT QUALIFICATIONS AND CRI:DIT REPORTS

My slpalure on Ibis ABR41ment authorizes dte Bank to obtain credit information about me. including credit

bureau reports, at any tim11. SUch credit bun:au reports may b$ requested or used in connection with (a) renewal

or extention of this Aareemont. (b) review or my Acaoont, {c) llklna any collection actlolt, or (d) any other

legitimate pUI'JIOSU associated wllh my Account. 1 qn:e to aubmil cunent financfallnfonnation to the Bank

upon U.e Bank'll request. Tba Bank may reexamine and reevaluate my credit qualifioatiOfiS at any time. The

Bank may rcpon .lea experience with me and my Account 10 odlers. to lite extent allowed by Jaw.

SECJ'ION 16: PAYOFF BALANCE INFORMATION

The Bank will toll me lha balanee required on any aiven day to pay oft' my Account in filii, If I so requesl If

euck requcat ia made on my behalf by an *row holw. settlement agent or other drird 'Party on my bellalf

during tho Draw Period, th8 Bank may Immediately freeze my Account. I ap that the rtantc•• meipt of such a

tqt~ost &om an 010r0w holder, se~~tcmenc qent or ollter third party on my ()eJtalf will be consldtR:d to be a

request by me to suspend cre4it privileges on my Account. While my Account is tro.n. I cannot receive 1I4W

Advances and tbe Banlc will return unpaid uy Advance reqiiCIII chclclclltlill Bank receives and will refllae to

ltoaor any odJer Advance: req~~est made on my Account. This payolr licoJ.o will be lifted and my Account

reopened If lite mauest for payoD' balance infOrmation is withdrawn, lo which event the Bank may require

written ccmfinnatlon from the escrow bolder, senfement agent or other lhlrd party on my behalf that the escrow

or odJer settlement has been cancelled. . · . · . · · .

SECTION 17: DEFAULT

I will be In default if(a) 1 fail to meet 1M repayment 141M!$ of this A&fCelllOrlt for any 0\liSlandlng bala1lw, or (b)

there is fi'aud or material misrepreselltation by me in eonnection with lhfs Agreement. or (c) any action or

inaction hy me Adversely ~'' lhe Bank't security in dte Propeny, lncludlna WiU.oul limitation. trariSfer of the

Property without the Bank's c01111ent, filllure to maintain required iMurance or pay requlml taxes, revocation or

t«mination or any '-VOCable trusttltat i., an owner of the Property, or the death or aD)' peliOn who hu signed

this Aammtent. or (d) Jam an.cxccutlveofficerofcbc Bank1111d federal law govt:mlng credit extended b)• a bank

to its exec:utille officer, including withoul llmltadon Seelfon21S.S(d)(4) of federal Res~ Regulation 0 (12

CPR f 2JS.S(d)(4)), permits or requires Immediate payment of my entire Ac:cowll balance.

If I am in defilul~ tlle Bank, aubjectco applicable law, may cJo 1111)1 or all of the ronowlna: (a) dole my Account

immedlarcly. wllhoutnotice; (b) ~m liiiP•id any outstanding Advance request dlecks drawn on my AOCOilnt

and refUse tD honor any other Advance request ltlliM on my Accollllt; and (c) require Immediate pa)lmenl of lhe

entire balanco of my Aecount. and, If I flail to pay, exercise the Bank's rights under tho Security lnslmment.

wbkh may n:sult in the loss or lho Property. l waive my c:omiDOD law rigbtl 10 n:clrivo llOike or the Bank•s

intent to accelente tho sum& 1 owe under lhis Agreement and aotfce of aec:eleration. If I am in defa-ult. t~e

melbod of clotennblina U.O Daily Periodic Ra1e tllld cosresponding ANNUAL PERCENTAGE RATE wm remam

as doecribed Jn this Agreement.

11le Blmk amtl agree thatnoiWithstandina any other provision of tbis Agrecme~nt or the Security Tmtn»ment, tbe

Bank will have dle right to tenninate or suspend my ACGount u, dto Cllltont permitted by applicable law.

SECfJON 18: CLOSURE OR SUSPENSION OF ACCOUNT, REDUCfiON OF CREDIT

9115

~1'1oc1:ssec101~7.1l:44:Sl

I

55

LIMIT; REINSTATEMENT OF CREDIT

Q.OSIJBIOISUSPEN§ION Ot ACCOWf. REDUCTION Of CREPJT LIMIT By BORROWER

Any one Bonower can close the Aceount by paying in ftd1 and satdilll a signed li:Uer 10 lhc BIJlk at abe address

indicated on my monthly billing sratement ~uesllnalhat the Accoum be closed. Any one Borrower may

terminate lhe Advanc:e feature, at any time durlna tile Draw Period, by seadhs& a sianed lcuer to the Bank at lhe

addRss indicated on m,y monlhly billing statement fCC(UCSthtg lhc tennlnadon of die Advaac:e roature. To

reactivate Ch& Ad1111nce fe.ttun on the Account durin& tile Draw Period, the Bank will require all Borrowers to

sign a written request~nd malt to the address indicated 011 my mcmthly billing statement.

CL9SilBI OR SJJSPEN810N OFACCOWL ppUCTIQN OF CB£D1T LIMIT BY BANK .

I wall receive a written notfee if tbe B~nk ausperuls 01 &ee1.es m)' Account or reduces my crecHt limit as reqwe4

under applicable law. The nolice will Include the reason(s) for such accfoa(a). 'Thereafter, irJ wish 10 reinslate

my Account or increaflb my credit limit, I agree to send a Millen MqUest to the B81Jk at the ecldre.ss specified on

m)' montht)' billina sta!Jiment, algnc4 by all of1lto Bonower&, along wllh satisfactory evidence to·the Bank lbat lhe

reuon(s) for susp0118lon or RCI~tlon or my Account no longer exlsl(s). I abo agree 10 provide the Bank

promptly with IIU' addlti()l)al information necessary to wppm m)' 1equeat.

The Bank may suspend the use of my Account and ~emporarily problbit ftlturc Mvanoos during the Draw

Period, or the Bank may !educe my credit limit, ror anyreascm ponnilled by applicable law, Including without

Umltation, (a) If the annualized Dally Perioclio Rate cqueb or exceeds the Ufillime Rate Cap ll18ted herein, (b)

there is any material cbanae in my fmaoefal circumllaace& thai tile Bank reasbnably believes will make me

unablc to fulfill my repayment obll&atlons under this Asreement, (c) the value of the Property declines

significantly below ils origiualiiPPI81sed 'Y81118, as ftletmined by lito Bank, (d) my .-nuro to comply with any

material obligaUon unctcr tills Agreement or the SeQUdty JnsiTOment, (o) a fOiUlalOJY 81Hboriry has notified lhe

Bank 1hat continued Advances would eonsritute an unsafe and unsound business practice, (f) I am in deflllalt

under Seotfon 17 above. or (I) government action prevenls the Bank &om lmpoafna tho ANNUAL

P~RCENTA.GE RATE provided for in Ibis A&reetnent or impairs the Bank's security interest ia tho Property,

such that the value of the security interest is less tllan 120 pen\ent of the em!it limit.

Jn the event of a suspension of my Account. the Bank ill authorized to ·Oblain ncb Jftformation aR may be

required by lite Bank, including without limitation, credit reports and appraisals of the Property. to evaluate any

request by me to RJinstale the AccoUJit, To the extent flC'I'I'IIittcd by applicable law. I agree to pay to the Bank the

cost of obtaining such addilionallnfonnatlon.

If my Account is closed or suspancled for any R:ason. lhc Bank may Altum unpaid any outstanding Advance

requeet checks drawn on my AOI:OIIllt and refUse to honor any other Acl\lllltCe requesl macle on my Account. I

will continue to be r~onslble for full payment of the balance or my ACCOIIIlt as well as all other Account

obliaations, ac:cordln& to lbe terms or tbls Aareemcnt.

SECTION 19: FURTHER ASSURANCES

I a~ tllat J will take any sleps,lacludlng but notllmiled to, signing, filing or recording any cfocumcals. which

are necessary or wllicll the Bank deems appropriate. co be sure tbat my obligations 10 the Bank under this

Apccmenl become and continue to be secured by tbe Securily Jnstrumeqt.

SECTION Zfl: CHANGE IN RESIDENCE OR OWNERSHIP OF THE PROPERTY

J aarce to notifY the Bank immediately if (a) the Property I$ my primary realdenae and I ~~~ to live In the

Property as my primary Rlliidoncc, or (b) lherc Is any change in tho ownCI8bip of the Ptoperty; or (c) I have

declared the Property my Texas Homostead u clefhled by Chapter 41 of ille Texas Propert)' Code, and lhe

Proporty or any pare of the Property ceases to be used as Hontestead property or I declare other propertY I own to

bo my Texas Homes1ead.. 1 aaroe that Ill)' Account shall he closed and that the enUre outstanding balance of my

Account shall be due and payable immediately on anyaalc or otlter IIQR$fer of the Property, unliiSS prohibited by

applicable law. rn this reprd, I undeetand dtat my A.tlCOunt i.~ acuml by a Security 1nsuument c:ontainins tbt:

following or a sulJstanUally similar provision:

1011$

DlloumcniS Pmcxucd Ot.0!.\.2007. 13>44:53

I

56

If all or any pan of the Propeny or any Interest in the Property L~ sold or uansferred (or ifBonower Is

not a llldural person and a benefiCial intereat In Bonower is sold or ln!Mferred) witlloutl.endcr"a prior

wriUen con~en1, Lencfer may require Immediate paym~l In filii of all sums secured by this Security

lll."lnlment. Howwer, this option shall not bo ex~ised by Lender If such exerc:ise is prohibited by

Applicable Law.

If Lender exorcises this option, Lender sball give Borrower notice or aecelenttion. The nolic:o shall

provide a period of not Jess than 30 days from tbe date the notice Is given In acc:ordance wilh Section 13

within which Borrower mll$1 pay all sums .uml by this Security lnS\IIIIIIllnt lrBorrower faDs to pay

these swns prior to the expiration or this period, Lender may invoke any ~medics permitted by this

Security Instrument witb0111 filnher notice or demand on Borrower.

SECTION 21: CHANGE IN TERMS

To the extent allowed by law, I aaRC tbat the Bank may make cenain olumJCS to the temas of this Apeemont at

speelfted times or vpon tho oc:cunem::e of S)leolfted events. Tha Bank may make in.,itpdftcant cbanaes, such as

challgos ill tho address for payments, bllllna cycle dates, p&YmMI due dates, day of the month on which Index

values an: dctonnincd, lndelt or intete$t rat~ rounding rules, and balance computation method (if the change

produc~ an insisnillcant differenco in tile lntereat or FINANCE CHARGE I am required r.o pay). The Btmk

may also make c:hanJO$ tllal will benefit me, such as addltl01181 opllons or a lempatary reduction in rates or fees.

In aucordanoo with federal law. the Bank may also c:hiiRJO tho Index and Margin used to determine the ANNUAL

PERCENTAGE RATE(S) that apr.ly to my Line of Credit Advances andfor Fixed Rate Advances if the original

Index Ia no longer available. The Bank may make any of lhe chaoges discu.'llled above without my con.qont,

unless applicable law provides otherwise. Tho Bank will give me any notice or clt!mae tbat is required by Jaw. I

may also agree lo cbanges in wrilina.

So long atlhe Property SC(;urill(l this Asrcemenl is my Texas hometlead n defmed by Chapter 41 of the Texas

Propeny Code, lhe Bank may not, in any ci~umslanco. unlraterally amend the terms or this AgJeement.

SECTION 12: WAIVERS· ·

BOBltQWQ'S WAIVERS

I waive my riahttl to wquire the Bank co do certain things. Those things are: (a) to demand payment or

amounls due (known as "presentment"); (b) to Jive notice lhat amounts due have not been paid (known as

"notice of dishonor'')> (c) to obtain an omciaJ cmnu:atlon of nonpayment (lmown as "protesl").

lANK'S NON•WAIV£R •

The Bank may fall to make use or any of ils riJhiS under this Agreement or the Securi&y Jnstnamcnt or under

appllcablo law on one or more oocaslom, or dc:Jay or partially exercise such rights, wlthaut waiving any of its

riJ)ds or amending any of my obligations. Tho Bank may r.n to mab use or any of iL<~ righL~> or delay or

partially exen:lso such righrs against one party, without waiving ally of its rights against any other party to this

Asrecmet~~.

SECTION 23: GOVERNING LAW; SEVERABILITY

All interest., fees and other amounta charged or accruing in connection with this Apeement wbiob are considered

"interest" wilhin tho meanina ofS~tion 8S of tho National Bank Act (12 USC §BS; 12 CFR 7.4001(a)) sball be

governed by and interpreted under South Dakola law. In all other teSpects, this Agreement and all ~lated

document!!, as well as the righfS, remedies, and duties of the Bank and the Borrower(s). shall be governed and

interpreted by federal law 'With respect to nalionel banks and, lo the extent not preempted by federal law, the

laws of the state In which the Property is located, except that Texas Finance Code Chapter 346 (which re&111ates

certain revolvin& credit accounts) does not apply to thi$ Ap:emenl. •

If any provision of this Agreement or the Security Jnstm~nent is detennlned to be invalid or unenforc:eablc by a

coun or competent jurisdiction, che Rj$t of this Agreement will mnllin in tUU fon:e and efreet and enforceable

acconling to its tc:nn!i. All menmce~~ln this Agreemllnt to lhe singular shall include 1M plurallllld vice versa.

11115

DOCUIDCIIIS 1"ru!ICS$Cd 0t.Q9•2007 t 13:44:53

57

SECTION 14: LOST OR STOLEN ADVANCE REQUEST CHECKS; BILLING ERRORS

LOST OR 8J'OLEN APXANC£ REOUIST CRECQ fWUER£ AVAJyBLI): RQJ.ING IRRQRS

I Will immediately contact the Bank at tha phone number oo my monthly billing lllatement 111d confinn by leiter

if any or my Advance request cheeks arc ever lost or stolen, if tberc arc lillY enors in my monthlY billing statement.

or iff suspect any 'IIJI8Uihotized use of my Ac:eount.

The Bank will not rctum to me my canteUed Advance~~ checks or other AdVIII!ce request Jnstnunonts after

~)'iftg tham. The Ban}( wlll make available photocopies of my Advance RlqUCSl chEcks and other Advallee request

msuuments upon request. I will ewnille mY AceoUIII atatemeniS promptly ift order to ldeatll)r any Improper or

UllaU1horlzed entries, In coaaideralloa ror t1te Bank's pa)'IIICIIt ofeach Advance request check, I lllf" that even

thouah I will110t JCCeive the original Advance Rqucst cheeks, all time periods llllder tho UnifOrm Commercial

Code (UCC) for examinlna my mOIIthly billina statement and ~Jting lmpropor entries, inoludlng tbe UCC's

statutes of limltalfOD with respect co fbrged, unllUihOrizecf, or missing signatures or endorsements, will begin

fi'om the time my Ac:c:ount statement is first sent or made available to me.

IJNAUTHQ.RIZED TRAN$ACTjON$

I will notity the Bank if someone baa b'anaferred, or may tranarcr IIIOl\e)' liom my A.ceo'lml wilbout my

pennlssfon, or If I suspect any &audulent activity on my Accolml. I can call the Wells Fargo Pllont: Bank at the

telephone number on my monthly blllint statement, anytime. 24 hours a day, 7 days a week. or advise my local

Bank branch omce. l may al5o 5el1d written notice to the Bank at tho addrees incllcated on my billing statement.

BW!nt lUgh!!- Ketp Dl1 Notlq Fqr Future UH

This notice contain• lmpoJtanllnt'onnation about my rights and the Bank's responRibililies under the 'Fair Cnldlt

Billing Act.

Notify Tbe Bllpk In Case OfiJ'tm Or Ouutlont Abont My BID

If t think my billing statement Is wrong. or if I need more illformation about a aran.•tion on my billing

statement. J will &end a Iotter on a separate pqe co tho Dank, a$ soon as possible, at the acldr~ listed on my

·billing sratemmt. ·ne Bank must heat &om me nc. later tban 60 days ·after dte Balllc mn me the first billing

statement on which the &II$JJec:ted error or problem appears. I can telephone the Bank, but doing liO will not

preserve my rishts.

In my Jetter.l will proYide the Bank wilh tbo foDowina illfbrmation:

• My namo. Ac:c:ouat llllnlber and cfaylimc phone number, and

• Tho dollar amount ofthe &UI~ted error, and

• A closcripllon or tltc error and OJtPianaclon, If possible. as ro why 1 believe thoro is an error. If I need mont

information, I will describe the Item I am not sure about.

If 1 have authOrized the Bank to pay my minimum monthly payment automaticaUy ftom my ohecldng acooulll at

the Bank, I ean stop the paymont of any scheduled automatic payment if I believe a biDing error has oec&~rrcd.

To atop chc payment, my letter must reaoh lho Blink at tcasr tfiiH businees da,ys before tho automatic payment ia

scheduled lo occur.

My lU!hta ADd The Bank's ft.tHIO!l!!!!iiWU After kdol Of fdY }Yrit&p Nallu • •

The Bank must acknowledge my leiter within 30 day:~, uDleas the Bank ha$ coneoted tho error by then. W.ithm

90 days. lhe Bank must either COI!Ult tho error or explain why 1M Bank believes the bmlng statement was

concct.

After the Bank rec:oives my letter, the Bank CIDIIOC 11y to collecl any amouat I question, or report me as

delinquent. Tho Bank Gan continue to biD me for tho amount I queetlon. includina financ:e chmgcs, and the Bank

can apply anY Wlp&id amoun1 against my credit limit. I 4o not llave to pay IUIY qucstaoned QIUO\Ull while the

Bank Is researching my Ac:c:ount, but J am still obligated to pay tho parts of my bill thai are not in question.

ll/15

Doc:umenrs Pmc:essod 01.()9.2:007, 13:44:53

I

58

lt the Bank fmds that a mistake was made on my billing stalelllent, I will not have to pay any ftnanee charges

related to lhe questioned amount. lflhe Bank didn't mako a mistake, I will have to pay finaMC charges. and 1

will have lo make up any missed payaJcn~s on lhe questlomd amount. In eilller case, the Bank will send me a

$tatemtlllt of the amom~t I owe and the dalO chat payment is due.

If 1 filii to pay the amount that the Bank dotennines I owe, the Bank may report me as delinquent. However, if

the Bank's explanation docs not satiJfy me and I write to the Bank within ten daya tellina tbe Bank that l still

refuse to pay, the Bank muat ten anyone the Bank repons me to lhatl have a quesclon about my biD. And. the

Bank must tell me the name or anyona the Bank APOI1S me to. When the matter has been souled between the

Bank and me, •II• Bank mllll tell anyone the Bank repc11ts mo to that tile matter has been setllcd.

If die Bank does not follow the above rules, the Bank c:annot collect the fltst $50 of the questioned amoum, even

it my billina statement waa corrc:c:c.

SECTION 25: NOTICES

Unless appllaabla law requires a ditTercnt method, any notice that must be pven to me or to anyone el$e who

sips,a.mranteea or endoi'SOfllhis Aareement may be glwn by 11111ilina it to my addres& as aet forth abo-ve in Ibis

Ap:emont, or to a different address If I have properly notified the Balik of tbat different adns. Any notice

that I may send to the Bank must be afven by maill.q it to the Bank 111 lhe address provided on my billing

statement, unless the aype of notice ls more specifically addreued in this Asreoment alld a different address is

provided herein.

If I contact YOII by phone. I acknowledge that telephone calls between me and the Bank or any of the Bank's

amliaces may be monitored and recorded by the Bank or the Bank•s affiliaccs to ensure that my inquiries aro

bandied prompdy, COIIrtiiOUSiy and ac<:~~raiCiy.

I aaree that the Bank may c:ontact me by telephono. I qree to accept c:aJis &om the Bank at any telephone

number that I provide to tile Bank.

I aare«1 to aoeopt wls fi'om the Bank or the Bank's c;leslgnated rllllrest:ntatives which bqin with a verbal

statement or tabbed messllJO IdentifYing the call as a business oan tiom tbe Bank. I ackllowledge and understand

that some of the telephono Galls between me and tho Bank may be monitored and recorded to onsure that abe

Bank handle& these calls courteou.,ly and ac:curately.

SECTION 26: ADDENDA

I agree to llt11 foJiowil\g attached addencla, rnodificalioM or an~elldmente:

NIA '

SECTION 27; STATE DISCLOSURES

N/A

THIS AGREEMENT, mE SECURITY INSTRUMENT AND THE CLOSING DOCUMENTS EXECUTED

HEREWITH CONSTITlJ'I'E A WRITIEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL

AGREEMENT OF THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRJO:R.,

CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS Or THE PARTIES. THERE ARE NO

'UNWRITIEN ORAL AGREEMENTS BETWEENntE PARTIES RELAnNG TO THIS AGREEMENT.

SECTION 28: PERSONAL LIABILITY (Texaa BGmestead PropertyOaly)

an

I intend to comply with provitioos and conditions of the Equity Law in orcJer toROI!Ie tbis Aatetment with a

valid lien upon the Property. 1 will exc\lllte any document nccess&IY ro comply wilh all provisions and

conditions of the Equ.lty Law in older to securo this Asreement with a valid lien IIJIOD die Property. If, for any

reason the Property descn"bed in the Security Instrument Is not homesteSd property. due lo mistake,. ~r or

misrepresentation by me or anyone else alping this AgreemeiU, then lite parties intaul and •pe that thas l•ne of

l31U

Docu!IIUIS Proctssed 01.09-2007. 13:44:53

59

credit Is not an eqllity line or credir made under the Equity Law, the non-recourse provisions of lhe Equity law

arc nor applicable:, and lbe: Security Instrument remain$ a wlid lien on the Property.

SECTION ·19: FORFEITlJRE OF PRINCIPAL AND INTEREST; CURE OF VIOLATION

11le Bank sball comply with any of it& obliptlons under sections SO(a)(6), SO(e)-(i), or !O(t) Anicle XVI, Texas

ConslitudOD or olher provisions ofthis Aammcot and related loan documencs (colleclively. the "Obligations'1

within 60 days after the Bank receives 110tlce of tile failure to comply, ullless 1he Bank remedies Chat failllle as

provided in Texas COnstitution Art. XVI, Section SO(a)(6)(Q)(x). AAy 1101iec of non-compliance wJih any

portion of !he Obliptions must b~ In wrili1J8, mailed poatage PJePaid by first eh1sa mall to:

Wells FOJSo Bank Bxet111tive omce

MACP60.5).016

POBox4233

Portland, Oteaon 97208

or to a differeDt address If 1 am given notice pursuam to this Agreement of that different address. M a

precondition to taking any action promised on tile fiilure of tile Bank to comply, I will cooperate in reasonable

efforts to eft'ecluate any compliance.

NOTICE TO THE BORROWER

DO NOT SIGN THIS AGREEMENT IF IT CONTAINS BLANK SPACES. ALL SPACES SHOULP BE

COMPLETED BEFORE THIS AGREEMENT IS SIGNED. READ THIS AGREEMENT BEFORE

SIGNINGIT, .

ACKNOWLEDGMENT

I have reeelved. read aad ntalaed a copy or lhlir w~lls Ftugo Hom• Et•ily Acco11nt Aareement $ad

Ditclosure Staa.ment (tilt "Atmmtat"), tile Security Jnstr11111ent, the Aareement to Provide Insurance,

and the HOD Settlement Statement provided to- me at the closinJ, all of wlllcb I agree to by ttanlna tbiJ

Aareement. The HlJD Stttlemen& Shtement is fDtorporated fnto and made a part or tllis Agmment. I

aclmowltcJ&e receipt or tlae Wells Fmp HtH111 Bqulty Aaeollllt Important Terms dlttlosllre end lbe bome

equity broC!hQre 'Wiata I applied for this Aceouat. In addltloll, I hereby qree tltllt the term• of thlt

Alfeement replace tlte ttrms of any prior oral or written aanemeaD betweea the Bank and me abo~at tbls

AcCGunt. lncludllla. for tumple. any and all commitment letters and pre-approwl leiters bemeea the

B~ank and me abo~Mt.

_ ~

:B-::::OF-RO~w==E~R~-~..::;..:::.....---------..w~~~~~o~

<suo 0C- 1(-t:>

DATESlGNED

'f.

JANOS F'ARKAS

(Set\)

BORROWER DATE SIGNED

BORROWER DATE SIGNED

BORR.OWER DATE SIGNED

••••••

14/lS

WeJI5FarpHo-~~= Acc:ount Aa-t Oocullltll1$1'roc<:$SGIOI.09-2007.13:44:Sl

60

I BORROWER

!§SAil

DATE SIGNED

fSeall

BORROWER DATE SIGNED

Uiall

BORROWER DATE SIGNED

(~tall

BORROWER DATE SIGNED

&SitS

OocumeniC Poousscd 01-4»-2.007. U:#:Sl

I

61

.. tf

After Recording Mail to:

Wells Farg() Bank, N.A.

Attn: Document Mgt.

P.O.Box31557

MAC 86908-012

III~IIIIIJIIMIIII!IImfll~~llltiiiiiii~IIOOIII

DT

Billings, MT 59107-9900

14 PGS

This Instrument Prepared by:

Wells Fargo Bank, N.A.

2202 W ROSE GARDEN LN

PHOENIX, ARIZONA 8S027

Account Number: 650-650-4349999-lXXX j i \ ~ (_;! Reference Number: l0063367SOOO!t9

THIS SECURITY INSTRUMENT SECURES AN EX1'ENSION OF CREDIT AS DEFINED BY SECTION

5D(a)(6} AND 50(t), ARTICLE XVI OF THE TEXAS CONSTITUTION.

TEXAS DEED OF TRUST

(Securing Future Advances)

DEFINITIONS

Words used in multiple sections of this document are defined below and other words are defined elsewhere in this

document. Certain rules regarding the usage of words ll~ed in this document are also provided in Section l4.

(A) "Security Instrument" means this document, which is dated JANUARY 11, 2007, together with all Riders to

Ibis ducwnent.

(B) ''Borrower" is JANOS FARKAS, AN UNMARRIED PERSON. Borrower is the grantor under this Security

Instrument. Borrower's Address is 6315 FARl\-IDALE, AUSTIN, TEXAS 78749.

(C) "l..ender" is .Wells Fargo Rank, N.A .. Lender is a National Bank organized and existing under the laws of the

United States. Lender's address is 101 North Phillips Avenue, Sioux Falls, SD 57104. Lender includes any holder

of the Debt Instnnnent who is entitled to receive payment~ under the Debt Instrument. Lender is the beneficiary

under this Security Instrument.

(D) ''Trustee" is Stephen F. Marquart.

Trustee's address is 4406 Piedras Drive West, Suite llO, San Antonio, TX 78228.

(E) "Debt Instrument" means the Joan agreement or other credit instrument signed by Borrower and d&ted

.JANUARY II, 2007. The Debt Instrument states that Borrower owes Lender, or may owe Lender, an amount that

may vary from time to time up to a maximum principal sum outstanding at any one time of, ONE HUNDRED

THREE THOUSAND FOUR HUNDRED FORTY-ONF: AND 00/lOOTHS DollarS (U.S. $ 103,441.00) plus

interest. Borrower has promised to pay this debt in Periodic Payments and to pay the debt in full not later than

January 11,2047.

(F) "Property.., means the property that is described below under the heading "Transfer of Rights in the Property."

(G) "Extension of Credit" means the debt evidenced by the Debt Instrument, as defined by Sedion 50(a)(6) and

50( c), Article XVJ of the Texas Constirotion and all the documents executed in connection with the debt.

(H) "Riders" means all Riders to this Security Instrument that are executed by Borrower. The following Riders are

to be executed by Borrower [check box as applicable}:

~ Leasehold Rider EXHIBIT

~ Trust Rider

IN1AI Other(s) [specify]

~ Rcncw!ll and ExtensioiJ Rider

N/A

I ~

TEXAS-·OPEN-ENP SECURITY INSTRUMENT {page I of' 14 pug~s}

liliiiillll111111111111111111 Documenls Processed 0\·09·2007. l 3:44:53

70

()

(0 "Applicable Law" means all control\ing applicable federal law and, to the extent not preempted by federal law, .

~

.

state and local statutes, regulations, ordinances and administrative mles and orders (that have the effect of law) as

.

well as all applicable final, non-appealable judicial opinions.

(J) "Community Association Dues, Fees, and Assessments" means all dues, fees, assessments and other charges

that may be impo~d on Borrowt:r or the Property by a condominium association, homeo"WneTS association or similar

.

:n .

organization.

(K) ..Electronic Funds Transfer" means any transfer of funds, other than a transaction originated by check, draft,

or similar paper instrument, which is initiated through an electronic tenninal, telephonic in'l.trument, computer, or

magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an accoWit. Such tenn

includes, but is not limited to, point-of-sale transfers, automated teller machine transactions, transfers initiated by

telephoae, wire tri111Sfers, and automated clearinghouse transfers.

(L) "MisceUaneous Proceeds" means any compensation, settlement, award of damages, or proceeds paid by any

third party (other than insurance proceeds paid under the coverages described in Section 4) for: condemnation or

other taking of all or any part of the Property or conveyance in Jieu of condemnation.

(M) "Periodic Payment, means the amounts as they become due for principal, interest and other charges as

provided for in the Debt Instrument.

(N) "Successor in Interest of Borrower" meall8 any party that has taken title to the Property, whether or not that

party has assumed Borrower's obligation!! under the Debt Instrument and/or this Security Instrument

TRAJ\iSFER OF RJGIITS IN THE PROPERTY

This Security Instrument secures to Lender: (i) the repayment of the Extension of Credit, and all future advances,

renewals. extensions and modifications of me Debt Instrument, including any future advances made at a time when

no indebtedness is currently secured by this Security Instrument; and (ii) the performMce of Borrower's covenants

and agreements under this Security Instrument and the Debt Instrument. For this purpose, Dorrower irrevocably

grants and conveys to Trustee, in trust, with power of sale, the following described property located in the

County of TRAVIS

[Type of Recording Jurisdiction j [Name of Recording Jurisdiction]

327357

LOT 18, BLOCK 5, OF VILLAGE AT WESTERN OAKS SECTION 14, A SUBDIVISION IN TRAVIS

COUNTY, TEXAS, ACCORDING TO THE MAP OR PLAT OF RECORD IN YOLL'ME 86, PAGES 80B-

81A, OF THE PLAT RECORDS OF TR.o\VIS COUNTY, TEXAS.

which currently has the address of 6315 FARMDALE LN

--------------------~~~~~~~~~--------------------

[Street}

---------'A""U-:=-::-ST-=-1::-:N-'------• Texas 78749 ("Property Address"):

[City] [Zip Code]

TOGETHER WITH all the improvements now or hereafter erected on the property, and all easements,

appurtenances. and fixtures now or hereafter a part of the property. All replacements and additions shall also he

covered by this Security Tnstmmenl.

All of the foregoing is referred to in this Security instrument as the "Property"; provided however, that the

Property is limited to homestead property in accordance with Section 50(a)(6)(H), Article XVI of the Texas

Constitution. The Property shall also include any additional property described in Section 20.

BORROWER COVENANTS that Borrower is lawfully seised of the estate hereby conveyed and has the

right to gran£ and convey tbe Property and that the Property is unencumbered. except for encumbrances of record as

of the execution date of this Security Instrument. Borrower warrants and win defend generally the title to the

Property against all clain1s and demands, subject to any encumbrances of record.

TEXAS-OPEN-END SECURITY INSTRUMI!:NT fpag(' 2 ~( 14 pages;

HC#l62v7 (2/3/05)

111111111111111111111111111 Documents ProccS$0d 0 1-0Q-2007, 13:44:5.1

71

)

UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows:

1. Payment of Principal, Interest, Prepayment and Other Charges. Borrower shall pay when due the

principal of, and interest on, the debt evidenced by the Debt Insl.nlment and any prepayment charges, late charges

and other charges due under the Debt Instrument. Payments due under the Debt Instrument and this Security

Instrument shall be made in U.S. currency. However, if any check or other instrument received by Lender as

payment under the Debt Instrument or !.his Security Instrument is returned to Lender unpaid, Lender may require that

any or all subsequent payments due under the Debt Instrument and this Security Instnuncnt be made in one or more

of the following forms, as selected by Lender: (a) cash; (b) money order; (c) certified check, bank check, treasurer's

check or cashier's check, provided any such check is drawn upon an institution whose deposits are insured by a

federal agency, instrumentality, or entity; or (d) Electronic Funds Transfer.

Payments are deemed received by Lender when received at the location designated in (or in accordance

with) the Debt Instrument or at such other location as may be designated by Lender in accordance with the notice

provisions in Section 13. Subject to Applicable Law, Lender may return any payment or partial payment if the

payment or partial payments are insufficient to bring the Extension of Credit current. Lender may accept any

payment or partial payment insufficient to bring the Extension of Credit current, without waiver of any rights

hereunder or prejudice to its rights to refuse such payment or partial payments in the future.

2. Application of Payments or Proceeds. Unless other procedures are set forth in the Debt Instrument

cr Applicable Law, Lender may apply payments in any order that Lender deems appropriate.

Any application of payments, insurance proceeds, or Miscellaneous Proceeds to principal due under the

Debt Instrument shall not extend or postpone the due date, or change the amount, of the Periodic Payments.

3. Charges; Liens. Borrower shall pay all taxes, assessments, charges, fines, and impositions attributable

to the Property which can attain priority over rhis Security Instrument, leasehold payments or ground rents on the

Property, if any, and Community Association Dues, Fees, and Assessments, if any.

Borrower shall promptly discharge any lien which has priority over this Security Instrument unless

Borrower: (a) has disclosed such lien to Lender at application for the Extension of Credit or agrees in writing to the

payment of the obligation secured by the lien in a manner acceptable to Lender, but only so long as Borrower is

performing such agreement; (b) contests the lien in good faith by, or defends against enforcement of the lien in, legal

proceedings which in Lender's opinion operate to prevent the enforcement of the lien while those proceedings are

pending. but only until such proceedings are concluded; or (c) secures from the holder of the lien an agreement

satisfactory to Lender subordinating the lien to this Security Instrument. If Lender detern~inM thai any part of the

Property is subject to a lit:n that can attain priority over this Security Instrument and which was not disclosed on the

application for the Extension of Credit that Borrower provided to Lender, Lender may give Borrower a notice

identifying the lien. Within l 0 days of the date on which that notice is given, Borrower shall satisfY the lien or tnkc

one or more of the actions satisfactory to Lender set forth above in this Section 3.

Lender may require Borrower to pay a one-time charge for a real estate tax verification and/or reporting

service used by Lender in connection with this Extension of Credit.

4. Property Insuranc~. Borrower shall keep tho: improvements now existing or hereafter erected on the

Property insured against loss by fire, hazards included within !he tenn "extended coverage," and any other hazards

including, but not limited to, earthquakes and floods, for which Lender requires insurance. This insurance shall be

maintained in the amounts (including deductible levels) and for the periods that Lender requires. What Lender

requires pursuant to the preceding sentences can change during the tern~ of the Extension of Credit. The insurance

carrier providing the insurance shall be chosen by Borrower subject to Lender's right to disapprove Borrower's

choice, which right shall not be exercised unrc:asonably. Lender may require Borrower to pay, in connection with

this Extension of Credit, either: {a) a one-time charge for flood zone detennination, certification and tracking

services~ or (b) a one-time charge tor flood zone detennination and certification services and subsequent charges

each time remappings or similar changes occur which reasonably might affect such determination or certification.

Borrower shall also be responsible for the payment of any fees imposed by the Federal Emergency Management

Agency in connection with the review of any flood zone detennination resuJring from an objection by Borrower.

If Borrower fails to maintain any of the coverages described above, Lender may obtain insurance coverage,

at Lender's option and Borrower's expense. Lender is under no obligation to purchase any particular type or amount

of coverage. Therefore, such coverage shall cover Lender, but might or might not protect Borrower, Borrowt:r's

equity in the Property, or the contents of the Property, against any risk, hazard or liability and might provide greater

or lesser coverage than was previously in effect. Borrower acknowledges that the cost of the insurance coverage so

obtained might significantly exceed the cost of insurance that Borrower could have obtained. Any amounts

disbursed by Lender under this Section 4 shall become additional debt of Borrower secured by this Security

TEXAS-OPEN-END SECURITY INSTRUMENT (page J of I 4 pag~s)

HC#162v7 (2/3/05)

11111111111111111111111.1111 Documcnls Pr\Jce~ecl 01-M-2007. 13:44:51

72

Instrument. These amounts shall bear interest at the rate applicable to the Debt Instrument from time to time, from

the date of disbursement and shall be payable, with such interest, upon notice from Lender to Harrower requesting

pa;;.ment.

All insurance policies required by Lender and renewals of such policies shall be subject lo Lender's right to

disapprove such policies, shaU include a standard mortgage clause, and shall name Lender as mortgagee and/or as an

additional loss payee and Borrower further agrees to generally assign rights to insurance proceeds to the holder of

the Debt Instrument up to the amount of the outstanding loan balance_ Upon Lender's re!juest. Borrower shall

promptly give to lender copies of all policies, renewal certificate.<~, receipts of paid premiums and renewal notices.

If Borrower obtains any form of insurance coverage, not otherwise required by Lender, for damage to, or destruction

of, the Property, such policy shall include a standard mongage clause and shall name Lender as mortgagee and/or as

an additional loss payee and Borrower further agrees to generally assign rights to insurance proceeds to the holder of

the Debt Instrument up to the amount of the outstanding loan balance.

In the event of loss and subject to the rights of any lienholder with rights to insurance proceeds that are

superior 10 Lender's rights, the following provision_s in this Section 4 shall apply_ Borrower shal1 give prompt notice

to the insmance canier and Lender. Lender may make proof of loss if not made promptly by Borrower. Unless

Lender and Borrower otherwise agree in writing, any insurance proceeds, whether or noc the underlying insurance

was required by Lender, shall be applied to restoration or repair of the Property, if the restoration or repair is

economically feasible and Lender's se<:wily is not lessened. During such repair and restoration period, Lender shall

have the right to hold such insurance proceeds until Lender has had an opportunity to inspect such Property ro ensure

the work has been completed to Lender's satisfaction, provided that such inspection shall be undertaken promptly.

Lender may disburse proceeds for the repairs and restoration in a single payment or in a series of progress payments

as the work is completed. Unless an agreement is made in writing or Applicable Law requires interest to be paid on

such insurance proceeds, Lender shall not be required to pay Borrower any interest or earnings on such proceeds.

Fees for public adjusters, or other third parties, retained by Borrower shall not be paid out of the insurance proceeds

and shall be the sole obligation of Borrower_ If the restoration or repair is not economically feasible or Lender's

security would be lessened. the insurance proceeds shall be applied to the sums secured by this Security Instrument,

whether or noc then due, with the excess, if any, paid to Borrower. Such insurance proceeds shall be applied in the

order provided for in Section 2.

If Borrower abandons the Propeny, Lender may file, negotiate and settle any available insurance claim anll

related matters. If Borrower does not respond within 30 days to a notice from Lender that the insurance cattier has

offered to settle a claim, then Lender may negotiate and settle the claim. The 30-day period will begin when the

notice is given_ In either event, or if Lender acquires the Property under Section 21 or otherwise, Borrower hereby

assigns to Lender (a) Borrower·s rights to any insurance proceeds in an amount not to exceed the amounts Wlpaid

under the Debt lut;trument or this Security Instrument, and (b) any other of Borrower's rights (other than the right to

any refund of unearned premiums pl!id by Borrower) under all insurance policies covering the Property, insofar as

such rights are applicable to the coverage of the Property. Lender may usc the insurance proceeds either to repair or

restore the Property or to pay amounts unpaid undet the Debt Instrument or this Security Instrument, whether or not

then due, subject to the rights of any lienholder with rights to insurance proceeds that are superior to Lender's rights.

5. Occupancy. Borrower now occupies and uses the Property as BorTOwer's Texas homestead and shall

continue to occupy the Property as Borrower's Texas homestead for at least one year after the date of this Security

Instrumr.:nt, unless Lender otherwise agrees in '1\-riting, which consent shall not be unreasonably withheld, or unless

extenuating circumstances exist which are beyond Borrower's control_

6. Prcscrvationt Maintenance and Protection of the Property; Inspections. Borrower shall not

destroy, damage or impair the Property, allow the Property to deteriorate or commit waste on the Property. Whether

or not Borrower is residing in the Property, Borrower shall maintain the Property in order to prevent the Property

from deteriorating or decreasing in value due to its condition_ Unless it is detennined pursuant tu St:ction 4 thai.

repair or restoration is not economically feasible, Borrower shall promptly repair the Property if damaged to avoid

further deterioration or damage. If insurance or cond~mnation proceeds a1e paid in connection with damage to, or

rhe taking of, the Property, Borrower shall he responsible for repairing or restoring the Property only if Lender has

released proceeds for such putposes_ Lender may disburse proceeds for the repairs and restoration in a single

payment or in a series of progress payments as the work is completed. If the insurance or condemnation proceeds

are not sufficient to repair or restore the Property, Horrower is not relieved of Borrower's obligation tor the

completion of such repair or restoration.

TEXAS-OPEN-END SEClJRITV INSTRUMENT (page 4 ol U pa_ges)

HCIII62vi (2/3105)

11111111111111111111111111111 Documenls Prue=""ll Ol-0~-2007, \3:44:5)

73

Lender or its agent may make reasonable entries upon and inspections of the Property. If it has reasonable

cause, Lender may inspect the interior of the improvements on the Property. Lender shall give Borrower notice at

the time of or prior to such an interior inspection specifying such reasonable cause.

1. Borrower's Loan Application. Borrower's actions shall constitute acrual fraud under Section

50{a)(6)(c), Article XVI of the Texas Constitution and Borrower shall be in default and may be held personally

liable for the debt evidenced by the Note and this Security Instrument if, during the Extension of Credit, Borrower or

any persons or entities acting at the direction of Borrower or with Borrower's knowledge or consent gave materially

false, misleading, or inaccurate information or statements to Lender (or failed to provide Lender with material

information} in connection with the Extension of Credit or any other action or inaction that is detennined to be actual

fraud. Material representations include. but are not limited to, representations concerning Borrower's occupancy of

the Property as a Texas homestead, the representations and warranties contained in the Texas Home Equity

Extension of Credit Agreement and Acknowledgement of Fair Market Value Affidavit as described in Section 27.

8. Protcctioa of Lender's Interest in the Property and Rights Under this Security Instrument. If (a)

Borrower fails to perform the covenants and agreements contained in this Security Instrument or any obligation that

is secured by a lien that is superior to this Security Instrument, (b) there is a legal proceeding that might significantly

affect Lender's interest in the Property and/or rights under this Security Instrument (such as a proceeding in

bankruptcy, probate, for condemnation or forfeiture, for enforcement of any lien which may attain priority over this

Security Instrument or tu tmforoe laws or n:gulations), or (c) Borrower has abandoned the Property, 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, including protecting and/or assessing the value of the Property, and securing and/or repairing

the Property. Lender's actions can include, but are not limited to: (a) paying any sum!i secured by a lien which ha<;

priority over this Security lnsnument; (b) appearing in court; and (c) paying reasonable auomeys' fees to protect its

interest in the Property and/or rights under this Security Instrument, including its secured position in a bankruptcy

proceeding. Securing the Property includes, but is not limited to, entering the Property to make repairs, change

locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or

dangerous conditions, and have utilities turned on or off. Although Lender may take action under this Section 8,

Lender does not have to do so and is not Wlder any duty or obligation to do so. It is agreed that Lender incurs no

liability for not taking any or all actions authorized under this Section 8.

Any amounts disbursed by Lender under this Section 8 shan become additional debt of Borrower secured

by this Security Instrument. These amounts shall bear interest at the rate applicable to the Debt Instrument from time

to time, from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower

requesting payment.

If this Security Instrument i!i on a leasehold, Borrower shall comply with all the provisions of the lease. If

Borrower acquires fee title to the Property, the leasehold and the fee title shall not merge unless Lender agrees to the

merger in writing.

!). Assignment of Miscellaneous Proceeds; Forfeiture. All Miscellaneous Proceeds are hereby assigned

to and shall be paid to Lender, !iubject to the rights of any lienholder with rights to MisceJlaneous Proceeds that are

superior to Lender's rights.

If the Property is damaged, such Miscellaneous Proceeds shall be applied to restoration or repair of the

Property, if the restoration or repair is economically feasible and Lender's security is not lessened. During such

repair and restoration period, Lender shall have the right to hold such Miscellaneous Proceeds until Lender has had

an opportunity to inspect such Property to ensure tht: work has been completed to Lender's satisfaction, provided

that such inspection shall be undertaken promptly. Lender may pay for the repairs and restoration in a single

disbursement or in a series of progress payment<~ a'> the work is completed. Unless an agreement is made in writing

or Applicable Law requires interest to be paid on such Miscellaneous Proceeds, Lender shall not be required to pay

Borrower at1y interest or earnings on such MisceUaneous Proceeds. Subject to the rights of any lienholder with

rights to Miscellaneous Proceeds that are superior to Lender's rights, if the restoration or repair is not economical1y

feasible or Lender's security would be lessened, the Miscellaneous Proceeds shall be applied to the sums secured by

this Security Instrument, whether or not then due, with the excess, if any, paid to Borrower. Such Misccllaneou~

Proceeds shall be applied in the order provided for in Section 2.

Subject to the rights of any lienholder with rights to Miscellaneous Proceeds that are superior to Lender's

rights, in the event of a total taking, destmction, or loss in value of the Property, the Miscellaneous Proceeds shall be

applied to the sum

This text is long and has been trimmed here. Open the source document for the complete record.