Daisy Trust v. Wells Fargo Bank, N.A.
445 P.3d 846
| Nev. | 2019Background
- In 2007 the Blumes obtained a mortgage from Universal; the deed of trust named MERS as nominee and Universal later sold the loan to Freddie Mac. Wells Fargo later appeared as record beneficiary and servicer.
- The HOA foreclosed for unpaid assessments and Daisy Trust purchased the property at the 2012 HOA sale.
- Daisy Trust sued to quiet title; Wells Fargo asserted Freddie Mac owned the loan at the time of the HOA sale and invoked the Federal Foreclosure Bar (12 U.S.C. § 4617(j)(3)) to argue the HOA sale did not extinguish the first deed of trust.
- Wells Fargo submitted declarations from a Wells Fargo employee and a Freddie Mac employee plus database printouts showing Freddie Mac acquired the loan in November 2007 and that Wells Fargo serviced it.
- Daisy Trust argued Freddie Mac had to be the recorded beneficiary, and alternatively that Wells Fargo needed to produce the loan servicing agreement and the original promissory note to prove Freddie Mac’s ownership.
- The district court found the records sufficient, granted summary judgment for Wells Fargo, and concluded the HOA sale did not extinguish the deed of trust because Freddie Mac owned the loan; Nevada Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument (Daisy Trust) | Defendant's Argument (Wells Fargo/Freddie Mac) | Held |
|---|---|---|---|
| Whether Freddie Mac had to be the publicly recorded beneficiary to show ownership | Recording statutes require Freddie Mac to be beneficiary of record | Recording not required; MERS/servicer can be record beneficiary while Freddie Mac owns note | No: Nevada recording statutes did not require Freddie Mac to be beneficiary of record |
| Whether loan servicer must produce the loan servicing agreement to prove servicer authority | Servicing agreement needed to prove servicer’s authority to invoke Federal Foreclosure Bar | Servicer’s declarations + Freddie Mac guide and business records suffice to show authorization | No: servicing agreement not required where authenticated business records show authority |
| Whether the original promissory note must be produced or inspected to prove ownership timing | Original note or attestation of inspection required to prove when Freddie Mac obtained/held ownership | Note not necessary; endorsements need not be dated; business records can show acquisition date | No: original note not required; admissible business records established ownership timing |
| Admissibility of servicer/Freddie Mac database printouts under business-records exception | Printouts are unreliable and prepared for litigation; thus inadmissible | Declarations established foundation under NRS 51.135; not untrustworthy | Printouts admissible under business-records exception absent showing of untrustworthiness |
Key Cases Cited
- SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. 742, 334 P.3d 408 (2014) (establishes HOA "superpriority" lien can extinguish a first deed of trust)
- Saticoy Bay LLC Series 9641 Christine View v. Federal National Mortgage Ass'n, 134 Nev. 270, 417 P.3d 363 (2018) (Federal Foreclosure Bar preempts state law and prevents HOA sale from extinguishing deed of trust when FHFA/enterprise interests are involved)
- Edelstein v. Bank of New York Mellon, 128 Nev. 505, 286 P.3d 249 (2012) (MERS may serve as record beneficiary on behalf of lender and successors)
- In re Montierth, 131 Nev. 543, 354 P.3d 648 (2015) (note and deed may be split yet deed still secures the note when record beneficiary is agent of note holder)
- Nationstar Mortgage, LLC v. SFR Investments Pool 1, LLC, 133 Nev. 247, 396 P.3d 754 (2017) (loan servicer has standing to assert Federal Foreclosure Bar on behalf of Freddie Mac/Fannie Mae)
- Berezovsky v. Moniz, 869 F.3d 923 (9th Cir. 2017) (similar evidence can suffice to establish servicer authorization and enterprise ownership)