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LEXSTAT L@~}}n@@Lan UNITED STATES CODE SERVICE Copyright 2012 Matthew Bender & Company, Inc. a member of the LexisNexis Group (TM) All rights reserved. *** Current through PL 112-150 with a gap of PL 112-141, approved 7/27/12 *** TITLE 12. BANKS AND BANKING CHAPTER 13. NATIONAL HOUSING MORTGAGE INSURANCE Go to the United States Code Service Archive Directory 12 USCS 1715u 1715u. Authority to assist mortgagors in default (a) Loss mitigation. Upon default or imminent default, as defined by the Secretary of any mortgage insured under this title [12 USCS 1707 et seq.], mortgagees shall engage in loss mitigation actions for the purpose of providing an alternative to foreclosure (including but not limited to actions such as special forbearance, loan modification, preforeclosure sale, support for borrower housing counseling, subordinate lien resolution, borrower incentives, and deeds in lieu of foreclosure, as required, but not including assignment of mortgages to the Secretary under section 204(a)(1)(A) [12 USCS 1710(a)(1)(A)][)] or section 230(c) [subsec. (c) of this section][)], as provided in regulations by the Secretary. (b) Payment of partial claim. (1) Establishment of program. The Secretary may establish a program for payment of a partial claim to a mortgagee that agrees to apply the claim amount to payment of a mortgage on a 1- to 4-family residence that is in default or faces imminent default, as defined by the Secretary. (2) Payments and exceptions. Any payment of a partial claim under the program established in paragraph (1) to a mortgagee shall be made in the sole discretion of the Secretary and on terms and conditions acceptable to the Secretary, except that-(A) the amount of the payment shall be in an amount determined by the Secretary, not to exceed an amount equivalent to 30 percent of the unpaid principal balance of the mortgage and any costs that are approved by the Secretary; (B) the amount of the partial claim payment shall first be applied to any arrearage on the mortgage, and may also be applied to achieve principal reduction; (C) the mortgagor shall agree to repay the amount of the insurance claim to the Secretary upon terms and conditions acceptable to the Secretary; (D) the Secretary may permit compensation to the mortgagee for lost income on monthly payments, due to a reduction in the interest rate charged on the mortgage; (E) expenses related to the partial claim or modification may not be charged to the borrower; (F) loans may be modified to extend the term of the mortgage to a maximum of 40 years from the date of the modification; and (G) the Secretary may permit incentive payments to the mortgagee, on the borrower's behalf, based on successful performance of a modified mortgage, which shall be used to reduce the amount of principal indebtedness. (3) Payments in connection with certain activities. The Secretary may pay the mortgagee, from the appropriate

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insurance fund, in connection with any activities that the mortgagee is required to undertake concerning repayment by the mortgagor of the amount owed to the Secretary. (c) (1) Assignment. (A) Program authority. The Secretary may establish a program for assignment to the Secretary, upon request of the mortgagee, of a mortgage on a 1- to 4-family residence insured under this Act. (B) Program requirements. The Secretary may accept assignment of a mortgage under this paragraph only if-(i) the mortgage was in default or facing imminent default, as defined by the Secretary; (ii) the mortgagee has modified the mortgage to cure the default and provide for mortgage payments within the reasonable ability of the mortgagor to pay, at interest rates not exceeding current market interest rates; and (iii) the Secretary arranges for servicing of the assigned mortgage by a mortgagee (which may include the assigning mortgagee) through procedures that the Secretary has determined to be in the best interests of the appropriate insurance fund. (C) Payment of insurance benefits. Upon accepting assignment of a mortgage under this paragraph, the Secretary may pay insurance benefits to the mortgagee from the appropriate insurance fund, in an amount that the Secretary determines to be appropriate, not to exceed the amount necessary to compensate the mortgagee for the assignment and any losses and expenses resulting from the mortgage modification. (2) Assignment and loan modification. (A) Authority. The Secretary may encourage loan modifications for eligible delinquent mortgages or mortgages facing imminent default, as defined by the Secretary, through the payment of insurance benefits and assignment of the mortgage to the Secretary and the subsequent modification of the terms of the mortgage according to a loan modification approved by the mortgagee. (B) Payment of benefits and assignment. In carrying out this paragraph, the Secretary may pay insurance benefits for a mortgage, in the amount determined in accordance with section 204(a)(5) [12 USCS 1710(a)(5)], without reduction for any amounts modified, but only upon the assignment, transfer, and delivery to the Secretary of all rights, interest, claims, evidence, and records with respect to the mortgage specified in clauses (i) through (iv) of section 204(a)(1)(A) [12 USCS 1710(a)(1)(A)]. (C) Disposition. After modification of a mortgage pursuant to this paragraph, the Secretary may provide insurance under this title [12 USCS 1707 et seq.] for the mortgage. The Secretary may subsequently-(i) re-assign the mortgage to the mortgagee under terms and conditions as are agreed to by the mortgagee and the Secretary; (ii) act as a Government National Mortgage Association issuer, or contract with an entity for such purpose, in order to pool the mortgage into a Government National Mortgage Association security; or (iii) re-sell the mortgage in accordance with any program that has been established for purchase by the Federal Government of mortgages insured under this title, and the Secretary may coordinate standards for interest rate reductions available for loan modification with interest rates established for such purchase. (D) Loan servicing. In carrying out this paragraph, the Secretary may require the existing servicer of a mortgage assigned to the Secretary to continue servicing the mortgage as an agent of the Secretary during the period that the Secretary acquires and holds the mortgage for the purpose of modifying the terms of the mortgage, provided that the Secretary compensates the existing servicer appropriately, as such compensation is determined by the Secretary consistent, to the maximum extent possible, with section 203(b) [12 USCS 1709]. If the mortgage is resold pursuant to subparagraph (C)(iii), the Secretary may provide for the existing servicer to continue to service the mortgage or may engage another entity to service the mortgage. (d) Prohibition of judicial review. No decision by the Secretary to exercise or forego exercising any authority under this section shall be subject to judicial review. (e) [Repealed] (f) Applicability of other laws. No provision of this Act, or any other law, shall be construed to require the Secretary to

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provide an alternative to foreclosure for mortgagees with mortgages on 1- to 4-family residences insured by the Secretary under this Act, or to accept assignments of such mortgages. HISTORY: (June 27, 1934, ch 847, Title II, 230, as added Sept. 23, 1959, P.L. 86-372, Title I, 114(a), 73 Stat. 662; Sept. 2, 1964, P.L. 88-560, Title I, 104(b), 78 Stat. 770; May 25, 1967, P.L. 90-19, 1(a)(3), 81 Stat. 17; Oct. 8, 1980, P.L. 96-399, Title III, 341, 94 Stat. 1659; Nov. 30, 1983, P.L. 98-181, Title IV, Part A, Subpart 2 418, 97 Stat. 1212; Feb. 5, 1988, P.L. 100-242, Title IV, Subtitle A, 428, 101 Stat. 1918; Jan. 26, 1996, P.L. 104-99, Title IV, 407(b), 110 Stat. 45; April 26, 1996, P.L. 104-134, Title I [Title II, 221(b)(2)], 110 Stat. 1321-221; May 2, 1996, P.L. 104-140, 1(a), 110 Stat. 1327; Oct. 21, 1998, P.L. 105-276, Title VI, 601(f), 112 Stat. 2674.) (As amended May 20, 2009, P.L. 111-22, Div A, Title II, 203(d)(1)-(3), 123 Stat. 1645.) HISTORY; ANCILLARY LAWS AND DIRECTIVES

References in text: "This Act" referred to in this section, is the National Housing Act, which appears generally as 12 USCS 1701 et seq. For full classification of this Act, consult the USCS Tables volumes.

Explanatory notes: In subsec. (a), the first bracketed parenthesis has been so enclosed to indicate the probable intent of Congress to delete it; the second bracketed parenthesis has been inserted to indicate the probable intent of Congress to include such punctuation. Act May 2, 1996, P.L. 104-140, 1(a), 110 Stat. 1327, inserted the heading "TITLE I--OMNIBUS APPROPRIATIONS" after the enacting clause of Act April 26, 1996, P.L. 104-134.

Amendments:

1964 . Act Sept. 2, 1964 substituted "payment of the insurance benefits in an amount" for "issuance to the mortgagee of debentures having a total face value", substituted "any unpaid mortgage interest plus reimbursement for such costs and attorney's fees as the Commissioner finds were properly incurred in connection with the defaulted mortgage and its assignment to the Commissioner, and for" for "any accrued interest and", substituted ". After" for "; and after", and inserted "and notwithstanding the fact that he has previously approved a request of the mortgagee for an extension of the time for curing the default and of the time for commencing foreclosure proceedings or for otherwise acquiring title to the mortgaged property, or has approved a modification of the mortgage for the purpose of changing the amortization provisions by recasting the unpaid balance,".

1967 . Act May 25, 1967 substituted "Secretary" for "Commissioner" throughout the section.

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1980 . Act Oct. 8, 1980, substituted this section for one which read: "Upon receiving notice of the default of any mortgage covering a one-, two-, three-, or four-family residence heretofore or hereafter insured under this Act, the Secretary, in his discretion and for the purpose of avoiding foreclosure of the mortgage, and notwithstanding the fact that he has previously approved a request of the mortgagee for an extension of the time for curing the default and of the time for commencing foreclosure proceedings or for otherwise acquiring title to the mortgaged property, or has approved a modification of the mortgage for the purpose of changing the amortization provisions by recasting the unpaid balance, may acquire the loan and security therefor upon payment of the insurance benefits in an amount equal to the unpaid principal balance of the loan plus any unpaid mortgage interest plus reimbursement for such costs and attorney's fees as the Secretary finds were properly incurred in connection with the defaulted mortgage and its assignment to the Secretary, and for any proper advances theretofore made by the mortgagee under the provisions of the mortgage. After the acquisition of such mortgage by the Secretary, the mortgagee shall have no further rights, liabilities, or obligations with respect thereto. The provisions of section 204 relating to the issuance of debentures incident to the acquisition of foreclosed properties shall apply with respect to debentures issued under this subsection, and the provisions of section 204 issued under this subsection, and the provisions of section 204 relating to the rights, liabilities, and obligations of a mortgagee shall apply with respect to the Secretary when he has acquired an insured mortgage under this section, in accordance with and subject to regulations (modifying such provisions to the extent necessary to render their application for such purposes appropriate and effective) which shall be prescribed by the Secretary.".

1983 . Act Nov. 30, 1983, in subsec. (d), deleted ", to the extent practicable," following "Secretary".

1988 . Act Feb. 5, 1988, in subsec. (a)(5), substituted the sentences beginning "The interest rate on . . .", and "The interest rate to be . . ." for one which read: "The Secretary may establish interest charges on payments made under this subsection; except that such charges shall not exceed a rate which is more than the maximum interest rate applicable with respect to level payment mortgages insured pursuant to section 203(b) of this Act at the time assistance under this section is approved by the Secretary.".

1996 . Act Jan. 6, 1996 (applicable as provided by 407(c) of such Act, which appears as 12 USCS 1710 note) substituted this section for one which read: "Temporary mortgage assistance payments and acquisition of mortgages to avoid foreclosure "(a) Temporary mortgage assistance payments; authorization; scope; criteria; amount; term and extension; security requirements; repayment; interest charges; prior assistance. (1) Upon receiving notice of the default of any mortgage covering a one-, two-, three-, or four-family residence insured under this Act the Secretary (for the purpose of avoiding foreclosure of the mortgage, and notwithstanding the fact that the Secretary has previously approved a request of the mortgagee for an extension of the time for curing the default and of the time for commencing foreclosure proceedings or for otherwise acquiring title to the mortgaged property, or has approved a modification of the mortgage for the purpose of changing the amortization provisions by recasting the unpaid balance) may make all or part of the monthly payments due under the mortgage directly to the mortgagee on behalf of the mortgagor, if such default was caused by circumstances which are beyond the mortgagor's control and render the mortgagor temporarily unable to correct a mortgage delinquency and to resume full mortgage payments. Payments may be made only in accordance with the provisions of this subsection and shall be subject to any additional requirements the Secretary may prescribe. "(2) No payments may be provided under this subsection unless the Secretary has determined that such payments are necessary to avoid foreclosure and that there is a reasonable prospect that the mortgagor will be able--

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"(A) to resume full mortgage payments within thirty-six months after the beginning of the period for which such payments are provided or upon termination of assistance under this subsection; "(B) to commence repayment of the payments made under this subsection at a time designated by the Secretary; and "(C) to pay the mortgage in full by its maturity date or by a later date established by the Secretary for completing the mortgage payments. "(3) Payments under this subsection may be in an amount determined by the Secretary up to the amount of the principal, interest, taxes, assessments, ground rents, hazard insurance, mortgagee's expenses in connection with payments or repayments under this subsection, and mortgage insurance premiums due under the mortgage, and the initial payment may include an amount necessary to make the payments on the mortgage current. Payments may not exceed amounts which the Secretary determines to be necessary to supplement the amounts, if any, which the mortgagor is capable of contributing toward the mortgage payments. "(4) Payments under this subsection may be provided for a period of not to exceed eighteen months, and any period of default. Such period may be extended, in the Secretary's discretion, for not to exceed eighteen months where the Secretary has determined that such extension is necessary to avoid foreclosure and that there is a reasonable prospect that the mortgagor will be able to make the payments and repayments specified in paragraph (2) of this subsection. The Secretary shall establish procedures for periodic review of the mortgagor's financial circumstances for the purpose of determining the necessity for continuation, termination, or adjustment in the amount of the payments. Payments shall be discontinued at any time when the Secretary determines that, because of changes in the mortgagor's financial circumstances, the payments are no longer necessary to avoid foreclosure or that there is no longer a reasonable prospect that the mortgagor will be able to make the payments and repayments specified in paragraph (2) of this subsection. "(5) All payments shall be secured by a lien on the property and by such other obligation as the Secretary may require. Payments shall be repayable upon terms and conditions prescribed by the Secretary, and such terms and conditions may include requirements for repayment of any amount paid by the Secretary toward a mortgagee's expenses in connection with the payment or repayments made under this subsection. The interest rate on payments made under this subsection shall be the rate established under section 1803(c) of title 38, United States Code. The interest rate to be charged shall be determined when the Secretary approves assistance under this subsection. Such charges shall be payable notwithstanding any provision of any State constitution or law or local law which limits the rate of interest on loans or advances of credit. "(6) Payments under this subsection may be made without regard to whether the Secretary has previously taken action to avoid mortgage acquisition or foreclosure, except that payments may be provided on behalf of a mortgagor previously assisted under this section only in cases in which full mortgage payments (and any repayments to the Secretary which may have been requested) have been made by such mortgagor for at least 12 months from the time such previous assistance under this section was terminated. "(b) Acquisition of mortgages to avoid foreclosure; authorization; scope; type of assistance available; additional remedy. (1) When the Secretary receives notice of a default described in subsection (a)(1) and makes a determination that assistance under subsection (a) would be inappropriate in the case of the mortgagor, the Secretary (for the purpose of avoiding foreclosure of the mortgage, and notwithstanding the facts described in the parenthetical material contained in subsection (a)(1) and the fact that payments have been made under subsection (a) with respect to the mortgage) shall, if determined necessary by the Secretary, acquire the mortgage and security therefor upon payment of the insurance benefits in an amount equal to the unpaid principal balance of the mortgage plus any unpaid mortgage interest and reimbursement for such costs and attorney's fees as the Secretary finds were properly incurred in connection with the defaulted mortgage and its assignment to the Secretary, and for any proper advances theretofore made by the mortgagee under the provisions of the mortgage. After the acquisition of such mortgage by the Secretary, the mortgagee shall have no further rights, liabilities, or obligations with respect thereto. The provisions of section 204 relating to the issuance of debentures incident to the acquisition of foreclosed properties shall apply with respect to debentures issued under this subsection, and the provisions of section 204 relating to the rights, liabilities, and obligations of a mortgagee shall apply with respect to the Secretary when the Secretary has acquired an insured mortgage under this section, in accordance

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with and subject to regulations (modifying such provisions to the extent necessary to render their application for such purpose appropriate and effective) which shall be prescribed by the Secretary. "(2) The Secretary may provide assistance, to a mortgagor whose mortgage has been acquired under paragraph (1) of this subsection, through forebearance of interest or principal, or both, or through other means, for a period of not more than eighteen months after the acquisition of the mortgage, if the mortgagor has not been assisted under subsection (a) within twelve months of the date of such acquisition and if the Secretary determines that there is a reasonable prospect that the mortgagor will be able to meet the conditions described in subsection (a)(2). Such period may be extended, in the Secretary's discretion, for not to exceed eighteen months where the Secretary has determined that such extension is necessary to avoid foreclosure and that there is a reasonable prospect that the mortgagor will be able to meet the conditions described in subsection (a)(2). Such assistance (which may include any expenses of the Secretary incurred in connection with providing such assistance) shall be repayable upon terms and conditions prescribed by the Secretary, except that in no event shall any interest rate charged on such repayments exceed the interest rate chargeable for repayments of assistance made under subsection (a). Such rate shall be payable notwithstanding any provision of any State constitution or law or local law which limits the rate of interest on loans or advances of credit. "(3) In carrying out paragraph (1), the Secretary shall, if determined necessary by the Secretary, acquire a mortgage, with respect to which assistance was being provided under subsection (a) immediately prior to such acquisition, for the sole purpose of extending the term of repayment under the mortgage so that the mortgagor will be able to make the full payments on the mortgage. "(c) Funding requirements. All expenditures made under this section shall be made from the insurance fund chargeable for insurance benefits on the mortgage covering the property to which the payments made relate, and any payments received under this section shall be credited to such fund; except that payments made pursuant to subsection (a) of this section may only be made to the extent approved in appropriation Acts. "(d) Homeownership counseling. The Secretary shall provide homeownership counseling to persons assisted under this section.". Act April 26, 1996 repealed subsec. (d), which read: "(d) Savings provision. Any mortgage for which the mortgagor has applied to the Secretary, before the date of enactment of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1996, for assignment pursuant to subsection (b) of this section as in effect before such date of enactment shall continue to be governed by the provisions of this section, as in effect immediately before such date of enactment.".

1998 . Act Oct. 21, 1998 redesignated subsecs. (a)-(e) as subsecs. (b)-(f), respectively; and added new subsec. (a).

2009 . Act May 20, 2009, in subsec. (a), inserted "or imminent default, as defined by the Secretary", "preforeclosure sale, support for borrower housing counseling, subordinate lien resolution, borrower incentives,", "as required,", and "or section 230(c),"; and substituted subsecs. (b) and (c) for ones which read: "(b) Payment of partial claim. The Secretary may establish a program for payment of a partial claim to a mortgagee that agrees to apply the claim amount to payment of a mortgage on a 1- to 4-family residence that is in default. Any such payment under such program to the mortgagee shall be made in the sole discretion of the Secretary and on terms and conditions acceptable to the Secretary, except that-"(1) the amount of the payment shall be in an amount determined by the Secretary, not to exceed an amount equivalent to 12 of the monthly mortgage payments and any costs related to the default that are approved by the Secretary; and "(2) the mortgagor shall agree to repay the amount of the insurance claim to the Secretary upon terms and conditions acceptable to the Secretary. "The Secretary may pay the mortgagee, from the appropriate insurance fund, in connection with any activities that the

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mortgagee is required to undertake concerning repayment by the mortgagor of the amount owed to the Secretary. "(c) Assignment. (1) Program authority. The Secretary may establish a program for assignment to the Secretary, upon request of the mortgagee, of a mortgage on a 1- to 4-family residence insured under this Act. "(2) Program requirements. The Secretary may accept assignment of a mortgage under a program under this subsection only if-"(A) the mortgage was in default; "(B) the mortgagee has modified the mortgage to cure the default and provide for mortgage payments within the reasonable ability of the mortgagor to pay, at interest rates not exceeding current market interest rates; and "(C) the Secretary arranges for servicing of the assigned mortgage by a mortgagee (which may include the assigning mortgagee) through procedures that the Secretary has determined to be in the best interests of the appropriate insurance fund. "(3) Payment of insurance benefits. Upon accepting assignment of a mortgage under a program established under this subsection, the Secretary may pay insurance benefits to the mortgagee from the appropriate insurance fund, in an amount that the Secretary determines to be appropriate, not to exceed the amount necessary to compensate the mortgagee for the assignment and any losses and expenses resulting from the mortgage modification.". Such Act further directed that subsec. (a) be amended by substituting "loan" for "loss". Such amendment has been made only the second time the word "loss" appeared, before "modification", in order to effectuate the probable intent of Congress.

Other provisions: Savings provision. Act April 26, 1996, P.L. 104-134, Title I [Title II, 221(b)(1)], 110 Stat. 1321-291; May 2, 1996, P.L. 104-140, 1(a), 110 Stat. 1327, provides: "Any mortgage for which the mortgagor has applied to the Secretary, before the date of enactment of this Act, for assignment to the Secretary pursuant to section 230(b) of the National Housing Act [subsec. (b) of this section] shall continue to be governed by the provisions of such section, as in effect immediately before enactment of the Balanced Budget Downpayment Act, I [enacted Jan. 26, 1996].". Implementation of May 20, 2009 amendments. Act May 20, 2009, P.L. 111-22, Div A, Title II, 203(d)(4), 123 Stat. 1647, provides: "The Secretary of Housing and Urban Development may implement the amendments made by this subsection [amending this section] through notice or mortgagee letter.". NOTES:

Code of Federal Regulations: Office of Assistant Secretary for Housing-Federal Housing Commissioner, Department of Housing and Urban Development--Single family mortgage insurance, 24 CFR 203.1 et seq.

Related Statutes & Rules: This section is referred to in 12 USCS 1710, 1715y, 1735f-14.

Research Guide:

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Annotations: Conditions under which Department of Housing and Urban Development will accept assignment or defaulting mortgage under 12 USCS 1715u(b)(1). 103 ALR Fed 766. Interpretive Notes and Decisions: 1. Generally 2. Circumstances beyond control of mortgagor 3. Homeownership counseling 4. Regulations

1. Generally Enactment of new 12 USCS 1715u is not change in law requiring modification or derogation of Housing and Urban Development consent decree concerning foreclosure relief assistance program, since Congressional intent behind statute is that Temporary Mortgage Assistance Payments program in statute be offered only in manner consistent with operation of consent-decree program and not in derogation of that decree. Ferrell v Pierce (1984, CA7 Ill) 743 F2d 454. Mortgagor bears burden of proving that he or she meets conditions to qualify for HUD's assignment program (which provides relief from foreclosure to low income homeowners who, because of temporary financial crisis, default on mortgages insured by HUD under National Housing Act). Pozzie v United States Dep't of Hous. & Urban Dev. (1995, CA7 Ill) 48 F3d 1026. HUD foreclosure action pursuant to 12 USCS 1715u(b)(1) may proceed, despite mortgagor's assertions of inadequate notice in violation of state statutes, because respective rights and obligations of federal mortgagee and defaulting mortgagor under national housing program are governed by federal law, which preempts state laws in field and which HUD claims to have satisfied. United States ex rel. United States Dep't of Hous. & Urban Dev. v Jones-Williams (1994, MD Pa) 870 F Supp 90. Unpublished Opinions Unpublished: In bankruptcy adversary proceeding, district court correctly determined that 12 USCS 1715u(a) did not provide mortgagor with private right of action to sue mortgagee for not complying with statute's loss mitigation requirements. Miller v GE Capital Mortg. Serv. (In re Miller) (2005, CA4 Va) 124 Fed Appx 152. Unpublished: Because: (1) 12 USCS 1715u(a) addresses only mortgagee's obligation to engage in loss mitigation; (2) focus of statute is on regulating mortgagees, not protecting mortgagors; and (3) statute does not mention nor explicitly confer right upon mortgagors, mortgagors do not have private right of action under statute. Miller v GE Capital Mortg. Serv. (In re Miller) (2005, CA4 Va) 124 Fed Appx 152. 2. Circumstances beyond control of mortgagor Mortgagor who was fired from her job for excessive tardiness and unauthorized overtime work was not eligible for HUD's assignment program, because mortgagor could not prove that her default on mortgage was caused by circumstances beyond her control. Pozzie v United States Dep't of Hous. & Urban Dev. (1995, CA7 Ill) 48 F3d 1026. HUD abused its discretion in denying defaulting mortgagor's petition seeking HUD's acceptance of assignment of mortgage under 12 USCS 1715u where refusal was based solely upon mortgagor's husband's amassing of substantial debt in mortgagor's name during first 4 months of couple's marriage, and where evidence indicated that default, which occurred after husband caused injuries to mortgagor that forced her to take sick leave from work and fall behind in mortgage payments, was caused by circumstances beyond mortgagor's control. Federal Nat'l Mortg. Asso. v Rathgens

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(1984, SD Ohio) 595 F Supp 552. Failure of HUD, in response to defaulting mortgagors' application to have mortgage assigned to HUD under 12 USCS 1715u, to consider injuries to one of mortgagors as possible cause of default merely because injuries occurred several years prior to default constitutes abuse of discretion, although no abuse lies in HUD's determination that neither increased debt service burdens resulting from mortgage refinancing and consumer loans nor tax increases levied 2 months after default had occurred entitled mortgagors to assignment. Butler v United States Dep't of Housing & Urban Dev. (1984, ED Pa) 595 F Supp 1041. HUD's rejection of mortgagor for mortgage assignment program was improper under 12 USCS 1715u, where rejection was premised upon mortgagor's self-employed status and conclusion that her financial difficulties were thus not beyond her control, because rejection was arbitrary and capricious; HUD regulations recognize underemployment as circumstance beyond mortgagor's control. Brown v Kemp (1989, WD Wash) 714 F Supp 445. HUD Secretary is prohibited from proceeding with foreclosure against subject property pending further submittal by disabled mortgagor of rehabilitation plan, where Secretary arbitrarily denied mortgagor acceptance into mortgage relief "assignment program" of 12 USCS 1715u(b), because mortgagor's inability to make timely payments due to unemployment and illness was caused by circumstances beyond his control and his recent efforts to obtain vocational rehabilitation assistance at least temporarily give him reasonable prospect of resuming full payments in future. Cronkhite v Kemp (1990, ED Wash) 741 F Supp 828. HUD Secretary is ordered to accept assignment of mortgagor's HUD-insured mortgage under 12 USCS 1715u, where both mortgagor and his former employer assert that mortgagor resigned when faced with being fired due to "unreconcilable expectation differences," because HUD's rejection of mortgage assignment application on basis that mortgagor's termination was voluntary and not beyond his control was arbitrary, capricious, and abuse of discretion. Edwards v Kemp (1992, SD Ohio) 795 F Supp 856. 3. Homeownership counseling Trustee's sale of HUD program participant's home is preliminarily enjoined, where mortgagor, disabled and suffering from inguinal hernia, will irretrievably lose home and his equity in it if sale takes place, because mortgagor states facially valid claim that HUD did not perform its statutory duty under 12 USCS 1715u(d) to provide homeownership counseling to mortgagor in need of help and potential relief through HUD "assignment" program. Cronkhite v Kemp (1989, ED Wash) 741 F Supp 822. 4. Regulations HUD's substantial failure to address effect of certain proposed regulations implementing Temporary Mortgage Assistance Program pursuant to 12 USCS 1715u on HUD's obligations under amended stipulation of settlement agreement to operate assignment program or provide equivalent mortgage foreclosure avoidance relief, precludes operation of TMA Program without reference to HUD's obligations under amended stipulation, since there are numerous features of proposed regulations that will unnecessarily render terms of foreclosure avoidance assistance more onerous for mortgagors or restrict availability of such assistance. Ferrell v Pierce (1983, ND Ill) 560 F Supp 1344, affd (1984, CA7 Ill) 743 F2d 454. Prudent lender standard adopted by HUD for administering foreclosure avoidance program set forth in 12 USCS 1715u is contrary to plain desires of Congress; "prudent lenders" service credit-worthy mortgagors and it is HUD's role under statute to insure risky mortgages of low-income mortgagors that "prudent investors" will not take, and to accept assignment of risky mortgages whose mortgagors are having temporary problems. Federal Nat'l Mortg. Asso. v Rathgens (1984, SD Ohio) 595 F Supp 552. Failure to comply with servicing regulations which are mandatory and have force and effect of law can be raised in

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foreclosure proceeding as affirmative defense; HUD rules requiring that no mortgagee commence foreclosure until arrangement of face to face interview with mortgagor or reasonable effort to arrange such meeting before 3 full monthly installments are unpaid set forth violations which may be raised as affirmative defense in foreclosure action. Bankers Life Co. v Denton (1983, 3d Dist) 120 Ill App 3d 576, 76 Ill Dec 64, 458 NE2d 203.