5th Circuit: Only the VA Can Foreclose

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This is for general information only. It is not a legal opinion.

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HAT TIP TO GEORGE RILEY. THANKS

see Equity Trust Company v. McDonald Secretary of Veteran Affairs

Interesting case that opens up a series of questions to which I don’t have the answers. In this case the circuit court of appeals decided and affirmed a lower court ruling that only the VA can foreclose on a VA guaranteed loan. But the wording of the opinion seems to say that if you want to take title to property owned by the Federal government, then you must file an action to quiet title under the Quiet Title Act which frankly I never knew existed.

The main question is whether this applies to loans guaranteed by other quasi governmental and now nationalized agencies like Fannie and Freddie — especially after bailouts. If it does then there are millions of foreclosures that might be subject to unwinding just on this issue alone. But since the VA was an actual Federal Agency and Fannie and Freddie were always considered GSE’s (Government Sponsored Entities), it is possible that the same court might draw a distinction.

So I am asking for lawyers out there to give me their opinion on this issue. Write to neilfgarfield@hotmail.com.

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