WASHINGTON STATE HOUSING FINANCE COMMISSION, a public body Corporate and politic of the State of Washington, Petitioner,
NATIONAL HOMEBUYERS FUND, INC., f/k/a Homebuyers Fund, Incorporated, a California nonprofit corporation; GOLDEN STATE FINANCE AUTHORITY, f/k/a California Home Finance Authority, f/k/a/ California Rural Home Mortgage Finance Authority, a California joint powers authority; RURAL COUNTY REPRESENTATIVES OF CALIFORNIA, f/k/a Regional Council of Rural Counties, f/k/a Mountain Counties Water Resources Association, a California nonprofit corporation, Respondents.
case asks us to review whether petitioner Washington State
Housing Finance Commission (Commission) has standing to
challenge respondent National Homebuyers Fund's
(NHF) authority to provide down payment
assistance to Washington residents in conjunction with
federally insured mortgages. The Commission is a Washington
public body with delegated authority to provide down payment
assistance within the state in a governmental capacity. NHF
is a California nonprofit corporation established by several
California counties to offer down payment assistance to home
buyers nationwide. The Commission alleges that NHF is falsely
claiming governmental authority when it provides down payment
assistance in Washington, thus its activities impermissibly
compete with the Commission's own activities. The
Commission brought this suit to challenge NHF's alleged
lack of authority to operate in this state.
Court of Appeals reversed the trial court's summary
judgment in favor of the Commission on the basis that the
Commission lacked standing. We reverse and hold that the
Commission has standing to bring this action. In doing so, we
express no opinion on the merits of the Commission's
Background and Procedural History
legislature, in response to a serious shortage of affordable
housing, established the Commission in 1983 for the purpose
of making "additional funds available at affordable
rates to help provide housing throughout the state."
Laws of 1983, ch. 161, § 1; RCW 43.180.010. The
Commission accomplishes this mission without using public
funds or lending the credit of the state through bond
issuances and revenue it generates from its housing programs.
One of these programs assists low-income and first-time home
buyers qualify for a mortgage by lending them funds for the
required down payment. These are low or no interest loans
that do not need to be paid back until either the primary
mortgage is paid or the home is sold.
a California nonprofit public benefit corporation formed by
Rural County Representatives of California (RCRC) and Golden
State Finance Authority (GSFA). RCRC is a California
nonprofit mutual benefit corporation founded by several
counties in California to provide services to those counties
and advocate on their behalf. GSFA is a joint powers
authority created by these same counties to offer home
ownership assistance to their residents. NHF was formed for
the purpose of providing down payment assistance to low- and
moderate-income home buyers throughout the United States. The
assistance comes in the form of a gift (which NHF also calls
a grant) of up to five percent of the purchase price, which
the home buyer does not need to repay.
the Commission and NHF offer their programs in conjunction
with primary mortgages that are insured through the Federal
Housing Administration's (FHA) mortgage insurance
program. Each partners with participating lenders that
provide the primary mortgage. These insured loans are then
purchased, bundled into mortgage backed securities, and sold
for a profit on the open market. The Commission reinvests
these proceeds into its housing programs that benefit
Washington residents. NHF also uses a portion of its proceeds
to expand its housing programs nationwide and distributes
excess funds to RCRC to benefit its member counties.
FHA, a part of the United States Department of Housing and
Urban Development (HUD), promotes home ownership for those
who may not qualify for a conventional mortgage by protecting
lenders against losses in the event the borrower defaults on
the loan. These loans are made by FHA approved lenders, who
must ensure the loans comply with detailed underwriting
guidelines published by HUD. One such requirement is
that the home buyer pay a minimum 3.5 percent down payment.
See 12 U.S.C. § 1709(b)(9)(A).
restricts where the funds for this minimum down payment can
come from. Borrowers may receive gifts from certain sources,
such as family members, charitable organizations, and
government housing programs. But no part of the minimum down
payment can come from a "person or entity that
financially benefits from the transaction." 12 U.S.C.
§ 1709(b)(9)(C)(i). This restriction does not apply to
gifts or secondary loans made by a government entity acting
in its governmental capacity within its jurisdiction. Federal
Housing Administration: Prohibited Sources of Minimum Cash
Investment Under the National Housing Act-Interpretive Rule,
77 Fed. Reg. 72, 219, 72, 220 (Dec. 5, 2012).
requirements are at the center of the dispute between the
parties. The Commission is an "instrumentality of the
state exercising essential government functions." RCW
43.180.040(1). The legislature has authorized the Commission
to "secure to itself and the people of the state the
benefits" of federal housing programs by making loans
for down payment assistance. RCW 43.180.050(1)(d)-(e). The
Commission alleges that NHF is falsely asserting the same
governmental authority in Washington by providing funds that
only authorized government entities can provide and marketing
itself as governmental.
disputes these allegations. It asserts that while it meets
HUD's definition of a government entity (because it is
exempt from federal taxation pursuant to section 115 of the
Internal Revenue Code), it is acting in a proprietary, rather
than governmental, capacity when it gifts funds to borrowers
in Washington. In NHF's view, it is not an "entity
that financially benefits from the transaction" within
the meaning of 12 U.S.C. § 1709(b)(9)(C) because it
receives revenue only from the sale of mortgage backed
securities, not from the individual loan transactions.
Consequently, it does not need to invoke the exception for
government entities acting in their governmental capacity.
Commission filed this lawsuit in 2015, arguing that NHF was
unlawfully invoking governmental authority in this state and
interfering with the Commission's mission and programs.
The Commission sought a declaratory judgment that NHF's
ongoing activities in Washington are unauthorized and may not
continue. The Commission also sought an injunction
prohibiting NHF from any further provision of homeownership
financing services in Washington.
parties filed cross motions for summary judgment based on
these arguments, both of which were denied. On
reconsideration, the trial court granted the Commission's
request for declaratory relief and declared that NHF's
"housing activities in the State of Washington are
prohibited by law." Clerk's Papers (CP) at 1287
appealed this decision and claimed that the Commission lacked
standing to bring the lawsuit. The Court of Appeals held
that the Commission lacked standing because it did not show
that it was within the zone of interests that a statute was
intended to protect and it had not demonstrated sufficient
economic injury. The Court of Appeals did not reach the other
issues and, instead, reversed and remanded with directions to
dismiss. Wash. State Hous. Fin. Comm'n v. Nat'l
Homebuyers Fund, Inc., No. 76510-8-1, slip op. at 10
(Wash.Ct.App. June 11, 2018) (unpublished),
The Commission petitioned for review, which we granted.
the Commission has standing to bring this declaratory
generally refers to a particular party's right to bring a
legal claim. When declaratory relief is sought, the Uniform
Declaratory Judgments Act (UDJA), chapter 7.24 RCW, provides
that "[a] person . . . whose rights, status or other
legal relations are affected by a statute . . . may have
determined any question of construction or validity arising
under the . . . statute . . . and obtain a declaration of
rights, status or other legal relations thereunder." RCW
7.24.020. We utilize the common law doctrine of standing to
clarify the boundaries of this broad statutory
right.Grant County Fire Prot. Dist. No.
5 v. City of Moses Lake,150 ...