A purchaser of a foreclosed unit sued in DC Superior Court to quiet the title of a unit. The lender/servicer (New Penn Financial) removed the matter to federal court and filed a 3rd Party Complaint against, the Condo Association (Langston Lofts) alleging that the Association failed to obtain the consent of FNMA as per HERA. FNMA is not a party to the litigation. The lender then filed a Motion for Summary Judgment on the sole grounds that HERA trumps the non-judicial foreclosure provisions of the DC Condo Act that provide the Association with a superior lien. The association argues that HERA does not apply because Freddie Mac transferred all risk of loss to the loan servicer so that there is no federal interest at risk and that HERA does not preempt the D.C. Code under the Supremacy Clause because federal and state law operates in harmony without conflict. It is crucial the court understands that community associations provide essential services that benefit homeowners and lenders and require financial stability with effective remedies to recover unpaid assessments. Community associations are self-governing organizations that provide essential services benefiting homeowners and lenders. Homeowners fund associations and rely on effective and timely means to collect unpaid assessments to operate with financial stability.
Court: United States District Court for the District of Columbia
Topic: Super priority lien
Brief Author: Katherine J. Seiklay, Esq. and Robert M. Diamond, Esq., CCAL of Reed Smith, LLP and Marvin J. Nodiff, Esq., CCAL.
CAI Amicus Review Panel: Mr. Robert Diamond, Esq. (VA), Mr. Stephen Marcus Esq. (MA), Mr. Gregory Cagle, Esq. (TX), Ms. Karyn Kennedy Branco, Esq. (NJ), Mr. Kimball A. Forbes, Esq., (UT), Mr. Thomas Morarity, Esq. (MA), and Mr. Steven Sugarman, Esq. (PA)