Vita Bella Homeowners Association v. Federal National Mortgage Association et al

MOTION for Summary Judgment

D. Neb.July 11, 2016

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 Colt B. Dodrill, Esq. (SBN 9000) WOLFE & WYMAN LLP 6757 Spencer Street Las Vegas, NV 89119 Tel: 702-476-0100 Fax: 702-476-0101 cbdodrill@wolfewyman.com Attorneys for Defendant/Counterclaimant Federal National Mortgage Association Leslie Bryan Hart, Esq. (SBN 4932) John D. Tennert, Esq. (SBN 11728) FENNEMORE CRAIG, P.C 300 E. Second St., Suite 1510 Reno, NV 89501 Tel: 775-788-2228 Fax: 775-788-2229 lhart@fclaw.com; jtennert@fclaw.com Attorneys for Intervenor Federal Housing Finance Agency UNITED STATES DISTRICT COURT DISTRICT OF NEVADA VITA BELLA HOMEOWNERS ASSOCIATION, Plaintiff, v. FEDERAL NATIONAL MORTGAGE ASSOCIATION; et al., Defendants, and FEDERAL HOUSING FINANCE AGENCY, as Conservator of the Federal National Mortgage Association, Intervenor. CASE NO. 2:15-cv-00515-JCM-VCF FEDERAL NATIONAL MORTGAGE ASSOCIATION AND FEDERAL HOUSING FINANCE AGENCY’S MOTION FOR SUMMARY JUDGMENT FEDERAL NATIONAL MORTGAGE ASSOCIATION, Counterclaimant, and FEDERAL HOUSING FINANCE AGENCY, as Conservator of the Federal National Mortgage Association, Intervenor, v. VITA BELLA HOMEOWNERS ASSOCIATION, Counter-Defendant. Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 1 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 TABLE OF CONTENTS INTRODUCTION ...............................................................................................................................3 BACKGROUND .................................................................................................................................4 I. The Secondary Mortgage Market.............................................................................................4 II. Undisputed Facts Specific to this Case ....................................................................................5 A. The Subject Property, Note, and Deed of Trust ...........................................................5 B. Fannie Mae’s Contract with Its Servicers Establishes that Fannie Mae Retains an Ownership Interest in the Deed of Trust While Its Servicer Is the Beneficiary of Record ..................................................................................................6 C. The HOA Foreclosure Sale and Plaintiff’s Purported Acquisition of the Property........................................................................................................................7 D. Foreclosure of the Deed of Trust and Acquisition of the Property by Fannie Mae...............................................................................................................................7 REQUEST FOR JUDICIAL NOTICE ................................................................................................8 LEGAL STANDARD..........................................................................................................................8 ARGUMENT .......................................................................................................................................9 I. The Federal Foreclosure Bar Preempts Contrary State Law....................................................9 II. Fannie Mae Had a Protected Property Interest at the Time of the HOA Sale .......................10 A. Fannie Mae Owned the Loan at the Time of the HOA Sale ......................................10 1. A Loan Owner Does Not Sacrifice Its Property Interest by Having a Contractually Authorized Representative Serve as Record Beneficiary........11 2. Undisputed Evidence Supports Fannie Mae’s Ownership of the Loan .........18 B. The Federal Foreclosure Bar Protects Fannie Mae’s Interest as Loan Owner...........18 1. The Federal Foreclosure Bar’s Broad Protection Includes Lien Interests ..........................................................................................................18 2. The Protection of the Federal Foreclosure Bar Extends to Fannie Mae When It Is Under FHFA’s Conservatorship...................................................19 C. FHFA Did Not Consent to the Extinguishment of the Deed of Trust........................20 CONCLUSION..................................................................................................................................21 Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 2 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 INTRODUCTION Plaintiff Vita Bella Homeowners’ Association alleges that it purchased property at a homeowners’ association lien foreclosure sale that it had initiated to recover unpaid assessments from the former property owner. At that time, Defendant Federal National Mortgage Association (“Fannie Mae”) owned a deed of trust encumbering the property, and thereby had a property interest in the underlying collateral. Plaintiff contends that the HOA foreclosure sale extinguished the deed of trust under state law, leaving the title Plaintiff acquired free and clear of any encumbrance. But as this Court and other courts in this District have already held in related cases, a federal statute prevents that outcome. See 1597 Ashfield Valley Trust v. Fannie Mae, No. 2:14-cv-2123-JCM, 2015 WL 4581220 (D. Nev. July 28, 2015). Specifically, a broad statutory “exemption” within the Housing and Economic Recovery Act of 2008 (“HERA”) provides that while Fannie Mae is under the conservatorship of the Federal Housing Finance Agency, none of its property “shall be subject to . . . foreclosure . . . without the consent of [FHFA].” 12 U.S.C. § 4617(j)(3) (“Federal Foreclosure Bar”). The Federal Foreclosure Bar expressly precludes the involuntary extinguishment of Fannie Mae’s property interest, and thus preempts the Nevada statute that grants HOAs a superpriority lien for uncollected dues, and allows a properly conducted foreclosure sale on such a lien to extinguish all junior interests, including deeds of trust. See Nev. Rev. Stat. § 116.3116(2) (“State Foreclosure Statute”). Under the Supremacy Clause, the State Foreclosure Statute must yield, such that the HOA Sale did not extinguish Fannie Mae’s interest. In Ashfield, this Court granted FHFA and Fannie Mae’s motion for summary judgment on substantially the same issue. The facts here are nearly identical. The principal difference-that Fannie Mae’s servicer rather than Fannie Mae itself appeared as the record beneficiary of the deed of trust at the time of the HOA Sale-is immaterial under a subsequent decision of the Nevada Supreme Court, and does not change the legal conclusion that at the time of the HOA Sale, Fannie Mae had a protected property interest protected by the Federal Foreclosure Bar. The Court should similarly grant this Motion for Summary Judgment. Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 3 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 BACKGROUND I. The Secondary Mortgage Market In the 1930s, Congress chartered Fannie Mae to facilitate the nationwide secondary mortgage market, and thereby to enhance the equitable distribution of mortgage credit throughout the nation. See City of Spokane v. Fannie Mae, 775 F.3d 1113, 1114 (9th Cir. 2014). Fannie Mae’s federal statutory charter authorizes it to purchase only secured “mortgages,” not unsecured loans. See 12 U.S.C. §§ 1717(b), 1719 (authorizing purchase of residential mortgages and setting forth minimum requirements for such mortgages). In the course of carrying out its congressionally mandated mission, Fannie Mae has acquired millions of mortgages nationwide, including hundreds of thousands of mortgages in Nevada. While Fannie Mae plays an important role in the mortgage market, it is not in the business of managing the mortgages themselves, such as handling day-to-day borrower communications and conducting foreclosures of delinquent loans. Therefore, Fannie Mae, like other investors in loans, contracts with servicers that often serve as the record beneficiary of deeds of trust to facilitate efficient management. See Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1038-39 (9th Cir. 2011) (describing how loan owners contract with servicers and the servicers’ role); Restatement (Third) of Prop.: Mortgages § 5.4 cmt. c (“Restatement”) (discussing the common practice where investors in the secondary mortgage market designate their servicer to be assignee of the mortgage);1 Fannie Mae’s Single-Family Servicing Guide (“Guide”) at A1-1-03, F-1-14 (discussing Fannie Mae’s relationship with servicers to manage the loans Fannie Mae purchases). The Nevada Supreme Court has recognized the importance of these relationships by adopting the Restatement approach. See In re Montierth, 354 P.3d 648, 650-51 (Nev. 2015). Montierth holds that when a loan owner has an agency or contractual relationship with an entity who acts as the beneficiary of record of a deed of trust, the loan owner (though not the record beneficiary) maintains a secured property interest. Id. 1 Cf. 12 C.F.R. § 226.39(a)(1) (2015) (excluding servicers from federal regulations requiring loan owners to disclose transfers of mortgages to affected consumers and confirming that “a servicer of a mortgage loan shall not be treated as the owner of the obligation if the servicer holds title to the loan, or title is assigned to the servicer, solely for the administrative convenience of the servicer in servicing the obligation”). Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 4 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 II. Undisputed Facts Specific to this Case A. The Subject Property, Note, and Deed of Trust 1. A deed of trust listing Terrance Imel (“Borrower”) as the borrower; Countrywide Bank, FSB2 as the Lender; and Mortgage Electronic Registration Systems, Inc. (“MERS”), as beneficiary solely as nominee for Lender and Lender’s successors and assigns, was executed on May 28, 2008, and recorded on June 2, 2008. Ex. A at 1. The Deed of Trust granted Lender a security interest in real property known as 5 Corte Belleza, Henderson, Nevada, 89011 (the “Property”) to secure the repayment of a loan in the original amount of $375,049 to Borrower (the “Loan”). Id. at 1-5. 2. The Deed of Trust provides that “The Note or a partial interest in the Note (together with this [Deed of Trust]) can be sold one or more times without prior notice to Borrower. A sale might result in a change in the entity (known as the ‘Loan Servicer’) . . . . There also might be one or more changes of the Loan Servicer unrelated to a sale of the Note.” Ex. A at 16. 3. Fannie Mae purchased the Loan and thereby obtained a property interest in the Deed of Trust on or about June 1, 2008. Ex. B, Declaration of John Curcio at 2-3, ¶¶ 4-7. Fannie Mae has never sold or transferred the Loan to any other entity. Id. ¶¶ 4, 7-8. 4. On September 6, 2008, pursuant to HERA, FHFA’s Director placed Fannie Mae into conservatorship. 5. On June 3, 2013, MERS, as nominee for Lender and Lender’s successors and assigns, assigned the Deed of Trust to Green Tree Servicing LLC, now known as Ditech Financial LLC (“Green Tree”). Ex. C at 1. The assignment of the Deed of Trust was recorded on June 5, 2013. Id.3 2 Countrywide was later merged into Bank of America, N.A. 3 A second assignment of the Deed of Trust from MERS to Green Tree was recorded on July 11, 2013. Ex. D at 1. This second assignment was redundant with the first, but in any event is not material here; no matter which assignment is effective, MERS had transferred the Deed of trust to Green Tree prior to the HOA Sale. Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 5 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 6. At the time of the HOA Sale on September 16, 2013, Green Tree was the servicer of the Loan for Fannie Mae. See Ex. B, Curcio Decl. at 3, ¶¶ 9-11; Ex. E, Declaration of Brian Hamm at 2-3, ¶¶ 3-5. B. Fannie Mae’s Contract with Its Servicers 7. The relationship between Green Tree, as the servicer of the Loan, and Fannie Mae, as owner of the Loan, is governed by the Guide, a central governing document for Fannie Mae’s relationship with servicers nationwide. See Ex. B, Curcio Decl. at 3, ¶ 11. Among other things, the Guide provides that Fannie Mae’s servicers may act as record beneficiaries for the deeds of trust owned by Fannie Mae and requires that servicers assign these deeds of trust to Fannie Mae upon Fannie Mae’s demand. See Exs. F-G at 1, Guide at A1-1-03, F-1- 14.4 8. The Guide provides that: 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 recording any required documentation, such as mortgage assignments, powers of attorney, or affidavits; and • providing recordation information for the affected mortgage loans. Ex. H at 1, Guide at A2-1-03 (emphasis added). 4 The Guide is publicly available on Fannie Mae’s website. An interactive version is available at https://www.fanniemae.com/content/guide/servicing/index.html, and archived prior versions of the Guide are available at that URL by clicking “Show All” in the left hand column of that site. While the sections of the Guide have been amended over the course of Fannie Mae’s ownership of the Loan, none of these amendments have changed these sections in a way material to this case. A static, PDF copy of the most recent version of the Guide is available at https://www.fanniemae.com/content/guide/svc060816.pdf. The Court may take judicial notice of the Guide. See, e.g., Charest v. Fannie Mae, 9 F. Supp. 3d 114, 118 & n.1 (D. Mass. 2014); Cirino v. Bank of Am., N.A., No. CV 13-8829 PSG MRWX, 2014 WL 9894432, at *7 (C.D. Cal. Oct. 1, 2014). Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 6 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 9. The Guide also provides for a temporary transfer of possession of the note when necessary for servicing: In order to ensure that a servicer is able to perform the services and duties incident to the servicing of the mortgage loan, Fannie Mae temporarily gives the servicer possession of the mortgage note whenever the servicer, acting in its own name, represents the interests of Fannie Mae in foreclosure actions, bankruptcy cases, probate proceedings, or other legal proceedings. This temporary transfer of possession occurs automatically and immediately upon the commencement of the servicer’s representation, in its name, of Fannie Mae’s interests in the foreclosure, bankruptcy, probate, or other legal proceeding. Ex. I, Guide at A2-1-04. Nevertheless, “Fannie Mae is at all times the owner of the mortgage note,” and “[a]t the conclusion of the servicer’s representation of Fannie Mae’s interests in the foreclosure . . . possession automatically reverts to Fannie Mae.” Id. C. The HOA Foreclosure Sale and Plaintiff’s Purported Acquisition of the Property 10. On February 14, 2014, a foreclosure deed was recorded against the Property. Ex. J at 1. The foreclosure deed states that the Property was sold in an HOA foreclosure sale (the “HOA Sale”) on September 16, 2013 to the HOA, with a purchase price of $16,206.19. See id. 11. At no time did the Conservator consent to the HOA Sale extinguishing or foreclosing Fannie Mae’s interest in the Property. See Ex. K at 1, (FHFA’s Statement on HOA Super-Priority Lien Foreclosures (Apr. 21, 2015), www.fhfa.gov/Media/PublicAffairs/Pages/Statement-on- HOA-Super-Priority-Lien-Foreclosures.aspx). D. Foreclosure of the Deed of Trust and Acquisition of the Property by Fannie Mae 12. On August 19, 2014, Green Tree assigned the Deed of Trust to Fannie Mae. Ex. L at 1. The assignment of the Deed of Trust was recorded on September 10, 2014. Id. 13. On September 4, 2014, a Trustee’s Sale occurred at which Fannie Mae purchased the Property by credit bid. Ex. M at 1. The Trustee’s Deed Upon Sale reflecting that sale was recorded September 10, 2014. Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 7 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 REQUEST FOR JUDICIAL NOTICE Many of the preceding facts are supported by admissible evidence introduced by the testimony of a qualified witness; the remainder are judicially noticeable facts that are either “generally known” or that “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201. FHFA and Fannie Mae respectfully request that the Court take judicial notice of two categories of documents. First, FHFA and Fannie Mae respectfully request that the Court take judicial notice of the publicly recorded instruments cited in the statement of Undisputed Facts. Specifically, the Court should take judicial notice of the facts discussed in Paragraph 1-2, 5, 7, 10, 12-13. Facts derived from the publicly available records of the Clark County Recorder are judicially noticeable. See Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866 & n.1 (9th Cir. 2004) (court may take judicial notice of the records of state agencies and other undisputed matters of public record under Fed. R. Evid. 201); Harlow v. MTC Fin. Inc., 865 F. Supp. 2d 1095, 1097 (D. Nev. 2012) (“When ruling on a motion for summary judgment, the Court may take judicial notice of matters of public record, including recorded documents”). Second, the Court should take judicial notice of the FHFA Statement regarding its policy not to consent to the extinguishment of Enterprise property, which is cited in Paragraph 11 of the Statement of Undisputed Facts. FHFA’s statement is available on a federal government website that is not subject to reasonable dispute. See Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010); Eagle SPE NV 1, Inc. v. S. Highlands Dev. Corp., 36 F. Supp. 3d 981, 985, 988 n.6 (D. Nev. 2014) (taking judicial notice of document on FDIC website). LEGAL STANDARD In evaluating a motion for summary judgment, courts must view all facts and draw all inferences in the light most favorable to the nonmoving party. See Amerson v. Clark Cnty., 995 F. Supp. 2d 1155, 1159 (D. Nev. 2014) (citing Kaiser Cement Corp. v. Fischbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986)). Summary judgment shall be granted if the moving party demonstrates that the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and the Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 8 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 moving party is entitled to judgment as a matter of law. See Zoslow v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982). ARGUMENT I. The Federal Foreclosure Bar Preempts Contrary State Law The Federal Foreclosure Bar preempts any Nevada law, including the State Foreclosure Statute, that would otherwise permit the HOA’s foreclosure of its superpriority lien to extinguish Fannie Mae’s interest in the Property while Fannie Mae is under FHFA’s conservatorship. Indeed, in eleven related cases, this Court and others in this District consistently have held that the Federal Foreclosure Bar preempts the application of the State Foreclosure Statute under similar circumstances. See Ashfield, 2015 WL 4581220, at *7.5 These rulings have relied on the theories of express and conflict preemption. A federal statute expressly preempts contrary law when it “explicitly manifests Congress’s intent to displace state law.” Valle del Sol Inc. v. Whiting, 732 F.3d 1006, 1022 (9th Cir. 2013). This is the case here: the text of HERA declares that “[n]o property of the Agency shall be subject to levy, attachment, garnishment, foreclosure, or sale.” 12 U.S.C. § 4617(j)(3). The Federal Foreclosure Bar automatically bars any nonconsensual limitation or extinguishment through foreclosure of any interest in property held by Fannie Mae while in conservatorship. All of these “adverse actions . . . could otherwise be imposed on FHFA’s property under state law. Accordingly, Congress’s creation of these protections clearly manifests its intent to displace state law.” Skylights, 112 F. Supp. 3d at 1153. Therefore, the Federal Foreclosure Bar expressly preempts the State Foreclosure Statute to the extent that the state statute otherwise would permit any such nonconsensual limitation or extinguishment. 5 See also Skylights v. Byron, 112 F. Supp. 3d 1145 (D. Nev. 2015); Elmer v. Freddie Mac, No. 2:14-cv-01999-GMN-NJK, 2015 WL 4393051 (D. Nev. July 14, 2015); Premier One Holdings, Inc. v. Fannie Mae, No. 2:14-cv-02128-GMN-NJK, 2015 WL 4276169 (D. Nev. July 14, 2015); Williston Inv. Grp., LLC v. JP Morgan Chase Bank, NA, No. 2:14-cv-02038-GMN-PAL, 2015 WL 4276144 (D. Nev. July 14, 2015); My Glob. Vill., LLC v. Fannie Mae, No. 2:15-cv-00211-RCJ- NJK, 2015 WL 4523501 (D. Nev. July 27, 2015); Fannie Mae v. SFR Invs. Pool 1, LLC, No. 2:14- CV0-2046-JAD-PAL, 2015 WL 5723647 (D. Nev. Sept. 28, 2015); Berezovsky v. Moniz, No. 2:15- cv-01186-GMN-GWF, 2015 WL 8780198 (D. Nev. Dec. 15, 2015); Order, Opportunity Homes, LLC v. Freddie Mac, No. 2:15-cv-008993-APG-GWF (D. Nev. Mar. 11, 2016), ECF No. 39; FHFA v. SFR Investments Pool 1, LLC, No. 2:15-cv-1338-GMN-CWH, 2016 WL 2350121 (D. Nev. May 2, 2016). Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 9 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 The Federal Foreclosure Bar also preempts the State Foreclosure Statute because “‘state law is naturally preempted to the extent of any conflict with a federal statute.’” Valle del Sol, 732 F.3d at 1023 (internal quotations omitted). Congress’s clear and manifest purpose in enacting Section 4617(j)(3) was to protect the nationwide operations of the Enterprises while in conservatorship from actions, such as the HOA Sale, that otherwise would deprive them of their interests in property. Accordingly, the Federal Foreclosure Bar preempts any state law that would authorize the HOA Sale to effect the nonconsensual extinguishment of the Enterprises’ property interests and thereby permit the transfer to Plaintiff of free and clear title to the Property. Noting the “direct conflict” between the Federal Foreclosure Bar and State Foreclosure Statute, this Court has held that “the federal law must prevail. Unless FHFA consents, HOA superpriority foreclosure sales are incapable of extinguishing property interests held by [an Enterprise] while under FHFA conservatorship.” Ashfield, 2015 WL 4581220, at *7 (citations omitted). II. Fannie Mae Had a Protected Property Interest at the Time of the HOA Sale To successfully invoke the Federal Foreclosure Bar’s preemptive protection, Fannie Mae and FHFA need to establish two things: first, that Fannie Mae owned the Loan at the time of the HOA Sale, and second, that ownership of the Loan was a property interest covered by the Federal Foreclosure Bar’s protection. Finally, while it is not FHFA and Fannie Mae’s burden to establish this fact, it is undisputed that FHFA has not consented to the extinguishment of Fannie Mae’s property interest in this case. A. Fannie Mae Owned the Loan at the Time of the HOA Sale Nevada law confirms that when Fannie Mae purchased the Loan on or about June 1, 2008, Fannie Mae acquired a secured property interest through its ownership of the note and Deed of Trust. At the time of the HOA Sale, Green Tree was the record beneficiary of the Deed of Trust, but it did not own the Loan; Green Tree’s interest in the Deed of Trust was as record beneficiary in its capacity as the contractually authorized servicer of Fannie Mae. Other courts in this District have held that Fannie Mae (or the similarly situated Freddie Mac) had an interest in property when (1) the Enterprise both owned the note and was record beneficiary of the deed of trust, e.g., Skylights, 2015 WL 3887061; FHFA v. SFR, 2016 WL Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 10 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 2350121, at *7; or (2) the Enterprise owned the note and its servicer was beneficiary of record of the deed of trust, e.g., Berezovsky, 2015 WL 8780198, at *3; FHFA v. SFR, 2016 WL 2350121, at *6-7. The circumstances of Fannie Mae’s property interest in this case are materially identical to those of the property at issue in Berezovsky and of four of the five properties discussed in FHFA v. SFR: at the time of the relevant HOA foreclosure sale, Fannie Mae owned the note and its servicer acted as record beneficiary of the deed of trust. This is sufficient under Nevada Law, as recently confirmed in the Nevada Supreme Court’s Montierth decision, for Fannie Mae to be a secured creditor with a property interest in the deed of trust and the collateral. Evidence of Fannie Mae’s ownership interest is provided by the business records data derived from SIR, a database that Fannie Mae uses in its everyday business to track millions of loans that it acquires and owns nationwide. See Ex B, Curcio Decl., generally, and Exhibit A attached thereto. Under the Federal Rules of Evidence, business records are, by their nature, admissible to prove the truth of their contents when introduced by a qualified witness, as they are here. See Fed. R. Evid. 803. 1. A Loan Owner Does Not Sacrifice Its Property Interest by Having a Contractually Authorized Representative Serve as Record Beneficiary a. Nevada Adopts the Restatement Approach that Acknowledges the Loan Owner-Servicer Relationship In Edelstein v. Bank of New York Mellon, the Nevada Supreme Court adopted the Restatement approach to the transfer of mortgages. 286 P.3d 249, 257-58 (Nev. 2012) (citing Restatement (Third) of Prop.: Mortgages § 5.4(a) (1997) (“Restatement”)). Recently, the Nevada Supreme Court reaffirmed that it adopted the entirety of the Restatement approach, including sections not discussed in Edelstein. See In re Montierth, 354 P.3d 648, 650-51 (Nev. 2015). Under the Restatement approach adopted in Edelstein and Montierth, ownership of the Deed of Trust was transferred to Fannie Mae along with the promissory note when Fannie Mae purchased the Loan; the fact that a servicer may appear as the record beneficiary of the deed of trust does not undermine Fannie Mae’s status as a secured creditor with a property interest in the deed of trust and the collateral. /// Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 11 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 The Restatement describes the typical arrangement between investors in mortgages, such as Fannie Mae, and their servicers: Institutional purchasers of loans in the secondary mortgage market often designate a third party, not the originating mortgagee, to collect payments on and otherwise “service” the loan for the investor. In such cases the promissory note is typically transferred to the purchaser, but an assignment of the mortgage from the originating mortgagee to the servicer may be executed and recorded. This assignment is convenient because it facilitates actions that the servicer might take, such as releasing the mortgage, at the instruction of the purchaser. The servicer may or may not execute a further unrecorded assignment of the mortgage to the purchaser. Restatement § 5.4 cmt. c (emphasis added). The Restatement then emphasizes that this arrangement preserves the investor’s ownership interest: It is clear in this situation that the owner of both the note and mortgage is the investor and not the servicer. This follows from the express agreement to this effect that exists among the parties involved. The same result would be reached if the note and mortgage were originally transferred to the institutional purchaser, who thereafter designated another party as servicer and executed and recorded a mortgage assignment to that party for convenience while retaining the promissory note. Id. (emphasis added). Thus, the Restatement acknowledges that the assignment of a deed of trust to a servicer does not alter the fact that the purchaser of the loan remains the owner of the note and deed of trust. See, e.g., Berezovsky, 2015 WL 8780198, at *3 (citing Restatement to hold that Freddie Mac had a protected property interest while its servicer was record beneficiary of the deed of trust). The Restatement approach reflects the realities of the mortgage industry: Fannie Mae and Freddie Mac can support the national secondary mortgage market more efficiently if they can contract with servicers to manage loans without relinquishing ownership of deeds of trust.6 Indeed, the Restatement counsels that “[c]ourts should be vigorous in seeking to find” an agency or contractual relationship between the owner of a mortgage and one purporting to enforce it “since the result is otherwise likely to be a windfall for the mortgagor and the frustration of [the mortgage owner]’s expectation of security.” Restatement § 5.4 cmt. e. /// 6 The Restatement approach also is consonant with federal law, which defines the scope of property interests protected by statutes such as the Federal Foreclosure Bar broadly. See infra at 18- 19. Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 12 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 While Edelstein did not mention the above provisions of the Restatement, Montierth confirmed that they are nevertheless incorporated into Nevada law: “Because it was not pertinent to [the Nevada Supreme Court’s] analysis in Edelstein, [the court] did not include the exceptions provided in the Restatement.” Montierth, 354 P.3d at 651. Accordingly, Montierth held that a foreclosure could proceed when the noteholder was not the beneficiary named in the recorded deed of trust so long as the named beneficiary had authority to foreclose on the noteholder’s behalf. Id. at 650-51. Montierth also stated unequivocally that in those circumstances a note owner remains “a secured creditor” under Nevada law, meaning that it retains a property interest in the collateral. Id. In Montierth, the Nevada Supreme Court explained that “foreclosure is not impossible if there is either a principal-agent relationship between the note holder and the mortgage holder, or the mortgage holder ‘otherwise has authority to foreclose in the [note holder]’s behalf.’ We agree with the Restatement’s reasoning.” Id. at 651 (citing Restatement § 5.4 cmts. c, e). The court concluded that because the beneficiary in that case, MERS, “would be authorized to foreclose on behalf of” the lender as the lender’s agent, “reunification of the instruments would not be required.” Id. Thus, Montierth makes clear that any “split” of the note and deed of trust is legally irrelevant in the context of a relationship such as that between a note owner and servicer. In “agree[ing] with the Restatement’s reasoning,” and specifically citing to Section 5.4, comment c of the Restatement, the Nevada Supreme Court adopted the principle that an investor acquires a property interest in the deed of trust when it purchases the note and when it has an agent or contractual relationship with the beneficiary of record of the deed of trust. See Montierth, 354 P.3d at 651; Restatement § 5.4 cmt. c. In such a circumstance, the purchaser of the loan, like Fannie Mae here, is a secured lender with a “fully-secured, first priority deed” that can be enforced. Id. Here, Green Tree was the record beneficiary of the deed of trust at the time of the HOA Sale, in its capacity as servicer for Fannie Mae. The facts of this case are thus similar to the prior related case in which this Court granted a motion for summary judgment; both here and in Ashfield, at the time of the relevant HOA Sale, there had been no assignment of the relevant deed of trust in the loan owner’s name. Rather, in both cases, the record beneficiary was an entity that had a contractual or agency relationship with Fannie Mae. This fact did not prevent summary judgment Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 13 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 for FHFA and Fannie Mae in Ashfield; nor should it prevent summary judgment for FHFA and Fannie Mae here. In Ashfield, this Court discussed a circumstance where, as here, an assignment of a deed of trust in the loan owner’s name had not been executed at the time of the HOA Sale. Ashfield, 2015 WL 4581220, at *8. This discussion relied chiefly on a general rule, drawn from Edelstein, that under such circumstances, the note and deed of trust would be split. See id. But shortly after this Court issued Ashfield, the Nevada Supreme Court decided Montierth. As discussed above, Montierth, unlike Edelstein, clarified that Nevada adopted the entirety of the Restatement approach, including those sections that articulate exceptions to the general rule discussed in Edelstein. See supra at 11-13. Montierth explained that any purported split between a note and deed of trust was of no moment, and a foreclosure could proceed, when the noteholder had an agency or contractual relationship with the record beneficiary of the deed of trust. 354 P.3d at 650-51. Montierth also held that in those circumstances, a note owner remains “a secured creditor,” meaning that the note owner retains a property interest in the collateral. Id. Thus, Ashfield predated and did not have the benefit of the elaboration of Nevada law in Montierth. Given that clarification, the Court should hold that a loan owner like Fannie Mae does have a secured property interest when it has an agent or contractual relationship with an entity serving as record beneficiary of the deed of trust. See Montierth, 354 P.3d at 651; Restatement § 5.4 cmt. c. Indeed, since Montierth was issued in 2015, several decisions of courts within this District have cited the Restatement approach to hold that Fannie Mae or Freddie Mac had a protected property interest while a party acting on behalf of the Enterprise-in those cases, as here, a loan servicer-served as record beneficiary of the relevant deed of trust. See, e.g., Berezovsky, 2015 WL 8780198, at *3; FHFA v. SFR, 2016 WL 2350121, at *6-7 (granting FHFA and the Enterprises summary judgment with regard to five properties). This Court should do the same here. b. Nevada Adopts the Uniform Commercial Code, Which Is Consistent with the Restatement Approach The Restatement approach is consistent with Nevada’s version of the Uniform Commercial Code Article 9, which applies to transfers of real property interests and likewise provides that Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 14 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15 Fannie Mae’s acquisition of the promissory note gave it a secured interest in the Property. Specifically, Nevada Revised Statute § 104.9203(7) provides that “[t]he attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security, mortgage or other lien.” See also NRS § 104.9102(1)(ttt)(4) (defining “secured party” under UCC Art. 9 to include “[a] person to which . . . promissory notes have been sold”); Report of the Permanent Editorial Board for the UCC, Application of the UCC to Selected Issues Relating to Mortgage Notes at 14 (Nov. 14, 2011) (“Article 9 of the UCC provides that a transferee of a mortgage note whose property right in the note has attached also automatically has an attached property right in the mortgage that secures the note.”). Similarly, the Restatement approach is consistent with Nevada’s adoption of UCC Article 3, which provides that “[a] person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument.” Nev. Rev. Stat. § 104.3301 (Nevada’s adoption of UCC § 3-301). A “person entitled to enforce the instrument” may be a “holder of the instrument” or even a “nonholder in possession of the instrument who has the rights of the holder.” Id. Accordingly, “the status of holder merely pertains to one who may enforce the debt and is a separate concept from that of ownership.” Thomas v. BAC Home Loans Servicing, LP, No. 56587, 2011 WL 6743044, at *1, 3 & n.9 (Nev. Dec. 20, 2011) (quoting Nev. Rev. Stat. § 104.3301(2) and citing UCC § 3-203 cmt. 1). That is because “[o]wnership rights in instruments may be determined by principles of the law of property . . . which do not depend upon whether the instrument was transferred.” UCC § 3-203 cmt. 1. For that reason, a transfer of a note “vests in the transferee any right of the transferor to enforce the instrument,” but has no bearing on ownership. Nev. Rev. Stat. § 104.3203. In fact, the Nevada Supreme Court has applied this principle in a similar circumstance where Freddie Mac claimed to be the owner of a note while BAC Home Loans Servicing, LP, claimed to be the holder of the note and the beneficiary of record of the associated deed of trust. The court held there was nothing inconsistent with those two positions under Nevada law. See Thomas, 2011 WL 6743044, at *1, 3 & n.9. Here, too, there is nothing inconsistent with Fannie Mae being the Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 15 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 owner of the note and the Deed of Trust while Green Tree, its servicer, was beneficiary of record of the Deed of Trust.7 c. The Guide Confirms that Fannie Mae Retains Ownership of the Deed of Trust While Green Tree Serves as Beneficiary of Record Fannie Mae is the owner of millions of mortgages nationwide and hundreds of thousands of mortgages in Nevada pursuant to its congressionally mandated mission to support the national secondary mortgage market. Therefore, it contracts with servicers that often serve as the beneficiary of record of deeds of trust to facilitate the servicers’ efficient management of those loans. The Guide serves as a central document governing the contractual relationship between Fannie Mae and its servicers nationwide, including Green Tree. See Ex. F, Guide at A1-1-03; Ex. B, Curcio Decl. at 3, ¶ 11. Reflecting the principles of Nevada law discussed supra, the Guide provides that a servicer may act as the beneficiary of record while Fannie Mae maintains ownership of the deed of trust and can “compel an assignment of the deed of trust.” Montierth, 354 P.3d at 651. For example, the Guide provides that: 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 recording any required documentation, such as mortgage assignments, powers of attorney, or affidavits; and • providing recordation information for the affected mortgage loans. Ex. H, Guide at A2-1-03 (emphasis added).8 7 If the rule were instead that every deed of trust must be recorded in the name of its owner, there could never be a record beneficiary working on behalf of an owner as nominee or other contractual representative; MERS could never be the beneficiary of record of a deed of trust as nominee for a lender and the lender’s successors and assigns. But that would be directly contrary to common practice, the Nevada Supreme Court’s holding in Montierth, and a number of Ninth Circuit decisions regarding MERS and its role in the consumer mortgage industry. See In re Mortgage Elec. Registration Sys., Inc., 754 F.3d 772, 776-77 (9th Cir. 2014); Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1038-39 (9th Cir. 2011). Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 16 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17 The provisions of the Guide demonstrate that Fannie Mae and its loan servicers maintain the type of relationship described in the Restatement and consistent with Nevada’s adoption of the UCC, as they also permit a temporary transfer of possession of the note when necessary for servicing and to protect the interests of Fannie Mae. See Ex. I, Guide at A2-1-04. For example, the note may be constructively transferred to the servicer when the servicer is pursuing a foreclosure on Fannie Mae’s behalf. See id. Nevertheless, the Guide is clear that ownership always lies with Fannie Mae. For example, “Fannie Mae is at all times the owner of the mortgage note,” and “[a]t the conclusion of the servicer’s representation of Fannie Mae’s interests in the foreclosure . . . possession automatically reverts to Fannie Mae.” Id. Furthermore, the servicer is required to “maintain in the individual mortgage loan file all documents and system records that preserve Fannie Mae’s ownership interest in the mortgage loan.” Ex. N, Guide at A2-5.1-02. Any servicer retaining documents related to a particular loan, such as a deed of trust, has “no right to possession of these documents and records except under the conditions specified by Fannie Mae.” Ex. O, Guide at A2-5.1-01. Indeed, “[a]ny of these documents and records in possession of the mortgage loan originator, seller, or servicer, any service bureau, or any other party providing services in connection with selling a mortgage loan to, or servicing a mortgage loan for, Fannie Mae are retained in a custodial capacity only.” Id. Thus, under Nevada law and pursuant to the Guide, the fact that Green Tree was the beneficiary of record of the Deed of Trust at the time of the HOA Sale does not negate the fact that Fannie Mae remained the owner of the note and the Deed of Trust at that time. Accordingly, the Federal Foreclosure Bar, which protects Fannie Mae’s property interests, protected the Deed of Trust from extinguishment, and Fannie Mae continued to own both the Deed of Trust and the note after the HOA Sale. 8 Relatedly, the Guide also discusses transfers of servicing rights and requires servicers to complete assignments of deeds of trust depending on the circumstances of those transfers. If the transferor servicer is the beneficiary of record, the transferor servicer must prepare and record an assignment to the transferee servicer. See Ex. G, Guide at F-1-14. Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 17 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 2. Undisputed Evidence Supports Fannie Mae’s Ownership of the Loan Undisputed evidence supports Fannie Mae’s ownership of the Loan at the time of the HOA Sale. The date that Fannie Mae acquired the loan, on or about June 1, 2008, five years prior to the HOA Sale, is supported by the business records of Fannie Mae derived from the SIR database, an electronic system of record that Fannie Mae uses to track mortgage loans it acquires. See Ex B., Curcio Decl. at 2, ¶¶ 3-5. There is no evidence that Fannie Mae’s ownership of the Loan ended prior to the date of the HOA Sale; indeed, Fannie Mae’s business records reflect continued ownership of the Loan to until its foreclosure in September 2014. See Ex. B, Curcio Decl. at 2-3, ¶¶ 7-8. In addition, the records of both Fannie Mae and Green Tree support that at the time of the HOA Sale, Green Tree acted as Fannie Mae’s servicer with respect to the Loan. See id; see also Ex. E, Hamm Decl. at 2-3, ¶¶ 3-6. These business records are admissible under a commonly applied exception to the hearsay rule. Fed. R. Evid. 803(6). Indeed, they are deemed to have “unusual reliability . . . supplied by systematic checking, by regularity and continuity which produce habits of precision, by actual experience of business in relying upon them, or by a duty to make an accurate record as part of a continuing job or occupation.” Fed. R. Evid. 803 (1972 advisory committee notes). This rule allows business records to be introduced as evidence for the truth of their contents, Malek v. Fed. Ins. Co., 994 F.2d 49, 53 (2d Cir. 1993), and provided that a qualified witness has established the requirements for the exception-as is the case here-“the burden is on the opponent to show that the source of information or the method or circumstances of preparation indicate a lack of trustworthiness.” Fed. R. Evid. 803 (2014 advisory committee notes). B. The Federal Foreclosure Bar Protects Fannie Mae’s Interest as Loan Owner 1. The Federal Foreclosure Bar’s Broad Protection Includes Lien Interests Under federal law, Fannie Mae’s ownership of the Loan qualifies as a protected property interest for purposes of the Federal Foreclosure Bar. Indeed, federal law defines the scope of property interests protected by statutes such as the Federal Foreclosure Bar broadly. See Matagorda Cty. v. Russell Law, 19 F.3d 215, 221 (5th Cir. 1994). Courts uniformly have held that mortgage Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 18 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 liens constitute property for purposes of the analogous FDIC statute, 12 U.S.C. § 1825(b)(2).9 “[T]he term ‘property’ in § 1825(b)(2) encompasses all forms of interest in property, including mortgages and other liens.” Simon v. Cebrick, 53 F.3d 17, 20 (3d Cir. 1995). This reflects Congress’s intent to provide the greatest possible scope of protection to Fannie Mae and Freddie Mac in the midst of a severe housing crisis. Cf. Cambridge Capital Corp. v. Halcon Enterps., Inc., 842 F. Supp. 499, 503 (S.D. Fla. 1993) (“This Court need look no further than [Section 1825(b)(2)] itself to determine that Congress has expressed its intent that no property of the FDIC-fee or lien-be subject to foreclosure without the FDIC’s consent.”); Trembling Prairie Land Co. v. Verspoor, 145 F.3d 686, 691 (5th Cir. 1998) (“In deference to the will of Congress, we hold that the tax sale at issue was conducted without the consent of the FDIC . . . [and] violated 12 U.S.C. § 1825(b)(2).”). Therefore, Fannie Mae’s interest here-ownership of both the Deed of Trust and the note- was a protected property interest under the Federal Foreclosure Bar. That federal statute sets forth no other requirements for its protection to apply, as it unequivocally states that when Fannie Mae is under FHFA’s conservatorship, none of its property “shall be subject to . . . foreclosure . . . without the consent of [FHFA].” 12 U.S.C. § 4617(j)(3). 2. The Protection of the Federal Foreclosure Bar Extends to Fannie Mae When It Is Under FHFA’s Conservatorship The Federal Foreclosure Bar necessarily protects the Deed of Trust because the Conservator has succeeded by law to all of Fannie Mae’s “rights, titles, powers, and privileges,” 12 U.S.C. § 4617(b)(2)(A)(i). “Accordingly, the property of [Fannie Mae] effectively becomes the property of FHFA once it assumes the role of conservator, and that property is protected by section 4617(j)’s exemptions.” Skylights, 112 F. Supp. 3d at 1155; accord Ashfield, 2015 WL 4581220 at *9. This interpretation is supported by the text and structure of HERA. See Skylights, 112 F. Supp. 3d at 9 When analyzing HERA’s provisions, courts have frequently turned to precedent interpreting the analogous receivership authority of the FDIC. See, e.g., Cty. of Sonoma v. FHFA, 710 F.3d 987, 993 (9th Cir. 2013) (referring to the FDIC’s statutory authority in a related area as “analogous to 12 U.S.C. § 4617(f)”); In re Fed. Home Loan Mortg. Corp. Derivative Litig., 643 F. Supp. 2d 790, 795 (E.D. Va. 2009) (“[T]he Court is persuaded by decisions that have reached the same conclusion when interpreting [FIRREA], whose provisions regarding the powers of federal bank receivers and conservators are substantially identical to those of HERA.”), aff’d sub nom. La. Mun. Police Retirement Sys. v. FHFA, 434 F. App’x 188 (4th Cir. 2011). Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 19 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20 1155. Section 4617 concerns FHFA’s “[a]uthority over” Freddie Mac and Fannie Mae when they are placed into “conservatorship or receivership.” Furthermore, the protections of Section 4617(j)(3) apply in “any case in which [FHFA] is acting as a conservator or a receiver.” 12 U.S.C. § 4617(j)(1). Indeed, courts uniformly have rejected any argument that the immunities provided by Section 4617(j) do not apply to the property of Freddie Mac or Fannie Mae while in FHFA conservatorship. See Skylights, 112 F. Supp. 3d at 1155 (collecting cases); Nevada v. Countrywide Home Loans Servicing, LP, 812 F. Supp. 2d 1211, 1218 (D. Nev. 2011) (“while under the conservatorship with the FHFA, Fannie Mae is statutorily exempt from taxes, penalties, and fines to the same extent that the FHFA is”); FHFA v. City of Chicago, 962 F. Supp. 2d 1044, 1064 (N.D. Ill. 2013) (argument is “meritless”). The courts have also rejected similar arguments in the context of FDIC receiverships. See In re Cty. of Orange, 262 F.3d 1014, 1020 (9th Cir. 2001) (“We also note that subsection (b)(2) provides ‘nor shall any involuntary lien attach to the property of the Corporation.’ That language’s plain meaning is that once the property belongs to the FDIC, that is, when the FDIC acts as receiver, no liens shall attach”) (emphasis omitted) (quoting 12 U.S.C. § 1825(b)(2)); Cty. of Fairfax v. FDIC, Civ. A. No. 92-0858, 1993 WL 62247, at *4 (D.D.C. Feb. 26, 1993) (rejecting contention that statutory penalty bar applicable to the FDIC as receiver, 12 U.S.C. § 1825(b)(3), only “exempts the FDIC itself from penalty assessment but not the [financial institution] for which the FDIC assumes receivership”). C. FHFA Did Not Consent to the Extinguishment of the Deed of Trust Because Fannie Mae had a protected property interest at the time of the HOA Sale, the Federal Foreclosure Bar precluded Plaintiff from acquiring free-and-clear title unless Plaintiff obtained FHFA’s consent to the extinguishment of Fannie Mae’s interest. Plaintiff does not allege and cannot show that it received such consent. To the contrary, the Conservator has publicly announced that it has not and will not consent to the extinguishment of Fannie Mae’s property interest through HOA non-judicial foreclosure sales. See Ex. K (FHFA’s Statement on HOA Super-Priority Lien Foreclosures (Apr. 21, 2015), http://www.fhfa.gov/Media/PublicAffairs/Pages/ Statement-on-HOA-Super-Priority-Lien-Foreclosures.aspx (FHFA “has not consented, and will not Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 20 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21 consent in the future, to the foreclosure or other extinguishment of any Fannie Mae or Freddie Mac lien or other property interest in connection with HOA foreclosures of super-priority liens.”)). Accordingly, the Federal Foreclosure Bar protected Fannie Mae’s interest, and the HOA Sale could not have extinguished the Deed of Trust. CONCLUSION Under the Federal Foreclosure Bar, the HOA Sale could not extinguish Fannie Mae’s interest and therefore did not convey the Property to Plaintiff free and clear of the Deed of Trust. Accordingly, FHFA and Fannie Mae respectfully request that the Court grant their Motion for Summary Judgment; grant judgment in their favor on their declaratory relief and quiet title counterclaims, and declare that: • 12 U.S.C. § 4617(j)(3) preempts any Nevada law that otherwise would permit a foreclosure on an HOA lien to extinguish a property interest of Fannie Mae while it is under FHFA’s conservatorship; • the HOA Sale did not extinguish Fannie Mae’s interest in the Property and thus the Deed of Trust continued to encumber the Property after the HOA Sale; and • Fannie Mae’s request for quiet title is granted insofar as any interest of the Plaintiff in the Property is subject to Fannie Mae’s interest in the Property. DATED this 11th day of July, 2016. WOLFE & WYMAN LLP By: /s/ Colt B. Dodrill Colt B. Dodrill, Esq. (SBN 9000) Richard G. Verlander, Esq. (SBN 12887) 6757 Spencer Street Las Vegas, Nevada 89119 Tel: (702) 476-0100 Fax: (702) 476-0101 cbdodrill@wolfewyman.com rgverlander@wolfewyman.com Attorneys for Defendant/Counterclaimant Federal National Mortgage Association FENNEMORE CRAIG, P.C. By: /s/ Leslie Bryan Hart Leslie Bryan Hart, Esq. (SBN 4932) John D. Tennert, Esq. (SBN 11728) 300 E. Second St., Suite 1510 Reno, Nevada 89501 Tel: 775-788-2228 Fax: 775-788-2229 lhart@fclaw.com; jtennert@fclaw.com Attorneys for Intervenor Federal Housing Financing Agency Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 21 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 22 CERTIFICATE OF SERVICE Pursuant to F.R.C.P. 5(b) and Electronic Filing Procedure IV(B), I certify that on the 16th day of July, 2016, a true and correct copy of the MOTION FOR SUMMARY JUDGMENT, was transmitted electronically through the Court’s e-filing electronic notice system to the attorney(s) associated with this case. If electronic notice is not indicated through the court’s e-filing system, then a true and correct paper copy of the foregoing document was delivered via U.S. Mail. Edward J Song, Esq. - esong@leachjohnson.com Nicole Guralny, Esq. - nguralny@leachjohnson.com Ryan D. Hastings, Esq. - rhastings@leachjohnson.com /s/ Pamela Carmon Pamela Carmon Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 22 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FENNEMORE CRAIG, P.C. 300 E. SECOND ST. SUITE 1510 RENO, NEVADA 89501 (775) 788-2200 EXHIBIT INDEX DESCRIPTION EXHIBIT Deed of Trust A Declaration John Curcio B Assignment of Deed of Trust from MERS to Green Tree C Second Assignment of Deed of Trust from MERS to Green Tree D Declaration of Brian Hamm E Fannie Mae Servicing Guide A1-1-03 F Fannie Mae Servicing Guide F-1-14 G Fannie Mae Servicing Guide A2-1-03 H Fannie Mae Servicing Guide A2-1-04 I HOA Trustee’s Deed Upon Sale J FHFA Statement on HOA Super-Priority Lien Foreclosures K Assignment of Deed of Trust from GT to Fannie Mae L Trustee’s Deed Upon Sale M Fannie Mae Servicing Guide at A2-5.1-02 N Fannie Mae Servicing Guide A2-5.1-01 O Case 2:15-cv-00515-JCM-VCF Document 45 Filed 07/11/16 Page 23 of 23 Exhibit A Deed of Trust Exhibit A Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 1 of 41 001 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 2 of 41 002 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 3 of 41 003 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 4 of 41 004 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 5 of 41 005 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 6 of 41 006 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 7 of 41 007 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 8 of 41 008 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 9 of 41 009 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 10 of 41 010 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 11 of 41 011 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 12 of 41 012 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 13 of 41 013 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 14 of 41 014 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 15 of 41 015 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 16 of 41 016 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 17 of 41 017 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 18 of 41 018 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 19 of 41 019 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 20 of 41 Exhibit B Declaration of John Curcio Exhibit B Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 21 of 41 001 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 22 of 41 002 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 23 of 41 003 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 24 of 41 Exhibit A Exhibit A 004 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 25 of 41 005 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 26 of 41 006 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 27 of 41 007 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 28 of 41 008 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 29 of 41 009 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 30 of 41 010 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 31 of 41 011 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 32 of 41 012 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 33 of 41 013 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 34 of 41 014 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 35 of 41 Exhibit C Assignment of Deed of Trust Exhibit C Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 36 of 41 001 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 37 of 41 002 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 38 of 41 Exhibit D Second Assignment of Deed of Trust Exhibit D Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 39 of 41 001 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 40 of 41 002 Case 2:15-cv-00515-JCM-VCF Document 45-1 Filed 07/11/16 Page 41 of 41 Exhibit E Declaration of Brian Hamm Exhibit E Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 1 of 49 001 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 2 of 49 002 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 3 of 49 003 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 4 of 49 2171018.1 EXHIBIT “A” 004 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 5 of 49 005 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 6 of 49 006 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 7 of 49 NOTICE OF ASSIGNMENT, SALE, OR TRANSFER OF SERVICING RIGHTS You are hereby notified that the servicing of your mortgage loan, that is, the right to collect payments from you, is being assigned, sold or transferred from Bank of America N.A. ("Bank of America") to Green Tree Servicing LLC (“Green Tree”) effective May 1, 2013. The assignment, sale, or transfer of the servicing of the mortgage loan does not affect any term or condition of the mortgage instruments, other than the terms directly related to the servicing of your loan. Except in limited circumstances, the law requires that your present servicer send you this notice at least 15 days before the effective date of transfer, or at closing. Your new servicer must also send you this notice no later than 15 days after this effective date or at closing. Your present servicer is Bank of America. If you have any questions relating to the transfer of servicing from your present servicer, call Customer Service toll-free at 1-800-669-6607 between 7:00 a.m. and 7:00 p.m., Monday through Friday, all US time zones. Your loan file will be transferred from Bank of America with the following information relating to your payments and escrow account: Monthly Payment Information: Principal Payment Amount: Interest Payment Amount: Escrow Payment Amount:__________________________________________ Monthly Payment Amount 1:____________________________________________________________________________________ Payment Due: Current Loan Information: Current Interest Rate: Principal Balance: Escrow Balance: Interest Calculation method is Scheduled Interest Calculation. 1Please refer to your billing statement for any future possible changes to this payment amount. If you have any questions relating to the transfer of servicing to your new servicer, call Customer Service toll free at 1-855-675- 1030 between 7:00 a.m. and 8:00 p.m. CST, Monday through Friday or between 7:00 a.m. and 1:00 p.m. CST, on Saturday. The date that your present servicer will stop accepting payments from you is April 30, 2013. The date that your new servicer will start accepting payments from you is May 1, 2013. SEND ALL PAYMENTS DUE ON OR AFTER MAY 1, 2013 TO YOUR NEW SERVICER: Green Tree Servicing LLC PO Box 7169 Pasadena, CA 91109 - 7169 The transfer of servicing will affect the terms of or the continued availability of any optional insurance (i.e.,mortgage life, disability insurance etc.) or optional products that you may have on the loan. You will need to contact the company providing the insurance or other product directly for continued coverage or enrollment. NOTICE ABOUT YOUR RIGHTS You should be aware of the following information, which is set out in more detail in Section 6 of the Real Estate Settlement Procedures Act (“RESPA”) (12 U.S.C. §2605): During the 60 day period following the effective date of the transfer of the loan servicing, a loan payment received by your present servicer before its due date may not be treated by your new servicer as late, and a late fee may not be imposed on you. Section 6 of RESPA (12 U.S.C. §2605) gives you certain consumer rights. If you send a “qualified written request” to your loan servicer concerning the servicing of your loan, your servicer must provide you with a written acknowledgement within 20 Business Days of receipt of your request. A “qualified written request” is a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, which includes your name and account number, and your reasons for the request. If you want to send a “qualified written request” regarding the servicing of your loan to your new servicer, it must be sent to this address: Green Tree, PO Box 6176, Rapid City, SD 57709-6176. Not later than 60 Business Days after receiving your request, your servicer must make any appropriate corrections to your account, and must provide you with a written clarification regarding any dispute. During this 60 Business Day period, your servicer may not provide information to a consumer reporting agency concerning any overdue payment related to such period or qualified written request. However, this does not prevent the servicer from initiating foreclosure if proper grounds exist under the mortgage documents. A Business Day is a day on which the offices of the business entity are open to the public for carrying on substantially all of its business functions. Section 6 of RESPA also provides for damages and costs for individuals or classes of individuals in circumstances where servicers are shown to have violated the requirements of that Section. You should seek legal advice if you believe your rights have been violated. As your future servicer, we at Green Tree look forward to serving you. Defaulted Account Notice: If your account was in default at the time servicing rights were transferred to Green Tree, please note that this is an attempt to collect a debt and any information obtained may be used for that purpose. This communication is from a debt collector. It is an attempt to collect a debt, and any information obtained will be used for that purpose. 0427502 000016151 09GTR8 0055272 W *C 00 44 0* *C 00 44 0* 007 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 8 of 49 Additional Important Information Payment Processing: You will be receiving your monthly statement from Green Tree within the next twenty-five days. If your payment is due prior to receiving a statement please send your payment to the address below with your new Green Tree account number noted on the memo line. After receiving your first Green Tree statement, please destroy any Bank of America payment coupons and begin using the coupon attached to the bottom of the monthly statement. Please be sure to include your new Green Tree account number and send any future payments made after April 30, 2013 to the following address: Green Tree Servicing LLC PO Box 7169 Pasadena, CA 91109 - 7169 AUTO PAY & BILL PAYMENT SERVICES Automatic Payments Deductions: If your prior servicer had permission to draw your payment from your bank account, that service will not transfer to Green Tree. You can set up a new automatic payment plan with Green Tree by visiting gtservicing.com or by contacting customer service with your request. Bill Payment Services : If your payments currently are made through a military allotment process, or a third-party bill payment service (including online banking services), please inform your vendor or financial institution of the following: • The above-referenced Green Tree account number. • Change of payee to Green Tree Servicing LLC. • The new payment mailing address is: Green Tree Servicing LLC PO Box 7169 Pasadena, CA 91109 - 7169 If you currently have future dated Pay By Phone payment(s) set up with Bank of America, these transactions were canceled upon transfer of servicing to Green Tree. If you would like to set up future Pay by Phone payments with Green Tree, please contact our Customer Service Department at 1-855-675-1030. Loan Modifications : If you are currently in an active trial modification or have a modification review underway, this information will be forwarded to Green Tree so they can continue the process with you. Please call 1-800-643-0202 if you have questions about your modification. Payoffs Payoff checks sent via regular mail , or via United States Postal Service overnight delivery, sent after April 30, 2013, should be sent to the following address: Green Tree Servicing LLC Dept CH 9052 Palatine, IL 60055 - 9052 Payoff checks sent via UPS/FedEx/Airborne Priority Mail , sent after April 30, 2013, should be sent to the following address: Green Tree Servicing LLC Attn: Payoff 9052 5505 N Cumberland Ave. Suite 307 Chicago, IL 60656 Insurance Loss Payee Information The mortgagee clause of your homeowners insurance policy, and if applicable your flood insurance policy, needs to be updated to reflect Green Tree Servicing LLC as a loss payee. Please have your insurance agent update your policy with the information listed below. If your loan or line of credit is in a second lien position, in addition to the mortgagee clause below, your policy should also still have a separate mortgagee clause for the lender in the first lien position. Proof of insurance can be faxed to 1-866-263-8962 or mailed to Green Tree Servicing LLC at the following address: Green Tree Servicing LLC Its affiliates and/or assigns PO Box 979282 Miami FL 33197-9282 Customer Service: Any questions, complaints or inquiries you have regarding your loan may always be directed in writing to our Customer Service Department at the below-referenced address or by calling the toll-free phone number at 1-855- 675-1030, between 7:00 a.m. and 8:00 p.m. CST, Monday through Friday and between 7:00 a.m. and 1:00 p.m. CST, on Saturday. You can also access our website at GTServicing.com 24 hours a day. The website allows convenient, secure access to your basic account information, and allows you to make payments on your account, obtain payoff quotes and insurance information. The website will be available to you shortly after the servicing transfer day. You may also contact Green Tree by writing to us at the following address: Green Tree Servicing LLC PO Box 6172 Rapid City, SD 57709-6172 008 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 9 of 49 This communication is from a debt collector. It is an attempt to collect a debt, and any information obtained will be used for that purpose. Fair and Accurate Credit Transactions Act Notice - We may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report. 0427502 000016151 09GTR8 0055272 W X *C 00 4K 2* *C 00 4K 2* 009 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 10 of 49 010 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 11 of 49 2171018.1 EXHIBIT “B” 011 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 12 of 49 012 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 13 of 49 013 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 14 of 49 2171018.1 EXHIBIT “C” 014 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 15 of 49 015 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 16 of 49 2171018.1 EXHIBIT “D” 016 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 17 of 49 017 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 18 of 49 018 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 19 of 49 Exhibit F Guide A1-1-03 Exhibit F Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 20 of 49 Part A, Doing Business with Fannie Mae Subpart 1, Contractual Obligations Chapter 1, Understanding the Lender Contract 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 6 A1-1-03, Nature of the Contractual Relationship (05/11/2016) Introduction This topic contains the following: • Overview of the MSSC and Lender Contract • Defining the Responsible Party • Fannie Mae’s Choice of Law • Representation and Warranty Requirements for All Fannie Mae Mortgage Loans • Representation and Warranty Requirements for Mortgage Loans with Mortgage Insurance • Indemnification for Losses 001 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 21 of 49 Part A, Doing Business with Fannie Mae Subpart 1, Contractual Obligations Chapter 1, Understanding the Lender Contract 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 7 Overview of the MSSC and Lender Contract Once Fannie Mae approves the seller/servicer, both parties execute the MSSC and any other relevant agreements needed at the time to establish the terms and conditions of the contractual relationship. The continuation of that relationship depends on both parties honoring the mutual promises in the MSSC and on the seller/servicer satisfying the requirements of all of the agreements, including, without limitation: • the Selling Guide, the Servicing Guide, the Servicing Guide Procedures, the Guide to Delivering eMortgage Loans to Fannie Mae, the Requirements for Document Custodians, and the Multifamily Guide(s) (if applicable) (the “Guides”); • the Reverse Mortgage Loan Servicing Manual, the Investor Reporting Manual, and the Balloon Mortgage Loan Servicing Manual (the “Manuals”); • any supplemental servicing instructions or directives provided by Fannie Mae; • any Announcements, Lender Letters, Notices, release notes, and information posted on Fannie Mae’s website that is incorporated by reference into the Selling or Servicing Guide; • all applicable master agreements (including MBS pool purchase contracts and variances), recourse agreements, repurchase agreements, indemnification agreements, loss-sharing agreements, and any other agreements between Fannie Mae and the seller/servicer; • any other agreement(s) a seller/servicer has entered into with Fannie Mae; and • all such items as amended, modified, restated, or supplemented from time to time. The seller/servicer’s obligations under all of the agreements described above are referred to in the Servicing Guide in their entirety as the “Lender Contract.” The MSSC establishes the basic legal relationship between the seller/servicer and Fannie Mae. Specifically as to servicing, the MSSC, when executed • establishes the seller/servicer as an approved servicer of applicable mortgage loans; • provides the general terms and conditions for servicing; • incorporates by reference the terms of the Guides and any supplementary matter such as the Servicing Guide Procedures, Manuals, Announcements, Lender Letters, directives, Notices, forms and exhibits and any other procedures and documents which may be incorporated by reference into the Guides, all as amended from time to time; and • may state the types of mortgage loans the seller/servicer may sell and/or service. 002 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 22 of 49 Part A, Doing Business with Fannie Mae Subpart 1, Contractual Obligations Chapter 1, Understanding the Lender Contract 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 8 The seller/servicer must originate and service mortgage loans in a sound, businesslike manner, in accordance with applicable law and good judgment. Engaging in business practices that have the apparent intent of avoiding Fannie Mae requirements that would ordinarily apply violates the Lender Contract. All of the items that make up the Lender Contract form a single integrated MSSC and not a separate contract or agreement. Notwithstanding any other provisions in the Guides, or any assignment or transfer of servicing by a seller/servicer to another entity: • The seller/servicer’s benefits and obligations with respect to its contractual rights to service mortgage loans are, and were at the time of execution of the Lender Contract, fully integrated and non-divisible from the seller/servicer’s benefits and obligations with respect to its contractual rights and obligations to sell mortgage loans under the Lender Contract. • Absent such integration, Fannie Mae would not have entered into, or continued to be bound by, the Lender Contract and would not have entered into, or continued to be bound by, separate agreements with the seller/servicer providing for the contractual right to sell or to service mortgage loans for Fannie Mae. • When Fannie Mae consents to a transfer of servicing, it relies on the integration and non- divisibility of the Lender Contract. Unless explicitly agreed to the contrary in writing by Fannie Mae, Fannie Mae requires that - the transferor servicer remain obligated for all selling and servicing representations and warranties and recourse obligations upon the transfer of servicing, and - the transferee servicer, whether the original seller, responsible party, or a transferee servicer, undertake and assume joint and several liability for all selling representations and warranties, all servicing responsibilities and liabilities, and all recourse obligations related to the mortgage loans it services. Regardless of the medium through which they are issued, including without limitation, information posted on Fannie Mae’s website, all of Fannie Mae’s communications (Guides, Manuals, Announcements, Lender Letters, and Notices) are incorporated into the Guides by reference. These communications are the instructions Fannie Mae provides to enable a servicer to perform its obligations to Fannie Mae under the terms of the MSSC. Certain information and requirements are posted on Fannie Mae’s website. This information and the requirements are incorporated by reference into the Guides. No borrower or other third party is intended to be a legal beneficiary of the MSSC or to obtain any such rights or entitlements through our seller/servicer communications. 003 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 23 of 49 Part A, Doing Business with Fannie Mae Subpart 1, Contractual Obligations Chapter 1, Understanding the Lender Contract 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 9 Defining the Responsible Party The Servicing Guide references “seller,” “servicer,” lender,” and “seller/servicer.” The Servicing Guide generally describes the relationship between Fannie Mae and the servicer. However, the particular designation should not be considered an exclusion with respect to an entity’s responsibilities in connection with a particular mortgage loan. Depending on the structure of the transaction in question, the entity that has the responsibility for a selling representation and warranty or for the servicing responsibilities or liabilities may be • both the seller and the servicer, • either the seller or the servicer, or • neither the seller nor the current servicer. The “responsible party” means a seller, servicer, or other entity that is responsible for the selling representations and warranties and/or for the servicing responsibilities or liabilities on a mortgage loan. Terms not defined in the Servicing Guide have the meaning given them in the Selling Guide. Fannie Mae’s Choice of Law Fannie Mae has adopted New York law as its choice of law provision for the Lender Contract. This Servicing Guide shall be construed, and the rights and obligations of Fannie Mae and the seller, servicer, and/or responsible party hereunder determined, in accordance with the laws of the State of New York without regard to its conflict of law rules. Representation and Warranty Requirements for All Fannie Mae Mortgage Loans In order to sell mortgage loans to Fannie Mae or deliver pools of mortgage loans to Fannie Mae for MBS, the seller makes certain representations and warranties concerning the seller itself as well as the mortgage loans it is selling or delivering. The MSSC contains specific representations and warranties as does the Selling Guide. Additional representations and warranties are contained in the Servicing Guide and elsewhere in the Lender Contract. Violation of any representation or warranty is a breach of the Lender Contract, including the warranty that the mortgage loan complies with all applicable requirements of the Lender Contract, which provides Fannie Mae with certain rights and remedies. All selling representations and warranties are made to Fannie Mae as of the date a seller/servicer transfers mortgage loans to Fannie Mae and continue and survive 004 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 24 of 49 Part A, Doing Business with Fannie Mae Subpart 1, Contractual Obligations Chapter 1, Understanding the Lender Contract 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 10 • the sale of mortgage loans to Fannie Mae or delivery of pools of mortgage loans for Fannie Mae MBS, • any subsequent resale of the mortgage loans by Fannie Mae, and • termination of the MSSC and any agreement that is part of the Lender Contract unless Fannie Mae expressly releases the seller/servicer from them in writing. The seller/servicer makes each representation and warranty set forth in the Lender Contract separately and independently from every other warranty it makes for a specific mortgage loan. Representations and warranties are not limited to matters of which the seller/servicer had knowledge, except for the warranties numbered 10, 11, and 17 of Section IV, A: Specific Warranties, of the MSSC, which are violated only if the seller/servicer had knowledge of the untruth or, acting as a prudent seller/servicer, should have known about it through the exercise of due diligence. Although warranty number 17 is limited to matters of which the seller/servicer has knowledge or, as a prudent seller/servicer, should have discovered, this limitation does not in any way limit the seller/servicer’s warranty number 1 that the mortgage loan meets all applicable requirements in the Lender Contract, nor does it affect any other warranty. The seller/servicer is deemed to know matters that are of public record. Because the selling warranties are not limited to matters within a seller/servicer’s knowledge, except as noted above, the action or inaction (including misrepresentation or fraud) of the borrower, or a third party, as well as the action or inaction (including misrepresentation or fraud) of the seller/servicer will constitute the seller/servicer’s breach of a selling warranty. The servicer that acquires the servicing of a mortgage loan (either concurrently with or subsequent to Fannie Mae’s purchase of the mortgage loan) assumes and is responsible for the same selling warranties that the party responsible for the selling representations and warranties made when the mortgage loan was sold to Fannie Mae. When the servicer transfers its contractual right to service some or all of its servicing responsibilities to another Fannie Mae- approved servicer, any variance or waiver granted to a transferor servicer does not automatically transfer to the transferee servicer. In addition, the transferor servicer and transferee servicer must ensure that all existing special servicing obligations associated with the transferred mortgage loan are disclosed. By submitting any mortgage loan or participation interest to Fannie Mae under any execution, including MBS, or a portfolio mortgage loan, the seller/servicer represents and warrants that • there is no agreement with any other party providing for servicing the mortgage loans that continues after such date unless there is full compliance with all the Fannie Mae Guide requirements for subservicing, or 005 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 25 of 49 Part A, Doing Business with Fannie Mae Subpart 1, Contractual Obligations Chapter 1, Understanding the Lender Contract 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 11 • any prior servicing agreement is made expressly subordinate to Fannie Mae’s rights as owner of the mortgage loans. The party that was servicing for the seller/servicer prior to such date may become the servicer for Fannie Mae, if there is full compliance with all the Servicing Guide requirements that provide for assignment of servicing from the seller/servicer concurrent with conveyance of the mortgage loan to Fannie Mae. For additional information, see A2-7-01, Concurrent Servicing Transfers. Representation and Warranty Requirements for Mortgage Loans with Mortgage Insurance The seller represents and warrants that each mortgage loan it sells and delivers is insurable and that no fraud or material misrepresentation has been committed • by any employee, any agent of the responsible party, or any third party including, without limitation, the borrower; • by act or omission, in connection with the origination of the mortgage loan or servicing prior to the sale; and • regardless of the level or type of documentation, verification, or corroboration of information that may be required by the Selling Guide or any other contract. A mortgage loan is insurable if a mortgage insurer would not decline to insure it by reason of any fraud, misrepresentation, negligence, or dishonest, criminal, or knowingly wrongful act in origination or servicing, and would not be entitled to deny a claim by reason of any of the foregoing. See Chapter B-8, Mortgage Insurance for additional information. Indemnification for Losses Fannie Mae requires the responsible party to indemnify and hold Fannie Mae (including its successors and assigns and its employees, officers, and directors individually when they are acting in their corporate capacity) harmless against all losses, damages, penalties, settlements, liabilities, judgments, claims, counterclaims, defenses, actions, costs, expenses, attorney fees, and other legal fees (collectively, “Fannie Mae losses” or “losses incurred by Fannie Mae”), that are based on or result or arise from the events described below. Selling Obligations Servicing Obligations • The breach or alleged breach of selling representations, warranties, or obligations; • The failure or alleged failure to satisfy the servicing duties and responsibilities for 006 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 26 of 49 Part A, Doing Business with Fannie Mae Subpart 1, Contractual Obligations Chapter 1, Understanding the Lender Contract 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 12 mortgage loans or MBS pools serviced for Fannie Mae. • Origination, delivering, selling, or trading activities related to Fannie Mae-owned or Fannie Mae-securitized mortgage loans; and • The breach or alleged breach of securities disclosure or settlement requirements. • A breach or alleged breach of obligations owed to the borrower by the manufacturer or by any party that sells the manufactured home to the borrower, delivers it to the site, or installs it at the site. “Fannie Mae losses” include losses related to the mortgage loans and the servicing of those mortgage loans prior to their delivery to Fannie Mae. The requirements described above • apply regardless of whether - Fannie Mae is a party to the lawsuit or other proceeding; - the claim, suit, or proceeding has merit; • include Fannie Mae losses related to claims between Fanie Mae and the indemnifying party; • do not include Fannie Mae losses resulting solely from the indemnifying party following the written instructions of Fannie Mae relating to a claim, suit, or proceeding; • do not modify or otherwise affect Fannie Mae’s right to manage its defense for any claim, suit, or proceeding in accordance with its own judgment. - If Fannie Mae chooses its own counsel, the indemnifying party will still be obligated to the full extent of the indemnities described above, including paying the attorney fees and costs of counsel selected by Fannie Mae. - If Fannie Mae decides that its interests and the indemnifying party’s coincide, Fannie Mae may decide to cooperate with the indemnifying party in a joint defense. All payments for indemnification are due within 60 days of demand or within 15 days after an appeal is denied. Fannie Mae may offset the amount of any unpaid indemnification payment due from an indemnifying party against amounts Fannie Mae owes to the indemnifying party. 007 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 27 of 49 Exhibit G Guide F-1-14 Exhibit G Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 28 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 808 F-1-14, Post-Delivery Servicing Transfers (11/12/2014) Introduction This Servicing Guide Procedure includes the following: • Requesting Fannie Mae Approval • Special Notifications to the Transferee Servicer • Notifying Third Parties • Transfer of Individual Mortgage Loan Files and Portfolio Information • Submission of Final Accounting Reports/Remittances • Preparing Mortgage Loan Assignments • Transfer of Custodial Documents Requesting Fannie Mae Approval Transfer of Mortgage Loans As required in Requesting Fannie Mae Approval in A2-7-03, Post-Delivery Servicing Transfers, the servicer must submit the appropriate information to request Fannie Mae’s approval of the transfer of servicing, including servicing transfers involving a subservicer. When requesting approval to transfer servicing, the transferor or transferee servicer or subservicer must submit the information in the following table to Fannie Mae. ✓ The transferor or transferee servicer or subservicer must submit to Fannie Mae... A fully completed Request for Approval of Servicing or Subservicing Transfer (Form 629) in an electronic format to the Servicing Transfers group at 001 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 29 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 809 ✓ The transferor or transferee servicer or subservicer must submit to Fannie Mae... servicing_transfers@fanniemae.com at least 60 days before the proposed transfer date. A check for a nonrefundable $500 processing fee to the address referenced on Form 629, noting the names of the transferor and transferee servicers, the name of the subservicer, and the proposed transfer date. The servicer must include the transfer and sale dates on Form 629. The transfer date refers to the date on which the physical transfer of the servicing (or subservicing) responsibilities from the transferor servicer (or subservicer, as the case may be) to the transferee servicer (or subservicer) occurs. It may not necessarily be the same date as the sale date identified in a servicing transfer agreement. The sale date is the date on which the ownership of the servicing rights and the legal liability for the servicing of the Fannie Mae mortgage loans transfer from one servicer to another. Note: While Fannie Mae requires the transferring parties to identify the sale date associated with a servicing transfer, Fannie Mae’s approval will only be issued as to the transfer date. Mortgage Loans in a Fannie Mae Majors As required in Requesting Fannie Mae Approval in A2-7-03, Post-Delivery Servicing Transfers, the servicer must submit the appropriate information to request Fannie Mae’s approval of the transfer of servicing. The transferee servicer must take the actions described in the following table for reporting on the transferred mortgage loans if any of the mortgage loans for which servicing is to be transferred are in MBS pools that are part of a Fannie Mae Majors multiple pool and the transferee servicer is already servicing mortgage loans in the same Majors pool. If the mortgage loan being transferred... Then the transferee servicer... has the same remittance type and date is authorized to report the transferred mortgage loans under the same nine-digit Fannie Mae lender identification number that it currently uses. has a different remittance type or date must contact its Fannie Mae Servicing Representative (see F-4-03, List of Contacts) to request a new branch lender identification number. 002 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 30 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 810 Special Notifications to the Transferee Servicer As required in Obligations of the Transferor and Transferee Servicers and Special Notifications to the Transferee Servicer in A2-7-03, Post-Delivery Servicing Transfers, the transferor servicer must provide special notification to the transferee servicer when a transfer of servicing includes the following: • a mortgage loan modified under HAMP and/or 2MP, • an eMortgage, or • a mortgage loan subject to resale restrictions regardless of whether the restrictions survive foreclosure or acceptance of a Mortgage Release (deed-in-lieu of foreclosure). When a Servicing Transfer Includes a Mortgage Loan Modified Under HAMP, 2MP, or an eMortgage For a mortgage loan modified under HAMP/2MP or an eMortgage, the transferor servicer must take the actions described in the following table. ✓ The transferor servicer must... Advise the transferee servicer that a mortgage loan modified under HAMP/2MP or an eMortgage is part of the portfolio being transferred. Confirm that the transferee servicer • is aware of the special requirements for these mortgage loans, and • agrees to assume the additional responsibilities associated with servicing these mortgage loans. When a Servicing Transfer Includes a Mortgage Loan Subject to Resale Restrictions For a mortgage loan subject to resale restrictions, the transferor servicer must take the actions described in the following table. ✓ The transferor servicer must... Identify each mortgage loan subject to resale restrictions on Form 629. Confirm that the transferee servicer is aware of its duties and obligations related to the servicing of a mortgage loan subject to resale restrictions. 003 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 31 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 811 Notifying Third Parties As described in Notifying Third Parties in A2-7-03, Post-Delivery Servicing Transfers, the transferor and transferee servicers must take certain actions to ensure that all servicing functions that involve third parties will continue uninterrupted (or discontinued, if appropriate) after the transfer of servicing. The following table describes the actions the transferor or transferee servicer must take to ensure that all servicing functions that involve third parties will continue uninterrupted (or discontinued, if appropriate) after the transfer of servicing. ✓ The transferor or transferee servicer must... Fulfill all requirements of each MI policy that insures any conventional mortgage loans included in the transfer-including, but not limited to, the requirements for providing timely notification or requesting prior approval-to ensure the continuation of the MI coverage. If the current mortgage insurer will not provide continuing coverage following the servicing transfer, the transferee servicer must find another mortgage insurer to provide MI coverage that is equivalent to the previous coverage-at no increased cost to the borrower or Fannie Mae-and obtain that mortgage insurer’s written commitment to provide the required coverage. Fulfill all requirements of FHA, VA, RD, or HUD-including, but not limited to, providing timely notification or requesting prior approval-to ensure the continuation of the MI or mortgage loan guaranty, if applicable. Notify the hazard, flood, earthquake, other property insurance carriers, as applicable, to request a policy endorsement to substitute the transferee servicer’s name in the mortgagee clause and to change the premium billing address to that of the transferee servicer (unless the borrower pays the premium directly). Notify any tax or flood service provider and any optional insurance provider (or other products that are providing coverage) that the transferor servicer used for any of the mortgage loans that are being transferred to indicate whether the transferee servicer will continue using its services. Send appropriate notices of the transfer of servicing (providing the transferee servicer’s name and address) to taxing authorities, holders of leaseholds, HOAs, and other lien holders. Note: Any public utilities that levy mandatory assessments for which funds are being escrowed also must be notified. 004 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 32 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 812 ✓ The transferor or transferee servicer must... Notify any law firm involved in the management of foreclosure or other legal action in connection with the mortgage loans or acquired properties. Notify the current document custodian of the pending transfer of servicing and make arrangements for the prompt and safe transfer of the custodial documents to the document custodian designated by the transferee servicer, in accordance with requirements in the Servicing Guide. Transfer of Individual Mortgage Loan Files and Portfolio Information As described in Transfer of Individual Mortgage Loan Files and Portfolio Information in A2-7-03, Post-Delivery Servicing Transfers, the transferor servicer must deliver specific information to the transferee servicer. The following table describes the information that must be delivered to the transferee servicer. ✓ The transferor servicer must deliver to the transferee servicer... Documentation evidencing each mortgage insurer’s approval of the servicing transfer or its commitment to insure the transferred mortgage loans, or a copy of the mortgage insurer’s master policy evidencing that it is permissible to transfer servicing of insured mortgage loans without the mortgage insurer’s prior approval. A list of any conventional mortgage loans that have borrower-paid or lender- purchased MI (identifying the applicable premium rates and the due date of the next premium payment) and an explanation of the premium payment obligations and claim payment procedures that apply to them. A list of any eMortgages that are part of the portfolio being transferred. Copies of any tax or flood service contracts that will remain in effect, or notification that the contracts will be transferred to the transferee servicer by a tape process. A list of tax bills, assessments, property insurance premiums, MIPs, etc. that are due to be paid by the servicer, but that are still unpaid as of the transfer date. A list of the expiration dates and premium payment frequencies for property insurance, and MI policies, as applicable, related to each mortgage loan being transferred, whether or not premiums for these policies are escrowed. A list of mortgage loans that have optional insurance and other insurance products that will remain in effect. A list of mortgage loans that are subject to automatic drafting of the monthly payments. 005 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 33 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 813 ✓ The transferor servicer must deliver to the transferee servicer... A list of ARM loans, showing the plan identification and parameters, the index used, the next interest rate change date, the next payment change date, the dates on which any fixed rate conversion option may be exercised, and the current status of any changes in process. Transaction and payment histories for the life of the mortgage loans. Trial balances, as of the close of business on the day immediately preceding the transfer date, showing • the remittance type for each mortgage loan (actual/actual, scheduled/actual, or scheduled/scheduled); • the remittance cycle for each MBS mortgage loan (standard, RPM, or MBS Express); • Fannie Mae’s applicable ownership interest if it holds only a participation percentage in the mortgage loan; • the applicable pool number for MBS mortgage loans; • delinquencies, foreclosure, bankruptcies, and acquired properties; • transfers of ownership, payoffs, and other exception transactions that are in process, including mortgage loan modification-related transactions; • escrow balances, escrow advances, curtailments, unapplied funds, and loss drafts; and • buydown account balances for mortgage loans subject to temporary interest rate buydown plans. A copy of the custodial bank reconciliation for each custodial bank account maintained as of the cutoff date (if the transferor servicer is unable to complete this reconciliation by the transfer date, it should complete the reconciliation as promptly as possible and send it to the transferee servicer within five business days after the transfer date). Copies of all investor accounting reports that were filed with Fannie Mae for the three months that immediately precede the cutoff date. A reconciliation of any outstanding shortage/surplus balance and over/under collateralized MBS pools, if applicable, related to the mortgage loans being 006 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 34 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 814 ✓ The transferor servicer must deliver to the transferee servicer... transferred as of the last reporting period of Fannie Mae’s investor reporting system. Definitions of codes used in ledger records, trial balances, or any other documents that are being forwarded to the transferee servicer. Escrow analyses. All information relating to delinquency management and default prevention. Copies of all documents including items held by a document custodian, and all other documents pertinent to servicing the mortgage loans including mortgage loan modification agreements. All customer correspondence and responses, including borrower complaints and escalated cases. The title policies or alternative title products. A list of each mortgage loan that is in the process of foreclosure or for which the borrower has filed bankruptcy, including the Fannie Mae loan number and the name and address of the law firm handling the foreclosure or bankruptcy. Information and records for any mortgage loans that are in foreclosure, bankruptcy, or a workout status and for any properties that Fannie Mae acquired by foreclosure or acceptance of a Mortgage Release [(deed-in-lieu of foreclosure) (if Fannie Mae has not sold them by the transfer date)]. Note: If the original mortgage loan custodial documents are not part of the individual mortgage loan file that is being transferred, the transferor servicer must provide a list showing the name of the party that is in possession of the original mortgage loan note. All pertinent information related to the status of any mortgage loan for which a workout option is being pursued. A list of any acquired properties for which it is performing administrative functions, such as paying taxes or performing property maintenance if the responsibilities for these functions will be transferred to the transferee servicer. The list must identify each property by the Fannie Mae loan number and include a history of the transferor servicer’s actions from the date the property was acquired (including information about expenditures, receipts, and management and marketing activities) and provide the appropriate documentation. Information on any mortgage loan or acquired property being transferred that is the subject of litigation at the time of the transfer, including all records pertaining 007 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 35 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 815 ✓ The transferor servicer must deliver to the transferee servicer... to such litigation (including court filings, disclosure requests and responses, and preliminary rulings). Transfer of P&I and T&I Funds As required in A4-1-02, Establishing Custodial Bank Accounts, the servicer is responsible for the safekeeping of custodial funds at all times. The transferor servicer must forward to the transferee servicer all P&I and T&I custodial account balances including, but not limited to, the following: • unremitted P&I collections; • escrow funds; • unapplied funds; • loss drafts; • accruals on deposit-for example, for the payment of future renewal premiums for lender- purchased MI; and • buydown funds. If the transferor servicer has advanced delinquent interest or scheduled P&I to Fannie Mae, the transferee servicer must reimburse the transferor servicer once it receives a final accounting of all monies from the transferor servicer. All new amounts owed must be paid to the appropriate party promptly, as agreed by the parties. Submission of Final Accounting Reports/Remittances As described in Submission of Final Accounting Reports/Remittances in A2-7-03, Post-Delivery Servicing Transfers, the transferor servicer must submit the monthly LAR for the month that includes the transfer date. When the servicing is transferred for individual mortgage loans in an MBS pool, the pool will be subdivided, with the mortgage loans transferred to the transferee servicer being grouped into a new supplemental pool and the mortgage loans that were not transferred remaining in the original pool. In the month of the transfer date, the transferor servicer will be contractually responsible for • reporting the monthly LAR for all mortgage loan activity processed on the mortgage loans in the original pool; 008 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 36 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 816 • reporting that month’s MBS pool security balances if any of the transferred mortgage loans are in MBS pools; and • ensuring that sufficient funds to satisfy that month’s remittance obligation (including MBS pool guaranty fees) are available for drafting on the scheduled remittance date for the pool. However, the transferor and transferee servicers may agree that the transferee servicer will make the actual remittance to Fannie Mae. In the month following the transfer date, the transferor servicer will be responsible for reporting the monthly LAR applicable to mortgage loans remaining in the original MBS pool after the transfer, and the transferee servicer will be responsible for reporting the monthly LAR applicable to the transferred mortgage loans in the newly created supplemental MBS pool. Each of the servicers will be responsible for reporting that month’s MBS pool security balances for their respective share of the original MBS pool(s). The transferor servicer must provide the transferee servicer with copies of its Fannie Mae investor reporting system shortage/surplus reconciliations and the pool-to-security balance reconciliations for the final monthly accounting period for all mortgage loans and MBS pools included in the servicing transfer. The two servicers should agree on how to resolve any differences and reconcile items or funds that are owned Fannie Mae and security holders. (Any questions regarding these issues must be directed to the transferor servicer’s Fannie Mae Investor Reporting Representative.) If, after reconciling the final shortage/surplus balance, the transferor servicer determines that Fannie Mae needs to process a shortage/surplus adjustment, the transferor servicer must send to its Fannie Mae Investor Reporting Representative (see F-4-03, List of Contacts) a copy of the final shortage/surplus reconciliation along with adequate documentation to support the requested adjustment. The adjustment must be requested within 30 days after the transfer date. The transferee servicer will be responsible for any Fannie Mae investor reporting system shortages or MBS security balance deficiencies related to mortgage loans or pools included in the transfer that are not promptly resolved by the transferor servicer. Preparing Mortgage Loan Assignments As described in Preparing Mortgage Assignments in A2-7-03, Post-Delivery Servicing Transfers, the transferee servicer must prepare and deliver a recorded mortgage assignment to the applicable document custodian for all mortgage loans subject to a transfer of servicing within six months of the transfer date. Any required assignment that is submitted to the document custodian(s) must be identified by the applicable Fannie Mae loan number and submitted under cover of a transmittal letter that includes the following information: 009 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 37 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 817 • the name of the transferor servicer; • the name of the transferee servicer; • the number of mortgage loans included in the transfer, as well as the number of mortgage loans for which recordable (but unrecorded) assignments to Fannie Mae have been executed; • the transfer date; and • a trial balance of the transferred mortgage loans, which identifies the mortgage loans for which assignments to Fannie Mae are being provided (or, if only a few mortgage loans are being transferred, a list of the transferred mortgage loans for which assignments are being provided). Fannie Mae is the Owner of Record A new mortgage loan assignment does not need to be prepared if the assignment to Fannie Mae has been recorded. A mortgage loan for which Fannie Mae is the owner of record would be one of the following: • a mortgage loan that was delivered to Fannie Mae before it converted to the Fannie Mae investor reporting system in 1984 (regardless of the location of the security property); • a mortgage loan that is secured by a property located in Mississippi or Utah, if the mortgage loan was delivered to Fannie Mae during the period that Fannie Mae required recorded assignments for a Mississippi mortgage loan (after September 1, 1988, until June 7, 1989) or for a Utah mortgage loan (after September 1, 1988, until October 31, 1991); or • a mortgage loan for which Fannie Mae requested recordation of the assignment (for any reason) after it purchased or securitized the mortgage loan. Fannie Mae is Not the Owner of Record and the Mortgage Loan is Not Registered with MERS An assignment from the transferor servicer to the transferee servicer must be prepared and recorded if an assignment to Fannie Mae has not been recorded for a mortgage loan that is not registered with the MERS. The transferor servicer has full responsibility for recording an assignment from the transferor servicer to the transferee servicer. (Blanket assignments may be used for the assignment, as long as the coverage for each blanket assignment is restricted to a single recording jurisdiction.) Fannie Mae will hold both the transferor servicer and the transferee servicer accountable for ensuring all assignments are prepared and recorded appropriately. An assignment from the transferee servicer to Fannie Mae must be prepared (in recordable form, but not recorded) to replace the one Fannie Mae had originally received from the transferor servicer. This unrecorded assignment from the transferee servicer to Fannie Mae 010 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 38 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 818 must be an individual assignment. The unrecorded assignment to Fannie Mae must be delivered to the applicable document custodian within six months of the transfer date. Note: Generally, when a transferred mortgage loan is secured by a property located in Puerto Rico, neither an assignment of the mortgage loan from the transferor servicer to the transferee servicer nor an unrecorded assignment from the transferee servicer to Fannie Mae will need to be prepared and recorded. Fannie Mae is Not the Owner of Record and the Mortgage Loan is Registered with MERS Generally, when the servicing of a MERS-registered mortgage loan is transferred to a servicer that is not a MERS member (or to a servicer that elects not to continue the MERS registration for the mortgage loan), Fannie Mae requires • the transferor servicer to prepare an assignment of the mortgage loan from MERS to the transferee servicer and have it executed and recorded, • the transferor servicer to “deactivate” the Mortgage Identification Number (MIN) in the MERS system for reason: “Transfer to Non-MERS Status,” and • the transferee servicer to prepare a recordable (but unrecorded) assignment of the mortgage loan from itself to Fannie Mae and to deliver it to the applicable document custodian. Transfer of Custodial Documents If the transferee servicer continues to store the custodial documents with the existing document custodian, it must execute the Master Custodial Agreement (Form 2003), in accordance with Documentation of the Document Custodian Relationship in A2-6-02, Document Custodians. If the transferee servicer already has a master custodial agreement on file with that document custodian, the transferee servicer must obtain an MBS Custodian Recertification (Form 2002) in connection with the servicing transfer within six months of the transfer date. If Fannie Mae’s DDC is already holding the custodial documents for the mortgage loans that are being transferred, Fannie Mae will update its records to reflect the new servicer and accept any new unrecorded assignment of the mortgage loan to Fannie Mae from the transferee servicer, if applicable, without charging any additional fees. The transferee servicer and the transferor servicer must work out appropriate arrangements for paying the costs of transferring the documents and obtaining the required pool recertification in an expeditious manner. MBS pool documents that will be held by a new document custodian or by the transferee servicer must be recertified, and Form 2002 must be completed and submitted to the transferee servicer’s Fannie Mae office within six months of the transfer date. 011 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 39 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 819 When Fannie Mae’s DDC Transfers Custodial Documents to a New Document Custodian If Fannie Mae’s DDC will need to transfer custodial documents for MBS mortgage loans that it is holding to a new document custodian, the transferee servicer must notify Fannie Mae at least 45 days before the date that it wants to physically transfer the documents. The notification must • state its intent to transfer the documents to a new custodian as the result of a transfer of servicing, • specify the approximate number of mortgage loans for which documents will be transferred, • indicate the desired date for shipping the documents to the new custodian, and • provide the names and telephone numbers of the contact persons for the transferee servicer and the new document custodian. This advance notification must be sent to Fannie Mae’s Bulk-Out Transfer division, 13150 Worldgate Drive, Herndon, VA 20170. Fannie Mae will provide additional instructions for handling these “bulk-out” transfers- including the format for electronic requests for document release-after it has reviewed the servicer’s advance notification. When Fannie Mae’s DDC Will be Receiving Custodial Documents If Fannie Mae’s DDC will be receiving documents from an existing document custodian, the transferee servicer must notify Fannie Mae at least 30 days before the date that it wants to physically transfer the documents. The notification must • state its intent to transfer the documents to the DDC as a result of a transfer of servicing, • specify whether the transfer relates to an entire servicing portfolio or to only certain individual mortgage loans, • indicate the desired date for delivering the documents to the DDC, and • provide the names and telephone numbers of the contact person for the transferee servicer and the current document custodian. This advance notification must be sent to Fannie Mae, Region Code (A, C, D, L, or P, as required to identify the transferee servicer’s Fannie Mae regional office), MBS Bulk-In Transfer, 13150 Worldgate Drive, Herndon, VA 20170. Fannie Mae will provide additional instructions for handling these “bulk-in” transfers-including the record layout for the electronic transfer tape- after it has reviewed the servicer’s advance notification. Custodial Documents for Participation Pool Mortgage Loans 012 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 40 of 49 Part F, Servicing Guide Procedures, Exhibits, Quick Reference Materials, and Change Control Log Chapter 1, Servicing Guide Procedures 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 820 For participation pool mortgage loans that Fannie Mae holds in its portfolio, any original mortgage notes that the transferor servicer has in its possession must be transferred to Fannie Mae’s DDC for permanent retention no later than 30 days after the transfer date. To ensure that the transferred documents are appropriately identified, a label showing the Fannie Mae loan number must be affixed to the notes. The documents that are being turned over to Fannie Mae for custody also must be annotated on the trial balance that is submitted to Fannie Mae in connection with the servicing transfer. 013 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 41 of 49 Exhibit H Guide A2-1-03 Exhibit H Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 42 of 49 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 1, Servicer Duties and Responsibilities 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 90 A2-1-03, Execution of Legal Documents (11/12/2014) Introduction 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 or an MBS trust’s 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 recording any required documentation, such as mortgage assignments, powers of attorney, or affidavits; and • providing recordation information for the affected mortgage loans. The servicer is authorized to execute legal documents related to payoffs, foreclosures, releases of liability, releases of security, mortgage loan modifications, subordinations, assignments, and conveyances (or reconveyances) for any mortgage loan for which it (or MERS®) is the owner of record. When an instrument of record requires the use of an address for Fannie Mae, including assignments of mortgage loans, foreclosure deeds, REO deeds, and lien releases, the servicer must follow the procedures in F-1-13, Obtaining and Executing Legal Documents to locate the appropriate address. This topic contains the following: • Fannie Mae’s Limited Power of Attorney to Execute Documents • Correcting Conveyances to Fannie Mae Fannie Mae’s Limited Power of Attorney to Execute Documents When Fannie Mae is the owner of record for a mortgage loan, it permits the servicer that has Fannie Mae’s LPOA to execute certain types of legal documents on Fannie Mae’s behalf. The servicer must have an LPOA in place to be authorized to execute the following legal documents on behalf of Fannie Mae: • release of a borrower from personal liability under the mortgage or deed of trust following an approved transfer of ownership of the security property; 001 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 43 of 49 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 1, Servicer Duties and Responsibilities 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 91 • full satisfaction or release of a mortgage or the request to a trustee for a full reconveyance of a deed of trust; • partial release or discharge of a mortgage or the request to a trustee for a partial reconveyance or discharge of a deed of trust; • modification or extension of a mortgage or deed of trust; • subordination of the lien of a mortgage or deed of trust; • completion, termination, cancellation, or rescission of foreclosure relating to a mortgage or deed of trust, including, but not limited to, the following actions: - the appointment of a successor or substitute trustee under a deed of trust, in accordance with state law and the deed of trust; - the issuance or cancellation or rescission of notices of default; - the cancellation or rescission of notices of sale; and - the issuance of such other documents as may be necessary under the terms of the mortgage, deed of trust, or state law to expeditiously complete said transactions, including, but not limited to, assignments or endorsements of mortgage loans, deeds of trust, or promissory notes to convey title from Fannie Mae to the Attorney-in-Fact under this LPOA; • conveyance of properties to FHA, HUD, the VA, RD, or a state or private mortgage insurer; and • assignment or endorsement of mortgage loans, deeds of trust, or promissory notes to FHA, HUD, VA, RD, a state or private mortgage insurer, or MERS. To request an LPOA, the servicer must follow the procedures in Fannie Mae Contacts for Document Execution Requests in F-1-13, Obtaining and Executing Legal Documents. Upon receiving the executed LPOA from Fannie Mae, the servicer must have the document recorded in the proper jurisdiction. The servicer is authorized to submit the LPOA for recordation immediately upon its receipt or wait until such time as it is actually needed to process a covered transaction. If the servicer does not have an LPOA to execute documents on Fannie Mae’s behalf, or has a power of attorney that does not authorize it to execute documents for a specific type of transaction, the servicer must send the documents requiring execution in any instance in which Fannie Mae is the owner of record for the mortgage loan by email, when permitted. If, however, 002 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 44 of 49 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 1, Servicer Duties and Responsibilities 06/08/2016 92 an original document must be executed by Fannie Mae, the servicer must send the document by regular or overnight mail to Fannie Mae’s Vendor Oversight/Custody group, SF CPM division, or SF CPM, Loss Mitigation department (see F-4-03, List of Contacts). Correcting Conveyances to Fannie Mae The servicer must execute a quitclaim deed for properties that have been conveyed in error to Fannie Mae. The servicer must follow all procedures in F-1-13, Obtaining and Executing Legal Documents when preparing the reconveyance quitclaim deed. A quitclaim deed is an instrument of conveyance of real property that passes whatever title, claim, or interest that the grantor has in the property, but does not make any representations as to the validity of such title. A quitclaim deed is not a guarantee that the grantor has clear title to the property; rather it is a relinquishment of the grantor’s rights, if any, in the property. The holder of a quitclaim deed receives only the interest owned by the person conveying the deed. Fannie Mae will execute the quitclaim deed only if the servicer has prepared the document to quitclaim or assign back to the previous grantor or assignor. Within five business days of receipt of the fully executed quitclaim deed from Fannie Mae, the servicer must submit the quitclaim deed for recording. The servicer must send the request for quitclaim deed execution to Fannie Mae as described in Fannie Mae Contacts for Document Execution Requests in F-1-13, Obtaining and Executing Legal Documents. 003 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 45 of 49 Exhibit I Guide A2-1-04 Exhibit I Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 46 of 49 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 1, Servicer Duties and Responsibilities 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 92 A2-1-04, Note Holder Status for Legal Proceedings Conducted in the Servicer’s Name (11/12/2014) Introduction Fannie Mae is at all times the owner of the mortgage note, whether the mortgage loan is in Fannie Mae’s portfolio or part of the MBS pool. In addition, Fannie Mae at all times has possession of and is the holder of the mortgage note, except in the limited circumstances expressly described in this topic. This topic contains the following: • Ownership and Possession of Note by Fannie Mae • Temporary Possession by the Servicer • Physical Possession of the Note by the Servicer • Reversion of Possession to Fannie Mae 001 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 47 of 49 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 1, Servicer Duties and Responsibilities 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 93 Ownership and Possession of Note by Fannie Mae Fannie Mae may have direct possession of the note or a custodian may have custody of the note. If Fannie Mae possesses the note through a document custodian, the document custodian has custody of the note for Fannie Mae’s exclusive use and benefit. Temporary Possession by the Servicer In order to ensure that a servicer is able to perform the services and duties incident to the servicing of the mortgage loan, Fannie Mae temporarily gives the servicer possession of the mortgage note whenever the servicer, acting in its own name, represents the interests of Fannie Mae in foreclosure actions, bankruptcy cases, probate proceedings, or other legal proceedings. This temporary transfer of possession occurs automatically and immediately upon the commencement of the servicer’s representation, in its name, of Fannie Mae’s interests in the foreclosure, bankruptcy, probate, or other legal proceeding. When Fannie Mae transfers possession, if the note is held by a document custodian on Fannie Mae’s behalf, the custodian has possession of the note on behalf of the servicer so that the servicer has constructive possession of the note and the servicer shall be the holder of the note and is authorized and entitled to enforce the note in the name of the servicer for Fannie Mae’s benefit. Physical Possession of the Note by the Servicer In most cases, the servicer will have a copy of the mortgage note. If the servicer determines that it needs physical possession of the original mortgage note to represent the interests of Fannie Mae in a foreclosure, bankruptcy, probate, or other legal proceeding, the servicer may obtain physical possession of the original mortgage note by submitting a request directly to the document custodian. If Fannie Mae possesses the original note through a third-party document custodian that has custody of the note, the servicer must submit a Request for Release/Return of Documents (Form 2009) to Fannie Mae’s custodian to obtain the note and any other custodial documents that are needed. In either case, the servicer must specify whether the original note is required or whether the request is for a copy. 002 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 48 of 49 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 1, Servicer Duties and Responsibilities 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 94 Reversion of Possession to Fannie Mae At the conclusion of the servicer’s representation of Fannie Mae’s interests in the foreclosure, bankruptcy, probate, or other legal proceeding, or upon the servicer ceasing to service the loan for any reason, possession automatically reverts to Fannie Mae, and Fannie Mae resumes being the holder for itself, just as it was before the foreclosure, bankruptcy, probate, or other legal proceeding. If the servicer has obtained physical possession of the original note, it must be returned to Fannie Mae or the document custodian, as applicable. 003 Case 2:15-cv-00515-JCM-VCF Document 45-2 Filed 07/11/16 Page 49 of 49 Exhibit J HOA Trustee’s Deed Upon Sale Exhibit J Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 1 of 21 001 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 2 of 21 002 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 3 of 21 003 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 4 of 21 Exhibit K FHFA Statement on HOA Super-Priority Lien Foreclosures 4/21/15 Exhibit K Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 5 of 21 © 2016 Federal Housing Finance Agency Statement Statement on HOA Super-Priority Lien Foreclosures FOR IMMEDIATE RELEASE 4/21/2015 Title 12 United States Code Section 4617(j)(3) states that, while the Federal Housing Finance Agency acts as Conservator, “[no] property of the Agency shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Agency.” This law precludes involuntary extinguishment of Fannie Mae or Freddie Mac liens while they are operating in conservatorships and preempts any state law that purports to allow holders of homeownership association (HOA) liens to extinguish a Fannie Mae or Freddie Mac lien, security interest, or other property interest. As noted in our December 22, 2014 statement on certain super-priority liens, FHFA has an obligation to protect Fannie Mae's and Freddie Mac’s rights, and will aggressively do so by bringing or supporting actions to contest HOA foreclosures that purport to extinguish Enterprise property interests in a manner that contravenes federal law. Consequently, FHFA confirms that it has not consented, and will not consent in the future, to the foreclosure or other extinguishment of any Fannie Mae or Freddie Mac lien or other property interest in connection with HOA foreclosures of super-priority liens. 12/22/2014: Statement of the Federal Housing Finance Agency on Certain Super-Priority Liens ### The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.6 trillion in funding for the U.S. mortgage markets and financial institutions. Additional information is available at www.FHFA.gov, on Twitter @FHFA, YouTube and LinkedIn. Contacts: Media: Corinne Russell (202) 649-3032 / Stefanie Johnson (202) 649-3030 Consumers: Consumer Communications or (202) 649-3811 Page 1 of 1Statement on HOA Super-Priority Lien Foreclosures | Federal Housing Finance Agency 5/11/2016http://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-on-HOA-Super-Priority-Lien-F... 001 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 6 of 21 Exhibit L Assignment of Deed of Trust Exhibit L Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 7 of 21 001 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 8 of 21 Exhibit M Trustee’s Deed Upon Sale Exhibit M Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 9 of 21 001 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 10 of 21 002 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 11 of 21 003 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 12 of 21 Exhibit N Guide at A2-5.1-02 Exhibit N Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 13 of 21 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 5, Individual Mortgage Loan Files and Records, Ownership, Establishment and Maintenance of Mortgage Loan Files and Records 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 136 A2-5.1-02, Overview of Individual Mortgage Loan Files and Records (11/12/2014) Introduction This topic contains the following: • General Provisions of Individual Mortgage Loan Files and Records • Contents of the Individual Mortgage Loan File • Special Individual Mortgage Loan File Requirements for Bifurcated Mortgage Loans • Identifying Manufactured Home Mortgage Loans General Provisions of Individual Mortgage Loan Files and Records The individual mortgage loan file consists of the mortgage loan origination file, mortgage loan custodial file, and mortgage loan servicing file held by a seller, servicer, or prior servicer arising from or related to the origination, sale, securitization, or servicing of an individual mortgage loan or acquired property, as applicable. The mortgage loan origination file consists of all documents, records, and reports used to support the underwriting decision required by the Lender Contract or any documentation required by Fannie Mae or by law relating to the mortgage loan arising from or related to the origination, closing, sale, securitization, and/or delivery of a mortgage loan, including, but not limited to, those that are required as part of the post-closing mortgage loan file documentation requirements in the Selling Guide. The mortgage loan custodial file consists of the custodial documents and any and all documents, books, records, and reports, in any format, required to be retained by the document custodian pursuant to the Servicing Guide or other Fannie Mae requirements. The mortgage loan servicing file (including the file maintained with respect to an acquired property) consists of all documents, books, records, reports, and payment and escrow histories, in any format, arising from or related to the servicing of the mortgage loan or acquired property by the current servicer or any prior servicer, including, but not limited to, those required at any time by the Lender Contract or an insurer, including, but not limited to, those set forth in the Servicing Guide. Individual mortgage loan files and records that may be required to be sent to Fannie Mae include: • mortgage origination files, 001 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 14 of 21 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 5, Individual Mortgage Loan Files and Records, Ownership, Establishment and Maintenance of Mortgage Loan Files and Records 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 137 • mortgage loan custodial files, • individual mortgage loan files (including the mortgage loan servicing file), • permanent mortgage account records, and • accounting system reports. The seller/servicer is responsible for maintaining these files and records, as well as borrower payment records. The responsibility for the physical possession of the mortgage loan documents may vary depending on whether the mortgage loan is a portfolio or MBS mortgage loan. See A2-6-01, Custodial Documents for additional information. The seller/servicer must establish the individual mortgage loan file when it originates a mortgage loan. If the seller/servicer does not service the mortgage loan, it must transfer the files and records to the servicer to ensure that the servicer will have complete information about the mortgage loan in its records. The accounting records relating to mortgage loans serviced for Fannie Mae must be maintained in accordance with sound GAAP and in such a manner as will permit Fannie Mae's representatives to examine and audit such records at any time. State and federal laws now recognize electronic records as being equivalent to paper documents for legal purposes. Therefore, Fannie Mae's requirements for record accessibility and retention apply equally to paper and electronic records. The servicer must implement appropriate measures designed to • ensure the accuracy, security, integrity, and confidentiality of files and records; • protect against any anticipated threats or hazards to the security or integrity of files and records; and • protect against unauthorized access to or use of files and records and is responsible for requiring, by contract, that any subservicers or other third parties that access mortgage files and records also implement these measures. Contents of the Individual Mortgage Loan File The individual mortgage loan file must include, but is not limited to, the following: • copy of the Participation Certificate, if applicable; • copy of the related Schedule of Mortgages for a mortgage loan if an MBS mortgage loan; 002 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 15 of 21 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 5, Individual Mortgage Loan Files and Records, Ownership, Establishment and Maintenance of Mortgage Loan Files and Records 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 138 • originals of the recorded mortgage or deed of trust, any applicable rider, and any other documents changing the mortgage loan terms or otherwise affecting Fannie Mae’s legal or contractual rights; • copy of the mortgage or deed of trust note and any related addenda; • copy of either the unrecorded assignment to Fannie Mae (or the recorded assignment, when applicable), or the original assignment to MERS, if the mortgage loan is registered with MERS and MERS is not named as nominee for the beneficiary, and copies of all required intervening assignments; • copy of the FHA MI certificate, VA mortgage loan guaranty certificate, RD mortgage loan note guarantee certificate, HUD Indian mortgage loan guarantee certificate, or conventional MI certificate, if applicable; • copy of the underwriting documents, including any Desktop Underwriter® reports; • copy of the title policy, property insurance policy, flood insurance policy (if required), and any other documents that might be of interest to a prospective purchaser or servicer of the mortgage loan or might be required to support title or insurance claims at some future date (for example, FEMA flood hazard determination form, title evidence, or survey); • copy of the final settlement statement evidencing all settlement costs paid by the borrower and seller, executed by the borrower and seller (if applicable); Note: In escrow states, if the seller/servicer is unable to have the final settlement statement signed by the borrower and seller, the seller/servicer may supplement the final settlement statement signed by the escrow officer with either - the estimated settlement statement (or multiple matching documents) signed by the borrower and seller, or - the final Escrow Instructions (or multiple matching documents) signed by the borrower and seller; • copies of all documents or records that are used to evaluate a borrower and the property condition when determining the eligibility for a workout option; and • copies of property inspection orders and reports. In all instances, the servicer must document its compliance with all Fannie Mae policies and procedures, including but not limited to, timelines that are required within the Servicing 003 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 16 of 21 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 5, Individual Mortgage Loan Files and Records, Ownership, Establishment and Maintenance of Mortgage Loan Files and Records 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 139 Guide. The servicer must maintain in the individual mortgage loan file all documents and system records that preserve Fannie Mae’s ownership interest in the mortgage loan. Also see F-1-05, Examples of Documentation Required in the Mortgage Loan Servicing File, which includes some (but not all) of the types of documentation that is required to be in the individual mortgage loan file. Special Individual Mortgage Loan File Requirements for Bifurcated Mortgage Loans The servicer and the responsible party must keep all of the individual mortgage loan records, including, but not limited to those identified in Selling Guide, E-2-07, Post-Closing Mortgage Loan File Documentation and any and all servicing records for the time it serviced the bifurcated mortgage loan. Identifying Manufactured Home Mortgage Loans Examples of the collateral document(s) for a manufactured home that are required for a mortgage loan for which an application was taken on or after August 24, 2003 include: • documentation (if it is available) indicating that no certificate of title (or similar ownership document) was ever issued in states where a manufactured home can become real property without first being titled as personal property, • documentation evidencing such surrender or retirement in states where the certificate of title (or similar ownership document) can be surrendered or retired when the home becomes real property, • the certificate of title (or similar ownership document) if it has not been or cannot be surrendered, • any UCC financing statement (or similar notice of lien) that was filed pursuant to applicable law, or • a security agreement that creates a lien on the manufactured home in addition to the mortgage loan or deed of trust. The servicer that has collateral documents for manufactured home loans prior to August 24, 2003, must retain any such documents, but is not required to seek these documents for such mortgage loans. In order to be prepared to meet special servicing and default management requirements for mortgage loans secured by manufactured homes, the servicer must ensure that all mortgage loans secured by manufactured homes are so identified on their internal systems. 004 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 17 of 21 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 5, Individual Mortgage Loan Files and Records, Ownership, Establishment and Maintenance of Mortgage Loan Files and Records 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 140 If it comes to the attention of the servicer that it is servicing a mortgage loan secured by a manufactured home that was delivered to Fannie Mae without notation of Special Feature Code 235 (which is required to identify that property type), the servicer must follow the procedures documented in F-1-11, Manufactured Home Post-Purchase Adjustments. 005 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 18 of 21 Exhibit O Guide A2-5.1-01 Exhibit O Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 19 of 21 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 5, Individual Mortgage Loan Files and Records, Ownership, Establishment and Maintenance of Mortgage Loan Files and Records 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 134 Section A2-5.1, Ownership, Establishment and Maintenance of Mortgage Loan Files and Records A2-5.1-01, Ownership of Individual Mortgage Loan Files and Records (11/12/2014) All records pertaining to mortgage loans sold to Fannie Mae are at all times the property of Fannie Mae and any other owners of a participation interest in the mortgage loan, regardless of their physical form or characteristics or whether they were developed or originated by the mortgage loan seller, servicer, or others. The types of records owned by Fannie Mae include, but are not limited to, the following: • mortgage notes, • security instruments, • mortgage loan applications, • credit reports, • property appraisals, • payment records, • insurance policies and insurance premium receipts, • water stock certificates, • ledger sheets, • insurance claim files and correspondence, • foreclosure files and correspondence, • current and historical computerized data files, 001 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 20 of 21 Part A, Doing Business with Fannie Mae Subpart 2, Getting Started with Fannie Mae Chapter 5, Individual Mortgage Loan Files and Records, Ownership, Establishment and Maintenance of Mortgage Loan Files and Records 06/08/2016 Printed copies may not be the most current version. For the most current version, go to the online version at https://www.fanniemae.com/singlefamily/servicing. 135 • machine-readable materials, and • all other documents, instruments, and papers pertaining to the mortgage loan including, without limitation, any records, data, information, summaries, analyses, reports, or other materials representing, based on, or compiled from such records that are reasonably required to originate and subsequently service a mortgage loan properly. The mortgage loan originator, seller, or servicer, any service bureau, or any other party providing services in connection with servicing a mortgage loan for or delivering a mortgage loan to Fannie Mae will have no right to possession of these documents and records except under the conditions specified by Fannie Mae. Any of these documents and records in possession of the mortgage loan originator, seller, or servicer, any service bureau, or any other party providing services in connection with selling a mortgage loan to, or servicing a mortgage loan for, Fannie Mae are retained in a custodial capacity only. The seller/servicer must maintain an individual mortgage loan file for each mortgage loan it sells to Fannie Mae. Each file must be clearly identified by Fannie Mae’s loan number, which can be marked on the file folder or logically associated with any file which is composed of electronic records. Individual mortgage loan files for participation mortgage loans must be clearly identified by the words “Fannie Mae participation” and Fannie Mae’s percentage interest. Individual mortgage loan files for MBS mortgage loans must identify the number of the related MBS pool. Individual mortgage loan files must include any records that will be needed to service and that support the validity of the mortgage loan. The servicer must use the individual mortgage loan file established at the time of origination to accumulate other pertinent servicing and liquidation information, including, but not limited to, the following: • property inspection reports, • copies of delinquency repayment plans, • copies of disclosures of ARM loan interest rate and payment changes, • documents related to insurance loss settlements, and • foreclosure notices. 002 Case 2:15-cv-00515-JCM-VCF Document 45-3 Filed 07/11/16 Page 21 of 21