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December 5, 1985

THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; SAMUEL R. PIERCE, JR., Secretary of the United States Department of Housing and Urban Development; JOSEPH RUSSELL, Chief, Loan Management Branch, Philadelphia Area Office; and SOUTHEAST MORTGAGE COMPANY

The opinion of the court was delivered by: LUONGO

 Plaintiffs, William and Colette Rickards, seek judicial review of the decision of the United States Department of Housing and Urban Development ("HUD") rejecting their application for an assignment of their mortgage. The parties have filed cross-motions for summary judgment. For the reasons which follow, I will remand the matter to HUD for reconsideration.

 In April 1983, plaintiffs purchased a home with a loan secured by a mortgage which was assigned to mortgagee Southeast Mortgage Company in May 1983. The mortgage was insured by HUD pursuant to § 221(d)(2) of the National Housing Act. See 12 U.S.C. § 1709. After falling three months behind on their payments, plaintiffs were notified by Southeast Mortgage Company on June 12, 1984, that it intended to foreclose on the mortgage.

 Pursuant to § 1715(u) of Title 12 of the United States Code, the Secretary of HUD is authorized to accept an assignment of the loan and security on any HUD-insured mortgage for the purpose of avoiding foreclosure. See 12 U.S.C. § 1715(u), 24 C.F.R. §§ 203.650-60. The request for assignment may come from the mortgagee or mortgagor. 24 C.F.R. § 203.652. In this instance, Southeast Mortgage Company did not request the assignment because it determined that the plaintiffs were not eligible. *fn1"

 HUD may only accept assignment of a mortgage when six conditions are satisfied. 24 C.F.R. § 203.650(a). The operative requirement for the purposes of this action is that the default must have been "caused by circumstances beyond the mortgagor's control which render the mortgagor unable to correct the delinquency within a reasonable time or make full mortgage payments." 24 C.F.R. § 203.650(a)(5). Plaintiffs applied to HUD for an assignment of their mortgage. HUD rejected the application. The Rickards then commenced the instant action for review of HUD's decision, contending that HUD's determination was arbitrary, capricious, and an abuse of discretion.

 In reviewing HUD's decision, my role is limited to determining whether the agency's action was arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A); Anderson v. United States Dept. of Housing and Urban Development, 701 F.2d 112 (10th Cir. 1983). The reviewing court must "consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment . . . but may not substitute its judgment for that of the agency." Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971).

 In its initial rejection of plaintiffs' request for an assignment, HUD stated that it could not accept the assignment because it had determined that the default was not caused by circumstances beyond the plaintiffs' control, and further, that there was no reasonable prospect that the plaintiffs would be able to resume full mortgage payments after a temporary period of reduced or suspended payments. Pursuant to plaintiffs' request, an appeal conference was held at the HUD office on November 20, 1984. In its letter of January 17, 1985, notifying plaintiffs of its final decision to reject their application, HUD stated that the loss of income resulting from Mr. Rickards' job dismissal was the cause of the default, and that plaintiffs had failed to demonstrate that this was a circumstance beyond their control.

 The facts in the administrative record are as follows: William Rickards was dismissed from his job on February 20, 1984. His employer stated that he was fired for leaving work without permission and failing to punch his time card as required. Rickards applied for unemployment benefits which were denied by the referee of the Pennsylvania Unemployment Compensation Board of Review on the ground that Rickards had been dismissed for "willful misconduct." The Pennsylvania Unemployment referee found that Rickards had earlier been warned regarding violations of work rules and knew or should have known that his actions would result in termination. Section 402(c) of the Pennsylvania Unemployment Law provides that a claimant who is dismissed for "willful misconduct," i.e., actions of an intentional or deliberate nature which violate the employer's rules or standards of conduct, is ineligible for benefits. 43 P.S. § 802(e) (1964).

 Plaintiffs assert that HUD impermissibly accepted the referee's decision as dispositive of whether termination of employment was a circumstance beyond Mr. Rickards' control. *fn2" But the administrative record also contains a statement by Mr. Rickards' employer that Rickards was dismissed for leaving work without permission and for not punching out his time card as required. The determination of the Unemployment Compensation Board of Review was, accordingly, not the sole basis for HUD's finding that Mr. Rickards' termination was not a circumstance beyond his control and, in any event, it was proper for the agency to consider the referee's decision, along with Rickards' failure to appeal, as evidence that the circumstances of termination were within his control.

  There was also evidence in the administrative record that on March 11, 1983, William Rickards was involved in an altercation at about 1:00 a.m. while driving home from work on Route 252 near Newtown, Pennsylvania. According to Rickards, two youths ran his car into the curb and physically threatened him. While attempting to defend himself, Rickards allegedly stabbed one of the men in the stomach. *fn3" Rickards was arrested on June 23, 1983 on charges arising out of this incident. A jury convicted Rickards of assault in November 1983. Rickards incurred $4,576.30 in legal fees and costs in his defense. Thereafter, the trial judge granted Rickards a new trial. At the second trial, Mr. Rickards entered into a plea bargain and received a sentence of three years' probation for pleading guilty to the assault charge.

 Plaintiffs contend that HUD failed to consider the altercation and subsequent arrest and conviction as a cause of his job termination. At the HUD conference held on November 20, 1984, Mr. Rickards expressed the belief that his dismissal came about because of his arrest and conviction for assault. On the initial HUD application, Rickards made no such assertion. *fn4" Plaintiffs produced no evidence to indicate that Mr. Rickards' arrest and conviction caused the job loss. *fn5" It could not have been due to time lost in connection with the proceedings, because the record indicates that Rickards missed only six days of work between the date of the incident and the date of his trial, and he did not miss any time in the months immediately preceding, during, or following his trial.

 In their brief, plaintiffs assert that as a result of the stress of Mr. Rickards' trial, he suffered "a maladaptive reaction with impaired occupational functioning." Plaintiffs assert that this ailment was a cause of Mr. Rickards' job termination, and was a circumstance beyond his control. Although plaintiffs claim that they raised this issue at the appeal conference and that "it [was] not reflected in the notes taken by HUD," it appears that this issue was raised for the first time in their brief filed in this court. The contention therefore merits no consideration, and further, there is no support for it in the record.

 Plaintiffs also assert that HUD failed to consider Mr. Rickards' arrest and conviction as a possible cause of the default on the mortgage. In their initial HUD application the plaintiffs stated that "high legal fee expenditure depleted all cash reserves." Plaintiffs produced a statement dated November 13, 1984, showing that $4,050.00 in legal fees had been paid to that date, with an unpaid balance of $326.30. The statement does not reflect when the payments were made. A bank statement dated November 12, 1984, showing a zero savings account balance, was also submitted by the plaintiffs, but no detail was offered to show expenditures from that savings account for legal expenses or otherwise.

 HUD determined that Mr. Rickards' job termination was the cause of the default. Rickards was dismissed on February 20, 1984. The plaintiffs made mortgage payments on March 5, 1984, March 30, 1984, and on May 31, 1984. This last payment, made possible by a gift from Rickards' church, was applied to March 1984. Although the record indicates that the plaintiffs had frequently been late in making mortgage payments, they had never before been three months behind in their ...

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