United States District Court, D. Nevada
J. Dawson, United States District Judge.
the Court are competing motions for summary judgment filed by
defendants MTC Financial, Countrywide Home Loans, Bank of
America, Inc., and Mortgage Electronic Registration Systems,
Inc. (MERS) (#80) and plaintiff RH Kids, LLC
(#82). Bank of America moved first. RH Kids
responded to oppose Bank of America's motion and itself
moved for summary judgment. (#82). In one responsive
pleading, Bank of America opposed RH Kids's motion and
replied in support of its own summary judgment motion. (#85).
real estate foreclosure case asks the Court to determine who
holds superior title in a residential property located at
2704 Coventry Green Avenue, Henderson, Nevada 89074. To do
so, the Court confronts two questions. First, did the
so-called Federal Foreclosure Bar of 12 U.S.C. §
4617(j)(3) prohibit the HOA's otherwise valid
non-judicial foreclosure of the Coventry Green property? And
second, did Bank of America's attempt to ascertain the
superpriority portion of the lien-amounting to nine months of
delinquent assessments-preserve its interest in the property
despite that foreclosure? The Court answers both questions in
the affirmative and therefore grants Bank of America's
motion for summary judgment, denies RH Kids's motion, and
enters judgment in favor of defendants.
Factual and Procedural Background
The Housing and Economic Recovery Act and Federal
passed the Housing and Economic Recovery Act in response to
the 2008 recession and its ensuing foreclosure crisis. The
purpose of the act was to protect the fragile housing market
by addressing the critical undercapitalization of the Federal
Home Loan Mortgage Corporation (Freddie Mac) and Federal
National Mortgage Association (Fannie Mae). It sought to
ensure that the two companies “operated in a safe and
sound manner . . . consistent with the public
interest.” 12 U.S.C. § 4513(a)(1)(B). To that end,
the act subjected both Fannie Mae and Freddie Mac to
increased oversight and government control.
created the Federal Housing Finance Agency and authorized it
to place both Fannie Mae and Freddie Mac under the
Agency's conservatorship, which it did in 2008. As
conservator, the FHFA was responsible for supervising and
winding up Fannie's and Freddie's affairs. 12 U.S.C.
§ 4617(a)(2). As conservatees, Freddie Mac and Fannie
Mae assets received certain federal protection, including
protection from non-consensual foreclosure. This has come to
be known as the “Federal Foreclosure Bar.”
See id § 4617(j)(3) (“No property of the
Agency shall be subject to levy, attachment, garnishment,
foreclosure, or sale without the consent of the Agency, nor
shall any involuntary lien attach to the property of the
The Foreclosure and Sale of 2704 Coventry Green
Luis and Mirna Alfaro purchased the Coventry Green property
in August of 2007. (#80, at 3). At the time of the purchase,
the property was part of the Cobblestone Homeowners'
Association and was subject to the Association's
Covenants, Conditions, and Restrictions (CC&Rs). (#10, at
2-3). The deed of trust listed the Alfaros as the borrowers,
Bank of America as the lender, and MERS as the
beneficiary nominee. (#80, Exh. A). That deed of trust was
recorded August 30, 2007. Id Bank of America claims
that Freddie Mac purchased the loan and obtained a security
interest in the property the very next week. (#80, Exh. B, at
2-3). It also claims that Freddie Mac has not transferred or
otherwise relinquished its ownership in the property.
Id at 3. In May of 2011, MERS recorded an assignment
of its deed of trust to BAC Home Loans Servicing. (#80, Exh.
C). Defendant Bank of America NA. is successor by merger to
BAC Home Loans Servicing. (#80, at 3).
point, the Alfaros defaulted on their mortgage payments and
HOA assessments. That default prompted two separate
foreclosure proceedings. The HOA struck first. In January of
2011, the HOA recorded a lien for delinquent assessments
against the property through its agent Nevada Association
Services. (#80, Exh. D). After the Alfaros failed to satisfy
the outstanding lien, the HOA recorded a Notice of Default
and Election to Sell again through its agent Nevada
Association Services. (#80, at 5). In March of 2012, the
Coventry Green Trust purchased the property at a public
auction. Id Coventry Green later conveyed its
interest in the property to Diakonos Holdings, LLC-the
original plaintiff in this case. (#80, at 6). Diakonos
conveyed the property by quitclaim deed to RH Kids-the
current plaintiff in this case. (#80, Exh. J).
the HOA foreclosure, servicer Bank of America attempted to
satisfy the outstanding superpriority-lien balance. Bank of
America contacted Nevada Association Services by letter and
requested a payoff invoice that would satisfy the
superpriority portion of the HOA lien. (#80, Exh. G-1).
Nevada Association Services did not respond. (#80, at 5).
Shortly thereafter, the bank filed a Notice of Trustee's
Sale pursuant to a Deed of Trust to sell the property at
auction in May of 2012. (#10, at 3).
that sale, RH Kids filed this action in state court to halt
foreclosure proceedings. Id In addition to its
request to enjoin the sale, RH Kids sought to quiet title in
the Coventry Green property. Id The state court
enjoined the bank's foreclosure sale pending a
determination of the rights in the property. Id at
4. Bank of America then removed to this Court, which
subsequently stayed the case pending the Ninth Circuit's
decisions in two cases similar to this one. Following the
Ninth Circuit's issuance of those opinions in August of
2017, the Court lifted the stay. (#74). Discovery has closed,
and the parties have filed their respective motions for
summary judgment to which the Court now turns.
purpose of summary judgment is to isolate and dispose of
factually unsupported claims or defenses. Celotex Corp.
v. Catrett, 477 U.S. 317, 323-24 (1986). It is available
only where the absence of material fact allows the Court to
rule as a matter of law. Fed.R.Civ.P. 56(a);
Celotex, 477 U.S. at 322. Rule 56 outlines a burden
shifting approach to summary judgment. First, the moving
party must demonstrate the absence of a genuine issue of
material fact. The burden then shifts to the nonmoving party
to produce specific evidence of a genuine factual dispute for
trial. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986). A genuine issue of fact
exists where the evidence could allow “a reasonable
jury [to] return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). The Court views the evidence and draws all available
inferences in the light most favorable to the nonmoving