                             UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

                                                      )
ROBERT BENNETT, et al.,                               )
                                                      )
               Plaintiffs,                            )
                                                      )
               v.                                     )        Civil Action No. 11-0498 (ESH)
                                                      )
SHAUN DONOVAN                                         )
   Secretary, Housing and Urban                       )
   Development                                        )
                                                      )
               Defendant.                             )
                                                      )


                                  MEMORANDUM OPINION

       Plaintiffs have sued the Secretary of the Department of Housing and Urban Development

(“Secretary”) in his official capacity, alleging that certain regulations that implement the Home

Equity Conversion Mortgage (“HECM”) program violate the Administrative Procedures Act

(“APA”), 5 U.S.C. § 551 et seq. Although plaintiffs originally brought four claims against the

Secretary, the parties agree that three of the claims are now moot, so these counts have been

withdrawn without prejudice. (Def.’s Combined Mem. in Support of his Mot. to Dismiss and in

Opp. To Pls.’ Mot. for Prelim. Inj. (“Def.’s Mot.”) at 14; Pls.’ Mem. in Opp. to Def.’s Mot.

(“Pls.’ Opp’n”) at 3-4.) Plaintiffs’ surviving claim alleges that the Secretary has acted contrary

to law by failing to protect the spouses of holders of HECMs from foreclosure. (Compl. ¶¶ 148-

57.) The Secretary now moves to dismiss, arguing that plaintiffs’ claim should be dismissed

under Fed. R. Civ. P. 12(b)(1) because plaintiffs lack standing. The Secretary moves, in the

alternative, to dismiss plaintiffs’ claim under Fed. R. Civ. P. 12(b)(6) because his interpretation

of the statute is both in accordance with the unambiguously expressed intent of Congress and
based on a permissible construction of the statute. For the following reasons, the Court grants

the Secretary’s motion to dismiss for lack of jurisdiction.

                    STATUTORY AND REGULATORY FRAMEWORK

       An HECM, or a “reverse mortgage,” is a mortgage that provides “future payments to the

homeowner” from a “housing creditor,” “based on accumulated equity” held by the homeowner.

12 U.S.C. § 1715z-20(b). The HECM program is designed to “authorize the Secretary to carry

out a program of mortgage insurance” to “meet the special needs of elderly homeowners,” 12

U.S.C. § 1715z-20(a) (emphasis added), and was authorized by Congress as part of the Housing

and Community Development Act of 1987. Pub. L. No. 100-242, 101 Stat. 1815, 1908 (1988).

Unlike a traditional mortgage, an HECM pays the proceeds of the loan to the mortgagor over an

“extended period,” while the mortgagor repays the mortgagee in a single payment at the end of a

set period of time or after certain qualifying events have occured.1 53 Fed. Reg. 43,156 (Oct. 25,

1988). Payments are made to the mortgagor via a lump sum payment, monthly payments, or a

line of credit. (Def.’s Mot. at 2; see also 12 U.S.C. § 1715z-20(d)(9).) A mortgage that is

insured under this program must provide that the “homeowner” shall not be liable for the

difference in “remaining indebtedness of the homeowner under the mortgage and the amount

recovered by the mortgagee from (A) the net sales proceeds from the dwelling that are subject to

the mortgage” or “(B) the insurance benefits paid” to the mortgagee pursuant to the statute. Id. §

1715z-20(d)(7). Thus, a mortgagee may not recover the balance of a loan by suing a mortgagor,

obtaining a deficiency judgment, and/or attaching her other assets. (See Def.’s Mot. at 2.) As a

result, the “collateral risk of a home equity conversion mortgage” is “greatest in the out years


1
 In a traditional mortgage, the mortgagee (or lender) provides a lump sum to the mortgagor (or
borrower), who uses the money to buy a piece of property. The mortgagor then repays the
mortgagee the principal and interest over an extended period of time.



                                                 2
because the loan balance continues to grow as long as the mortgagor occupies the property,” and

the possibility of loss “becomes quite high” if the “mortgagor occup[ies] the property for many

years beyond his or her normal life expectancy at loan origination.” 53 Fed. Reg. 43,161 (Oct.

25, 1988). To mitigate against this risk, and to “encourage and increase the involvement of

mortgagees and participants in the mortgage markets,” the HECM statute permits the Secretary

to insure HECMs that meet the eligibility requirements. See 12 U.S.C. §§ 1715z-20(a), (d), (j).

       The statute uses various terms to refer to borrowers and lenders, including “homeowner,

“elderly homeowner,” “mortgagor,” and “mortgagee.” The terms “‘elderly homeowner’ and

‘homeowner’ mean any homeowner who is, or whose spouse is, at least 62 years of age or such

higher age as the Secretary may prescribe.”2 Id. § 1715z-20(b)(1). The HECM statute adopts

the definitions of “mortgagee” and “mortgagor” contained in 12 U.S.C. § 1707. Id. § 1715z-

20(b)(2). Thus, the term “mortgagee” includes “the original lender under a mortgage, and his

successors and assigns approved by the Secretary,” and “mortgagor” includes the “original

borrower under a mortgage and his successors and assigns.” Id. § 1707(b). A mortgagor must

“qualif[y] as an elderly homeowner” and must receive “adequate counseling . . . by an

independent third party” to be eligible for an HECM. Id. § 1715z-20(d)(2).

       The statute also prevents the Secretary from insuring mortgages that do not protect

homeowners for as long as they live in and own their home:

       The Secretary may not insure a home equity conversion mortgage under this section
       unless such mortgage provides that the homeowner's obligation to satisfy the loan
       obligation is deferred until the homeowner's death, the sale of the home, or the
       occurrence of other events specified in regulations of the Secretary. For purposes of this
       subsection, the term “homeowner” includes the spouse of a homeowner.
2
  While this subsection could be read to mean that only one “elderly homeowner” must meet the
minimum age to qualify for an HECM, the Secretary has promulgated regulations that require
the “youngest mortgagor” to be “62 years of age or older at the time the mortgagee submits the
application for insurance.” 24 C.F.R. § 206.33.



                                                3
Id. § 1715z-20(j) (“subsection (j)”). The Secretary has implemented this statutory command

with the following regulation:

       (1) The mortgage shall state that the mortgage balance will be due and payable in full if a
       mortgagor dies and the property is not the principal residence of at least one surviving
       mortgagor, or a mortgagor conveys all or his or her title in the property and no other
       mortgagor retains title to the property.

24 C.F.R. § 206.27(c) (emphasis added). Once the loan becomes due, the mortgagee “shall

require” the mortgagor to “pay the mortgage balance, including” interest, “sell the property for at

least 95% of the appraised value . . . with the net proceeds of the sale to be applied towards the

mortgage balance,” or provide the mortgagee with the deed to the property. 24 C.F.R. §

206.125(a)(2). The mortgagor has thirty days after receiving notice from the mortgagee to pay

the balance before the mortgagee may begin foreclosure proceedings. Id.

                         FACTUAL AND PROCEDURAL HISTORY

       Each of the three plaintiffs is a widowed spouse of an HECM mortgagor. (Compl. ¶¶ 59-

64, 84-94, 107-116.) Plaintiffs, however, were neither listed on the deeds to their homes nor on

the HECMs that their spouses had signed. (Id. ¶¶ 61, 92, 114.) The Secretary points out (Def.’s

Mot. at 10), and plaintiffs do not contest (see Pls.’ Opp’n at 9), that the mortgages on plaintiffs’

homes contain the following language, taken from the HECM form contract: “9.Grounds for

Acceleration of Debt. (a) Due and Payable. Lender may require immediate payment in full of all

sums secured by this Security Instrument if: (i) A Borrower dies and the Property is not the

principal residence of at least one surviving borrower.” (See Compl. Ex. 6.)

       Thus, per the contract language in the HECMs that had been signed by plaintiffs’

spouses, and per 24 C.F.R. § 206.27, the HECMs on plaintiffs’ homes became due upon their

spouses’ deaths, because the only borrower/mortgagor listed on each instrument was deceased.




                                                  4
(Id. ¶¶ 66, 97, 118.) Plaintiffs allege that, as a result, they are now the subject of foreclosure

actions brought by HECM mortgagees. (See id. ¶¶ 74, 102, 121.) Plaintiffs allege that HUD

regulations improperly implement the anti-displacement section in subsection (j) of the HECM

statute. (Id. ¶ 156.) Specifically, they argue that 24 C.F.R. § 206.27(c) illegally allows the

Secretary to insure mortgages that limit protection to “surviving mortgagors,” even though

subsection (j) prevents the Secretary from insuring mortgages that do not protect “the spouse of a

homeowner.” (Id. ¶¶ 148-157.) Thus, they argue, had the Secretary properly implemented

subsection (j), the reverse mortgages on their homes would not be payable and they would not be

facing foreclosure. (Id. ¶ 156.)

       Plaintiffs originally sought both declaratory and injunctive relief in their complaint,

which was filed on March 8, 2011. (Id. at 1.) On March 31, 2011, plaintiffs filed a request for a

preliminary injunction. (Mot. For Prelim. Inj. (Dkt. No. 2).) The Secretary then filed a

memorandum opposing the preliminary injunction and moving to dismiss, arguing that plaintiffs’

first three causes of action were moot and that HUD had taken steps to halt the threatened bank

foreclosures. (Def.’s Mot. at 11, 14.) Plaintiffs withdrew their motion for preliminary injunctive

relief on April 12 (Dkt. No. 11), and subsequently agreed that their first three causes of action

were moot. (Pls.’ Opp’n at 3-4.) However, they continue to allege that HUD violated subsection

(j) of the HECM statute, and they seek both a declaratory judgment that “HUD failed to properly

implement the anti-displacement protections in the HECM statute, has illegally passed

regulations that contravene this protection, and that [they] are entitled to the protections” of

subsection (j), and a “permanent injunction[] prohibiting HUD from failing to accord [them]

protection from displacement guaranteed to them by the HECM statute.” (Compl. at 28-29.)




                                                  5
                                            ANALYSIS

I.      STANDING

        To establish that this Court has jurisdiction to hear plaintiffs’ claims, plaintiffs must show

that they have standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (“the core

component of standing is an essential and unchanging part of the case-or-controversy

requirement of Article III”). In order to satisfy the “irreducible constitutional minimum of

standing,” plaintiffs must demonstrate: (1) that they have suffered injury in fact, an actual or

imminent invasion of a legally protected, concrete and particularized interest; (2) a causal

connection between the alleged injury and the defendant's conduct at issue; and (3) that it is

“likely,” not “speculative,” that the court can redress the injury. Id. at 560–61. “Since they are

not mere pleading requirements but rather an indispensable part of the plaintiff[s’] case, each

element must be supported in the same way as any other matter on which the plaintiff[s] bear[]

the burden of proof, i.e., with the manner and degree of evidence required at the successive

stages of litigation.” Id. at 561.

        In ruling on a motion to dismiss for lack of subject matter jurisdiction under Rule

12(b)(1), a court must construe plaintiffs' complaint liberally, giving them the benefit of all

favorable inferences that can be drawn from the alleged facts. See Barr v. Clinton, 370 F.3d

1196, 1199 (D.C. Cir. 2004). Nonetheless, plaintiffs bear the burden of establishing subject

matter jurisdiction. Pitney Bowes, Inc. v. U.S. Postal Serv., 27 F. Supp. 2d 15, 19 (D.D.C. 1998).

In addition, “[w]hen a court rules on a Rule 12(b)(1) motion, it may ‘undertake an independent

investigation to assure itself of its own subject matter jurisdiction,’” and it may consider “facts

developed in the record beyond the complaint.” Settles v. U.S. Parole Comm'n, 429 F.3d 1098,

1107 (D.C. Cir. 2005) (quoting Haase v. Sessions, 835 F.2d 902, 908 (D.C. Cir. 1987)). If




                                                  6
“plaintiff[s’] standing does not adequately appear from all materials of record, the complaint

must be dismissed.” Warth v. Seldin, 422 U.S. 490, 502 (1975).

       The Secretary does not contest that plaintiffs meet the injury-in-fact prong of the standing

inquiry (Def.’s Mot. at 16; Def.’s Reply at 5), and instead advances two arguments in support of

his claim that plaintiffs lack standing: (1) plaintiffs are unable to meet the causation prong of the

standing inquiry because their injury—being displaced from their houses—“is the direct result of

contracts entered into by Plaintiffs’ spouses and private sector lenders,” and not the result of any

action of any party (Def.’s Reply at 5); and (2) even assuming causation, plaintiffs “advance a

statutory interpretation that would not redress their injuries.” (Id. at 9.) The Court need not

address the causation prong of standing because it finds that plaintiffs have failed to establish

redressability.

       A.         Redressability

       Plaintiffs lack standing because the relief they seek would not redress their injuries.

Redressability requires a court to find that it is “likely, as opposed to merely speculative, that the

injury will be redressed by a favorable decision” on the merits. Lujan, 504 U.S. at 561 (quoting

Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 38, 43 (1992)) (quotation marks omitted).

The Court must assume that it will grant the relief sought and determine whether the relief “will

likely alleviate the particularized injury alleged by the plaintiff.” Fla. Audubon Soc’y v. Bentsen,

94 F.3d 658, 663-64 (D.C. Cir. 1996). Relief that does not “remedy the injury suffered cannot

bootstrap a plaintiff into federal court.” Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 107

(1998). Although causation and redressability are normally “overlapping inquiries” with “no

real analytic difference,” Emergency Coal. to Defend Educ. Travel v. Dep’t of Treasury, 545

F.3d 4, 11 (D.C. Cir. 2008), “causation does not inevitably imply redressability,” because there

may be circumstances where “governmental action is a substantial contributing factor in bringing


                                                  7
about a specific harm, but the undoing of the governmental action will not undo the harm.”

Renal Physicians Ass’n v. Dep’t of Health & Human Servs., 489 F.3d 1267, 1275, 1278 (D.C.

Cir. 2007).

        Plaintiffs’ claimed injury derives from the Secretary’s alleged failure to properly interpret

subsection (j) and to require that HUD-insured HECMs protect the spouses, as well as the

mortgagors/homeowners. (Compl. ¶ 156.) However, the actual injuries they allege are the

possible displacements from their homes from pending foreclosure actions brought by the banks

who hold mortgages that explicitly provide the lenders with the contractual right to foreclose.

(See, e.g., id. ¶¶ 103-106.) Where, as here, redressability “hinge[s] on the independent choices

of the regulated third party,” it is the “‘burden of the plaintiff to adduce facts showing that those

choices have been or will be made in such manner as to . . . permit redressability of injury.”

Nat’l Wrestling Coaches Ass’n v. Dep’t of Educ., 366 F.3d 930, 938 (D.C. Cir. 2004) (quoting

Lujan, 504 U.S. at 562). The facts alleged must be “sufficient to demonstrate a substantial

likelihood that the third party directly injuring the plaintiff would cease doing so as a result of

the relief the plaintiff sought.” Renal Physicians Ass’n, 489 F.3d at 1275.

        National Wrestling Coaches Association is the seminal case in this Circuit on

redressability where the injury to the plaintiff is the direct result of an action of an entity which is

not a party to the lawsuit. In that case, organizations representing men’s college wrestling

coaches, athletes, and alumni challenged a regulation interpreting Title IX issued by the

Department of Education. The regulation required universities to provide intercollegiate athletic

opportunities to male and female students in numbers proportionate to their respective

enrollments. Id. at 935. As a result, many colleges and universities, which were not parties to

the suit, chose to eliminate their men’s wrestling teams to comply with the regulation. Id. The




                                                   8
plaintiffs did not suggest that any particular school would restore or forego the elimination of its

wrestling team in the absence of the litigation, but rather, they argued that if the regulation were

repealed, they would have “better odds” of reinstating the wrestling programs. Id. at 939.

Accordingly, plaintiffs could not establish redressability because they offered “nothing but

speculation” that the “requested change in government policy [would] alter the behavior of

regulated third parties that [were] the direct cause of the plaintiff’s injuries.” Id. at 938, 940. As

the Circuit later explained, “the new status quo [was] held in place by other forces,” making any

possibility that the Court could remedy the injury too speculative. Renal Physicians Ass’n, 489

F.3d at 1278 (citing Nat’l Wrestling Coaches Ass’n, 366 F.3d at 939-40).

       Crucial to the Circuit’s holding was the determination that the individual choices of the

colleges and universities were “truly independent of government policy.” Nat’l Wrestling

Coaches Ass’n, 366 F.3d at 941. Moreover, the Court noted that the plaintiffs had not taken the

position that the injurious conduct would be “illegal in the absence of the challenged

enforcement policies.” Id. Thus, claims are redressable where providing the relief plaintiffs

seek “would make the injurious conduct of third parties complained of . . . illegal,” Int’l Ladies’

Garment Workers’ Union v. Donovan, 722 F.2d 795, 811 (D.C. Cir. 1983), and where the third

parties “could only preclude redress if those third parties took the extraordinary measure of

continuing their injurious conduct in violation of the law.” Nat’l Wrestling Coaches, 366 F.3d at

940-41. Thus, the Circuit found redressability where regulations allegedly permitted a third

party to keep primates in inhumane conditions that would otherwise have been illegal. Animal

Legal Def. Fund, Inc. v. Glickman, 154 F.3d 426, 428 (D.C. Cir. 1998). The plaintiffs showed

that their injuries were redressable because different regulations would “necessarily alleviate”

their injuries by rendering the objectionable conduct illegal. Id. at 443.




                                                  9
       Recently, the Circuit has issued several opinions that suggest other ways plaintiffs may

show that the relief they seek would likely redress their injuries. Plaintiffs had standing where

the Attorney General’s invalidation of a referendum was allegedly unconstitutional because

“absent that barrier, there is no reason to believe that [the third party] would refrain from

carrying out its state-law duty to put the referendum . . . into effect.” LaRoque v. Holder, No.

10-5433, 2011 WL 2652441, at *11 (D.C. Cir. July 8, 2011). Similarly, plaintiffs in a second

case showed redressability by providing a letter from the relevant third party stating that it

planned to remedy the injury plaintiffs complained of “once the regulatory obstacles [were]

removed.” Emergency Coal. to Defend Educ. Travel, 545 F.3d at 11 (the Court could “imagine

no reason, given the record before us,” why the injury would not be remedied). In a third case,

the Circuit held that a plaintiff may show redressability by showing that relief would make it in

the third party’s “pecuniary interest” to eliminate the alleged harm, thus rendering the “question

of redressability a hardly-speculative exercise in naked capitalism.” Abigail Alliance for Better

Access to Developmental Drugs v. Eschenbach, 469 F.3d 129, 135 (D.C. Cir. 2006).

       In contrast to these cases, plaintiffs here cannot sustain their burden of linking the relief

they seek to the injury they have suffered. Even if the Secretary has failed to require that HUD-

insured HECMs include a clause protecting the spouses of homeowners, and even if the statutory

interpretation plaintiffs propose will lead to third-parties protecting spouses in all future HUD-

insured mortgages, plaintiffs “offer nothing but speculation to substantiate their assertion” that

this change would affect the lenders foreclosing on their mortgages. See Nat’l Wrestling

Coaches Ass’n, 366 F.3d at 933. The terms of the mortgages at issue are clear: plaintiffs’

spouses agreed that if the property was “not the principal residence of at least one surviving

Borrower,” the loans would become due. (Compl. Ex. 6.) Plaintiffs have provided nothing




                                                 10
beyond mere speculation to suggest that their proposed interpretation of subsection (j) could

retroactively change the contractual provisions in the mortgages that their spouses agreed to.

Thus, to some extent, plaintiffs’ case for redressability is even weaker than the one rejected by

the Circuit in National Wrestling Coaches, because here, plaintiffs essentially seek to stand in the

shoes of future widows of insured homeowners. In fact, plaintiffs explicitly argue that they have

standing because they can “achieve relief for future HECM borrowers.” (Pls.’ Opp’n at 7.)

However, relief for spouses of future holders of HECMs is irrevelant for the purposes of

redressability. See Steel Co., 523 U.S. at 107 (mere “comfort and joy from the fact that . . . the

Nation’s laws are faithfully enforced . . . does not redress a cognizable Article III injury”); see

also Warth, 422 U.S. at 499 (plaintiffs generally “cannot rest [their] claim[s] to relief on the legal

rights or interests of third parties”).

        In response, plaintiffs argue that it is likely that the Secretary would order the mortgagees

to provide them with relief because he exercises “powerful and pervasive influence” over the

HECM program and has already temporarily postponed foreclosure on their properties. (Pls.’

Opp’n at 6, 8-9.) There is no doubt that the Secretary “can influence the lenders’ execution of

their contractual rights and responsibilities” and that “lenders are generally willing to accede to

HUD’s requests to halt foreclosure” so long as HUD pays the interest on the loan in default.

(Def.’s Reply at 10 & n.7.) But the Court has no doubt that the Secretary of Education could

have revived some of the wrestling programs at issue in National Wrestling Coaches by making

personal requests of university presidents. But more importantly, nothing about subsection (j),

which, again, governs the types of mortgages that the Secretary may insure, requires the

Secretary to stop mortgagees from foreclosing on plaintiffs’ property. 12 U.S.C. § 1715z-20(j).

In fact, plaintiffs have not argued, nor could they argue, that that their interpretation of




                                                  11
subsection (j) would allow HUD to void the mortgage or alter the terms of contracts between the

plaintiffs and private lenders. See United States v. Neustadt, 366 U.S. 696, 709 & n.24 (1961)

(existence of mortgage insurance program did not create a legal relationship between the

government and the individual mortgagor). As the Secretary points out, whether the “mortgages

were properly insured or not does not affect the mortgage’s own contractual terms, and it is these

terms that require Plaintiffs’ spouses’ estates to repay the mortgages or sell the houses.” (Def.’s

Mot. at 17.) Thus, plaintiffs have not explained how their interpretation of subsection (j) could

possibly require the Secretary to act, and have failed to show “a substantial likelihood” that their

proposed interpretation of the statute would prompt the Secretary to act to prevent foreclosure.3

Renal Physicians Ass’n, 489 F.3d at 1275.

       Nor have plaintiffs shown that requiring the Secretary to issue new regulations requiring

any HECM insured by HUD to protect the spouse of the homeowner would indirectly redress the

injuries that plaintiffs claim to have suffered. Unlike Animal Legal Defense Fund, it would not

be illegal for the mortgagees to continue to enforce the terms of the mortgage. See 154 F.3d at

438. Unlike Emergency Coalition to Defend Educational Travel, plaintiffs have not submitted

letters or affidavits from the relevant banks suggesting that they would voluntarily redress

plaintiffs’ injuries if the government were to reinterpret the statute. See 545 F.3d at 10-11 (letter

from third party “strongly suggest[ed] a continuing intention . . . to resume the program once the

regulatory obstacles are removed”). And unlike Abigail Alliance for Better Access, it is hardly in

the third parties’ “pecuniary interest” to grant plaintiffs relief by postponing foreclosure until

some undetermined date in the future. See 469 F.3d at 135. Thus, plaintiffs fail to show that it is
3
 Plaintiffs note that the Secretary may protect the mortgagor’s and the mortgagee’s interests by
providing funds to which they would otherwise be entitled. (Pls.’ Opp’n at 6-7 n.5 (citing 12
U.S.C. § 1715z-20(i)).) This section, however, makes no mention of postponing foreclosure
proceedings once a loan has come due, and thus, provides no support for plaintiffs’ argument.



                                                  12
likely that the mortgagees would alter their behavior as a result of the relief they seek. Indeed,

there is no evidence whatsoever that it is “likely, as opposed to merely speculative,” that

plaintiffs’ mortgages would be in any way affected by the changed eligibility requirements.

Lujan, 504 U.S. at 561. Plaintiffs have offered “nothing but speculation to substantiate their

claim that a favorable decision from this court will redress their injuries by altering” the lenders’

mortgages, see Nat’l Wrestling Coaches Ass’n, 366 F.3d at 937, and therefore, they lack standing

under Article III.

                                          CONCLUSION

       For the foregoing reasons, the Court grants the Secretary’s motion to dismiss. A separate

order accompanies this Memorandum Opinion.

                                                                   /s/
                                                      ELLEN SEGAL HUVELLE
                                                      United States District Judge

DATE: July 15, 2011




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