The Federal Housing Finance Agency (FHFA) has issued a statement saying it has not consented nor will it consent to the foreclosure of a GSE-backed mortgage loan when initiated by a homeowners association (HOA) that has attached “super-priority” lien status to a mortgage loan.

Several states currently allow HOAs to enforce the super-priority lien status and foreclose on a home non-judicially when the owner falls behind on his or her HOA dues – thus extinguishing the note held by the mortgagee, which in many cases suffers losses totaling hundreds of thousands of dollars as a result.

The issue has been a particularly hot one in Nevada in the last year, where the state supreme court made a controversial ruling that gave HOAs the power to foreclose on a home and extinguish a mortgage non-judicially, a ruling that was subsequently appealed by lenders. In order to protect Fannie Mae’s and Freddie Mac’s property rights, FHFA intervened in two Nevada cases in which an HOA extinguished a mortgage.

In its statement released Tuesday, FHFA quoted Title 12 United States Code Section 4617(j)(3), which states that “[no] property of the Agency shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the (FHFA)” while the Agency acts as conservator for Fannie Mae and Freddie Mac.  Read the article