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January 24, 1984


The opinion of the court was delivered by: NEWCOMER

 Newcomer, J.

 In these actions the United States, on behalf of the Secretary of Housing and Urban Development ("HUD"), seeks orders of foreclosure on federally insured mortgages and security agreements because of non-payment by defendants (collectively, for the sake of convenience, "Gross Partners"). *fn1" Gross Partners admit non-payment but have asserted several affirmative defenses and a counterclaim to HUD's actions. The case is now before the court on plaintiff's motions for summary judgment. For the following reasons, plaintiff's motions are GRANTED.

 The property at issue, Regency Towers I and II, is a rental housing project operated by Gross Partners. In 1971, Gross Partners executed mortgage notes on the two structures, and subsequently executed additional security agreements related to financing the operation. All of these instruments were insured by HUD. In 1978 severe structural problems became apparent. Gross Partners began repair, and litigation with the builder ensued. Since June, 1978, Gross Partners have not kept current the monthly payment obligations. The security instruments were assigned to HUD by the lending institutions in 1979, and since then HUD has assumed financial responsibility for the payments and taxes. Also during this time HUD and Gross Partners have been discussing workout agreements as an alternative to foreclosure. No formal agreement has ever been reached.

 HUD filed its claim in March 1983, seeking an order decreeing foreclosure on the security agreements and determining the liability of Gross Partners. HUD also seeks an order granting HUD or a designated receiver the right to immediate possession and management of the premises. Gross Partners answer that although they have failed to make payments, HUD agreed not to foreclose while defendants worked to remedy the structural problem. They also contend that a workout agreement was reached, albeit not a formal one. Therefore, Gross Partners contend this action is inappropriate due to estoppel or waiver and constitutes an abuse of discretion, a violation of federal regulations, and deprivation of property without due process of law.

 Gross Partners' initial response to plaintiff's motions for summary judgment was simply that they had not had enough time to complete discovery and therefore could not respond adequately to plaintiff's motions. Since then additional discovery has taken place and Gross Partners have filed a lengthy response with voluminous attachments. The thrust of all this paper is that summary judgment is barred by Gross Partners' assertion of the defenses listed above; however, none of the arguments creates an issue of material fact or otherwise precludes summary judgment in favor of plaintiff.

 Gross Partners first raise the defense that HUD's foreclosure action is arbitrary and capricious. HUD's right to foreclose is clearly established in federal statute, 12 U.S.C. § 1713, as well as by the mortgage instruments themselves. Several federal court decisions have suggested that the government's right to foreclose in these circumstances is virtually unequivocal. See United States v. Golden Acres, 520 F. Supp. 1073, 1075 (D.Del. 1981); United States v. Stadium Apartments, Inc., 425 F.2d 358 (9th Cir. 1970); United States v. Sylacauga Properties, Inc., 323 F.2d 487, 491 (5th Cir. 1963); United States v. Woodland Terrace, Inc., 293 F.2d 505, 507 (4th Cir.), cert. denied, 368 U.S. 940, 82 S. Ct. 381, 7 L. Ed. 2d 338 (1961). Nevertheless, the government's decision to foreclose must not amount to an abuse of discretion.

 The standard to be applied in judicial review of agency decisions of this sort is a narrow one. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 28 L. Ed. 2d 136, 153, 91 S. Ct. 814 (1971). The court is directed to look first at whether the administrative agency acted within its statutory authority. It must then determine whether the agency's exercise of its discretion was based on consideration of all relevant factors, and whether there was clear error of judgment. The court is cautioned not to substitute its judgment for that of the agency. Id.

 Here, the general authority to foreclose is found in 12 U.S.C. § 1713. Although the statute contains no indication of the standards or factors which should guide HUD in making foreclosure decisions, the most likely source is the National Housing Act. See 42 U.S.C. § 1441. See also, United States v. Winthrop Towers, 628 F.2d 1028, 1034 (7th Cir. 1980); United States v. Golden Acres, Inc., 520 F. Supp. 1073 (D.Del. 1981).

 The National Housing Act gives HUD broad discretionary authority. Shannon v. United States Department of Housing and Urban Development, 436 F.2d 809 (3rd Cir. 1970). Although the Third Circuit has not spoken on this, other circuits have held that HUD may weigh heavily the need to minimize losses to the insurance fund in any decision to exercise its discretion. A primary concern is protection of the security of federal investment in housing. United States v. Winthrop Towers, 628 F.2d at 1036; United States v. Victory Highway Village, Inc., 662 F.2d 488, 495 (8th Cir. 1981); Federal Property Management Corp. v. Harris, 603 F.2d 1226, 1230 (6th Cir. 1979); United States v. Sylacauga Properties, 323 F.2d 487 (5th Cir. 1963). The underlying concept is that the National Housing Act was intended primarily to benefit tenants as opposed to commercial developers.

 Gross Partners devote many pages to establishing that HUD officials knew of the structural defects that plagued the apartment project. They make much of the fact that under HUD's stated policy the government is "more likely to choose foreclosure" if the owner has mismanaged its project than if the project has gone into default because of conditions beyond the owner's control. This policy, a mere statement of preference or likelihood, fails to create a material issue as to whether the government acted arbitrarily or capriciously.

 Gross Partners also contend that HUD proposed a workout agreement that Gross Partners accepted and that the government acted arbitrarily in seeking foreclosure despite the agreement. The underlying undisputed facts are as follows.

 In July, 1980 HUD proposed a workout agreement under which Gross Partners would keep the tax escrow current, reimburse HUD over a three-year period for some $370,000 in delinquent tax escrow per building, and immediately remit $10,000 to the government representing interest on advances made by HUD for payment of taxes. One year later, having received no response, HUD informed Gross Partners that foreclosure would be recommended if the workout agreement was not signed and returned immediately. Further negotiations ensued and on August 3, 1981 James Harbison, a local HUD official, sent Gross Partners a sample workout agreement from a HUD handbook. Mr. Harbison advised Gross Partners that a workout proposal on their part should incorporate the points covered in the sample agreement. The sample workout agreement contained no suggested dollar figures. It was largely just a copy of HUD's July, 1980 workout agreement without any designated payment schedule.

 On October 22, 1981 Gross Partners submitted its workout proposal. The proposed payment term was "at least $5000.00" per month per building. This was merely enough to keep the taxes on the building current and allowed for no reduction of delinquent taxes or interest accrued on HUD advances. Not surprisingly, HUD rejected the workout proposal. In its January 14, 1982 letter rejecting Gross Partners' October 22 proposal, the HUD Philadelphia area office set forth nine points that needed to be addressed. Gross Partners' argument hinges in large part on whether an adequate response to those nine points would constitute ...

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