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Nationstar Mortgage, LLC v. SFR Investments Pool 1, LLC

Supreme Court of Nevada

June 22, 2017

NATIONSTAR MORTGAGE, LLC, A DELAWARE LIMITED LIABILITY COMPANY, Appellant,
v.
SFR INVESTMENTS POOL 1, LLC, A NEVADA LIMITED LIABILITY COMPANY, Respondent.

         Appeal from a district court order granting a motion for summary judgment in a quiet title action. Eighth Judicial District Court, Clark County; Michael Villani, Judge.

          Lemons, Grundy & Eisenberg and Robert L. Eisenberg, Reno; Akerman LLP and Darren T. Brenner, Allison R. Schmidt, and Ariel E. Stern, Las Vegas, for Appellant.

          Kim Gilbert Ebron and Jacqueline A. Gilbert, Howard C. Rim, and Zachary D. Clayton, Las Vegas, for Respondent.

          Fennemore Craig P.C. and Leslie L. Bryan-Hart and John D. Tennert, Reno; Arnold & Porter Kaye Scholer LLP and Michael A.F. Johnson, Washington, D.C., for Amicus Curiae.

         BEFORE THE COURT EN BANC.

          OPINION

          PARRAGUIRRE, J.

         Fannie Mae and Freddie Mac are government-sponsored entities that purchase and securitize residential mortgages. On September 6, 2008, the Director of the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac (hereinafter, the regulated entities) into conservatorships. As conservator, the FHFA is authorized to take over and preserve the assets of the regulated entities. Under federal law, when the FHFA is acting as conservator, its property is not subject to "levy, attachment, garnishment, foreclosure, or sale" without its consent, "nor shall any involuntary lien attach" to the property. 12 U.S.C. § 4617(j)(3) (2012) (hereinafter, the Federal Foreclosure Bar).

         In this appeal, we must determine whether the servicer of a loan owned by a regulated entity has standing to assert the Federal Foreclosure Bar in a quiet title action. We answer in the affirmative. Because the district court did not determine whether a regulated entity owned the loan in this matter, we reverse the district court's order and remand the matter for further proceedings consistent with this opinion.

         FACTS AND PROCEDURAL HISTORY

         Nonparty Ignacio Gutierrez took out a $271, 638 loan with lender KB Home Mortgage Company (KB) to purchase property located in Henderson, Nevada. KB's loan was secured by a deed of trust on the property, and the property was governed by a homeowners' association's (HOA) covenants, conditions, and restrictions. The deed of trust designated Mortgage Electronic Registration Systems, Inc. (MERS) as a beneficiary and as a nominee for KB and KB's successors and assigns. Subsequently, MERS assigned the deed of trust to nonparty Bank of America, N.A, who then assigned the deed of trust to appellant Nationstar Mortgage, LLC (Nationstar).

         Eventually, Gutierrez failed to pay his HOA dues, and the HOA foreclosed on the property. Respondent SFR Investments Pool 1, LLC (SFR) purchased the property at the foreclosure sale for $11, 000. Gutierrez filed suit against SFR, and SFR filed a third-party complaint against Nationstar. However, the district court ultimately dismissed Gutierrez's action after Gutierrez stipulated that his interest in the property was extinguished by the foreclosure sale, and that he would not contest the validity of the foreclosure deed.

         Thereafter, SFR and Nationstar filed motions for summary judgment on SFR's third-party complaint. SFR argued, among other things, that Nationstar's security interest was extinguished by the foreclosure sale pursuant to this court's decision in SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev., Adv. Op. 75, 334 P.3d 408 (2014). Nationstar argued that its security interest survived the sale pursuant to the Federal Foreclosure Bar. Specifically, Nationstar claimed (1) Freddie Mac had purchased the loan, (2) the FHFA had placed Freddie Mac under conservatorship prior to the HOA's sale, (3) the FHFA's property was not subject to foreclosure or sale without its consent pursuant to the Federal Foreclosure Bar, (4) the FHFA had issued a statement on its website declaring that it had not consented to the extinguishment of any Freddie Mac lien or other property interest in connection with HOA foreclosures, and (5) the Federal Foreclosure Bar therefore preempted NRS Chapter 116 to the extent state law would have extinguished the FHFA's security interest.

         The district court acknowledged that there was "a dispute as to whether Freddie Mac or [the] FHFA [had] an interest in the Deed of Trust"; however, the district court declined to address this factual dispute because it believed Nationstar lacked standing to assert the Federal Foreclosure Bar on behalf of Freddie Mac or the FHFA. Given that decision and because neither Freddie Mac nor the FHFA were parties to the action, the district court declined to address whether the Federal Foreclosure Bar preempted NRS Chapter 116. Therefore, the district court denied ...


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