Opinion ID: 466307
Heading Depth: 3
Heading Rank: 1

Heading: HUD Handbook and Regulations

Text: 24 The date of default is referred to in the note to HUD Handbook 4330.2 Sec. 2-1(d). 5 Section 2-1 is captioned ELIGIBILITY CRITERIA, and subsection (d) explains and gives examples illustrating when a mortgagor qualifies for assistance based upon a default caused by a circumstance or set of circumstances beyond the mortgagor's control which temporarily rendered the family financially unable to cure the delinquency within a reasonable time or make full mortgage payments. 25 Both HUD and the plaintiffs claim that the note to section 2-1(d) supports their method of calculating the date of default. The plaintiffs argue that the first sentence of the note, which provides that only the current default is relevant, supports the advancement rule. The plaintiffs contend that the last sentence, which appears to support the two-month rule, merely states the obvious: that if the account is current, all past defaults have been cured (i.e., paid). HUD argues the last sentence of the note incorporates the two-month rule that HUD applied prior to the district court's 1983-84 decisions. 26 The district court declined to follow the plaintiffs' argument, but ruled instead that the note addressed not the issue of fixing the date of default, but rather the issue of determining the cause of the default. Like the district court, we reject plaintiffs' argument that HUD's use of the two-month rule clearly violated the terms of the note. Indeed, even if we were to reinterpret the note, it is at best ambiguous. The terms plaintiffs rely upon to support their claim, such as current default in the first sentence, are susceptible to multiple interpretations and fall far short of spelling out an unequivocal command. 6 27 Next, plaintiffs argue that sections 203.330 and 203.331, 24 C.F.R. Secs. 203.330 & 203.331 (1985), control the date of default and are inconsistent with HUD's two-month rule. The district court followed this argument, particularly with respect to section 203.330, in its contempt order. Section 203.330 7 is titled Delinquency and default, and section 203.331 8 is titled Date of default. HUD argues that section 203.330 merely defines a default and section 203.331 only applies to HUD's relationship with the mortgagees. 28 Once again, we need not reassess whether the district court's interpretation of these sections to require the advancement rule is sound. It is enough for us to conclude, as we are forced to do, that these sections are at best too ambiguous to support a finding of contempt. The HUD two-month rule does not violate any unequivocal command, as demonstrated by HUD's arguments that these sections can reasonably be read as consistent with the two-month rule. 29 As HUD points out, section 203.330 fails to mention the consequences of late payments. The section thus does not state whether late payments operate to advance the date of default for purposes of mortgage assignment relief. HUD interpreted the regulation as merely defining what constitutes a default. Although the district court later rejected HUD's construction of the section, HUD's interpretation violates no unequivocal command. 30 Likewise, HUD points out that section 203.331, unlike section 203.330, specifically applies only to Subpart B of the regulations, the subpart which governs HUD's insurance contract with the mortgagee. Thus the late payment advancement rule in 203.330 is limited to the regulations dealing with the rights and obligations between HUD and the mortgagee. Under Subpart B, the late payment advancement rule is the only reasonable rule, because under the program, when HUD takes an assignment, it must pay the mortgagee all payments since the mortgagor's date of default. Clearly, different equities and considerations are involved when HUD must calculate the date of default to determine whether the defaulting mortgagor qualifies for the assistance program. Because section 203.331 is expressly limited to a quite different situation than determining whether a mortgagor qualifies for relief, 9 HUD did not violate any unequivocal command by not applying section 203.331 to determine the date of default for purposes of a mortgagor's eligibility for the assignment program. Therefore, HUD's use of the two-month rule did not violate any unequivocal command contained in the 1979 amended decree.