United States v. Garner, Civ. A. No. GC 80-53-WK-O.

• Decision Date: 01 July 1983
• Docket Number: Civ. A. No. GC 80-53-WK-O.
• Parties: UNITED STATES of America, Plaintiff, v. L.J. GARNER and Tommie N. Garner, Defendants.
• Court: U.S. District Court — Northern District of Mississippi

567 F. Supp. 313

UNITED STATES of America, Plaintiff, v. L.J. GARNER and Tommie N. Garner, Defendants.

Civ. A. No. GC 80-53-WK-O.

United States District Court, N.D. Mississippi, Greenville Division.

July 1, 1983.

Falton O. Mason, Jr., Asst. U.S. Atty., Oxford, Miss., for plaintiff.

Isaiah Madison, North Mississippi Rural Legal Services, Greenville, Miss., for defendants.

MEMORANDUM OPINION

KEADY, District Judge.

In this action involving a Farmers Home Administration (FmHA) loan, plaintiff, United States, sues defendants-borrowers, L.J. and Tommie N. Garner, husband and wife, for foreclosure and possession of their residential property. Following a hearing on March 4, 1983, the Court reserved final ruling pending submission of briefs on the single question of FmHA loan refinancing under 42 U.S.C. § 1471(a) of the Housing Act of 1949.¹

Defendants claim they are entitled to have their delinquent rural housing loan considered for refinancing under § 1471(a) and, until this is accomplished, foreclosure may not occur. Plaintiff argues that refinancing of FmHA loans is not allowed by the applicable Department of Agriculture regulations. The important question before this court is one of first impression: whether the regulation that prohibits FmHA loan refinancing is valid.

42 U.S.C. § 1471(a) provides in pertinent part:

(a) The Secretary of Agriculture (hereinafter referred to as the "Secretary") is authorized, subject to the terms and conditions of this title, to extend financial assistance, through the Farmers Home Administration ... (4) to an owner described in clause (1), (2), or (3) for refinancing indebtedness which —

(A) was incurred for an eligible purpose described in such clause,

(B)(i) if not refinanced, is likely to result (because of circumstances beyond the control of the applicant) at an early date in the loss of the applicant's necessary dwelling or essential farm service buildings, or (ii) if combined (in the case of a dwelling that the Secretary finds not to be decent, safe, and sanitary) with a loan for improvement, rehabilitation, or repairs and not refinanced, is likely to result in the applicant's continuing to be deprived of a decent, safe, and sanitary dwelling. (emphasis added)

Id. The present language of § 1471(a) was inserted by the Housing and Community Development Amendments of 1979, Pub.L. No. 96-153, 93 Stat. 1101. These amendments deleted old subsection (c) which prohibited refinancing of indebtedness less than five years old and revised and redesignated subsection (B). Pursuant to these amendments, the Secretary of Agriculture promulgated regulations that control qualifying conditions under 42 U.S.C. § 1471(a). The regulation here applicable is found at 7 C.F.R. § 1944.22(a) and provides simply that "refinancing of FmHA debts is not authorized," 7 C.F.R. § 1944.22(a) (1982) (emphasis added), while providing for refinancing non-FmHA debts under specified conditions, § 1944.22(b). The court must, therefore, determine whether this regulation, which exempts non-FmHA debt refinancing from the blanket prohibition, was reasonably adopted by the Secretary of Agriculture or whether he lacked statutory authority to bar refinancing of FmHA debts. See, e.g., Knebel v. Hein, 429 U.S. 288, 296-97, 97 S.Ct. 549, 554-55, 50 L.Ed.2d, 485, 493 (1977) (regulations must be reasonably adopted); Campbell v. United States Dept. of Agriculture, 515 F.Supp. 1239, 1249 (D.D.C.1981) (regulations may not decline to effectuate statutory policy).

To answer this question, the Court must first examine the language of the statute. Congress chose to use the term "authorized" when granting the Secretary of Agriculture jurisdiction over FmHA loans, including their refinancing. Plaintiff contends this phraseology granted the Secretary discretionary or permissive power to act rather than an obligation to do so. While the Court agrees that "authorize" usually connotes discretion, United States v. Maryland, 471 F.Supp. 1030, 1038 (D.Md. 1978), the use of discretionary language "is not determinative of whether Congress intended to impose a mandatory duty upon the Secretary." Rocky Ford Housing Authority v. United States Department of Agriculture, 427 F.Supp. 118, 127 (D.D.C.1977). What is important is whether Congress can fairly be said to have intended "to confer a discretionary power or to impose an imperative duty." Thompson v. Clifford, 408 F.2d 154, 158 (3d Cir.1968), quoting United States ex rel. Siegel v. Thoman, 156 U.S. 353, 359, 15 S.Ct. 378, 380, 39 L.Ed. 450 (1895). For this reason, congressional intent is of the utmost importance in resolving the issue. To divine that intent, we must turn to the legislative history of the Housing Act.

Congress has expressly declared the purpose of the FmHA loan program is to provide "a decent, safe, and sanitary dwelling" to individuals residing in rural areas of the United States. 42 U.S.C. § 1471(a). In addition, the courts have consistently interpreted the various sections of the Housing Act to effectuate that purpose. See, e.g., United States v. White, 429 F.Supp. 1245, 1253 (N.D.Miss.1977) (FmHA must exercise duties consistent with policy to realize goal of decent home and suitable living environment for every American family); Rocky Ford Housing Authority v. United States Department of Agriculture, 427 F.Supp. 118, 131 (D.D.C.1977) (ambiguity in legislative history of Housing Act to be interpreted in favor of effectuating policy); Pealo v. Farmers Home Administration, 361 F.Supp. 1320, 1323-24 (D.D.C.1973) (intent of Congress interpreted in favor of national policy of decent home and suitable living environment).

When Congress enacted the Housing and Community Development Amendments of 1979, it made clear that refinancing of FmHA loans was to be allowed. In House Report number 96-154 which accompanied the amendments, the Committee on Banking, Finance and Urban Affairs stated:

With limited funds to meet the housing needs of rural families, the Committee does not desire that refinancing be indiscriminately permitted.... However, when through no fault of their own, rural homeowners stand to lose their homes, and in turn, would be forced to occupy substandard housing, the Committee believes that FmHA should permit such owners to refinance their homes. The Committee recognizes that this places a difficult burden on FmHA and urges that it implement the new financing provisions cautiously. (emphasis added)

H.Rep. No. 96-154, 96th Cong., 1st Sess. 44, reprinted in 1979 U.S.Code Cong. & Ad. News 2317, 2360. It is clear the House Committee on Banking, Finance and Urban Affairs intended refinancing to be allowed in at least some instances when to do otherwise would result in the homeowner losing his home. Similarly, the Joint Explanatory Statement of the Committee of Conference, accompanying the final version of the 1979 amendments, provides:

The conferees, in approving the new refinancing authority, expect the Secretary to use the authority to assist rural home owners threatened with the loss of their homes or continuing housing deprivation under certain circumstances. At the same time, the conferees desire the Secretary to use the new authority prudently and in a manner that does not encourage borrowers to relax in

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