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Dennis & Yvonne Butcher - Administrative Offset Decision

 


 

 

In the Matter of
DENNIS & YVONNE BUTCHER,
Petitioners
HUDBCA No. 00-C-NY-AA22
Claim No. 7-709806440A

 

DECISION and ORDER

Petitioners were notified by Due Process Notice that the Secretary of the U.S. Department of Housing and Urban Development (HUD) intended to seek administrative offset of any Federal payments due to Petitioners in satisfaction of a delinquent and legally enforceable debt allegedly owed to HUD. Administrative offset is authorized by 31 U.S.C. ? 3720A. The claimed debt has resulted from a defaulted loan that was insured against non-payment by the Secretary pursuant to Title I of the National Housing Act (12 U.S.C. ? 1703).

Petitioners have made a timely request for a hearing concerning the existence, amount or enforceability of the debt allegedly owed to HUD. The administrative judges of this Board have been designated to conduct a hearing to determine whether the debt allegedly owed to HUD is legally enforceable. 24 C.F.R. ?? 17.150-161 and 20.4(b). As a result of Petitioner's request, referral of the debt for offset was temporarily stayed by the Board.

Discussion

31 U.S.C. ? 3720A provides Federal agencies with a remedy for the collection of debts owed to the United States Government. The burden of proof is on the Secretary to prove the existence or amount of the alleged debt. 31 C.F.R. ? 285(f)(8)(i). The Secretary has filed a Statement with documentary evidence in support of his position that Petitioners are indebted to the Department in a specific amount.

Petitioners do not dispute the existence or amount of the debt incurred pursuant to the retail installment contract insured by the Secretary under Title I of the National Housing Act, 12 U.S.C. ? 1703, or that the debt is delinquent. Rather, Petitioners assert that the debt is not legally enforceable against them because of (1) forgery (2) incomplete and poor workmanship; and (3) financial hardship. (Petitioners' Letters dated January 4, 2000 and May 3, 2000, hereinafter ("Pets. Ltr.").

On December 2, 1995, Petitioners executed and delivered to Alltown Builders Inc. an installment contract in the principal amount of $25,000.00. (Secretary's Statement dated March 28, 2000, hereinafter ("Secy. Stat."), Exh. A). The installment note was assigned to the Money Store on January 4, 1996. Id. Thereafter, on October 31, 1996, assignment of the note was made by the Money Store to the Secretary. Id. at Exh. B.

Petitioners assert that a forgery of their signatures on the completion certificate has been committed. (Pets. Ltr. dated May 3, 2000). Petitioners have not submitted any documentary evidence to support this assertion. Instead, Petitioners original statements in their letter of appeal contradicts Petitioners allegation of forgery. In Petitioner's January 4, 2000 letter to the Board, they state that:
    [t]he contractor had us sign a pile of documents in our home that we felt locked into after he had gone. The contractor was paid by the lender before the repairs were done. The contractor insisted that we had to sign a form stating that the work was completed in order for him to get the money to finish the job. (Pets. Ltr. dated January 4, 2000).
This statement, on its face, demonstrates an acknowledgment of the existence and execution of a completion certificate by Petitioners. Therefore, Petitioners raising a forgery defense, after making statements to the contrary, provides the Board with inadequate evidence that a forgery in fact occurred. Instead, Petitioners' defense of forgery, which was raised subsequent to their original statements of acknowledgment, only diminishes the veracity of Petitioners' forgery defense. Second, Petitioners assert that the debt is not enforceable against them due to incomplete and poor workmanship. There is no specific reference to the nature of the incomplete or poor workmanship, only that the work done was not completed to Petitioners' satisfaction. (Pets. Ltr. dated January 4, 2000). Here, the certificate of completion places all workmanship-related risks on the debtors rather than on the creditor. The Certificate states, in pertinent part, the following:

    I(We) understand that the selection of the dealer or contractor and the acceptance of the materials used and the work performed is my(our)responsibility, and HUD does not guarantee the quality or workmanship of the property improvements. (Decl. of Goodman, Exh. H).
With the risk expressly on Petitioners to exercise their own judgment in forming contractual relationships, redress for grievance is to be asserted against Alltown Builders Inc., their contractor, rather than against their creditors. Jesse High, HUDBCA No. 88-2663-H192 (January 29, 1988). Petitioners must resolve their numerous complaints regarding poor workmanship directly with the contractor instead of HUD. Ricardo Montelongo, HUDBCA No. 99-D-CH-Y264 (February 29, 2000).

Finally, the record contains a letter written by Petitioner husband to HUD's Title I Regional Service Center stating that Petitioners cannot meet their current monthly payment obligations due to financial circumstances. (Decl. of Goodman, Exh. D). Additionally, Petitioners have submitted their Notice of Dismissal from the United States Bankruptcy Court, Eastern District of New York, of their Chapter 13 petition in bankruptcy. (Pets. Ltr. dated January 4, 2000, unmarked Exh.). Therefore, Petitioners may be asserting unenforceability of the debt due to financial hardship. However, this Board must determine whether, as a matter of law, this debt is legally enforceable against Petitioners. Unfortunately, evidence of hardship, no matter how compelling, cannot be taken into consideration in determining whether the debt is legally enforceable. Anna Filiziana, HUDBCA No. 95-A-NY-T11 (May 21, 1996).

While Petitioners may wish to negotiate repayment terms with the Department, this Board is not authorized to extend, recommend, or accept any payment plan or settlement offer on behalf of the Department. Petitioners may want to discuss this matter with Lester J. West, Director, HUD Albany Financial Operations Center, 52 Corporate Circle, Albany, NY 12203-5121. His telephone number is 1-800-669-5152, extension 4206. A review of Petitioners' financial status may be conducted if Petitioners submit to that HUD Office a Title I Financial Statement (HUD Form 56142).

Order

The debt which is the subject of this proceeding is legally enforceable against Petitioners in the amount claimed by the Secretary. The Order imposing the stay of referral of this matter to the IRS for administrative offset or to the U.S. Department of Treasury is vacated.

It is hereby ORDERED that the Secretary is authorized to seek collection of this outstanding obligation by means of administrative offset of any eligible Federal payments due to Petitioners.


Jean S. Cooper
Administrative Judge

June 15, 2000