MBA Joins Amicus Brief on Nevada HOA Case

The Mortgage Bankers Association (MBA) joined the American Bankers Association (ABA) and the U.S. Chamber of Commerce in an amicus brief with the U.S. Supreme Court that supports a request by Wells Fargo Bank to review a Circuit Court of Appeals ruling regarding a Nevada statute that gives homeowners association (HOA) "super liens" priority over a first mortgage.

 

In their joint amicus brief, the trade groups called on the Supreme Court to grant Wells Fargo's petition for a writ of certiorari while affirming the Ninth Circuit's decision on whether the Nevada statute violates the concept of constitutional due process. The amicus brief argued that this case was based on "issues of critical importance to home lenders and the homebuyers and homeowners they serve," noting that in nearly half of the states the HOA acquires a special statutory lien on the property when a homeowner living in a common-interest community falls behind on association dues.
"Such liens not only allow HOAs to collect before other lienholders but also extinguish all other liens—including first mortgage liens," the brief said. "And in Nevada, this deprivation of mortgagees' property could take place without direct notice to the mortgage lienholders. In this case, the Ninth Circuit held that the state action requirement was satisfied and that Nevada statute violated mortgage lenders' due process right to notice before deprivation of their property, while the Nevada Supreme Court later came to the opposite conclusion."

 

The brief added that the Supreme Court "should grant the petition and then affirm the court of appeals' decision. Doing so would give lenders a measure of protection from the worst features of state super-priority regimes." The court is expected to hear this case later in the year.