United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued November 19, 2012               Decided January 4, 2013

                         No. 11-5288

                  ROBERT BENNETT, ET AL.,
                       APPELLANTS

                               v.

  SHAUN DONOVAN, IN HIS CAPACITY AS SECRETARY OF THE
   UNITED STATES DEPARTMENT OF HOUSING AND URBAN
                    DEVELOPMENT,
                      APPELLEE


         Appeal from the United States District Court
                 for the District of Columbia
                     (No. 1:11-cv-00498)


    Jean Constantine-Davis argued the cause for appellants.
With her on the briefs were Steven A. Skalet and Craig L.
Briskin. Janell M. Byrd entered an appearance.

    Benjamin M. Shultz, Attorney, U.S. Department of Justice,
argued the cause for appellee. With him on the brief were Stuart
F. Delery, Acting Assistant Attorney General, Ronald C.
Machen Jr., U.S. Attorney, Michael S. Raab and Mary L. Smith,
Attorneys.

    Before: BROWN, Circuit Judge, and EDWARDS and
SILBERMAN, Senior Circuit Judges.
                                 2

    Opinion for the Court filed by Senior Circuit Judge
SILBERMAN.

     SILBERMAN, Senior Circuit Judge: Two widowed spouses
of homeowners with reverse-mortgage contracts faced
foreclosure by mortgage lenders after their spouses died. They
brought suit against the Secretary of the Department of Housing
and Urban Development, alleging that HUD’s regulation
defining the conditions under which it would insure a reverse-
mortgage agreement was inconsistent with the applicable statute.
The district court dismissed for lack of standing, but we reverse.
The district court correctly reasoned that if relief for appellants’
injuries depended on the independent actions of the lenders —
deciding whether to foreclose or not — then appellants would
lack standing. But after, perhaps, a more thorough presentation
before us, we think that, assuming the regulation is unlawful,
HUD itself has the capability to provide complete relief to the
lenders and mortgagors alike, which eliminates the uncertainty
of third-party action that would otherwise block standing.

                                 I.

     A “reverse mortgage” is a form of equity release in which
a mortgage lender (typically, a bank) makes payments to a
borrower based on the borrower’s accumulated equity in his or
her home. Unlike a traditional mortgage, in which the borrower
receives a lump sum and steadily repays the balance over time,
the borrower in a reverse mortgage receives periodic payments
(or a lump sum) and need not repay the outstanding loan balance
until certain triggering events occur (like the death of the
borrower or the sale of the home). Because repayment can
usually be deferred until death, reverse mortgages function as a
means for elderly homeowners to receive funds based on their
home equity.
                                3

     Reverse mortgages are generally non-recourse loans,
meaning that if a borrower fails to repay the loan when due, and
if the sale of the home is insufficient to cover the balance, then
the lender has no recourse to any of the borrower’s other assets.
This feature is, of course, favorable to borrowers but introduces
significant risk for lenders — if regular disbursements are
chosen, they can continue until the death of the borrower (like
a life annuity), and the loan balance will increase over time,
making it less and less likely that the borrower will be able to
cover the full amount. If a borrower lives substantially longer
than expected, lenders could face a major loss.

     Congress, concerned that this risk was deterring lenders
from offering reverse mortgages, authorized HUD to administer
a mortgage-insurance program, which would provide assurance
to lenders that, if certain conditions were met, HUD would
provide compensation for any outstanding balance not repaid by
the borrower or covered by the sale of the home. The Housing
and Community Development Act of 1987 set out those
conditions. The particular provision at issue in this case states:

         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.

12 U.S.C. § 1715z-20(j) (emphasis added). HUD promulgated
regulations to implement the Act, which include the following
provision establishing when insured loans become due and
payable:
                                   4

          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 of his
          or her title in the property and no other mortgagor
          retains title to the property.

24 C.F.R. § 206.27(c)(1).

     Robert Bennett and Leila Joseph are the surviving spouses
of reverse-mortgage borrowers whose mortgage contracts were
executed pursuant to HUD’s insurance program. Only their
spouses, not the appellants themselves, were legal borrowers
under the mortgage contract. Appellants allege that they were
assured by their brokers that they would be protected from
displacement after their spouses died, and that in reliance on this
protection, they quitclaimed interest in the homes they had
owned jointly with their spouses when their mortgages were
originated.1

     Yet when appellants’ spouses died, the respective lenders
both asserted their right to immediate repayment of the loan.
Their claim was based on language in the mortgage contracts
stating that the balance became due and payable if “[a] Borrower
dies and the Property is not the principal residence of at least


     1
        Both Bennett and Joseph were younger than their respective
spouses, and because loan limits depend on the age of the youngest
borrower, quitclaiming interest in their homes likely allowed the banks
to provide appellants more favorable loan terms than if they had been
parties to the contract as well. Pricing of reverse mortgages is like the
inverse of life-insurance policies — older borrowers are expected to
live for a shorter period of time, and thus draw fewer payments over
the life of the mortgage, so the magnitude of those payments can be
greater for a given amount of equity.
                               5

one surviving Borrower.” Neither Bennett nor Joseph were
“borrowers” under the mortgage contracts. When appellants
failed to repay the loans, the lenders initiated foreclosure
proceedings.

     Bennett and Joseph responded by filing suit against the
Secretary of HUD in the District Court for the District of
Columbia. They asserted that HUD’s promulgation of 24 C.F.R.
§ 206.27(c) was unlawful because insuring loans payable on the
death of the last surviving borrower was inconsistent with 12
U.S.C. § 1715-z20(j), which protects “homeowners” from
displacement and defines “homeowner” to include “spouse of
the homeowner.” On appellants’ view, whether or not a spouse
is also a borrower is irrelevant.

     The district court dismissed the complaint for lack of
standing. Bennett and Joseph could not show that a favorable
outcome — that is, a declaratory judgment that HUD’s
regulation violated the statute — would redress this harm. Even
if HUD should never have insured these mortgages, the lenders
now had a lawful right to foreclose under the mortgage contracts
themselves, and that right did not depend on the legality of
HUD’s regulation. The district court therefore concluded that
this set of facts did not fall under any of the limited
circumstances whereby redressability of a plaintiff’s injury can
be based on the actions of a regulated third party.

                              II.

     The issue on appeal is limited to appellants’ standing. But
we admit to being somewhat puzzled as to how HUD can justify
a regulation that seems contrary to the governing statute. HUD
explains that it is specially concerned about the scenario in
which a homeowner, after taking out a reverse mortgage,
marries a spouse — particularly a young spouse — and thereby
                                6

significantly increases a lender’s risk. It would seem, however,
that HUD could legitimately deal with that problem by issuing
a regulation defining a “spouse” as only a spouse in existence at
the time of the mortgage. Be that as it may, we turn to the
standing question.

     To further limit our focus, it is only the redressability
component of Article III standing that is in dispute. See Lujan
v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (plaintiffs
must show that it is likely, and not merely speculative, that a
decision in their favor will redress their injury). There is no
dispute that the risk of displacement upon foreclosure constitutes
an injury in fact, and although the district court did not
specifically determine causation, we see little reason to doubt
that a causal connection exists between HUD’s actions and
appellants’ harm. Had HUD not issued its allegedly unlawful
regulation — which insures mortgages that protect from
displacement only surviving borrowers instead of surviving
spouses — it is reasonable to assume that the lenders would not
have executed contracts under these terms.

     But redressability is a closer question because it is the
private lenders, not HUD itself, that currently threaten
foreclosure. Bennett and Joseph point out that the lenders are
heavily regulated by HUD and would decline to foreclose if
HUD so suggested — HUD is the “900-pound gorilla” — and
thus a declaratory judgment that HUD’s regulation is unlawful
would likely redress their injuries. HUD argues that the lenders
are independent decision-makers with respect to foreclosure,
that they will have a legal right to foreclose (and economic
incentive to do so) regardless of the outcome of this litigation,
and therefore that any redress would be merely speculative.

     Our seminal case discussing standing in the context of a
regulated third party is National Wrestling Coaches Ass’n v.
                               7

Department of Education, 366 F.3d 930, 938 (D.C. Cir. 2004)
(“When a plaintiff’s asserted injury arises from the
Government’s regulation of a third party that is not before the
court, it becomes ‘substantially more difficult’ to establish
standing.” (quoting Lujan, 504 U.S. at 562)). We held that
men’s wrestling organizations lacked standing to challenge
interpretations of Title IX regulations that caused schools to
eliminate or reduce the size of the their men’s wrestling teams.
Id. at 933. That was because, assuming the interpretations were
unlawful, schools could still make their own decisions about
whether to forego elimination of a wrestling team or to reinstate
a disbanded program. Educational institutions were, in this
respect, “truly independent of government policy.” Id. at 941.
Bennett and Joseph’s case appears close to the facts of National
Wrestling. Both cases involve third parties who took actions
because of allegedly unlawful agency decisions, but who would
have no compelling reason to reverse those actions were the
decisions held unlawful by a court.

     In that regard, the lenders have no pecuniary interest in
withholding foreclosure, even if appellants prevailed on the
merits. Cf. Abigail Alliance for Better Access to Developmental
Drugs v. Eschenbach, 469 F.3d 129, 135-36 (D.C. Cir. 2006)
(public interest group had standing to seek to enjoin the FDA
from enforcing a policy barring the sale of drugs to their
members because drug companies would have clear financial
incentives to sell their products). Bennett and Joseph claim that
the lenders would not want to lose their HUD insurance and that
foreclosing after a court finds the regulation unlawful would
somehow effect this result. But appellants overlook 12 U.S.C.
§ 1709(e), which states that an insurance contract executed with
HUD “shall be conclusive evidence of the eligibility of the loan
or mortgage for insurance, and the validity of any contract of
insurance so executed shall be incontestable in the hands of an
approved financial institution . . . , except for fraud or
                               8

misrepresentation.” The lenders thus have a statutory guaranty
that their contracts will remain eligible for insurance, and no
ruling on the validity of HUD’s regulation will threaten this
protection.

     Indeed, HUD’s own regulations actually require lenders to
“commence foreclosure of the mortgage within six months of
giving notice to the mortgagor that the mortgage is due and
payable,” 24 C.F.R. § 206.125(d)(1), or else HUD may withhold
interest disbursements accordingly, id. § 206.129(d)(2)(iii). See
also id. § 206.125(d)(3) (lenders “must exercise reasonable
diligence in prosecuting the foreclosure proceedings to
completion”). So not only would prompt foreclosure fail to
forfeit the lenders’ insurance, but maintaining that insurance
actually requires it. To be sure, if the regulation was found
unlawful, HUD could decline to enforce these requirements,
which would give the lenders the option to withhold foreclosure
without forfeiting their insurance. But that course would still
leave the lender with an independent decision (and with no
economic incentive not to foreclose).

      Bennett and Joseph nevertheless insist that there is
“substantial evidence of a causal relationship,” Nat’l Wrestling,
366 F.3d at 941, between HUD and the lenders that participate
in its reverse-mortgage program. Appellants explain how HUD
has substantial control over most of the program’s features,
which in appellants’ view, amounts to the conclusion that the
lenders are not “truly independent of government policy.” Id.

    But the phrase “truly independent,” as we used it in
National Wrestling, does not refer to the general relationship
between a third party and a government agency. The relevant
question is whether a third party is independent of government
policy with respect to the action at issue in a particular case.
Here, that action is foreclosure according to the terms of a
                               9

lawfully executed mortgage contract, and in that respect, the
lenders are independent of HUD’s control. Insofar as the
lenders maintain the right to foreclose, Bennett and Joseph
would lack standing to bring suit against HUD.

                            * * *

      It does appear to us, however, that HUD has additional
statutory means to provide complete relief to both appellants and
their lenders, and at least one such avenue of relief would
remove speculation as to independent third-party actions. That
statutory provision is 12 U.S.C. § 1715z-20(i). This subsection
is titled “Protection of homeowner and lender” and states in
relevant part:

         (1) “[I]n order to further the purposes of the program
         authorized in this section, the Secretary shall take any
         action necessary —

             (A) to provide any mortgagor under this section
             with funds to which the mortgagor is entitled
             under the insured mortgage or ancillary contracts
             but that the mortgagor has not received because of
             the default of the party responsible for payment;

             (B) to obtain repayment of disbursements
             provided under subparagraph (A) from any source;
             and

             (C) to provide any mortgagee under this section
             with funds . . . to which the mortgagee is entitled
             under the terms of the insured mortgage or
             ancillary contracts authorized in this section.

         (2) Actions under paragraph (1) may include —
                               10


              (A) disbursing funds to the mortgagor or
              mortgagee from the Mutual Mortgage Insurance
              Fund; [and]

              (B) accepting an assignment of the insured
              mortgage notwithstanding that the mortgagor is
              not in default under its terms, and calculating the
              amount and making the payment of the insurance
              claim on such assigned mortgage . . . .

(emphasis added). Neither party’s briefs explicitly discuss the
precise text of this provision. Bennett and Joseph describe the
statute as compelling HUD to “take any action necessary” to
“further the purposes of the [reverse mortgage] program” — a
reading that misleadingly characterizes HUD as having authority
to take any action to further any purpose of the program, as
opposed to authority to take certain actions to effect the
particular goals listed in paragraph (1). HUD, unfortunately,
ignores the provision almost entirely.

     But notwithstanding appellants’ limited presentation of the
issue, they do suggest a means of relief that appears to fall
within this subsection and also resolves their standing problem
— HUD could accept assignment of the mortgage, pay off the
balance of the loans to the lenders, and then decline to foreclose
against Bennett and Joseph. Accepting assignment and
disbursing funds are both actions specifically authorized by
paragraph (2), and such actions could be used to satisfy the
“trigger” condition in subparagraph (1)(C) — to provide lenders
with funds to which they are entitled under their insured
mortgages.
                                11

     It might seem odd for the borrowers to benefit from a
provision intended to protect the lenders,2 but there is no doubt
here that the lenders were entitled to further funds under their
mortgage contracts. And, of course, if HUD were to accept
assignment, it would be within its discretion as the holder of the
contract to simply decline to foreclose. That this remedy would
also benefit the borrowers is hardly a problem — and indeed,
doing justice to § 1715z-20(j)’s intended protection for spouses
would seem to “further the purposes of the program authorized
in this section.” Id. § 1715z-20(i)(1).

     In sum, this remedy eliminates the uncertainty of third-party
action, which likewise eliminates the redressability problem —
if HUD took this series of steps, then HUD, and not the lenders,
would be in the position of deciding whether to foreclose against
Bennett and Joseph. To be sure, the statute does not make clear
whether “accepting an assignment of the insured mortgage”
requires the lender’s consent. Yet, even assuming the lenders’
agreement would be needed, it would clearly be in the lenders’
“pecuniary interest,” Abigail Alliance, 469 F.3d at 135, to
receive the full balance of the loan immediately, rather than face
the uncertainty and transaction costs of foreclosure. So even
though this potential remedy might involve third-party conduct,
there is no serious doubt as to how the lenders would respond.

    We do not hold, of course, that HUD is required to take this
precise series of steps, nor do we suggest that the district court
should issue an injunction to that effect. Appellants brought a
complaint under the Administrative Procedure Act to set aside
an unlawful agency action, and in such circumstances, it is the


    2
       Subparagraphs (A) and (B) — which give HUD authority to
ensure that mortgagors receive funds due under their contracts — are
irrelevant, because Bennett and Joseph were not actually entitled to
any further funds under their contracts.
                                12

prerogative of the agency to decide in the first instance how best
to provide relief. See N. Air. Cargo v. U.S. Postal Serv., 674
F.3d 852, 861 (D.C. Cir. 2012) (“When a district court reverses
agency action and determines that the agency acted unlawfully,
ordinarily the appropriate course is simply to identify a legal
error and then remand to the agency, because the role of the
district court in such situations is to act as an appellate
tribunal.”).3

     Perhaps HUD would provide the precise relief we have
outlined, perhaps it would find another alternative, or perhaps it
would decide no such relief was appropriate. We recognize that,
even if the district court issues a declaratory judgment,
appellants still have no guaranty of relief. Though of course,
if Bennett and Joseph prevailed on the merits in the district court
but were dissatisfied with HUD’s remedy, they would always
have the option to seek review on the ground that HUD’s actions
were “arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law.” 5 U.S.C. § 706(2)(A).

     The relevant question for standing, however, is not whether
relief is certain, but only whether it is likely, as opposed to
merely speculative. Lujan, 504 U.S. at 561. There would
indeed be a problem of merely speculative relief were the
lenders the only party with discretion not to foreclose, but
§ 1715z-20(i) gives HUD the tools to remove this uncertainty.
HUD is the government actor alleged to have caused appellants’
injury, and HUD is the actor that can provide relief — that
arrangement is sufficient to establish that relief is likely.




    3
      Northern Air Cargo was not technically an APA case because
the Postal Service is exempt from APA review, 674 F.3d at 858, but
the same principle applies regardless.
                              13

    Because we decide that appellants have standing, we need
not consider their alternative argument that the district court
abused its discretion in denying them leave to amend their
complaint. The judgment of the district court is reversed, and
we remand for proceedings consistent with this opinion.

                                                   So ordered.
