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B-194628 1 (1979-07-03)

handle is hein.gao/gaobadhkk0001 and id is 1 raw text is: DIGEST ' NO CRCUIATION 1 COMrrROLLER GENERAL OF THE UNITEDSTATES WASHINGTON.o.C. a U 59 B-194628 JUL 3 1979 The Honorable Bill Gradison House of Representatives Dear Mr. Gradison: This responds to your inquiry about authority to cancel the debt owed to the United States by the financially troubled Valley Homes Mutual Housing Corporation. Valley Homes is a.non-profit, tenant-owned, cooperative. housing- project consisting of 53 multi-family housing units constructed during World War II in Lincoln Heights, Ohio. The Government National Mortgage Association (GNMA) is the mortgagee and note holder on the loan which financed the tenants' purchase of the project. The note has run for 25 years and is due and payable on August 1, 1979. Total arrearages of principal and interest on the note amount to over $400,000. You have requested GNMA tQ cancel the debt on thebasis that the Government originall@' sold the project to Valley Homes at an inflated price which was inconsistent with the law governing the sale, and that the cost of collection may well exceed the amount that could be recov- ered. However, GNMA has advised you that, with the exception of the Federal Claims Collection Act, 31 U.S.C. S 951;4t se., it has no statutory authority to cancel indebtedness to the Government. Accord- ingly, you have requested this Office to review GNMA's statutory authority and determine whether its understanding of the law is cor- rect regarding cancellation of indebtedness to the Government. We have reviewed the statutory authori y of the national mortgage associations containid in 12 U.S.C. i 1716t seq. Under provisions of 12 U.S.C. 1 1723a, GNMA has the following express powers: * * * to enter into and perform contracts, leases, cooperative agreements, or other transac- tions, on such terms as.it may deem appropriate, with any agency or instrumentality of the United States, or with any State, Territory, or possession, or the Commonwealth of Puerto Rico, or with any political subdivision thereof, or with any person, firm, association, or corporation; to execute, in accordance with its bylaws, all instruments nec- essary or appropriate in the exercise of any of its powers; in its corporate name, to sue and to be sued, and to complain and to defend, in any court

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