Ditech Financial LLC v. T-Shack, Inc.
20-15526
| 9th Cir. | Jun 14, 2021Background
- In 2013 an HOA foreclosed on a Nevada property; Defendant T‑Shack purchased the property at that sale.
- At the time of the sale, Fannie Mae owned the loan/note and thus held a secured interest evidenced by business records and servicer practices.
- Fannie Mae and Freddie Mac were under FHFA conservatorship in 2013.
- FHFA (the Agency) has publicly stated it has not consented to HOA foreclosure sales that would extinguish Agency property.
- The district court granted summary judgment for Plaintiffs (Ditech and Fannie Mae), holding the HOA sale did not extinguish Fannie Mae’s deed of trust under the Federal Foreclosure Bar (12 U.S.C. § 4617(j)(3)), and declared the property subject to the deed of trust.
- T‑Shack appealed; the Ninth Circuit reviewed de novo and affirmed the summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fannie Mae held a secured interest at the time of the HOA sale | Fannie Mae owned the note and had a secured interest (supported by business records and servicer practices) | T‑Shack argued Fannie Mae’s interest had to be recorded to be protected | Court: No genuine dispute; Fannie Mae held a secured property interest without a recorded assignment |
| Whether Fannie Mae and Freddie Mac were under conservatorship when the sale occurred | FHFA conservatorship existed in 2013 | N/A (defendant did not dispute conservatorship) | Court: Conservatorship existed at the time of sale |
| Whether FHFA consented to the HOA foreclosure (and thus whether the Federal Foreclosure Bar applies) | FHFA has not consented to HOA foreclosures; no evidence of consent | T‑Shack offered no evidence of Agency consent | Court: No genuine dispute; FHFA did not consent, so the Foreclosure Bar applies |
| Whether the Federal Foreclosure Bar violates due process rights of a purchaser | Foreclosure Bar valid and constitutional | T‑Shack argued due process violation | Court: Bar does not violate purchaser’s due process rights; upheld as constitutional |
Key Cases Cited
- Berezovsky v. Moniz, 869 F.3d 923 (9th Cir. 2017) (interpreting scope and application of the Federal Foreclosure Bar)
- Saticoy Bay LLC Series 9641 Christine View v. FNMA, 417 P.3d 363 (Nev. 2018) (Nevada en banc decision on interaction of HOA sales and Agency interests)
- Nationstar Mortg. LLC v. Saticoy Bay LLC, Series 9229 Millikan Ave., 996 F.3d 950 (9th Cir. 2021) (evidentiary standards for establishing Fannie Mae ownership and secured interest)
- Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass’n, 920 F.3d 620 (9th Cir. 2019) (discussing when HOA foreclosure can extinguish a deed of trust under Nevada law)
- Daisy Trust v. Wells Fargo Bank, N.A., 445 P.3d 846 (Nev. 2019) (rejecting recording requirement to establish Agency’s secured interest)
- Fed. Home Loan Mortg. Co. v. SFR Invs. Pool 1, LLC, 893 F.3d 1136 (9th Cir. 2018) (holding the Federal Foreclosure Bar does not violate purchaser due process)