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Written by
Noel Cookman


Published On 
September 19, 2023

Idiocy #3 – That a refinance loan can close before final divorce and pay an Owelty [Buy-Out] to a spouse.

We have here a double-whammy. The judge ruled the impossible on August 3, 2023, then on August 16th doubled down, reaffirming this idiocy.

Case Identification

Cause No. 231-715459-22; In The District Court, 231st Judicial District, Tarrant County, Texas

The players

Presiding Judge Jesus “Jesse” Nevarez, II;

Attorney for Denisse Reynoso Rodriguez (Wife, my customer) – Elizabeth Rivera;

Attorney for Edwardo Huerta – James Masek;

Witnesses and Beneficiaries of Judge Nevarez’s bestowments and judgments:

David Meyers (real estate agent, receiver), Joseph Soto (mortgage loan officer and attorney).

But first, let me list all 10 of the idiocies of this court. I call them idiocies because they are presumptions and serious mistakes made out of the marriage of ignorance and arrogance. We are all ignorant about a great many things. But, when a person adds arrogance to their ignorance about a particular topic, thinking that they are informed enough to make judgments about that topic, stupidity flowers. And, great damage is done. The formula is I10 + A10 > S100 - the level of stupidity is multiplied exponentially.

Here is the introductory article:

10 STUPID THINGS JUDGES DO: The Idiocies of Judge Jesse Nevarez, et al


Idiocy #1 – That a person can purchase a property which they already own.

Idiocy #2 – That a judge can determine value, equity and therefore a fair and equitable buyout.

Idiocy #3 – That a refinance loan can close before final divorce and pay an Owelty to a spouse.

Idiocy #4 – That a court can rightfully prohibit a party from doing business with any company, person or firm they so wish (provided the prohibited company, person or firm has done nothing illegal).

Idiocy #5 – That a court can rightfully prohibit and restrict a mortgage lender from communicating with a person who has asked for the mortgage lender’s services by applying for a mortgage loan.

Idiocy #6 – that a mortgage professional who is working to get financing for a customer is “interfering” with a legal case.

Idiocy #7 – That a judge is acting within his rightful duties by forcing a party into a cash-out mortgage loan.

Idiocy #8 – That a mortgage loan (which meets guidelines and does not violate regulations) can close in 7 days.

Idiocy #9 – That a judge can issue a punitive judgment against a person or business without a finding of fault or due process (with trial and cross-examination of accusers) which leads to a finding of fault. Or that a judge can sanction or prohibit parties from doing business with a person or firm (or any legal enterprise) without a finding of fault, without even a charge of wrongdoing.

Idiocy #10 – That a lender (i.e., Joseph Soto) is making a valid statement of loan approval by issuing a PURCHASE Pre-Approval for a transaction that requires a REFINANCE.

Idiocy #11 – BONUS: That a Receiver (i.e., David Meyers) can effectuate a sales transaction in order to avoid a transaction that requires a refinance rather than a purchase.

Illustrative Case: Cause *NO. 231-715459-22; 231st Judicial District, Family Court Tarrant County, Texas.

Nevarez’s ruling on August 16th – the date by which Wife was to have financed and paid her husband $99,000 – was to give her another 6 weeks. This after sternly ordering on August 3 that the house “would definitely be sold on August 16” if Wife had not refinanced and paid Husband by August 15th.

As my customer texted me: “Elizabeth [Rivera] sent me a text that day around noon (August 16th) the judge gave Joseph [Soto, the mortgage lender] until September 27th to finalize the transaction and rescheduled the trial for that same date.” Mmmm. What changed?

The bordering-on-judicial-misconduct part is what Ms. Rodriguez was told by Soto – “I’ll just call Jesse and he will give us all the time we need.” That sounded strange – like some cabal or side hustle. Why would there be such ex-parte communication about a matter that was ordered with thunder from the bench? But obviously, something like that happened. Nevarez was hell-bent on having the house sold on August 16 if the loan had not closed.

Toward the end of the hearing on August 3, I heard some indications that – just maybe – between the lawyers, the judge, the realtor/receiver and the mortgage loan officer – everyone else was beginning to understand what I had been trying to tell them for weeks. Namely, that the transaction was a refinance, not a purchase; that it would include an Owelty of Partition; and, that the divorce had to final in order for an Owelty to exist.

I mean, it was almost comical. But the end of the hearing, they were using words like “refinance” instead of “purchase.” Ahh, they were learning from me though they would die before admitting it. At least they were beginning to understand, I naively thought. I even think I heard them use the word “Owelty” for the first time.

Rivera even asked me in her usual haughty tone, “you DO understand what we are trying to do, here don’t you?” Because of my oath and the incomprehensibility of their actions I could not say that I understood at all what they were trying to do. In retrospect, I see that I should have said “Yes, I think I do – you are trying to rip your client off and enrich yourselves and I suspect that what you’re doing is criminal.”

But, no. Their convoluted misunderstandings of the mortgage world had so twisted the contemplated transaction, no rational person could explain what they were “trying to do here.”

Then, just as I thought Jesus Nevarez understood some basic things, here comes this new order – you have until September 27 when we will have the trial for final divorce. That’s important. The date of final divorce and the date by which the refinance loan had to close.

So why can a refinance loan NOT close before final divorce and pay an Owelty [Buy-Out] to a spouse?

Here’s the presumptive idiocy again:

#3 – That a refinance loan can close before final divorce and pay an Owelty [Buy-Out] to a spouse

And, by the way this is why I am presenting Understanding Mortgage Rules for Family Trial Lawyers: How to Ask Smart Mortgage Questions in Court – a CLE accredited course to educate lawyers on the basic rules of mortgage lending. This will help you sift through erroneous presumptions, misunderstandings and outright falsehoods about mortgage loans. Wednesday, October 25, 2023; 12 Noon Central.

Now, if you don’t live and breathe mortgage rules and regulations, you might not see the problem here!

I’ll give you a hint:

“…until September 27th to finalize the transaction and rescheduled the trial [for final divorce] for that same date.”

The problem and the chain of logic:

  • A loan that finances a divorce buy-out (Owelty lien) must have an actual buy-out that has been created. Yes, it’s as simple as it appears. An Owelty is generally considered to be created by court order; although, it can be created by the two (or more) parties by agreement.
  • But, that buy-out (Owelty lien) cannot be created until final divorce; an Owelty interest does not exist until the property is partitioned by legal action as in a divorce; arguments that property can be partitioned during the marriage notwithstanding (as no title company will insure that the loan transaction is specifically not an equity loan, a Texas Home Equity loan).
  • So, there is no possible way that the refinance loan transaction could close before the event (final trial) that would finalize the divorce which would, hopefully, provide for an Owelty of Partition. Talk about the cart before the horse. In this case, the cart does not even exist and the horse is make-believe. It’s an incomprehensible non-chain of events. Or, as I’ve called it – A PURELY UNADULTERATED IDIOCY.

Now, the tragedy is that it is possible that Ms. Rodriguez could obtain a cash-out refinance, and hopefully obtain enough cash to pay the ordered amount. And, in theory she could do this before final divorce.

However, there are a few obstacles not to mention inequities; moreover, it is a “bad loan,” a bad deal for the borrower.

  • There would be no Owelty interest to be paid.
  • Cash would go to the owners of record – husband and wife in this case; a specific court order or agreement between the parties would be the only way that the title company could make the check to the husband (in this case, the beneficiary of a “buy-out,” pretend though it may be).
  • Husband would not be giving up any interest in the house. In theory, he could still claim an Owelty interest in the house. Given the low level of competence coming from the lawyers and the judge in this case, not to mention the incompetence of the mortgage loan officer, such a claimed interest is more likely than possible. Ms. Rodriguez has nothing to prevent husband from receiving an inordinate amount of cash in the transaction and still claiming further interest.
  • The property would still be husband’s homestead as well as wife’s homestead. All rights pertaining thereto perpetuate until final divorce.
  • Husband would be required to sign numerous documents at closing, even as a non-purchasing (i.e., non-borrowing) spouse. That may sound simple enough. But, the parties are divorcing and coordinating signatures could be problematic. If husband didn’t agree with something (like part of a contemplated provision pertaining to some other feature of the settlement), he could hold the closing hostage until wife caved to his demands. Husband would still be on title and he would still pledge the property as collateral to the lender – a property which he should be relinquishing interest in…but cannot because final divorce has not yet ended the marriage or his community (and homestead) interest in the house.
  • Speaking of a “bad loan” – the cash-out loan is more constrictive, is harder to qualify for, has higher interest rates, higher fees (e.g., title policy premium is 25% higher), and other onerous restrictions (like the loan cannot be refinanced for at least 12 months after closing). See Idiocy #7.

There really is no excuse for this level of ignorance amongst those who sit on the bench and issue what is effectively punitive, recriminatory and harmful judgments against divorcing homeowners. But this is what the cloak of arrogance will produce.

Judges should know better. They don’t.

It falls to the attorneys to educate them. Judge Jesus II is bound to ignore me. Maybe you attorneys can help him, other judges and especially some of your colleagues. See the list of “players” to get you started.

Please help educate the courts and the legal community. These idiocies are harming real citizens. Thanks for reading.

Noel Cookman
([email protected])

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