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Federal Housing Finance Agency1700 G Street, N.W., Washington, D.C. 20552-0003Telephone: (202) 414-3800Facsimi . (202) 414-3823www.fhfa.gov

April 26, 2011Lucas FolettaGeneral CounselOffice of the GovernorState of Nevada10 1 N. Carson StreetCarson City, NV 89701RE: SB 174Dear Mr. Foletta:In furtherance of our discussion regarding SB 174 and as promised, I wanted to expand on m yanalysis of and concerns with the provisions of the b ill. A s you kn ow , the Federal Housing FinanceAgency (FHFA) acts as regulator and conservator for Fannie Mae and Freddie Mac and hasobligat ions that focus on preserving and conserving assets of the f irms, avoiding losses andmaintaining their safe and sound operations. The agency also oversees operations of the twelveFederal Home Loan Banks.As we discussed, the provisions of the bill which relate to the collection of unpaid homeownersassociation (HOA) assessments raise significant issues. I would note Fannie Mae and Freddie Machave provided for reimbursement of six months of regular common expense unpaid assessments.They do not reimburse for collection costs or attorneys fees. The comments that follow,therefore, relate primarily with specifics of the legislation, bu t I would note that, in general, the billwould alter practices for which the Enterprises do not provide reimbursement.Specific observations concerning substantive provisions of SB 174 and problems withimplementation of such a law, that I would hope would be of benefi t to your cons ideration, areprovided here:First, Section 15 of the bill provides that reasonable attorneys fees and collection costs forcollecting unpaid HOA assessments are included in a HOAs super-priority lien for assessmentsfor common expenses. Experience shows that, in general, attorneys fees and collection costs aremuch h ighe r than the amount of delinquent assessments and this bill would transfer such costs toservicers and potentially the Enterprises. In any event, general practice has been that homeownerswho have title to the property and wan t to resolve claims related to the property would be requiredto pay attorneys fees and collection costs.

EXHIBIT J Senate Committee on Judiciary

Date:5-6-2013 Page: 1 of 2

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If a bill such as SB 174 were enacted, Fannie Mae and Freddie Mac servicers would be responsiblefor the payment of such attorneys fees and collection costs to the extent they are not paid byhomeowners. Servicers might attempt to seek reimbursement from Fannie Mae and Freddie Mac,however, Enterprise seller-servicer guides prohibit reimbursing servicers for such attorneys feesand collection costs. In addition, attorneys fees and collection expenses could increase foreclosurecosts and increase the costs to purchasers of homes coming to the market.Second, with regard to capping collection fees under Section 15, the set amount of $1950 is not atrue limitation as an exception exists transferring authority to homeowners associations to make adeclaration to provide that a lien may exceed the statutory cap without limitation. Therefore,because the provision allows the HOAs declaration to govern over the statutory cap, but thenapplies the limitation to any other amounts due the association pursuant to the governingdocuments, the cap may be illusory. While Fannie Mae and Freddie Mac, as noted above, wouldnot reimburse for such collection fees, the language as reported appears to provide no firm cappingof such fees in any event.Third, Section 15 is somewhat ambiguous about the lien for collection costs. In particular, it isunclear what time frame is involved for which such collection costs would be afforded l ien priority.As we discussed, Fannie Mae and Freddie Mac do not reimburse for such costs.Finally, I would note that this measure would represent a significant change to existing law andpractice and could have unintended consequences in the current market environment. Please donot hesitate to contact me if you have any questions regarding these comments; I may be reached at202 414-3788.With all best wishes, I amSincerely,

Alfred M. PollardGeneral Counsel

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