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December 18, 1989

JACK KEMP, Secretary of the U.S. Department of Housing and Urban Development, KEITH GREEN, Manager of Spokane Field Office of U.S. Department of Housing and Urban Development, LOMAS MORTGAGE USA, INC.; DCBL, INC., successor trustee; LESLIE DOUGHMAN, agent of DCBL, INC.; FEDERAL NATIONAL MORTGAGE ASSOCIATION, beneficiary, Defendants

The opinion of the court was delivered by: QUACKENBUSH

 BEFORE THE COURT are plaintiff's Motion for Order Granting Stay/Temporary Restraining Order/Preliminary Injunction (Ct. Rec. 3), and Motion for Shortening Time (Ct. Rec. 8). A hearing on said matter was held on December 18, 1989. Plaintiff was represented by Norman R. McNulty, Jr.; James Shively appeared on behalf of the federal defendants; John Riley appeared on behalf of defendant Lomas and Nettleton. Having reviewed the record, heard from counsel, and being fully advised in the premises, this Order is intended to memorialize the court's oral ruling in the hearing on this matter.

 Plaintiff is a mortgagor under § 203 of the National Housing Act, a/k/a the "203 Program". The subject property, located at E. 2211 Boone, Spokane, WA, is secured by a Deed of Trust wherein Federal National Mortgage Association is the Beneficiary, and DCLB, Inc. is the successor Trustee. Lomas Mortgage USA, Inc. administers the Deed of Trust for FNMA. The Deed of Trust is HUD insured under the 203 program. The monthly payments are approximately $ 230. Plaintiff admits that he is in default on the loan. However, he asserts that the HUD defendants have improperly refused to consider assignment of his mortgage under 12 U.S.C. § 1715u(b), a/k/a the "Assignment Program." The property is currently scheduled for trustee's sale on January 5, 1990. Plaintiff asserts that he will be irreparably harmed should the property be sold prior to a hearing on the merits of his claim.

 HUD argues that plaintiff was given ample opportunity to avoid foreclosure, and that he was given sufficient information to make informed decisions. It contends that when plaintiff failed to make his January 1, 1989 payment Lomas sent him a HUD pamphlet containing information on steps to take to avoid foreclosure, including information about HUD-approved housing counseling agencies. (See Ct. Rec. 12, Ex. 4). Lomas then sent a letter on April 6, 1989 requesting financial information. On May 12, 1989 HUD sent plaintiff another form requesting financial information for participation in the assignment program, which plaintiff denies having received. This letter bore an erroneous zip code. HUD subsequently discovered that the letter did not inform plaintiff of the date by which he was to respond, therefore Laura Cole called plaintiff on May 31, 1989. She asserts that plaintiff admitted receiving her letter, but did not request assistance in completing the forms, or show any interest in the assignment program. Plaintiff asserts that he was confused and unsure who was calling or what was being requested of him. On June 8, 1989, having received no further response, HUD closed its file and informed Lomas that it could proceed with foreclosure. Plaintiff contends that he never received this letter either, which also contained an erroneous zip code.

 On October 25, 1989 plaintiff wrote HUD asking that it find good cause for his failure to provide timely financial information, and asking that it reconsider him for the Assignment Program. On October 30, 1989 HUD refused to reopen the assignment request. On November 27, 1989 plaintiff requested reconsideration. HUD orally denied reconsideration on November 29, 1989.

 Plaintiff asserts that, although at present he is disabled and is receiving state disability benefits of $ 314 per month and $ 87 per month in food stamps benefits, he anticipates being able to return to work in the near future, once his physical situation improves. He is 32 years old, single, and has a high school education. His principal work experience has been as a furniture mover. He has been unable to do that work since August, 1988. It appears that he is suffering from an inguinal hernia for which an operation is proposed. During the spring and summer of 1989 he alleges that he was suffering great pain and was "spaced out" from prescribed pain medications. He made his mortgage payments until January, 1989 by selling personal possessions. He asserts that, should he be granted a period of reduced or suspended payments for not more than 36 months, he would then be able to resume full mortgage payments.

 Plaintiff alleges that his home has a fair market value of $ 29,000, although the most recent valuation of it, done in June 1985 by the County Assessor, is $ 22,800. He alleges that his equity in it is approximately $ 10,000, due in part to considerable remodeling he has done to the house in an effort to improve it. *fn1"

 Plaintiff's complaint asks that the court stay the Trustee's Sale of his residence pendente lite, that it declare unlawful the federal defendants' refusal to process his mortgage for the Assignment Program, and that it award him attorney's fees and costs. He asserts that the decision not to process him for the Assignment Program was a final administrative decision subject to review by this court.


 The party seeking a preliminary injunction in the Ninth Circuit bears the burden of fulfilling one of two standards. Under the "traditional" standard, a court may issue preliminary relief if it finds that (1) the moving party will suffer irreparable injury if the relief is denied; (2) the moving party will probably prevail on the merits; (3) the balance of potential harm favors the moving party; and (4) the public interest favors granting relief. Cassim v. Bowen, 824 F.2d 791, 795 (9th Cir. 1987). Under the "alternative" standard, the moving party may meet its burden by demonstrating either (1) a combination of probable success and the possibility of irreparable injury, or (2) that serious questions are raised and the balance of hardships tips sharply in its favor. Id.

 Although two tests are recognized, they are not totally distinct tests. Rather, they are "extremes of a single continuum." Wilson v. Watt, 703 F.2d 395, 399 (9th Cir. 1983). The critical element is the relative hardship to the parties. If the balance of hardships tips decidedly toward the plaintiff, less likelihood of success on the merits is required. Id. In such an event the plaintiff need not show as robust a likelihood of success on the merits; however, no chance of success at all will not suffice. "The irreducible minimum has been described by one court as a fair chance of success on the merits, while another court has said that the question must be serious enough to require litigation. The difference between the two formulations is insignificant. Therefore, we accept either as satisfactory." Benda v. Grand Lodge of Intern. Ass'n., 584 F.2d 308, 315 (9th Cir.), cert dismissed, 441 U.S. 937, 99 S. Ct. 2065, 60 L. Ed. 2d 667 (1979).

 Plaintiff asserts, and this court agrees, that he has satisfied either test. As evidence of irreparable injury, plaintiff calls the court's attention to the January 5 Trustee's foreclosure sale. Under non-judicial Deed of Trust foreclosures, there is no redemption period, therefore if the sale proceeds on January 5 plaintiff will lose his home and his equity in it. In that event his appeal of the administrative decision not to consider him for the assignment program would be moot.

 HUD responds that, in its view, the $ 314 per month which plaintiff receives in disability income is sufficient to provide him with alternative housing in the event his home is sold, and therefore he will not be irreparably harmed. HUD takes the position that plaintiff has the burden of showing that he lacks family or friends to help him out financially. Balanced against this asserted lack of hardship, HUD argues that it would suffer significant damage if the injunction is granted because it would incur additional costs in accepting assignment, if plaintiff succeeds on the merits, or new foreclosure costs and interest accrual if he fails on the merits. HUD disregards entirely the issue of lost equity. This court finds that any hardship which will be suffered by defendants due to a ...

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