ompsFOIA Appeal: Lenders in Property Imp. Loan Program

Legal Opinion: GMP-0035

Index: 7.380

Subject: FOIA Appeal: Lenders in Property Imp. Loan Program

January 13, 1992

Ms. Patricia A. Brent

Washington Document Service, Inc.

450 Fifth St., N.W.

Suite 1110

Washington, D.C. 20001

Dear Ms. Brent:

This is in response to your Freedom of Information Act

(FOIA) appeal dated November 8, 1991. In a letter dated

September 24, 1991, you requested 10 categories of documents

relating to lenders participating in the Property Improvement

Loan Program under Title I of the National Housing Act, 12 U.S.C.

1703 et seq. Your request was granted in part in a letter dated

October 11, 1991, issued by the Executive Secretariat (FOIA

Control No.: FI-272870A). The Executive Secretariat denied items

1, 2, and 9 of your request under Exemption 8 of the FOIA. These

items involved the following documents:

1\. any reports, memoranda or other documents identifying

the 20 lenders with the largest aggregate volume of

loans insured by HUD pursuant to the Title I Program

for each of the years 1983, 1984, 1985, 1986, 1987

and 1988.

2\. any reports, memoranda or other documents identifying

those lenders participating in the Title I Program that

had the highest aggregate dollar amount of insurance

claim denials for each of the years 1983, 1984, 1985,

1986, 1987 and 1988.

9\. any reports, memoranda or other documents that set forth

those lenders participating in the Title I Program whose

insurance coverage reserve account for insurance claims

made under the Title I Program was exhausted during the

period between 1983 and 1988.

I have determined to affirm the withholding of documentation

pertaining to items 2 and 9 of your request under Exemption 8 and

to reverse the initial denial of item 1 of your request.

I am affirming the withholding of documents under items 2

and 9 of your request because insurance claim activity and

reserve account solvency are means by which the Department

monitors a lender\'s performance on its Title I loan portfolio.

To disclose this information would compromise the Department\'s

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ability to effectively supervise the lender\'s operation, in

contravention of our statutory mandate.

Under Title I of the National Housing Act, financial

institutions are approved to originate and service Title I

property improvement and manufactured home loans in accordance

with a Contract of Insurance with the Department. (See

24 C.F.R. 201.1). An approved financial institution1

originates and services Title I loans, reports these loans to HUD

for insurance coverage, and receives insurance benefits on its

losses on defaulted loans in exchange for the payment of

premiums.

Exemption 8 of the FOIA, 5 U.S.C. 552(b)(8), covers matters

that are \"contained in or related to examination, operating, or

condition reports prepared by, on behalf of, or for the use of an

agency responsible for the regulation or supervision of financial

institutions.\"

Under HUD\'s supervisory authority with respect to the

Title I Program, (see 24 C.F.R. 201.43), the Department may

invoke Exemption 8 to withhold information about, or related to,

the condition and operations of financial institutions involved

in the Title I Program. All records concerning a financial

institution\'s condition and operations and in the possession of a

Federal agency responsible for the regulation or supervision of

the financial institution can be withheld under the exemption.

McCullough v. FDIC, 1 GDS 80,194, at 80,495 (D.D.C. 1980).

Under 24 C.F.R. 15.21 I have determined that the public

interest in protecting effective HUD supervision of Title I

lending institutions militates against release of the withheld

information.

I am reversing the denial of item 1 of your request,

pertaining to information identifying the 20 lenders with the

largest aggregate volume of loans insured by the Department,

under the Title I Program for the period 1983 to 1988, since

identification of the lenders will not adversely impact the

Department\'s responsibilities regarding the supervision of lender

operations.

1The term \"financial institution\" under Exemption 8 is not

limited to depository institutions. See Public Citizen v. Farm

Credit Administration, C.A. No. 90-5290 (D.C. Cir. 1991).

Mortgage lenders participating in the Government National

Mortgage Association\'s Mortgage-Backed Securities Program are

\"financial institutions\" under Exemption 8. Barron Financial

Group v. HUD, C.A. No. SA CV 91-95-GLT (RWRx) (C.D. Calif. 1991).

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I am providing a copy of this decision to the Title I

Insurance Division of the Office of Manufactured Housing and

Regulatory Functions and directing that they immediately provide

you with the information pertaining to item 1 of your request.

You have the right to judicial review of this determination

under 5 U.S.C. 552(a)(4).

Very sincerely yours,

Shelley A. Longmuir

Deputy General Counsel