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Cheatham v. Donovan, No. 07-13168 (E.D. Mich. Sept. 8, 2009).

A federal district court preliminarily enjoined HUD from relocating residents and failing to maintain full occupancy of a Section 236 property (Parkview Apartments, Ypsilanti, MI) where HUD became the mortgagee-in-possession in 2006.

The court granted the injunction based on plaintiffs’ cause of action under the Administrative Procedures Act for arbitrary and capricious action, or acting contrary to duties imposed by the Multifamily Housing Property Disposition Reform Act (12 U.S.C. Sec. 1701z-11). The court found that the tenant-plaintiffs were likely to succeed on the merits of their claims that HUD acted illegally by failing to maintain full occupancy in the property to the greatest extent possible and by deciding to relocate tenants without a consistent or rational explanation. Settlement discussions are underway.

Cheatham Order Granting Prelim Inj 9-09 (PDF)

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