B-127167, APR. 10, 1956

B-127167, APR. 10, 1956

TO MR. LESTER H. THOMPSON, AUTHORIZED CERTIFYING OFFICER, FEDERAL HOUSING ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 28, 1956, TRANSMITTING A VOUCHER IN FAVOR OF THE FIRST NATIONAL BANK OF WEST MONROE, WEST MONROE, LOUISIANA, FOR $651.86 AS REIMBURSEMENT OF LOSS SUSTAINED BY REASON OF DEFAULT IN PAYMENT OF A NOTE EXECUTED IN THE NAME OF BEULAH SNOWDEN, NORMAN MARTIN AND JOHN SNOWDEN. THE BANK PURCHASED THE NOTE FROM J. C. STEELE LUMBER COMPANY, INCORPORATED AND REPORTED IT FOR INSURANCE UNDER ITS CONTRACT WITH THE FEDERAL HOUSING ADMINISTRATION UNDER TITLE I OF THE NATIONAL HOUSING ACT. YOU REQUEST ADVICE WHETHER THE VOUCHER PROPERLY MAY BE CERTIFIED FOR PAYMENT.

THE LOAN WAS MADE ON THE APPLICATION OF BEULAH SNOWDEN FOR IMPROVEMENTS MADE BY THE LUMBER COMPANY ON PROPERTY OWNED AND INHERITED BY HER, BY NORMAN MARTIN AND OTHERS. THE APPLICATION AND THE NOTE TOGETHER WITH OTHER DOCUMENTS ARE SIGNED BY THE ABOVE NAMED OWNERS AND THESE DOCUMENTS ALSO BEAR THE PURPORTED SIGNATURE OF BEULAH SNOWDEN'S HUSBAND, JOHN SNOWDEN, WHO LIVED WITH HIS WIFE AT ANOTHER ADDRESS. IT SUBSEQUENTLY DEVELOPED, HOWEVER, THAT BEULAH SNOWDEN HAD SIGNED HER HUSBAND'S NAME TO THE ABOVE DOCUMENTS WITHOUT HIS AUTHORITY. FOLLOWING DEFAULT IN PAYMENTS ON THE NOTE THE BANK OBTAINED A JUDGMENT AGAINST BEULAH AND JOHN SNOWDEN, STATED TO BE THE ELIGIBLE BORROWERS UNDER YOUR REGULATIONS. THE COURT, HOWEVER, IN A SEPARATE ORDER REJECTED DEMANDS AGAINST JOHN SNOWDEN ON THE GROUNDS THAT HIS SIGNATURE ON THE NOTE WAS A FORGERY COMMITTED BY HIS WIFE BEULAH.

THE APPLICABLE FHA REGULATIONS QUOTED IN YOUR LETTER (24 CFR 201.1 (I) ( DEFINE "BORROWER" AS ONE "WHO APPLIES FOR AND RECEIVES A LOAN IN RELIANCE UPON THE PROVISIONS OF THE ACT AND WHOSE INTEREST IN THE PROPERTY TO BE IMPROVED IS (1) A FEE TITLE, OR (2) A LIFE ESTATE, OR (3) AN EQUITABLE INTEREST UNDER AN INSTRUMENT OR TRUST OR CONTRACT.' ALSO, THE REGULATIONS (24 CFR 201.2 (A) ( REQUIRE THAT THE NOTE "SHALL BEAR THE GENUINE SIGNATURE OF BORROWER AS MAKER, SHALL BE VALID AND ENFORCEABLE AGAINST THE BORROWER OR BORROWERS AS DEFINED IN SEC. 201.1 (I)" AND THAT THE ,SIGNATURES OF ALL OF THE PARTIES TO THE NOTE MUST BE GENUINE.'

IT IS STATED IN YOUR LETTER THAT WHILE THE SIGNATURE OF JOHN SNOWDEN WAS NOT HIS GENUINE SIGNATURE AND THAT THE NOTE WAS SIGNED IN HIS NAME WITHOUT HIS AUTHORITY, THERE IS NO QUESTION BUT THAT THE WORK WAS SATISFACTORILY COMPLETED AND THAT THE LOAN QUALIFIED FOR INSURANCE IN ALL OTHER PARTICULARS. ALSO, IT IS STATED THAT THE LOAN WOULD HAVE BEEN ELIGIBLE FOR INSURANCE WITHOUT THE SIGNATURE OF MRS. SNOWDEN'S HUSBAND. IN THE CIRCUMSTANCES, IT IS STATED THAT THE VIOLATION OF SEC. 201.2 (A) OF THE REGULATIONS AS TO JOHN SNOWDEN'S SIGNATURE HAS BEEN WAIVED. IT IS STATED THAT SUCH ACTION--- PRESUMABLY TAKEN UNDER SECTION 2 (E) OF THE NATIONAL HOUSING ACT, 12 U.S.C. 1703 (E/--- WAS BASED UPON AN ADMINISTRATIVE DETERMINATION THAT THE BANK SUBSTANTIALLY COMPLIED WITH THE APPLICABLE REGULATIONS IN GOOD FAITH AND UPON THE CONCLUSION THAT DENIAL OF THE BANK'S CLAIM WOULD WORK AN INJUSTICE.

IN VIEW OF THE CIRCUMSTANCES SET FORTH IN YOUR LETTER AND SINCE THERE IS NOTHING IN THE RECORD INDICATING THAT THE BANK HAD ANY INFORMATION AT THE TIME IT ACQUIRED THE NOTE THAT THE SIGNATURE OF JOHN SNOWDEN WAS A FORGERY, THE VIEW APPEARS JUSTIFIED THAT THE BANK ACTED IN GOOD FAITH IN ACCEPTING THE APPLICATION AND MAKING THE LOAN.

ACCORDINGLY, WE HAVE NO OBJECTION TO CERTIFICATION OF THE VOUCHER FOR PAYMENT, IF OTHERWISE CORRECT.