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April 13, 1981

Nancy GATTER et al.
Max CLELAND et al.

The opinion of the court was delivered by: GREEN


This class action suit filed pursuant to the Veteran's Benefit Act of 1958 (38 U.S.C. § 1801 et seq.) is before this Court on cross-motions for summary judgment. Plaintiffs, Nancy Gatter and Kenneth and Alma Marie Bernstein, are homeowners with mortgages guaranteed or insured by the Veteran's Administration (VA). Plaintiffs, on behalf of themselves and the class they represent, *fn1" are seeking declaratory and injunctive relief pursuant to 38 U.S.C. § 1801 et seq. the Fifth Amendment of the United States Constitution, and the Administrative Procedure Act (APA) 5 U.S.C. § 701 et seq. requiring VA implementation of a refunding program for their mortgages destined for foreclosure. Individually, plaintiffs request an order in the nature of a mandamus requiring the VA to accept assignments of their mortgage loans. For the reasons discussed hereafter, the Federal defendant's motion is granted. Under the Veteran's Home Loan Guaranty and Insurance Program, 38 U.S.C. § 1801 et seq., before suit on or foreclosure of a delinquent loan may occur, the lender must notify the VA of default, 38 U.S.C. § 1816(a) and the VA may within 30 days exercise its option to take an assignment of the mortgage to relieve the private lender of his risk of loss. If such assignment is accepted by the VA, the private mortgagee pursuant to VA Regulation 4318 (38 C.F.R. 36.4318) assigns the defaulted mortgage to the VA and the mortgagor veteran makes monthly payments to the VA based on a repayment plan.

 Plaintiffs, who defaulted on their VA guaranteed loans, contend that the Federal defendants have: 1) failed to implement any mortgage refunding program for VA guaranteed mortgages 2) failed to notify plaintiffs of their right to be considered for refunding of their mortgages and 3) failed to establish criteria for refunding which, if applied, would implement Congressional intent concerning refunding. Plaintiffs further assert that they are entitled to a hearing before an adverse decision is made by the VA.

 Plaintiff, Nancy Gatter and her husband William, a Marine Corp Veteran, purchased a home at 6712 Vandike Street, Philadelphia, Pa. on November 16, 1973 for $ 16,000. A Mortgage in this amount was obtained from the defendant, Fidelity Bond and Mortgage Co. The terms of the mortgage required the Gatters to pay $ 68.00 per month for 30 years. This loan from Fidelity was guaranteed by the VA because William Gatter's veteran status entitled him to this benefit under the Veterans Housing Program established by the Veteran's Benefit Act of 1958, 38 U.S.C. § 1801 et seq.

 Plaintiff and her husband met their monthly mortgage obligation until October 1977 when William Gatter's financial status deteriorated rendering him unable to make further payments.

 On or about December 27, 1977, Donald E. Schneider, Fidelity's servicing agent completed VA Form 26-6850 (Notice of Default) and sent it to the VA, thus giving notice of Gatter's default for the months of October, November, and December 1977.

 On or about January 5, 1978, Schneider completed VA Form 26-6851 (Notice of Intent to Foreclose) and sent it to the VA, giving notice of the mortgagee's intention to foreclose.

 During this time, the Gatters experienced marital difficulties that resulted in William Gatter's leaving the family residence in March 1978, and causing the mortgage account to become further delinquent.

 On April 17, 1978 Fidelity filed a complaint in mortgage foreclosure against the Gatters. This suit is still pending.

 Both before and after suit in mortgage foreclosure, the Gatters discussed the possibility of foreclosure with VA personnel. Plaintiff alleges that neither she or her counsel was ever informed of the existence of the refunding program, while defendants claim that refunding the Gatters' mortgage was considered. Plaintiff claims that the only assistance offered by VA personnel was the advice to secure funds to cure the mortgage default.

 The facts regarding plaintiff Bernsteins' VA guaranteed loan are similar to the Gatters. The Bernsteins purchased a home in Philadelphia in September 1977 for approximately $ 29,000. Lomas Nettleton financed this purchase and took a VA guaranteed mortgage. Under the terms of the mortgage, Bernstein was to pay $ 273.00 per month for 30 years. In June 1978, Kenneth Bernstein lost his job which reduced his income from $ 17,000 to $ 7,500 per year. Subsequently, in September 1978, Bernstein developed lung cancer forcing him not to work and to depend on welfare payments of $ 552.00 per month. The Bernsteins asked Lomas to accept partial payments until Kenneth Bernstein was awarded his Social Security disability benefits, but the company refused to accept this repayment plan. On March 6, 1978 Lomas & Nettleton filed suit to foreclose the mortgage and this suit is still pending. The Bernsteins argue that the VA never informed them of the availability of the refunding program.

 The issue of whether the VA's non-implementation of a mortgage refunding program is judicially reviewable is controlled by § 10 of the Administrative Procedure Act (APA). 5 U.S.C. § 702 (1976) mandates that judicial review be available to those persons adversely affected or aggrieved by agency action. However, 5 U.S.C. § 701(a) (1976) provides two exceptions to judicial review of agency action: (1) statutes preclude judicial review (2) or where agency action is committed to agency discretion by law.

 Because § 1816(a) does not specifically preclude judicial review, we must determine whether agency action regarding the non-implementation of a refunding program falls within the committed to agency discretion exception. The Supreme Court has warned that it will not "lightly interpret a statute to confer unreviewable power on an administrative agency" for the "ultimate analysis is always one of Congress' intent." Southern Ry. Co. v. Seaboard Allied Milling Corp., 442 U.S. 444, 454, 99 S. Ct. 2388, 2394, 60 L. Ed. 2d 1017 (1979). Congress' intent to restrict access to judicial review must appear from "clear and convincing evidence." Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967). The committed to agency discretion exception is a narrow one and the legislative history of the APA indicates that it is applicable in those rare instances when "statutes are ...

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