B-85193, MAY 10, 1949, 28 COMP. GEN. 638

B-85193: May 10, 1949

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BY 12 U.S.C. 1710 (G) AND 1747 (G) IN CONNECTION WITH THE COLLECTION OF CLAIMS ARISING OUT OF INSURED MORTGAGE TRANSACTIONS WHICH HAVE BEEN ASSIGNED TO THE ADMINISTRATOR AS A CONDITION PRECEDENT TO THE ISSUANCE OF DEBENTURES TO THE MORTGAGES PURSUANT TO AN INSURANCE CONTRACT MAY BE EXERCISED WITH RESPECT TO ANY AND ALL CLAIMS AGAINST ORIGINAL BORROWERS. IRRESPECTIVE OF THE TYPE OF INSURANCE OPERATIONS UNDER WHICH THE PROPERTY WAS ACQUIRED. NO COMPROMISE MAY BE EFFECTED WHERE THE ASSIGNMENT COVERED ONLY A CLAIM FOR RENTALS UNPAID WHEN TITLE PASSED AND WHERE OCCUPANCY THEREAFTER WAS BY ARRANGEMENT BETWEEN THE TENANT AND THE ADMINISTRATOR. 1949: REFERENCE IS MADE TO LETTER DATED MARCH 29. SETTING UP A FACTUAL SITUATION AS FOLLOWS: * * * A LOAN IS INSURED UNDER THE PROVISIONS OF SECTION 203 OF THE NATIONAL HOUSING ACT (12 U.S.C.A. 1709).

B-85193, MAY 10, 1949, 28 COMP. GEN. 638

COMPROMISES - CLAIMS ARISING OUT OF INSURED MORTGAGE TRANSACTIONS THE COMPROMISE AUTHORITY VESTED IN THE ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, BY 12 U.S.C. 1710 (G) AND 1747 (G) IN CONNECTION WITH THE COLLECTION OF CLAIMS ARISING OUT OF INSURED MORTGAGE TRANSACTIONS WHICH HAVE BEEN ASSIGNED TO THE ADMINISTRATOR AS A CONDITION PRECEDENT TO THE ISSUANCE OF DEBENTURES TO THE MORTGAGES PURSUANT TO AN INSURANCE CONTRACT MAY BE EXERCISED WITH RESPECT TO ANY AND ALL CLAIMS AGAINST ORIGINAL BORROWERS, THEIR SUCCESSORS, AND ASSIGNS, OR AGAINST TENANTS OF THE MORTGAGEE, IRRESPECTIVE OF THE TYPE OF INSURANCE OPERATIONS UNDER WHICH THE PROPERTY WAS ACQUIRED. WHERE A MORTGAGEE OF FORECLOSED INSURED PROPERTY ASSIGNED TO THE ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, ALL CLAIMS ARISING UNDER A LEASE FOR A TERM EXTENDING BEYOND THE DATE TITLE PASSED TO THE ADMINISTRATOR, ALL CLAIMS AGAINST THE TENANT MAY BE COMPROMISED IN ACCORDANCE WITH THE PROVISIONS OF THE NATIONAL HOUSING ACT, AS AMENDED (12 U.S.C. 1701, ET SEQ.), INCLUDING A CLAIM FOR UNPAID RENTAL ACCRUING FOR A PERIOD AFTER THE PASSAGE OF TITLE; BUT NO COMPROMISE MAY BE EFFECTED WHERE THE ASSIGNMENT COVERED ONLY A CLAIM FOR RENTALS UNPAID WHEN TITLE PASSED AND WHERE OCCUPANCY THEREAFTER WAS BY ARRANGEMENT BETWEEN THE TENANT AND THE ADMINISTRATOR.

COMPTROLLER GENERAL WARREN TO THE ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, MAY 10, 1949:

REFERENCE IS MADE TO LETTER DATED MARCH 29, 1949, ADDRESSED TO THE COMPTROLLER GENERAL OF THE UNITED STATES BY THE COMMISSIONER, FEDERAL HOUSING ADMINISTRATION, SETTING UP A FACTUAL SITUATION AS FOLLOWS:

* * * A LOAN IS INSURED UNDER THE PROVISIONS OF SECTION 203 OF THE NATIONAL HOUSING ACT (12 U.S.C.A. 1709), AND UPON THE MORTGAGOR'S DEFAULT, THE MORTGAGE IS FORECLOSED; THE MORTGAGEE ACQUIRING TITLE TO THE PROPERTY AT THE FORECLOSURE SALE. THE MORTGAGEE PROCEEDS IMMEDIATELY TO RENT THE PROPERTY TO A TENANT FOR A RENTAL CONSIDERATION OF $50.00 PER MONTH, AND A CLAIM IS FILED WITH THE FEDERAL HOUSING ADMINISTRATION FOR DEBENTURES AND A CERTIFICATE OF CLAIM IN ACCORDANCE WITH THE PROVISIONS OF THE CONTRACT OF INSURANCE. UPON EXAMINATION OF THE CLAIM AND THE TITLE EVIDENCE PRESENTED BY THE MORTGAGEE, THE COMMISSIONER FIXES AN ACCEPTANCE DATE FOR CONVEYANCE OF THE PROPERTY TO HIM AND AGREES TO ACCEPT THE PROPERTY OCCUPIED BY THE TENANT. ON THE ACCEPTANCE DATE, THE RENTAL PAYMENTS ARE IN ARREARS FOR A PERIOD OF TWO MONTHS, AND THE MORTGAGEE ASSIGNS TO THE COMMISSIONER, IN ADDITION TO THE CONVEYANCE OF THE PROPERTY TO HIM, THE CLAIM AGAINST THE TENANT FOR DELINQUENT RENTAL PAYMENTS IN THE AMOUNT OF $100.00. THE ASSIGNMENT TO THE COMMISSIONER OF ALL SUCH CLAIMS IS REQUIRED UNDER THE EXPRESS PROVISIONS OF SECTION 204 OF THE ACT (12 U.S.C.A. 1710), BUT THE AMOUNT OF DEBENTURES ISSUED TO THE MORTGAGEE IN ACCORDANCE WITH THE PROVISIONS THEREOF IS FIXED WITHOUT REGARD TO THE EXISTENCE OF ANY SUCH CLAIMS, THE COMMISSIONER'S LIABILITY BEING THE SAME UNDER THE CIRCUMSTANCES DESCRIBED HEREIN AS IF THE PROPERTY HAD NOT BEEN RENTED BY THE MORTGAGEE. AFTER ACQUISITION OF THE PROPERTY BY THE COMMISSIONER, THE TENANT FAILS TO PAY THE RENT FOR AN ADDITIONAL PERIOD OF TWO MONTHS AND HE IS FINALLY EVICTED FROM THE PROPERTY, OWING DELINQUENT RENTAL PAYMENTS AGGREGATING $200.00. THE COLLECTION EFFORTS OF THE COMMISSIONER CONTINUE AFTER THE TENANT'S EVICTION, RESULTING IN A COMPROMISE OFFER OF THE DEBTOR TO PAY THE SUM OF $175.00 IN FULL SETTLEMENT OF THE ACCOUNT.

THEREAFTER, THE LETTER QUOTES A PORTION OF SECTION 204 (G) OF THE NATIONAL HOUSING ACT, 12 U.S.C. 1710 (G), AND MAKES REFERENCE TO SECTIONS 207, 604, AND 708 OF THE ACT, 12 U.S.C. 1713, 1739, AND 1747, RESPECTIVELY, AS WELL AS TO THE AUTHORITY GIVEN THE ADMINISTRATOR IN SECTION 204 TO CONSENT TO THE RELEASE OF A MORTGAGOR FROM LIABILITY UNDER THE CREDIT INSTRUMENT SECURED THEREBY, AND TO CONSENT TO THE RELEASE OF A PORTION OF THE MORTGAGED PROPERTY FROM THE LIEN OF THE MORTGAGE.

THE LETTER CONCLUDES:

YOUR ADVICE IS REQUESTED AS TO WHETHER EXCEPTION WOULD BE TAKEN BY YOUR OFFICE TO THE RELEASE OF AN OBLIGOR BY THE COMMISSIONER OF THIS ADMINISTRATION PURSUANT TO THE PROVISIONS OF THE NATIONAL HOUSING ACT REFERRED TO ABOVE, ON THE BASIS OF A SETTLEMENT REPRESENTING LESS THAN PAYMENT IN FULL OF A DELINQUENT RENTAL ACCOUNT IN A CASE WHERE SUCH SETTLEMENT IS ADMINISTRATIVELY DETERMINED TO BE IN THE BEST INTEREST OF THE UNITED STATES, AND WHERE THE OBLIGATION EITHER (1) WAS ACQUIRED BY THE COMMISSIONER IN CONNECTION WITH A MORTGAGEE'S CLAIM FOR THE BENEFITS UNDER THE INSURANCE CONTRACT, OR (2) AROSE FROM THE COMMISSIONER'S RENTAL OF PROPERTY AFTER SUCH PROPERTY WAS CONVEYED TO HIM IN CONNECTION WITH A MORTGAGEE'S CLAIM FOR THE BENEFITS UNDER THE INSURANCE CONTRACT.

IN THIS CONNECTION, YOUR ATTENTION IS INVITED TO OFFICE DECISION OF JUNE 22, 1948, B-55970, B-56924, WHEREIN YOU WERE ADVISED THAT THERE IS PERCEIVED NO PROPER BASIS FOR REGARDING THE HEADS OF THE CONSTITUENT AGENCIES OF THE HOUSING AND HOME FINANCE AGENCY AS HEADS OF EXECUTIVE DEPARTMENTS OR ESTABLISHMENTS WITHIN THE MEANING OF SECTION 8 OF THE ACT OF JULY 31, 1894, 31 U.S.C. 74, SO AS TO AUTHORIZE THE DIRECT SUBMISSION BY THEM OF REQUESTS FOR DECISIONS BY THE COMPTROLLER GENERAL. HOWEVER, ASSUMING THAT IT WAS THROUGH MERE OVERSIGHT THAT THE ABOVE REFERRED TO LETTER WAS PREPARED FOR THE SIGNATURE OF THE COMMISSION, FEDERAL HOUSING ADMINISTRATION, RATHER THAN FOR YOUR SIGNATURE AS ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, AND THAT THE QUESTIONS PRESENTED CONCERN THE AUTHORITY OF THE ADMINISTRATOR, OR HIS PROPER DELEGEE, THE LETTER WILL BE REGARDED AS IF IT WERE A REQUEST BY YOU FOR DECISION ON THE QUESTIONS INVOLVED AND WILL BE ANSWERED ACCORDINGLY.

IT IS FUNDAMENTAL THAT THE POWER OF THE HEAD OF AN ADMINISTRATIVE AGENCY TO COMPROMISE CLAIMS IN FAVOR OF THE GOVERNMENT FOR LIQUIDATED AMOUNTS IS LIMITED TO THOSE CASES SPECIFICALLY SET OUT IN THE PERTINENT STATUTE--- WITHOUT WHICH NO SUCH POWER WOULD EXIST--- OR THOSE CASES WHICH ARE INCLUDED THEREIN BY NECESSARY IMPLICATION. WHILE, AS PHRASED, THE QUESTIONS ASKED SEEM TO GROUP INTO ONE CATEGORY ALL ACQUIRED PROPERTIES, IRRESPECTIVE OF THE VARIED TYPES OF INSURANCE OPERATIONS UNDER THE ACT WHICH GAVE RISE TO THEIR ACQUISITION, IT IS TO BE NOTED THAT THE TERMS OF THE STATUTES DEFINING THE COMPROMISE POWER OF THE ADMINISTRATOR VARY SOMEWHAT DEPENDING UPON THE TYPE OF INSURANCE OPERATION INVOLVED. THUS, AS TO MORTGAGE INSURANCE, 12 U.S.C. 1710 (G) RECITES, IN PART,"AND NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE ADMINISTRATOR SHALL ALSO HAVE POWER TO PURSUE TO FINAL COLLECTION, BY WAY OF COMPROMISE OR OTHERWISE, ALL CLAIMS AGAINST MORTGAGORS ASSIGNED BY MORTGAGEES TO THE ADMINISTRATOR AS PROVIDED IN THIS SECTION.' PARAGRAPH (A) OF SAID SECTION 1710 REQUIRES THAT THERE BE ASSIGNED TO THE ADMINISTRATOR, AS A CONDITION PRECEDENT TO THE ISSUANCE OF DEBENTURES TO THE MORTGAGEE PURSUANT TO THE INSURANCE CONTRACT,"ALL CLAIMS OF THE MORTGAGEE AGAINST THE MORTGAGOR OR OTHERS, ARISING OUT OF THE MORTGAGE TRANSACTION OR FORECLOSURE PROCEEDINGS, EXCEPT SUCH CLAIMS AS MAY HAVE BEEN RELEASED WITH THE CONSENT OF THE ADMINISTRATOR.' 12 U.S.C. 1739 (A), RESPECTING WAR HOUSING INSURANCE, REQUIRES ASSIGNMENTS TO THE ADMINISTRATOR OF CLAIMS AGAINST THE MORTGAGOR OR OTHERS, IN ALMOST IDENTICAL LANGUAGE, AND THE ADMINISTRATOR'S AUTHORITY TO COMPROMISE IS LIKEWISE EXPRESSED IN SECTION 1739 (G), AS IF LIMITED TO CLAIMS AGAINST MORTGAGORS. BUT 12 U.S.C. 1713 (G), DEALING WITH RENTAL HOUSING INSURANCE, REQUIRES THE ASSIGNMENT TO THE ADMINISTRATOR OF "/2) ALL CLAIMS OF THE MORTGAGEE AGAINST THE MORTGAGOR OR OTHERS, ARISING OUT OF THE MORTGAGE TRANSACTIONS," WHILE SECTION 1713 (1) GIVES THE ADMINISTRATOR POWER TO "PURSUE TO FINAL COLLECTION BY WAY OF COMPROMISE OR OTHERWISE ALL CLAIMS ASSIGNED AND TRANSFERRED TO HIM IN CONNECTION WITH THE ASSIGNMENT, TRANSFER, AND DELIVERY PROVIDED FOR IN THIS SECTION.' SIMILARLY, 12 U.S.C. 174G (H) AUTHORIZES THE ADMINISTRATOR TO COMPROMISE "ALL CLAIMS ACQUIRED BY, OR ASSIGNED OR TRANSFERRED TO, HIM IN CONNECTION WITH THE ACQUISITION OR DISPOSAL OF ANY PROJECT PURSUANT TO THIS SUBCHAPTER.'

THE TERM "MORTGAGOR," AS USED IN THE ACT WITH REFERENCE TO MORTGAGE INSURANCE AND WAR HOUSING INSURANCE,"INCLUDES THE ORIGINAL BORROWER UNDER A MORTGAGE AND HIS SUCCESSORS AND ASSIGNS.' (12 U.S.C. 1707 (B), 1736 (B).) IF GIVEN THIS LIMITED MEANING AS USED IN SECTION 1710 (G) OR IN SECTION 1739 (G), ONLY CLAIMS AGAINST ORIGINAL BORROWERS AND THEIR SUCCESSORS AND ASSIGNS, RECEIVED BY ASSIGNMENT FROM THE MORTGAGEE, COULD BE SETTLED BY COMPROMISE, WHILE CLAIMS AGAINST TENANTS OF THE MORTGAGEE COULD NOT BE SO SETTLED, EVEN THOUGH RECEIVED IN THE SAME TRANSACTION, AND UNDER THE SAME REQUIREMENT. NO REASON IS PERCEIVED WHY THE CONGRESS MIGHT HAVE INTENDED TO DRAW SUCH A DISTINCTION. ACCORDINGLY, IT IS THE VIEW OF THIS OFFICE THAT THE OMISSION OF THE WORDS "AND THERS" AFTER THE WORD "MORTGAGORS" AS USED IN THE LANGUAGE DEFINING THE AUTHORITY OF THE ADMINISTRATOR TO COMPROMISE IN SECTION 1710 (G) AND 1747 (G) IS NOT PARTICULARLY SIGNIFICANT AND THAT, AS TO ACQUIRED PROPERTY, IRRESPECTIVE OF THE TYPE OF INSURANCE OPERATIONS UNDER WHICH ACQUIRED, THE INTENT OF CONGRESS WAS TO GIVE TO THE ADMINISTRATOR THE POWER TO PURSUE TO FINAL COLLECTION, BY WAY OF COMPROMISE OR OTHERWISE, ANY AND ALL CLAIMS PAYABLE TO OTHERS WHICH INURE TO THE BENEFIT OF THE ADMINISTRATOR BY VIRTUE OF AN ASSIGNMENT TAKEN IN CONNECTION WITH THE ISSUANCE OF DEBENTURES UNDER THE INSURANCE CONTRACT.

BUT NOWHERE IN THE ACT IS THERE EXHIBITED A CONGRESSIONAL INTENT TO AUTHORIZE THE ADMINISTRATOR GENERALLY TO COMPROMISE CLAIMS FOR RENTALS DUE THE GOVERNMENT FOR THE USE OF ACQUIRED PROPERTY, UNDER LEASES OR OTHER ARRANGEMENTS ENTERED INTO BETWEEN TENANTS AND THE ADMINISTRATOR, PURSUANT TO HIS AUTHORITY TO DEAL WITH, RENT, SELL, ETC., SUCH PROPERTY. THUS, REFERRING BACK TO THE FACTUAL SITUATION PRESENTED AS QUOTED ABOVE, IF THE ASSIGNMENT TO THE ADMINISTRATOR COVERS ALL CLAIMS ARISING UNDER THE AGREEMENT OR CONTRACT BETWEEN THE MORTGAGEE AND THE TENANT (AS WHERE THERE IS A LEASE FOR A TERM EXTENDING BEYOND THE DATE OF PASSAGE OF TITLE TO THE ADMINISTRATOR, WHICH LEASE AND THE RIGHT TO RENTALS PROVIDED THEREIN ARE ASSIGNED) THEN ALL CLAIMS AGAINST THE TENANT UNDER THE CONTRACT MAY BE COMPROMISED, INCLUDING THE CLAIM FOR UNPAID RENTALS ACCRUING FOR THE PERIOD SUBSEQUENT TO THE PASSAGE OF TITLE. BUT IF THE ASSIGNMENT COVERS ONLY THE CLAIM FOR RENTALS UNPAID AT THE TIME TITLE PASSES, AND THE OCCUPANCY THEREAFTER WAS BY AN ARRANGEMENT BETWEEN THE TENANT AND THE ADMINISTRATOR, THEN THE ADMINISTRATOR'S CLAIM FOR UNPAID RENTALS IS ONE IN HIS OWN RIGHT, NOT ONE ACQUIRED BY ASSIGNMENT, AND, SINCE NO GOVERNMENT AGENT MAY GIVE AWAY A VESTED CONTRACT RIGHT, THIS OFFICE WOULD BE REQUIRED TO OBJECT TO A SETTLEMENT OF SUCH A CLAIM FOR LESS THAN THE FULL AMOUNT DUE.