News & Insights

Case of Interest where Texas Supreme Court Narrows Home-Equity “Forfeiture” Remedy to Constitutional Violations

Jun 25, 2026

In Staub v. BBVA USA, No. 24-1057, 2026 WL 1500941, (Tex. May 29, 2026). the Texas Supreme Court ruled that the Texas Constitution’s home-equity “forfeiture” remedy (wiping out principal and interest) is aimed at constitutional violations in a home-equity loan—not every alleged mistake or broken promise in the loan paperwork. The Court said the forfeiture provision in Article XVI, Section 50(a)(6)(Q)(x) ties to the Constitution’s specific home-equity requirements and the Constitution’s built-in cure options, so it does not automatically apply to ordinary breach of contract allegations. On these facts, the borrower pointed to an interest-rate overcharge/billing error, but the Court treated that as an alleged contractual damages issue rather than a constitutional forfeiture claim, and it affirmed judgment for the lender on forfeiture.

More specifically, Parker Young obtained a Texas homestead HELOC with a promotional rate 0.26% below prime, but BBVA charged about 0.25% more, overcollecting roughly $10,000 in interest. Young notified BBVA on December 2, 2020, BBVA denied error within sixty days, and Young sued for forfeiture of all principal and interest or actual damages. Representing BBVA, Pat Huttenbach obtained summary judgment in the trial court on the borrower’s forfeiture claim. BBVA subsequently paid $12,630.32 in actual damages plus interest, and the parties stipulated to facilitate final judgment; the court of appeals affirmed. The Supreme Court held the curative measures address only constitutional breaches and do not reach a simple interest-rate billing error. The Court therefore affirmed the summary judgment barring the borrowers’ claims.

This case is important to clients because it limits the drastic forfeiture remedy to constitutional noncompliance and confirms that ordinary contract errors yield contract damages, not loan forfeiture. It clarifies lenders’ exposure and borrowers’ remedies in Texas home-equity disputes, promoting predictability in homestead lending.

No information in this communication is intended to constitute specific legal advice. For specific legal advice, please contact an attorney, and if you have any such questions or would like more information about this issue, please contact William “Pat” Huttenbach at 713.752.8616, or email at phuttenbach@craincaton.com.

Thanks,

Pat

Staub v BBVA USA