Opinion ID: 349352
Heading Depth: 2
Heading Rank: 2

Heading: HUD's Duty to Pay Retainages.

Text: Defendant's own regulations provide that: 17 The mortgagee shall be obligated, as a part of the mortgage transaction, to disburse the principal amount of the mortgage, to, or for the account of the mortgagor or to his creditors for his account and with his consent. 18 24 C.F.R. § 221.512. The implications of this section accompanied with the assignment of the building loan agreement to HUD were aptly stated by the district court in Bennett, supra: 19 Inasmuch as HUD assumed the obligations of lender or mortgagee upon (the mortgagee's) assignment and pursuant to paragraph 18 of the building loan agreement, 1 it is equally obligated by regulation to dispurse (sic) proceeds to the mortgagor or the mortgagor's creditors. 20 Bennett, supra at 832-33. 21 In this case, the relevant statutory provisions and contractual clauses are almost identical to those in Bennett. Because we agree with the district court's reasoning therein, we hold that plaintiff is entitled to damages as a creditor third party beneficiary of the building loan agreement, unless defendant raises an effective bar to plaintiff's recovery. 22