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stating also that Fannie Mae is "a private shareholder-owned company, and its common stock is publicly traded on the New York Stock Exchange
Summary of this case from Bridgeman v. U.S.Opinion
NO. CIV. S-08-751 LKK/JFM.
November 4, 2010
ORDER
On September 15, 2010, the court filed an order observing the apparent lack of federal question or diversity jurisdiction over plaintiff's complaint as most recently amended, and informing the parties of the court's intent to refrain from continued exercise of supplemental jurisdiction. The court granted the parties seven days to show cause why the court should retain subject matter jurisdiction.
Defendants JPMorgan Chase Bank, N.A. and California Reconveyance Company request that this court retain supplemental jurisdiction because "[s]ignificant resources have been expended by the parties" that will be wasted if this court does not rule on the pending motion to dismiss. This is not so. If plaintiff re-files her complaint in state court, defendant may move for demurrer on similar, if not identical, grounds.
Plaintiff argues that this court has diversity jurisdiction over the instant action because some defendants are citizens of states other than California. In order for this court to have diversity jurisdiction, however, diversity must be complete. As such, the court does not have diversity jurisdiction because plaintiff and defendant California Reconveyance Company are both citizens of California.
Plaintiff also states that she has "alleged that defendants have violated the National Affordable Housing Act, 42 U.S.C. Section 12703 et seq. and FANNIE MAE Regulations. . . ." For this reason, plaintiff contends that the court has federal question jurisdiction over her complaint. The court has reviewed plaintiff's second amended complaint. She has not alleged that defendants violated the National Affordable Housing Act, and thus the Act fails to support plaintiff's argument for federal question jurisdiction.
Plaintiff has alleged, however, that "The defendant [JPMorgan Chase] Bank and defendant California Reconveyance Company violated FANNIE MAE RELEASE 98-06 in regard to non-judicial foreclosures in California by its failure to record a substitution of trustee prior to filing the Notice of Default." Second Amended Complaint ¶ 47. She further alleges that, "FANNIE MAE RELEASE 98-06 (August 14, 1998) requires that any substitution of trustee must be recorded prior to the recordation of a default and that the Notice of Default must not be prepared and recorded by a person or entity that was not the trustee of record. . . . FANNIE MAE RELEASE 98-06 states in pertinent part: `When the `notice of default' is recorded first it may carry the name of the trustee of record or the new trustee . . . If the `notice of default' names the new trustee that trustee is acting without power because [under Section 2924a of the California Civil Code] it is the filing of the `substitution of trustee' that provides authority to the new trustee.'" Id. Based upon defendants' alleged failure to comply with the Fannie Mae release, plaintiff seeks cancellation of trustee's deed upon sale. Consequently, only if the Fannie Mae Release constitutes federal law has plaintiff raised a federal question entitling her to federal subject matter jurisdiction.
Fannie Mae is one of two federally-chartered government-sponsored enterprises that serve the public policy of expanding home ownership to moderate and low-income families, in part, by supplying capital and liquidity for residential mortgages. In re Federal Nat. Mortg. Ass'n Securities, Derivative and ERISA, 247 F.R.D. 32 (D. D.C. 2008). It is a private shareholder-owned company, and its common stock is publicly traded on the New York Stock Exchange ("NYSE"). Id.
Fannie Mae is a private, for-profit entity. See 12 U.S.C. § 1716(b); see also Federal Nat. Mortg. Ass'n v. United States, 379 F.3d 1303, 1305 (Fed. Cir. 2004) ("Formerly a federal government agency, [Fannie Mae] is a private, for-profit entity that provides liquidity for mortgage investments"). Furthermore, courts have found that Fannie Mae's guidelines are not federal regulations. See Patriot, Inc. v. U.S. Dept. of Housing and Urban Development, 963 F.Supp. 1, 7 (D. D.C. 1997):
12 U.S.C. § 1716(b) reads "[t]he purposes of this title include the partition of the Federal National Mortgage Association as heretofore existing into two separate and distinct corporations . . . [o]ne of such corporations, to be known as Federal National Mortgage Association, will be a Government-sponsored private corporation . . . and will continue to operate the secondary market operations authorized by such section 1719. The other, to be known as Government National Mortgage Association, will remain in the Government."
"Even if Fannie Mae's guides required plaintiffs to continue to purchase reverse mortgage loans on the secondary market-which they do not-such guides would not be enforceable because Fannie Mae is not a government agency. The cases cited by plaintiffs are inapposite because they involve the obligation of government agencies, or a federally-owned executive branch agency such as the United States Postal Service, to follow their regulations. Fannie Mae's legal status is not analogous to the Postal Service. Fannie Mae is a `private corporation,' 12 U.S.C. § 1716b, owned by its private shareholders, and as a private entity, it does not issue regulations."
Because Frannie Mae is a private corporation, it cannot create federal law. Thus, plaintiff has not raised a federal question and the court also declines to exercise subject matter jurisdiction on that ground.
Accordingly, the court DISMISSES this case for lack of subject matter jurisdiction. The clerk of the court is directed to CLOSE this case.
IT IS SO ORDERED.
DATED: November 3, 2010.