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Green Tree Servicing, LLC v. NV Eagles, LLC

United States District Court, D. Nevada

November 12, 2019

GREEN TREE SERVICING, LLC., Plaintiffs,
v.
NV EAGLES, LLC SHADOW SPRINGS COMMUNITY ASSOCIATION, Defendants, and, FEDERAL HOUSING FINANCE AGENCY, Intervenor-Plaintiff.

          ORDER

          RICHARD F. BOULWARE, II, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the Court are Intervenor-Plaintiff Federal Housing Finance Agency's (“FHFA”) and Plaintiff Ditech Financial LLC f/k/a Green Tree Servicing LLC's (“Ditech”) Motion for Summary Judgment, Plaintiff Green Tree Servicing LLC's Motion for Summary Judgment on Tender, and Defendant Shadow Springs Community Association's Motion for Partial Summary Judgment. ECF Nos. 109, 113, 120. For the following reasons, the Court grants FHFA's motion.

         II. PROCEDURAL BACKGROUND

         Ditech filed its second amended complaint, the operative complaint, against Defendants NV Eagles, LLC (“NV Eagles”) and Shadow Springs Community Association (“Shadow Springs” or “HOA”) on August 17, 2016. ECF No. 74. In its complaint Green Tree asserts the following causes of action: quiet title as against NV Eagles, declaratory relief as against NV Eagles, negligent misrepresentation as against Shadow Springs, and declaratory relief in favor of Ditech. NV Eagles filed its answer on August 23, 2016. ECF No. 75. The Court granted FHFA's motion to intervene on September 9, 2016, and FHFA filed its intervenor-complaint on September 20, 2016. ECF Nos. 76, 79. On May 22, 2017 this Court stayed the case pending pertinent decisions in the Ninth Circuit Court of Appeals and the Nevada Supreme Court. ECF No. 99. The Court lifted the stay on April 8, 2019. ECF No. 106. FHFA filed its motion for summary judgment. ECF No. 109. FHFA's motion was fully briefed. ECF Nos. 110, 111. Ditech filed its motion for summary judgment on tender on June 27, 2019. ECF No. 113. NV Eagles and Shadow Springs filed their responses in opposition on July 18, 2019. ECF Nos. 121, 122. On July 12, 2019 Shadow Springs filed its motion for partial summary judgment. ECF No. 120. Third-Party Defendant Red Rock Financial Services, LLC joined Shadow Spring's Motion on July 22, 2019. On August 13, 2019, Ditech stipulated with Shadow Springs Community Association to dismiss Ditech's claim of negligent misrepresentation with prejudice. Shadow Springs also stipulated to dismiss its third-party claims against Red Rock Financial Services, LLC, thus mooting Defendant Shadow Spring's motion for summary judgment and terminating both Red Rock Financial Services, LLC and Shadow Spring Community Association's participation in this case.

         III. FACTUAL BACKGROUND

         The Court finds the following facts to be undisputed.[1]

         a. Undisputed Facts

         This matter concerns a nonjudicial foreclosure on a property located at 6137 Talbot Springs, North Las Vegas, 89091 (the “property”). The property sits in a community governed by the HOA. The HOA requires its community members to pay HOA dues

         James H. Urello borrowed funds from KB Home Mortgage Company to purchase the property in 2004. To obtain the loan, Urello executed a promissory note and a corresponding deed of trust to secure repayment of the note. The deed of trust listed Urello as the borrower, KB Home Mortgage Company as the lender, and Mortgage Electronic Registrations Systems, Inc. (“MERS”) as beneficiary. The deed of trust was recorded on November 12, 2004. On May 20, 2010 MERS assigned the deed of trust to BAC Home Loans Servicing LP, fka Countrywide Home Loans Servicing LP. Bank of America, National, Association (“BANA”) became the successor through a de jure merger with BAC Home Loans Servicing, LP fka Countrywide Home Loans, Inc., on July 1, 2011. On February 16, 2012, MERS, as nominee for Lender, recorded a second assignment of the deed to BANA. On September 6, 2013, BANA recorded an assignment of the deed of trust to EverBank. On November 26, 2014, an assignment of the deed of trust from EverBank to Ditech was recorded.

         Urello fell behind on HOA dues. From May 2009 through June 2013, the HOA, through its agent, recorded a lien for delinquent assessment concerning past-due assessments, followed by a notice of default and election to sale, and a notice of foreclosure sale upon the property. The foreclosure sale occurred on May 30, 2013, when Underwood Partners LLC purchased the property for $21, 000.00, according to a foreclosure deed recorded on July 3, 2013. On October 18, 2013, a Bargain Sale deed was recorded that stated that Underwood had conveyed the property to NV Eagles for $10.00.

         However, the Federal National Mortgage Association (“Fannie Mae”) previously purchased the loan and deed of trust in December 2004. While its interest was never recorded under its name, Fannie Mae continued to maintain its ownership of the note and the deed of trust at the time of the foreclosure. BANA was the servicer of the loan for Fannie Mae at the time of the foreclosure sale.

         The relationship between Fannie Mae and its servicers, is governed by Fannie Mae's Single-Family Servicing Guide (“the Guide”). The Guide provides that servicers may act as record beneficiaries for deeds of trust owned by Fannie Mae. It also requires that servicers assign the deeds of trust to Fannie Mae on Fannie Mae's demand. The Guide states:

The servicer ordinarily appears in the land records as the mortgagee to facilitate performance of the servicer's contractual responsibilities, including (but not limited to) the receipt of legal notices that may impact Fannie Mae's lien, such as notices of foreclosure, tax, and other liens. However, Fannie Mae may take any and all action with respect to the mortgage loan it deems necessary to protect its ... ownership of the mortgage loan, including recordation of a mortgage assignment, or its legal equivalent, from the servicer to Fannie Mae or its designee. In the event that Fannie Mae determines it necessary to record such an instrument, the servicer must assist Fannie Mae by [ ] preparing and ...

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