NATIONAL – Federal district court bars HOA foreclosure sale of first lien HUD-insured mortgages
MORTGAGE PROFESSIONAL AMERICA: Federal district court bars HOA foreclosure sale of first lien HUD-insured mortgages
December 2, 2014
Recently, the U.S. District Court for the District of Nevada held that a homeowners association (HOA) foreclosure sale is not valid against HUD-insured loans, but will the ruling be extended to GSE-insured mortgages?
The decision comes shortly after the Nevada Supreme Court upheld a state law that gives HOAs a super-priority lien on a Nevada property for up to nine months of unpaid HOA dues.
In its ruling, the District Court noted that federal rather than state law applies in cases involving FHA-insured mortgages to assure the protection of the federal program against loss, state law notwithstanding. The District Court reasoned that in situations where a mortgage is insured by a federal agency under the Federal Housing Administration (FHA) insurance program, state laws cannot operate to undermine the federal agency’s ability to obtain title after foreclosure and resell the property. Read more: