Fannie Mae was unsuccessful in its attempt to obtain a dismissal of a federal lawsuit accusing it of keeping a $100,000 deposit that an investor put down in an ultimately unsuccessful bid to acquire real-estate-owned assets.
REO Acquisition
Group claims it reached an agreement in 2010 with the Washington-based firm to acquire 35 foreclosed properties located mostly in Arizona and California.
But before it submitted a formal purchase proposal, the
Lakeview Terrace, Calif.-based company reportedly wrote in September 2010 to Fannie Mae Pool Sale Transaction Manager Deidre Rogers notifying the secondary lender of its intent to finance the project with mortgages on the subject properties.
The following month, according to to REO Acquisition, Rogers responded by e-mail that any lender “would be acceptable as long as they aligned themselves with the mission of Fannie Mae and accepted” certain resale restrictions to be included in the purchase agreement.
So REO Acquisition then sent the proposed purchase agreement along with a $100,000 deposit to Fannie in November.
Among the conditions of the agreement was a requirement that the agreement wouldn’t take effect until Fannie delivered a fully executed copy of the agreement to REO Acquisition.
It also stipulated that REO wouldn’t seek to modify its terms until Fannie returned the executed copy of the contract.
The agreement additionally required that a settlement statement would be provided to REO Acquisition outlining the anticipated closing date and other transaction details.
Once the settlement statement was received, REO Acquisition would have up to three business days to execute and return the settlement statement with the required funds.
But the agreement also required that REO Acquisition had provided proof of its ability to come up with the proceeds and that its “obligation to purchase the [properties] is not subject to any financing or other contingency.”
Rogers advised the investment firm by email that December that it was awarded the winning bid — though there was no executed copy of the agreement accompanying the email. There was, however, a settlement statement.
But when the lender financing the acquisition called Fannie’s escrow agent the following day to obtain wiring instructions, the escrow agent said Fannie wouldn’t accept the funds because a mortgage couldn’t be taken back on the properties for the purpose of purchasing the properties.
When REO Acquisition called Rogers about the discrepancy, she confirmed that the funds wouldn’t be accepted.
Although REO Acquisition worked to find acceptable financing,
later that month Fannie’s counsel notified the company that it was in default of the agreement, Fannie was terminating the agreement, and the deposit was being retained.
So REO Acquisition filed an instant complaint in December 2013 against Fannie in U.S. District Court for the District of Columbia alleging that Fannie breached the agreement and seeking its deposit back.
Fannie filed a motion to dismiss on Feb. 11, 2014.
Last month, U.S. District Judge Ketanji Brown Jackson denied Fannie’s request to dismiss and ordered the parties to submit supplemental briefing on the appropriate remedy.
