Lifgren v. Yeutter, 767 F.Supp. 1473 (D. Minn. 1991)

Residents of a Section 515 development, subsidized by HUD Section 8 project-based subsidies, challenged prepayment of a 515 loan because RD failed to make an incentive offer to the owner prior to approving the prepayment offer and to include proper use restrictions in the release deed at the time of loan satisfaction although RD, without the owner’s permission, filed a corrective deed of satisfaction later that included proper restrictions. In response, the owner challenged the ELIHPA prepayment restrictions, contending that they were unconstitutional because they breached his contract with RD and challenged the filing of the corrective release deed because it was done without consideration or the owner’s approval. The Court rejected the owner’s challenge of ELIHPA but upheld his contention that the corrective deed was improperly recorded. Nonetheless, the court upheld the residents’ claim that the prepayment violated ELIHPA and ordered that the project be returned into the Section 515 program.