Justia Banking Opinion Summaries

Articles Posted in US Court of Appeals for the Ninth Circuit
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The Ninth Circuit reversed the district court's grant of summary judgment in favor of the 732 Hardy Way trust, the denial of summary judgment to the Bank, and the dismissal of the Bank's claims against the HOA in a quiet title action brought by the Bank, concerning title to real property in Nevada that was subject to a HOA nonjudicial foreclosure sale. At issue is whether the Bank, as the first deed of trust lienholder, may set aside a completed superpriority lien foreclosure sale on the grounds that the sale occurred in violation of the automatic stay in bankruptcy proceedings.The panel concluded that the Bank may raise the HOA's violation of the automatic stay provision and that the Bank has superior title. The panel explained that the Bank has standing under Nevada's quiet title statute, Nevada Revised Statute 40.010, and established case authority confirms that any HOA foreclosure sale made in violation of the bankruptcy stay—like the foreclosure sale here—is void, not merely voidable, Schwartz v. United States, 954 F.2d 569, 571–72 (9th Cir. 1992). Therefore, the district court erred in holding that the Bank lacked standing to pursue its quiet title claim in federal court. The panel remanded for further proceedings. View "Bank of New York Mellon v. Enchantment at Sunset Bay Condominium Ass'n" on Justia Law

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The Ninth Circuit certified to the Nevada Supreme Court the following question: Whether, under Nevada law, an HOA's misrepresentation that its superpriority lien would not extinguish a first deed of trust, made both in the mortgage protection clause in its CC&Rs and in statements by its agent in contemporaneous arbitration proceedings, constitute slight evidence of fraud, unfairness, or oppression affecting the foreclosure sale that would justify setting it aside.The panel also asked the Nevada Supreme Court to consider the related issue of what evidence a first deed of trust holder must show to establish a causal relationship between a misrepresentation that constitutes unfairness under Nationstar Mortg., LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 133 Nev. 740 (2017), and a low sales price. View "U.S. Bank, NA v. Southern Highlands Community Ass'n" on Justia Law

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The Ninth Circuit affirmed the district court's grant of summary judgment for Nationstar in a diversity action brought by plaintiff alleging claims arising from nonjudicial foreclosure by a HOA on real property in Nevada. The Federal Foreclosure Bar, 12 U.S.C. 4617(j)(3), and Nevada state law, which establishes that in the event a homeowner fails to pay a certain portion of HOA dues, the HOA is authorized to foreclose on a "superpriority lien" in that amount, extinguishing all other liens and encumbrances on the delinquent property recorded after the Covenants, Conditions, and Restrictions attached to the title. The panel concluded that while Nevada law generally gives delinquent HOA dues superpriority over other lienholders, it does not take priority over federal law. Furthermore, federal law, in the form of the Federal Foreclosure Bar, prohibits the foreclosure of Federal Housing Finance Agency (FHFA) property without FHFA's consent.In this case, the panel concluded that Nationstar properly and timely raised its claims based on the Federal Foreclosure Bar. The panel also concluded that the Federal Foreclosure Bar applies to the HOA foreclosure sale here where Fannie Mae held an enforceable interest in the loan at the time of the HOA foreclosure sale, as established by evidence of Fannie Mae's acquisition and continued ownership of the loan throughout that time and by evidence of its agency relationship with BANA (formerly BAC), the named beneficiary on the recorded Deed. The panel explained that Fannie Mae's interest in the loan, coupled with the fact that it was under FHFA conservatorship at the time of the sale, means the Federal Foreclosure Bar applies to this case. Finally, the panel concluded that the Federal Foreclosure Bar preempts the Nevada HOA Law. View "Nationstar Mortgage LLC v. Saticoy Bay LLC" on Justia Law

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The Ninth Circuit affirmed the district courts' grants of summary judgment in favor of the HOA in an action brought by the Bank, seeking to set aside the HOA's foreclosure sale of real property in Nevada. The district court held that, because the mortgage savings clause in the applicable covenants, conditions, and restrictions (CC&Rs) did not affect the sale, the sale could not be set aside. Therefore, title vested with SFR Investments, the purchaser at the HOA sale.The panel predicted that the Nevada Supreme Court would adhere to its unpublished decisions, and hold that a mortgage-savings clause, by itself, did not constitute unfairness that affects a sale. The panel held that the clause was void as a matter of Nevada law, because it plainly conflicted with Nev. Rev. Stat. 116.3116(2), which required liens for unpaid assessments to have superpriority status, and Nev. Rev. Stat. 116.1104, which provided that the priorities cannot be modified by agreement. The panel also held that the mortgage-savings clause was void under the terms of the CC&Rs themselves. The panel explained that the Bank did not introduce any evidence whatsoever in this case that the mortgage-savings clause affected this sale. The panel rejected the Bank's remaining arguments and concluded that no unfairness arose from the HOA's processing of payments. Finally, the notice at issue did not violate due process. View "U.S. Bank, N.A. v. White Horse Estates Homeowners Ass'n" on Justia Law

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In 2005-2007, the borrowers obtained residential home mortgages on California properties. California law would normally have entitled them to “at least 2 percent simple interest per annum” on any funds held in escrow, California Civil Code Section 2954.8. The lender, a federal savings association organized and regulated under the Home Owners’ Loan Act of 1933 (HOLA), 12 U.S.C. 1461, did not pay interest because HOLA preempts California law. In a suit against the lender’s successor, Chase, a national bank organized and regulated under the National Bank Act, 12 U.S.C. 38, the district court denied the lender’s motion to dismiss; the Ninth Circuit has held that there is no “conflict preemption” between the National Bank Act and the California law.The Ninth Circuit reversed. HOLA field preemption principles applied to the claims against Chase even though its conduct giving rise to the complaint occurred after it acquired the loans in question. Because California’s interest-on-escrow law imposed a requirement regarding escrow accounts; affected the terms of sale, purchase, investment in, and participation in loans originated by savings associations; and had more than an incidental effect on the lending operations of savings associations, it was preempted by 12 C.F.R. 560.2(b)(6) and (b)(10), and 560.2(c). View "McShannock v. JP Morgan Chase Bank NA" on Justia Law

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A request for judicial relief under Nevada's Foreclosure Mediation Rules is the exclusive remedy under Nevada law for challenging a lender's conduct in the foreclosure mediation process.Plaintiffs filed suit alleging contractual and tortious breaches of the implied covenant of good faith and fair dealing against BNYM and its agents, Sables and Bayview. The Ninth Circuit affirmed the district court's dismissal of the complaint for failure to state a claim, holding that plaintiffs' claims rest on defendants' asserted failure to comply with the various requirements of the foreclosure mediation program, and these claims could have been raised in a timely request for review under the Foreclosure Mediation Rules. The panel explained that plaintiffs' exclusive remedy under Nevada law for addressing these deficiencies was a timely request for judicial review filed within the applicable 10-day period set forth in Nevada F.M.R. 20(2). Therefore, the district court correctly held that plaintiffs' state common-law claims and related requests for declaratory and injunctive relief failed to state a claim upon which relief could be granted. View "Tobler v. Sables, LLC" on Justia Law

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A judicial foreclosure proceeding is not a form of debt collection when the proceeding does not include a request for a deficiency judgment or some other effort to recover the remaining debt. If a foreclosure plaintiff seeks not only to foreclose on the property but also to recover the remainder of the debt through a deficiency judgment, then the plaintiff is attempting to collect a debt within the meaning of the Fair Debt Collection Practices Act (FDCPA). But if the plaintiff is simply enforcing a security interest by retaking or forcing a sale of the property, without regard to any additional debt that may be owed, then the FDCPA does not apply.The Ninth Circuit affirmed the district court's dismissal of plaintiff's action under the Fair Debt Collection Practices Act over a judicial foreclosure proceeding in Oregon. The panel held that plaintiff pleaded no conduct by the defendants beyond the filing of a foreclosure complaint and actions to effectuate that proceeding. View "Barnes v. Routh Crabtree Olsen PC" on Justia Law

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The Ninth Circuit affirmed the district court's grant of summary judgment to Freddie Mac and M&T in a quiet title action over a foreclosed property in Nevada. At issue was whether a first deed of trust in favor of Freddie Mac, which had been placed under the conservatorship of the Federal Housing Finance Agency (FHFA), survived a non-judicial foreclosure sale of a Nevada residential property to satisfy an HOA superpriority lien. The panel held, and the parties agree, that the Housing and Economic Recovery Act (HERA) statute of limitations, 12 U.S.C. 4617(b)(12)(A), controls.The panel held that, under 12 U.S.C. 4617(b)(12), a quiet title action is a "contract" claim that is subject to a statute of limitations of at least six years; Freddie Mac and M&T Bank timely filed their quiet title action within six years of the foreclosure sale; and Freddie Mac's deed of trust, which had been placed under the conservatorship of FHFA, survived a non-judicial foreclosure sale of a Nevada residential property to satisfy a homeowners association superpriority lien. The panel also held that, although Freddie Mac and the Bank were not assignees of the FHFA, Freddie Mac was under the FHFA conservatorship, and the FHFA thus had all the rights of Freddie Mac with respect to its assets. Furthermore, although there was no contract between the purchaser and plaintiffs, the quiet title claims were entirely "dependent" upon Freddie Mac's lien on the property, an interest created by contract. View "M&T Bank v. SFR Investments Pool 1, LLC" on Justia Law

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Citi filed suit against Corte Madera Homeowners Association for wrongful foreclosure, breach of the statutory duty of good faith by Nev. Rev. Stat. 116.1113, and quiet title. Nev. Rev. Stat. 116.3116(1) allows HOAs to pursue liens on members' homes for unpaid assessments and charges. The district court granted summary judgment in favor of defendants.The Ninth Circuit affirmed the district court's ruling regarding the adequacy of the lender's tender, holding that BANA's offer did not constitute valid tender. The panel held that 7510 Perla Del Mar Ave Tr. v. Bank of America, N.A., 458 P.3d 348, 350-51 (Nev. 2020) (en banc) -- which held that a mere offer to pay at a later time, after the superpriority amount was determined, does not constitute a valid tender -- did not alter the validity of Citi's tender because BANA insisted on the same condition that Perla Del Mar prohibited. The panel held that the district court did not err when it concluded that Citi was obligated to satisfy the superpriority portion of the lien in order to protect its interest. Furthermore, the district court did not err by observing that Citi's offer to pay nine months' assessments was not the equivalent of an offer to pay the superpriority portion of Corte Madera's lien. Therefore, in light of Perla Del Mar, the district court did not err by ruling that Citi's tender was impermissibly conditional. The panel rejected Citi's alternative arguments. However, the panel remanded for reconsideration of the complaint's allegation that Corte Madera's foreclosure notices violated the homeowner's bankruptcy stay. View "CitiMortgage, Inc. v. Corte Madera Homeowners Ass'n" on Justia Law

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Plaintiffs filed two pre-foreclosure actions against MERS and the banks holding their mortages, challenging their authority to foreclose on plaintiffs' properties. The Ninth Circuit affirmed the district courts' dismissal of the complaints for failure to state plausible claims for relief under California law. The panel followed the decisions of the California appellate courts in holding that California law does not permit preemptive actions to challenge a party's authority to pursue foreclosure before a foreclosure has taken place.The panel held that plaintiffs' pre-foreclosure judicial actions preemptively challenging the banks' authority to foreclose on the their properties in the future are not viable under California law. The panel also held that the district court did not abuse its discretion by denying plaintiffs leave to amend where the proposed amendments would not have changed the determination. View "Perez v. Mortgage Electronic Registration Systems, Inc." on Justia Law