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Suero v. Federal Home Loan Mortg. Corp.

United States District Court, D. Massachusetts

August 18, 2015

RAMON SUERO and ROSANNA SUERO, Plaintiffs,
v.
FEDERAL HOME LOAN MORTGAGE CORP. a/k/a FREDDIE MAC, Defendant, and FEDERAL HOUSING FINANCE AGENCY, Intervenor

          For Ramon Suero, Rosanna Suero, Plaintiffs: Eloise P. Lawrence, LEAD ATTORNEY, Harvard Legal Aid Bureau, Cambridge, MA.

         For Federal Home Loan Mortgage Corporation, also known as Freddie Mac, Defendant: Justin M. Fabella, LEAD ATTORNEY, Hinshaw & Culbertson LLP, Boston, MA; Robert T. Ferguson, Jr., Hinckley Allen & Snyder, LLP, Boston, MA.

         For Federal Housing Finance Agency, Intervenor: Asim Varma, Howard N. Cayne, LEAD ATTORNEYS, PRO HAC VICE, Arnold & Porter LLP, Washington, DC; Michael A.F. Johnson, LEAD ATTORNEY, PRO HAC VICE, Arnold & Porter, Washington, DC; Eric F. Eisenberg, Robert T. Ferguson, Jr., Hinckley, Allen and Snyder, LLP, Boston, MA.

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         MEMORANDUM OF DECISION AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

         Judith Gail Dein, United States Magistrate Judge.

         I. INTRODUCTION

         The plaintiffs, Ramon and Rosanna Suero (the " Sueros" ), have brought this action against the Federal Home Loan Mortgage Corporation, commonly known as " Freddie Mac," in order to challenge Freddie Mac's refusal to sell their foreclosed home to Boston Community Capital (" BCC" ), a not-for-profit lender that purchases foreclosed homes at their current fair market value, and resells or leases them back to the former homeowners. At the time it refused to sell the Sueros' former property to BCC, Freddie Mac was carrying out policies that prohibited it from selling foreclosed real estate to entities that intended to resell the property to the former borrower. By their claims in this action, the Sueros allege, inter alia, that Freddie Mac's implementation of those policies violates the Non-Profit Buyback Provision of the Massachusetts Foreclosure Law, Mass. Gen. Laws ch. 244, § 35C(h) (" Section 35C(h)" ), and constitutes an unfair or deceptive act or practice that violates Mass. Gen. Laws ch. 93A

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(" Chapter 93A" ). Since 2008, the Federal Housing and Finance Agency (" FHFA" or " Agency" ) has been acting as both the regulator and Conservator of Freddie Mac pursuant to the Housing and Economic Recovery Act, 12 U.S.C. § 4501 et seq. (" HERA" ). FHFA has intervened in this action, and is participating in the defense of the claims that the Sueros have brought against Freddie Mac.[1]

         The matter is presently before the court on the " Plaintiffs' Motion for Partial Summary Judgment" (Docket No. 46). It is also before the court on Freddie Mac's and FHFA's " Cross-Motion for Partial Summary Judgment" (Docket No. 63). By their motions, each of the parties contends that it is entitled to judgment as a matter of law on Count I of the Verified Complaint. Pursuant to Count I, the Sueros are seeking to hold Freddie Mac liable for the alleged violations of Section 35C(h) and Chapter 93A, and to obtain declaratory and/or injunctive relief requiring Freddie Mac to sell the Sueros' former home to BCC.

         The threshold issue raised by the parties' cross-motions is whether HERA's anti-injunction clause precludes this court from considering the plaintiffs' state law claims on the merits.[2] That clause provides that " no court may take any action to restrain or affect the exercise of powers or functions of the [FHFA] as a conservator" of Freddie Mac. 12 U.S.C. § 4617(f). The defendants contend that an order compelling Freddie Mac to sell the foreclosed property to BCC would constitute an unlawful restraint on the Conservator's statutory authority to dispose of an asset of the conservatorship on terms that it deems appropriate. In response, however, the plaintiffs argue that the anti-injunction provision is inapplicable because the defendants have failed to show that FHFA took any action or exercised its powers as a Conservator with respect to Freddie Mac's sales of foreclosed homes.

         This is not the first time these issues have arisen in the context of a lawsuit challenging Freddie Mac's refusal to sell foreclosed property to BCC. In Massachusetts v. Fed. Hous. Fin. Agency, the Commonwealth of Massachusetts, by its then-Attorney General, Martha Coakley, brought claims against Freddie Mac, FHFA and the Federal National Mortgage Association (" Fannie Mae" ) alleging, inter alia, that Freddie Mac's and Fannie Mae's refusal to sell foreclosed homes to BCC violated Section 35C(h) of the Massachusetts Foreclosure Law and constituted an unfair or deceptive business practice in violation of Chapter 93A. See Massachusetts v. Fed. Hous. Fin. Agency, 54 F.Supp.3d 94, 97 (D. Mass. 2014) (the " Common-wealth Action" ). As in this case, the plaintiff in that action sought to enjoin Freddie Mac from enforcing its policy on sales of foreclosed homes. Id. On July 14, 2014, the defendants filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) & (6) in which they argued that the anti-injunction provision of HERA barred the court from granting such relief. Id. On October 21, 2014, the court (Stearns, J.), issued a decision allowing the motion to dismiss, holding that HERA's anti-injunction

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clause applied and that the court lacked authority to consider the Commonwealth's claims on the merits. Id. at 101-02.

         Following Judge Stearns' issuance of his decision in the Commonwealth Action, this court heard oral argument on the pending motions for summary judgment and took the matter under advisement. Shortly thereafter, the Commonwealth filed a notice of appeal in the Commonwealth Action. Because the appeal presented issues that were identical to the issues presented to this court on summary judgment, it was prudent to await a ruling from the First Circuit before addressing the parties' cross-motions. Accordingly, this court continued to hold the matter under advisement pending a decision from the Court of Appeals.

         Eventually, the defendants notified this court that the Commonwealth, by its new Attorney General, Maura Healey, had filed a motion to voluntarily dismiss its appeal in the Commonwealth Action, and that the First Circuit had allowed the motion and entered Judgment accordingly. (Docket No. 96 at Ex. A). The record does not indicate why the Commonwealth decided to abandon its appeal. In any event, as a result of that action, Judge Stearns' decision in the Commonwealth Action remains unchallenged, and the issues presented on summary judgment in the present case must now be decided without the benefit of a ruling from the First Circuit.

         After careful consideration of the undisputed facts set forth in the record, as well as the parties' written submissions and their oral arguments, this court finds that HERA's anti-injunction clause bars this court's jurisdiction over the claims asserted in Count I of the Sueros' complaint. Therefore, and for all the reasons set forth below, the plaintiffs' motion for partial summary judgment as to Count I is DENIED, and the defendants' cross-motion for partial summary judgment as to Count I is ALLOWED.

         II. STATEMENT OF FACTS[3]

         The following facts are undisputed unless otherwise indicated.

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         The Parties

         The plaintiffs, Ramon and Rosanna Suero, are the former owners and current occupants of residential property that is located on Elder Street in Dorchester, Massachusetts (the " Property" ). (PF ¶ 1). The Sueros purchased the Property for $283,000 on August 31, 2005. (Id. ¶ 3). They refinanced their mortgage approximately two years later, on August 7, 2007. (Id. ¶ 4). In connection with the refinancing, the Sueros granted a mortgage to the Mortgage Electronic Registration System for $298,000. (Id.). The mortgage was subsequently assigned to Ocwen Loan Servicing, LLC (" Ocwen" ), which became the servicer of the loan. (See id. ¶ 5; DR ¶ 5; Compl. (Docket No. 1) at Ex. I ¶ 2). This case arises out of events that occurred after the Sueros defaulted on their mortgage and Ocwen foreclosed on their home.

         The defendant, Freddie Mac, is a government-sponsored enterprise (" GSE" ), which Congress created, along with Fannie Mae, in order to " 'establish secondary market facilities for residential mortgages,' 'provide stability in the secondary market for residential mortgages,' and 'promote access to mortgage credit throughout the Nation.'" Fed. Hous. Fin. Agency v. City of Chicago, 962 F.Supp.2d 1044, 1048 (N.D.Ill. 2013) (quoting 12 U.S.C. § 1716). The GSEs have worked toward achieving these goals by " buy[ing] residential mortgages from banks, repackag[ing] them for sale as mortgage-backed securities, and guarantee[ing] these securities by promising to make investors whole if borrowers default." Id. (quoting Judicial Watch, Inc. v. FHFA, 646 F.3d 924, 925, 396 U.S. App.D.C. 200 (D.C. Cir. 2011)). Together, " Freddie Mac and Fannie Mae own or guarantee roughly half of the outstanding residential mortgage loans in the United States." Massachusetts v. Fed. Hous. Fin. Agency, 54 F.Supp.3d at 96. Since September 10, 2007, Freddie Mac has been the investor on the Sueros' mortgage loan, and the holder of the promissory note for the loan. (PF ¶ 6; DR ¶ 6).

         The intervenor, FHFA, is a federal agency that was created pursuant to HERA as " the safety, soundness, and housing mission regulator" of Fannie Mae and Freddie Mac. (See Pl. 3d Supp. Ex. A at 11). In addition to its role as the regulator of the GSEs, FHFA has the power to be appointed as a conservator or receiver of Fannie Mae and Freddie Mac " for the purpose of reorganizing, rehabilitating, or winding up the affairs" of those entities. See 12 U.S.C. § 4617(a)(2). Since September 2008, FHFA has held Fannie Mae and Freddie Mac in conservatorship with the goal of preserving and conserving their assets and property, putting them in a " sound and solvent condition[,]" and restoring confidence in the GSEs. (Pl. 3d Supp. Ex. A at 12). A critical issue in this case is whether FHFA's status as the Conservator for Freddie Mac strips this court of subject matter jurisdiction over Count I of the Sueros' complaint. For the reasons described below, this court finds that it does.

         The Sueros' Involvement with BCC

         In September 2010, Ocwen foreclosed on the plaintiffs' mortgage, and Freddie Mac took title to the Property. (PF ¶ 5; DR ¶ 5; Compl. ¶ 5; Answer (Docket No. 24) ¶ 5). Although the Sueros no longer own the Property, they have continued to reside there since the foreclosure. (See PF ¶ 21; DF ¶ 32). They have also made monthly use and occupancy payments to Freddie Mac since October 2012. (See PF ¶ 21; Compl. ¶ ¶ 11, 14; Answer ¶ ¶ 11, 14). According to the plaintiffs, those payments have amounted to $700 per month. (PF ¶ 21; PSF ¶ 4).

         In about December 2011, the Sueros applied and received approval from BCC for a mortgage loan to repurchase the Property. (PF ¶ 7). BCC is a non-profit

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community financial development institution that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code. (Id.; Pl. 2d Supp. Ex. 1). Its aim is to build healthy communities in areas where low-income people live and work. (Pl. Ex. 3 ¶ 2). In an effort to achieve that goal, BCC has implemented what is known as its Stabilization Urban Neighborhoods (SUN) Initiative. (See id. ¶ ¶ 1-3; Pl. Supp. Ex. A at 1). Through its SUN Initiative, BCC assists struggling homeowners in their efforts to avoid foreclosure or otherwise stabilize their housing situation by purchasing their properties and renting or selling those properties back to the homeowners with a mortgage that they can afford. (Pl. Ex. 3 ¶ 3; PF ¶ 16). According to ...


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