Fannie Mae LL-2015-04 Nevada HOA Litigation
September 16, 2015
Servicer Reliance on HERA: Nevada Properties
On September 18, 2014, the Nevada Supreme Court held that a homeowners association’s non-judicial foreclosure of a “super-priority” lien could extinguish an existing first deed of trust. See SFR Investments v. U.S. Bank (Nev. 2014). In response, the Federal Housing Finance Agency (FHFA), Fannie Mae, Freddie Mac, and various GSE servicers have asserted in litigation that the Housing and Economic Recovery Act of 2008 (HERA), prohibits the extinguishment of GSE liens absent FHFA’s consent as conservator of the GSEs.
FHFA’s Statement on Servicer Reliance on HERA
For reference, attached is the Servicer Reliance on HERA in Foreclosures Involving Homeownership Associations statement issued by FHFA on August 28, 2015, regarding servicers’ reliance on HERA in connection with Nevada “super-priority” lien foreclosures and related HOA litigation.
Servicer Obligation to Escalate All Non-Routine Litigation
Fannie Mae reminds the servicer to escalate via submission of the Non-Routine Litigation Form (Form 20) as specified in Servicing Guide E-1.3-01, General Servicer Responsibilities for Non-Routine Matters all non-routine litigation involving actions that challenge the validity, priority, or enforceability of a Fannie Mae mortgage loan or that seek to impair Fannie Mae’s interest in an acquired property.
Additionally, Servicing Guide E-1.3-02, Reporting Non-Routine Litigation to Fannie Mae specifies servicers must report non-routine litigation to Fannie Mae within two business days of the servicer receiving notice of the litigation.
The servicer should contact its Servicing Consultant, Portfolio Manager, or Fannie Mae’s Credit Portfolio Management’s Servicer Support Center at 1-888-FANNIE5 (1-888-326-6435) with any questions regarding this Lender Letter.
Credit Portfolio Management