Federal Home Loan Mortgage Corporation v. SFR Investments Pool 1, LLC, No. 16-15962 (9th Cir. 2018)Annotate this Case
The 2007 mortgage crisis pushed to near-default the government-sponsored Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), collectively, “the Enterprises.” The Housing and Economic Recovery Act of 2008 (HERA), 12 U.S.C. 4511, established an independent agency, the Federal Housing Finance Agency (FHFA) to regulate the Enterprises and the Federal Home Loan Banks. FHFA’s Director placed the Enterprises under the Agency’s conservatorship. SFR owns Nevada properties, acquired from homeowners’ associations (HOAs) following foreclosures on liens for unpaid association dues. FHFA obtained a summary judgment declaration that HERA's Foreclosure Bar, 12 U.S.C. 4617(j)(3) preempts any Nevada law that would permit a foreclosure on a superiority lien to extinguish a property interest of Fannie Mae or Freddie Mac while they are under FHFA’s conservatorship, that the HOA Sale did not extinguish the Enterprises’ interest in the properties and did not convey the properties free and clear to SFR, and that title to the properties is quieted in either Fannie Mae’s or Freddie Mac’s favor insofar as the Defendants’ interest, if any, is subject to the interest of the Enterprises or the interest of the Enterprises’ successors. The Ninth Circuit affirmed. Under HERA, FHFA possessed enforceable interests in the properties at the time of the HOA foreclosure sales. Nevada law
did not provide SFR with a constitutionally-protected property interest in purchasing the houses with clear title, and, even assuming such an interest, SFR had adequate procedural protections.