     Case: 12-10752       Document: 00512191703         Page: 1     Date Filed: 03/29/2013




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                          March 29, 2013
                                     No. 12-10752
                                   Summary Calendar                        Lyle W. Cayce
                                                                                Clerk




ROBERT POSWALK; ELIZABETH M. POSWALK,

                                                  Plaintiffs-Appellants,

versus

GMAC MORTGAGE, L.L.C.,

                                                  Defendant-Appellee.




                   Appeal from the United States District Court
                        for the Northern District of Texas
                                 No. 3:11-CV-465




Before SMITH, PRADO and HIGGINSON, Circuit Judges.
JERRY E. SMITH, Circuit Judge:*


       Robert and Elizabeth Poswalk sued GMAC Mortgage, L.L.C. (“GMAC”),
for a declaration that the lien placed on their house as security for a mortgage

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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                                      No. 12-10752

is invalid under the Texas Constitution. Finding no constitutional violation, the
district court granted summary judgment for GMAC. We affirm.


                                             I.
       The Poswalks own a house in Dallas that qualifies as their homestead.
They took out a loan, backed by a lien on the house, for $108,000 from Quicken
Loans, Inc., which was later acquired by GMAC. The parties signed an Acknowl-
edgment, as provided for by the Texas Constitution,1 which stated that the fair
market value (“FMV”) was $135,000 based on an independent assessment done
by Forsythe Appraisals. That appraisal conflicted with the Dallas County
Appraisal District’s value of $122,060.
       GMAC’s predecessor charged fees for the loan origination. GMAC con-
tends that the fees amounted to $3,240, which equals exactly 3% of the $108,000
loan; that calculation excludes a $2,295 interest-point discount “fee.” The Pos-
walks argue that that additional charge should be included in the calculation of
the “fees” charged.
       The Poswalks alleged that, based on their valuation of the house, the loan
was for an amount exceeding the 80% value cap mandated by the Texas Consti-
tution. They also asserted that the fees exceeded the 3% maximum allowed by
the constitution. A finding of either would nullify the lien and cause GMAC to
forfeit all principal and interest.


                                            II.
       Although the Texas Constitution prohibits liens on a homestead to satisfy
a debt, TEX. CONST. art. XVI § 50(a), there is an exception for home-equity mort-


       1
         “The owner of the homestead and the lender [must] sign a written acknowledgment
as to the fair market value of the homestead property on the date the extension of credit is
made.” TEX. CONST. art. XVI, § 50(a)(6)(Q)(ix).

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                                   No. 12-10752

gages that meet specific requirements. Where the requirements are not met, the
lien is invalid, and all principal and interest are forfeited. Id. § 50(a)(6)(Q)(x).
      The first requirement the Poswalks claim was not met is based on the
amount of the loan they received. Extensions of credit backed by liens on a
homestead are valid only if the principal “does not exceed 80 percent of the fair
market value of the homestead on the date the extension of credit is made.” Id.
§ 50(a)(6)(B). The Poswalks argue that the $108,000 loan was more than 80%
of the home’s value.
      Despite signing the required Acknowledgment stating that the FMV was
$135,000, the Poswalks now maintain that the FMV was less than that. They
point to the appraisal district’s assessment showing a value for tax purposes of
$122,060 and to Robert Poswalk’s testimony that the home was worth less than
$122,000.
      Under Texas law, however, GMAC was able to rely on the Forsythe
appraisal and the Acknowledgment to establish the FMV. A “lender or assignee
for value may conclusively rely on the written acknowledgment as to the [FMV]
of the homestead property” so long as
      (1) the value acknowledged to is the value estimate in an appraisal
      or evaluation prepared in accordance with a state or federal require-
      ment applicable to an extension of credit under Subsection (a)(6);
      and

      (2) the lender or assignee does not have actual knowledge at the
      time of the payment of value or advance of funds by the lender or
      assignee that the [FMV] stated in the written acknowledgment was
      incorrect

Id. § 50(h).
      The first requirement is plainly met; the Poswalks focus on the second
prong and claim that GMAC’s predecessor knew that the Forsythe valuation was
inaccurate. That argument is unavailing.


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                                      No. 12-10752

       “[U]nder Texas law, tax valuations are legally insufficient evidence of
[FMV].” United States v. Curtis, 635 F.3d 704, 718 (5th Cir.), cert. denied, 132
S. Ct. 191 (2011). Curtis is based on numerous Texas state court decisions hold-
ing that the “value placed upon real property for tax assessment purposes . . . is
not evidence of its value for purposes other than taxation.”2
       Based on Texas’s clear law that tax valuations do not constitute conclusive
evidence of FMV, the Poswalks may not rely on that evidence to establish that
GMAC’s predecessor had knowledge that the market value stated in the
Acknowledgment was incorrect. The only other evidence they present is Robert
Poswalk’s self-serving testimony that he had a feeling that the market value was
less than $135,000. That is not sufficient to rebut the signed Acknowledgment
of the FMV. The district court correctly held that there was no violation of Sec-
tion 50(a)(6)(B).
       The Poswalks next challenge the amount of the fees they were charged to
close the loan. A loan secured by a lien on a homestead is not valid if the loan
requires “the owner or the owner’s spouse to pay, in addition to any interest, fees
. . . that exceed, in the aggregate, three percent of the original principal amount
of the extension of credit.” TEX. CONST. art. XVI, § 50(a)(6)(E).
       On appeal, the Poswalks contend that a $2,295 interest discount-point
charge constituted a fee that, when added to the other fees, resulted in a viola-
tion of the 3% rule. GMAC answers, and the district court found, that the dis-
count points constituted interest rather than a fee.
       Although the Texas Supreme Court has not explicitly answered whether
loan discount points constitute “fees” under Section 50(a)(6)(E), we recently



       2
         Dallas Cnty. Bail Bond Bd. v. Black, 833 S.W.2d 247, 249 (Tex. App.SSDallas 1992,
no writ); City of Sherman, Tex. v. Wayne, 266 S.W.3d 34, 49 (Tex. App.SSDallas 2008, no pet.)
(“[T]he tax appraisal is no criterion of market value in condemnation proceedings because it
rarely reflects the true market value.”).

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                                         No. 12-10752

addressed that question in Cerda v. 2004-EQR1 L.L.C., 612 F.3d 781, 795 (5th
Cir. 2010). Faced with a challenge similar to the one made here, this court made
an “Erie guess” about what the Texas Supreme Court would do. Id. at 794 (cit-
ing Beavers v. Metro. Life Ins. Co., 566 F.3d 436, 439 (5th Cir.2009) (Where “no
state court decisions control, we must make an ‘Erie guess’ as to how the Texas
Supreme Court would apply state law.”)). After analyzing conflicting Texas
intermediate appellate precedent, we concluded that “discount points involved
in the [ ] loan were interest that did not count against the 3% cap in § 50(a)-
(6)(E).” Id. at 796. We relied on Tarver v. Sebring Capital Credit Corp., 69
S.W.3d 708, 712 (Tex. App.SSWaco 2002, no pet.), in which the court undertook
an in-depth analysis of the meaning of interest in various Texas statutes and
regulations and ultimately concluded that an interest discount fee was interest
rather than a fee. Therefore, as a matter of Texas law, interest discount points
are not included in the 3% fee cap.
       The district court rightly found that the fee cap was not exceeded, and
Section 50(a)(6)(E) was not violated.3 Because the loan did not violate the Texas
Constitution, the court was correct in denying declaratory judgment to that
effect and denying relief under Section 50(a)(6)(Q)(x) predicated on a finding of
a constitutional violation.
       The summary judgment is AFFIRMED.




       3
        Robert Poswalk signed a Client Acknowledgment stating that he “acknowledged that
[he was] electing to pay discount point(s) in order to obtain a lower interest rate . . . [and] that
discount points are ‘interest’ under Texas law . . . excluded from the 3% fee limit.”

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