Nationstar Mortgage LLC v. Saticoy Bay LLC, No. 19-17043 (9th Cir. 2021)
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The Ninth Circuit affirmed the district court's grant of summary judgment for Nationstar in a diversity action brought by plaintiff alleging claims arising from nonjudicial foreclosure by a HOA on real property in Nevada. The Federal Foreclosure Bar, 12 U.S.C. 4617(j)(3), and Nevada state law, which establishes that in the event a homeowner fails to pay a certain portion of HOA dues, the HOA is authorized to foreclose on a "superpriority lien" in that amount, extinguishing all other liens and encumbrances on the delinquent property recorded after the Covenants, Conditions, and Restrictions attached to the title. The panel concluded that while Nevada law generally gives delinquent HOA dues superpriority over other lienholders, it does not take priority over federal law. Furthermore, federal law, in the form of the Federal Foreclosure Bar, prohibits the foreclosure of Federal Housing Finance Agency (FHFA) property without FHFA's consent.
In this case, the panel concluded that Nationstar properly and timely raised its claims based on the Federal Foreclosure Bar. The panel also concluded that the Federal Foreclosure Bar applies to the HOA foreclosure sale here where Fannie Mae held an enforceable interest in the loan at the time of the HOA foreclosure sale, as established by evidence of Fannie Mae's acquisition and continued ownership of the loan throughout that time and by evidence of its agency relationship with BANA (formerly BAC), the named beneficiary on the recorded Deed. The panel explained that Fannie Mae's interest in the loan, coupled with the fact that it was under FHFA conservatorship at the time of the sale, means the Federal Foreclosure Bar applies to this case. Finally, the panel concluded that the Federal Foreclosure Bar preempts the Nevada HOA Law.
Court Description: Nevada Foreclosure Law. The panel affirmed the district court’s summary judgment in favor of Nationstar Mortgage LLC in a diversity action alleging claims arising from a nonjudicial foreclosure by a homeowners’ association (“HOA”) on real property in Nevada. Fannie Mae purchased the loan, secured by a Deed of Trust (“Deed”), on a home in Las Vegas, Nevada. The Deed was eventually assigned to Bank of America, N.A. (“BANA”), and then to Nationstar. As a result of the homeowners’ failure to pay HOA dues, the HOA foreclosed on the real property at issue. The buyer at the sale conveyed the property to Saticoy Bay, LLC. Nationstar sued Saticoy Bay to quiet title. The district court granted summary judgment to Nationstar on the grounds that the Federal Foreclosure Bar (prohibiting the foreclosure of Federal Housing Finance Agency (“FHFA”) property without ** The Honorable Sharon L. Gleason, United States District Judge for the District of Alaska, sitting by designation. NATIONSTAR MORTGAGE V. SATICOY BAY 3 FHFA’s consent) prevented the extinguishment of Fannie Mae’s Deed. The panel rejected Saticoy’s two threshold challenges, and held that Nationstar properly and timely raised its claims based on the Federal Foreclosure Bar. Specifically, first, the panel held that Nationstar had standing to invoke the Federal Foreclosure Bar where Nationstar presented ample evidence of its servicing relationship with Fannie Mae. This relationship, along with the authority Fannie Mae delegated to its loan servicers to protect Fannie Mae’s mortgage loans, was more than sufficient to establish that Nationstar was Fannie Mae’s loan servicer and had the authority to assert the Federal Foreclosure Bar in this case. Second, Nationstar timely invoked the Federal Foreclosure Bar because Nationstar brought a quiet title action within the applicable six-year statute of limitations under 12 U.S.C. § 4617(b)(12)(A). The panel held that the Federal Foreclosure Bar applied to the HOA foreclosure sale here. First, Fannie Mae was, and remains, in FHFA conservatorship. Second, Nationstar’s evidence demonstrated Fannie Mae’s ownership interest in the loan. Third, Nationstar demonstrated its agency relationship with BANA at the time of the foreclosure sale. The panel held that, contrary to Saticoy’s argument, Nationstar did not need to specifically produce the Mortgage Selling and Servicing Contract to establish BANA’s relationship with Fannie Mae – or its own servicing relationship with Fannie Mae – because the argument had been explicitly rejected by the Nevada Supreme Court. The panel rejected Saticoy’s argument that Nationstar’s supporting declaration was defective because it was not based on “personal knowledge.” The panel also rejected, as foreclosed by binding precedent, Saticoy’s 4 NATIONSTAR MORTGAGE V. SATICOY BAY argument that Fannie Mae did not hold a valid ownership interest in the loan because Nationstar failed to produce a “signed writing” evincing such interest as required by the Nevada statute of frauds. Given that Saticoy was not a party to the underlying loan agreement pursuant to which Fannie Mae acquired the loan, Saticoy could not raise the statute of frauds. The panel also rejected Saticoy’s contention that Fannie Mae did not comply with the “mandatory language” of the Nevada recording statutes, Nev. Rev. Stat. §§ 111.315 & 111.325. It was sufficient that BANA, Fannie Mae’s loan servicer and agent, was listed as the beneficiary on the recorded Deed at the time of the foreclosure sale. Finally, the panel held that even if Nevada’s bona fide purchaser statutes were implicated here, Saticoy’s argument would still be doomed because it had constructive notice of Fannie Mae’s interest in the Deed. The panel concluded that Fannie Mae held an enforceable interest in the loan at the time of the HOA foreclosure sale, and the Federal Foreclosure applied to this case. The panel held that the Federal Foreclosure Bar preempted the Nevada HOA law. The panel noted that, as with most questions in this case, that this issue had already been clearly and repeatedly answered. The panel rejected Saticoy’s argument that because Nationstar had an adequate remedy at law, the district court inappropriately granted Nationstar equitable relief from the recitals in the foreclosure deed. Assuming without deciding that the relief granted by the district court was indeed equitable in nature, the panel held that Saticoy failed to explain how, under Nevada law, monetary damages constituted an adequate remedy for loss of real property rights. NATIONSTAR MORTGAGE V. SATICOY BAY 5
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