Nevada Supreme Court Holds Federal Preemption Bars HOA Lien From Extinguishing Fannie Mae Mortgage

The Nevada Supreme Court recently affirmed a lower court’s decision that a foreclosure under a Nevada statute giving “super priority” to homeowners’ association liens was preempted by the Housing and Economic Recovery Act of 2008 (“HERA”) in a foreclosure in which the Federal National Mortgage Association (“Fannie Mae”) held a mortgage.  See Satico Bay LLC Series 9641 Christine View v. Fed. Nat’l Mortg. Assoc., 2018 WL 1448731 (Nev. Mar. 21, 2018).  In 2004, the borrowers purchased a property with a home loan that was secured by a deed of trust on the property.  In 2012, the deed of trust was assigned to Fannie Mae, which had been placed into conservatorship by the Federal Housing Finance Agency (the “FHFA”) four years earlier pursuant to HERA.  In 2013, the homeowners’ association sold the property at a foreclosure sale due to unpaid association fees, which had “super-priority” status under N.R.S. 116.3116.  The purchaser at the sale then brought an action against Fannie Mae to quiet title, and the parties cross-moved for summary judgment.  The district court granted Fannie Mae’s motion, finding that 12 U.S.C. § 4617(j)(3) (the “Foreclosure Bar”), which holds that “[n]o property of the [FHFA] shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the [FHFA], nor shall any involuntary lien attach to the property of the [FHFA]” controls and preempts the state statute.

On appeal, the Court affirmed.  First, the Court held that Fannie Mae has standing to assert this claim under the Foreclosure Bar even though the Foreclosure Bar only mentions the FHFA.  Because Fannie Mae’s interest in the property became the FHFA’s interest during the conservatorship, the Foreclosure Bar also protects Fannie Mae.  Second, the Court agreed that the Foreclosure Bar preempts N.R.S. 116.3116.  Although the Foreclosure Bar does not expressly preempt the state statute, the state statute “is in direct conflict with Congress’s clear and manifest goal to protect Fannie Mae’s property interest while under the FHFA’s conservatorship from threats arising from state foreclosure law.”  Finally, the Court held that the FHFA did not consent to the foreclosure and, as such, the deed of trust could not be extinguished under the Foreclosure Bar.

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at, or Dylan Goetsch at