Opinion
956 C.D. 2020
09-01-2021
Barbara Mullikin, Petitioner v. Pennsylvania Housing Finance Agency, Respondent
OPINION NOT REPORTED
Submitted: March 12, 2021
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE ANNE E. COVEY, Judge HONORABLE ELLEN CEISLER, Judge
MEMORANDUM OPINION
RENÉE COHN JUBELIRER, Judge
Barbara Mullikin (Petitioner), pro se, petitions for review of an August 20, 2020 decision (Order) of a Hearing Examiner of the Pennsylvania Housing Finance Agency (PHFA) affirming PHFA's May 22, 2020 denial of Petitioner's application for a homeowner's emergency mortgage assistance loan (HEMAP loan) under the act commonly known as the Homeowner's Emergency Mortgage Assistance Loan Program (Act 91). Petitioner contends that the Hearing Examiner erred in determining that Petitioner failed to meet the criteria for a HEMAP loan. After review, we affirm.
Act of December 3, 1959, P.L. 1688, as amended, added by Section 2 of the Act of December 23, 1983, P.L. 385, No. 91, 35 P.S. §§ 1680.401c-1680.412c.
I. PROCEDURAL AND FACTUAL BACKGROUND
The record reflects, and the Hearing Examiner found, the facts as follows. On June 16, 2000, Petitioner received the deed to Petitioner's home and secured a mortgage financed by Specialized Loan Servicing in January 2006. (Order at 3.)The current application is Petitioner's "third application for a mortgage assistance loan." (Id. at 2.) The first application that PHFA received was in June 2011 for the Emergency Homeowner Loan Program through the Department of Housing and Urban Development, which was approved and provided Petitioner with 24 mortgage payments. (Id.) In November 2017, Petitioner submitted an application for a HEMAP loan, which was denied on January 2, 2018. (Id.) In January 2018, Specialized Loan Servicing modified Petitioner's mortgage. (Supplemental Reproduced Record (S.R.R.) at 63b-64b.) Upon Petitioner's September 2018 mortgage payment being reported overdue, Specialized Loan Servicing sent Petitioner an Act 91 Notice on November 13, 2018. (Id. at 9b.) The Act 91 Notice advised Petitioner to consult with a PHFA-approved consumer credit counseling agency to apply for a HEMAP loan to prevent foreclosure. (Id. at 9b, 11b.) Petitioner met with a PHFA-approved consumer credit counseling agency to complete the current application for a HEMAP loan. (Id. at 16b.) PHFA denied this application on January 9, 2020, which Petitioner subsequently appealed. (Order at 2, 3.) Following a hearing, the January 9, 2020 decision was reversed in a letter dated March 5, 2020, because Petitioner's financial information was updated to reflect an increase in income and decrease in expenses, and because Petitioner claimed to have $4,000, or 6.8 mortgage payments, to apply to the overdue mortgage. (Id. at 3.)
The Order can be found on pages 1b-8b of the Supplemental Reproduced Record.
Section 31.201 of the Policy Statement on Homeowner's Emergency Assistance Program (Policy Statement), defines an Act 91 Notice as "[t]he notice of intention to foreclose required to be sent to a mortgagor prior to the filing of a foreclosure action under the act in the form prescribed in this subchapter." 12 Pa. Code § 31.201.
Section 31.201 of the Policy Statement defines a consumer credit counseling agency as "[a] nonprofit corporation or governmental entity located in this Commonwealth which has been designated by [PHFA] to provide Homeowner's Emergency Mortgage Assistance Program counseling." 12 Pa. Code § 31.201.
The Hearing Examiner noted that the monthly expenses were "adjusted" to account for Supplemental Nutrition Assistance Program benefits and a decrease in the vehicle maintenance budget. (Order at 5.)
The March 5, 2020 letter directed Specialized Loan Servicing to bring Petitioner's mortgage current through April 30, 2020, by approving a non-continuing loan. (Id.) However, the approval of the non-continuing loan was contingent on the following actions by Petitioner: (1) that Petitioner submit a base contribution of $4,000 immediately upon receipt of the letter; and (2) that Petitioner submit the full mortgage payment from May 1, 2020, to the date of the loan closing and continue full mortgage payments after loan closing. (Id.) Importantly, the letter stated that "failure to fulfill the conditions of the loan approval will result in an affirmation of [PHFA's] denial decision, dated January 9, 2020[, ] and a denial of a[] [HEMAP] loan." (Id.)
On April 17, 2020, Petitioner informed PHFA that Petitioner did not have the $4,000 contribution and inquired if the contribution could be paid in installments. (Id.) PHFA replied that it could not accept payment in installments. (Id. at 3-4.) On April 27, 2020, Petitioner informed PHFA that Petitioner could "send $3,000 the following week" and would use the forthcoming COVID-19 pandemic stimulus check to pay the remaining $1,000. (Id. at 4.) On April 29, 2020, PHFA agreed to accept a reduced contribution of $3,000 through May 2020 and told Petitioner that Petitioner would be responsible to pay full monthly mortgage payments starting June 1, 2020. (Id.) Petitioner contacted PHFA again on May 19, 2020, to state that Petitioner could not pay the reduced contribution of $3,000. (Id.) Subsequently, on May 22, 2020, PHFA sent Petitioner a letter affirming the January 9, 2020 decision denying Petitioner's application for a HEMAP loan. (Id.)
Petitioner appealed, and the Hearing Examiner held a hearing on July 7, 2020. (Id. at 1.) Petitioner testified as follows. Petitioner has been receiving social security benefits as Petitioner's only income since 2010, which is insufficient on its own to pay the monthly expenses, including the mortgage. (Id. at 5.) Petitioner's boyfriend (Boyfriend) has been contributing to the net household income since 2010 and obtained a better paying job in January 2020, which increased Petitioner's net household income. (Id.) However, Boyfriend was laid off in April 2020 due to the COVID-19 pandemic, and, at the time of the July hearing, had "recently applied for unemployment compensation" benefits. (Id.) Petitioner did not make PHFA aware of the decrease in Petitioner's net household income until the July 2020 hearing. (Id.) It is unclear from the record how much Boyfriend contributed to the net household income from July 2020 forward. According to the Notice of Financial Determination, Boyfriend was eligible for unemployment compensation benefits for 26 weeks. (S.R.R. at 75b.) The Hearing Examiner calculated that, at the time of the Order, Petitioner's net household income essentially equaled Petitioner's expenses, including the monthly mortgage payment. (Order at 5.)
As to the non-payment of the base contribution, Petitioner testified as follows. Petitioner did not actually have the base contribution of $4,000 at the time of the January 20, 2020 hearing, but was instead attempting to secure a loan that was "promised." (Id. at 4.) A PHFA counselor told Petitioner that Petitioner "should have some kind of emergency funding" and should "try and get some money for the house." (Id.) Petitioner subsequently attempted to secure two loans from unknown loan companies. (Id.) Due to poor credit, the loan companies requested that Petitioner buy "eBay cards and stuff . . . [and the loan companies] kept coming up with all this stuff [that Petitioner] had to buy . . . ." (Id.) When asked at the July 7, 2020 hearing how much Petitioner paid the loan companies, Petitioner replied that Petitioner paid "[t]housands and thousands and thousands." (S.R.R. at 45b.) Petitioner subsequently filled out a Questionnaire of Fraud for the Fraud Services Department for the payments to the loan companies reflecting a total of $7,020.99 and provided receipts that reflect a total of $4,515. (Order at 4.)
II. HEARING EXAMINER'S ORDER
Based on the Hearing Examiner's findings, the Hearing Examiner issued the Order affirming the May 22, 2020 decision denying Petitioner's HEMAP loan application pursuant to Section 404-C(a)(5), (11) of Act 91, 35 P.S. § 1680.404c(a)(5), (11), because there is no reasonable prospect of Petitioner resuming full mortgage payments within 24 months from delinquency and pay the mortgage by maturity, and Petitioner did not satisfy a procedural requirement of PHFA. (Id. at 1.)
The Hearing Examiner first determined that there is no reasonable prospect that Petitioner will resume full mortgage payments within 24 months after delinquency and by maturity because Petitioner's income is insufficient. (Id.) The Hearing Examiner found that Petitioner's net household income increased when Boyfriend acquired a new job in January 2020. However, due to the COVID-19 pandemic, Boyfriend was laid off, at which time Petitioner's net household income again consisted solely of social security benefits. As the Hearing Examiner found, at the time of the Order, Petitioner's net household income essentially equaled the monthly expenses, including the monthly mortgage payment. Further, at the time of the Order, the mortgage remained overdue for 24 months after delinquency. The Hearing Examiner thus denied Petitioner a HEMAP loan on the basis that Petitioner's income is insufficient to maintain mortgage expenses.
Second, the Hearing Examiner determined that there is no reasonable prospect that Petitioner will resume full mortgage payments within 24 months from delinquency and by maturity because Petitioner's income has been insufficient for the past 2 years. (Id.) Specifically, the Hearing Examiner found Petitioner's "total monthly expenses have essentially equaled the average net monthly household income [since 2017] and left no margin for unexpected expenses or emergencies." (Id. at 5.) Further, the Hearing Examiner observed that PHFA recommends that housing expenses, including the mortgage payment, be "no more than 40% of the average net monthly income" to successfully maintain full mortgage payments. (Id.) However, Petitioner's housing expenses "encumbered no less than 86% of []Petitioner's income from social security benefits alone and 59% of the [net] household income including [Boyfriend's] contribution since at least 2017." (Id. at 5-6.) The Hearing Examiner thus denied Petitioner a HEMAP loan on the basis that Petitioner's income has been insufficient to maintain mortgage expenses for two years.
Third, the Hearing Examiner determined that there is no reasonable prospect that Petitioner will resume full mortgage payments within 24 months from delinquency and pay the mortgage by maturity because Petitioner was unable to save funds to apply to the overdue mortgage and Petitioner would not have funds until June 2020. (Id. at 1.) The Hearing Examiner explained that because Petitioner had not paid the overdue mortgage since 2018, Petitioner should have had a surplus of income of $7,776 for the year 2019, and $3,180 from January 2020 to June 2020, none of which Petitioner applied or saved to apply to the overdue mortgage. (Id. at 7.) The Hearing Examiner thus denied Petitioner a HEMAP loan on the basis that Petitioner's inability to save funds indicates an inability to maintain expenses, including mortgage payments.
Last, the Hearing Examiner determined that Petitioner failed to comply with the PHFA procedural requirement, set forth in the March 5, 2020 letter and subsequent communication, that Petitioner submit a reduced base contribution of $3,000 by the end of May 2020. (Id. at 2.) The Hearing Examiner found that Petitioner paid loan companies no less than $4,100 from January 2020 to July 2, 2020, "rather than apply those funds to the past due mortgage payments and/or the base contribution toward the [HEMAP] loan." (Id. at 7.) Further, after PHFA informed Petitioner of the reduced contribution, the Hearing Examiner noted that Petitioner expended $3,150 in pursuit of loans rather than apply those funds to the reduced contribution of $3,000. (Id.) The Hearing Examiner thus denied Petitioner a HEMAP loan because Petitioner did not comply with PHFA's procedural requirement.
III. PARTIES' ARGUMENTS
Petitioner filed a Petition for Review with this Court on September 24, 2020. (S.R.R. at 52b.) In the Petition for Review, Petitioner states that the Hearing Examiner did not provide enough time for Petitioner to secure the funds for the base contribution. (Id.) Petitioner also states that a HEMAP loan is needed to bring the mortgage current in order for Petitioner to be able to make monthly mortgage payments. (Id.) In Petitioner's brief, Petitioner challenges all four reasons the Hearing Examiner denied the HEMAP loan application. (Petitioner's Brief (Br.) at 3.) In addition, Petitioner argues that "the reason [Petitioner] was not able to provide [$3,000] is because the loan [Petitioner] applied for was a fraud[ulent] loan." (Id. at 6.) Petitioner also argues that the inability to pay $3,000 to PHFA was "due to circumstances beyond [Petitioner's] control." (Id. at 7.)
"Our scope of review is limited to a determination of whether constitutional rights were violated, [whether] an error of law was committed, or whether the findings of fact are not supported by substantial evidence." Mull v. Pa. Hous. Fin. Agency, 529 A.2d 1185, 1187 (Pa. Cmwlth. 1987).
PHFA responds that the Hearing Examiner did not err in denying Petitioner's application for a HEMAP loan because Petitioner has not demonstrated that Petitioner can resume full mortgage payments within 24 months from delinquency and pay the mortgage by maturity, Petitioner is not suffering financial hardship because of circumstances beyond Petitioner's control, and Petitioner failed to comply with PHFA's procedural requirement. (PHFA's Br. at 2.)
IV. DISCUSSION
To qualify for a HEMAP loan, a mortgagor must show that the mortgagor meets all criteria listed in Act 91. 35 P.S. § 1680.404c(a). Among the relevant criteria in Act 91 are:
(5) [PHFA] has determined that there is a reasonable prospect that the mortgagor will be able to resume full mortgage payments within twenty-four (24) months after the beginning of the period for which assistance payments are provided under this article and pay the mortgage or mortgages in full by its maturity date or by a later date agreed to by the mortgagee or mortgagees for completing mortgage payments. . . . .
(11) The mortgagor meets any other procedural requirements established by [PHFA].35 P.S. § 1680.404c(a)(5), (11). PHFA's "interpretation of Act 91 is entitled to great weight and should be disregarded or overturned only if such construction is clearly erroneous." Horton v. Pa. Hous. Fin. Agency, 511 A.2d 917, 918 (Pa. Cmwlth. 1986).
A. No reasonable prospect of resuming mortgage payments
Regarding Petitioner's reasonable prospect of resuming full mortgage payments within 24 months from delinquency and paying the mortgage in full by its maturity, Section 31.206(a)(1), (3), (4), and (7) of the Policy Statement on Homeowner's Emergency Assistance Program (Policy Statement), states that PHFA may consider:
This Court has acknowledged that PHFA's Policy Statement "is a statement of policy, not a regulation, and thus does not have the force and effect of law." R.M. v. Pa. Hous. Fin. Agency, 740 A.2d 302, 308 (Pa. Cmwlth. 1999). However, "PHFA [is] expressly authorized by the legislature to impose rules and standards governing the issuance of mortgage assistance loans." Anela v. Pa. Hous. Fin. Agency, 690 A.2d 1157, 1159 (Pa. 1997).
(1) The homeowner's prior work history, experience, training, opportunities for retraining and similar factors which may affect the homeowner's future employment opportunities.
. . . .
(3) Noncash benefits that may reduce household expenses, such as food stamps, free medical services for military or low income families, a company-provided automobile, or receipt of food or clothing from family members living outside the household.
(4) Changes in income or recurring expenses, or both, that may be affected by changes in the age, composition or employment of members of the household.
. . . .
(7) A homeowner's demonstrated ability to make regular monthly mortgage payments, even though those payments represented most of the homeowner's income. In determining whether the homeowner's future job and income prospects will be sufficient to enable the homeowner to pay the mortgage debt-including principal, interest, taxes and insurance-[PHFA] will take into consideration the amount of household income available to the homeowner for a reasonable period of time not to exceed 24 months prior to the circumstances which caused the mortgage delinquency and whether the income was sufficient as evidenced by documentation, including tax returns, Internal Revenue Service Form W-2 and tax transcripts.12 Pa. Code § 31.206(a)(1), (3), (4), (7); see also Powell v. Pa. Hous. Fin. Agency (Pa. Cmwlth., No. 2374 C.D. 2014, filed Sept. 1, 2015), slip op. at 6, 8 (holding that Act 91 and the Policy Statement provide that PHFA "may" consider a petitioner's employment record and, thus, it was not error to consider the petitioners' unemployment and underemployment in concluding the petitioners did not meet the eligibility requirements of Act 91). The Hearing Examiner concluded that Petitioner did not have a reasonable prospect of resuming full mortgage payments within 24 months from delinquency and by maturity for three reasons: (1) Petitioner's income is currently insufficient to maintain full monthly mortgage expenses; (2) Petitioner's income has been insufficient to maintain monthly mortgage expenses for the past 2 years; and (3) Petitioner has been unable to save funds to apply to the overdue mortgage payment.
Although unreported panel decisions of this Court are not precedential, they may be cited as persuasive pursuant to Pennsylvania Rule of Appellate Procedure 126(b), Pa.R.A.P. 126(b), and Section 414(a) of the Court's Internal Operating Procedures, 210 Pa. Code § 69.414(a).
1. Income currently insufficient
First, the Hearing Examiner considered Petitioner's income and expenses to ascertain Petitioner's current ability to maintain mortgage payments and found that Petitioner had not established an ability to do so based on Petitioner's current income. Our Court has held that there is no reasonable prospect of resuming full mortgage payments where a petitioner's public assistance income was insufficient to maintain expenses, future employment was uncertain, and the mortgage was delinquent for three years. Phillips v. Pa. Hous. Fin. Agency, 554 A.2d 607 (Pa. Cmwlth. 1989). Here, the record supports the Hearing Examiner's conclusion. Petitioner's income, which consisted solely of social security benefits, is insufficient on its own to maintain Petitioner's monthly expenses, including the monthly mortgage payment. With Boyfriend's contribution increasing due to a new job, Petitioner's net household income in January 2020 became sufficient to maintain monthly expenses, including the monthly mortgage payment. However, Boyfriend was laid off in April 2020 and did not apply for unemployment compensation benefits until June 2020. It is unclear from the record how Boyfriend's unemployment compensation benefits contributed or will contribute to the net household income, and when Boyfriend would be able to return to work. This left Petitioner's social security income as the sole income. Additionally, at the time of the Order, the mortgage remained overdue since September 2018, 24 months after delinquency and after Specialized Loan Servicing modified Petitioner's mortgage. Similar to the petitioner in Phillips, Petitioner here has an income from public assistance that is insufficient to maintain mortgage expenses, Boyfriend's future employment and the future net household income is uncertain, and the mortgage has remained overdue for two years. Based on these circumstances, we cannot say the Hearing Examiner erred in concluding that Petitioner's income is currently insufficient to maintain full monthly mortgage expenses.
2. Income insufficient for past two years
Second, the Hearing Examiner analyzed Petitioner's income and expenses since 2017 to conclude that Petitioner has no reasonable prospect of resuming mortgage payments because Petitioner's income has been insufficient since 2017. Our Court has held that it is within a hearing examiner's discretion to determine that a petitioner does not meet the eligibility requirements for a HEMAP loan when the petitioner's past income was insufficient to maintain monthly expenses. Mull v. Pa. Hous. Fin. Agency, 529 A.2d 1185, 1188 (Pa. Cmwlth. 1987); see also Turner v. Pa. Hous. Fin. Agency (Pa. Cmwlth., No. 572 C.D. 2018, filed Nov. 16, 2018), slip op. at 7 n.9 (stating that a hearing examiner who calculated and evaluated a petitioner's income for the past three years, as well as expenses and potential income, had the discretion to determine that the petitioner's income was insufficient to maintain monthly mortgage expenses). Upon review, the record supports the Hearing Examiner's findings and conclusion. As found by the Hearing Examiner, Petitioner's monthly expenses, including the full mortgage payment, have essentially equaled Petitioner's monthly income since 2017, leaving no funds for emergency expenses. The Hearing Examiner also cited PHFA's recommendation that no more than 40% of the monthly housing expenses should encumber the income. The Hearing Examiner found that the housing expenses compromised at least 86% of the monthly income based on Petitioner's social security benefits alone, and at least 59% of the monthly income including Boyfriend's contribution. Based on these findings, which are supported by the record, we cannot say that the Hearing Examiner erred in finding, in the Hearing Examiner's discretion, that Petitioner's income has been insufficient since 2017 to maintain mortgage expenses.
We note that our calculations reflect that the housing expenses compromised at least 88% of the monthly income based on Petitioner's social security benefits alone, and at least 60% of the monthly income including Boyfriend's contribution. The Hearing Examiner's calculations are supported because "at least" indicates an approximate sum, and those calculations are consistent with our own.
3. Inability to save funds
Last, the Hearing Examiner analyzed Petitioner's inability to save funds to apply to the overdue mortgage and concluded that this indicates an inability to maintain expenses. Our Court has held that an inability to save funds where the petitioner had sufficient income to save or apply toward the mortgage delinquency constitutes a legitimate reason to deny a HEMAP loan. Ebersole v. Pa. Hous. Fin. Agency (Pa. Cmwlth., No. 402 C.D. 2013, filed Feb. 10, 2014), slip op. at 15. In addition, we have held that "[the petitioner's] failure to pay anything toward [the petitioner's] mortgage for an extended time, coupled with [the petitioner's] failure to save any money in lieu of making mortgage payments, was the cause of [the petitioner's] predicament" where the petitioner had a surplus of funds to apply to the overdue mortgage. O'Brien v. Pa. Hous. Fin. Agency (Pa. Cmwlth., No. 2089 C.D. 2015, filed Apr. 18, 2016), slip op. at 15 (emphasis in original). Here, the record supports the Hearing Examiner's findings that Petitioner should have had a surplus of funds saved to apply to the overdue mortgage. Petitioner has not paid the mortgage since September 2018, which, as found by the Hearing Examiner, meant Petitioner should have had a surplus of income in the amount of $7,776 during the year 2019, and a surplus of income in the amount of $3,180 from January 2020 to June 2020, saved to apply toward the overdue mortgage. However, Petitioner did not save any of those funds to apply to the overdue mortgage.
In summary, based on our review of the record, we cannot say the Hearing Examiner erred in concluding that Petitioner's income is currently insufficient to maintain full monthly mortgage expenses, Petitioner's income has been insufficient to maintain monthly mortgage expenses for the past 2 years, and Petitioner's lack of saved funds all indicated an inability to maintain expenses with no reasonable prospect of paying the mortgage within 24 months from delinquency and by maturity or in denying the HEMAP loan application on that basis.
B. Failure to comply with PHFA's procedural requirement
The Hearing Examiner also reviewed the requirement that Petitioner submit a lump sum of $3,000 to receive a HEMAP loan and concluded that Petitioner failed to do so. Our Court has held that failure to comply with a procedural requirement set forth in Act 91 supported the denial of a HEMAP loan application. Mull, 529 A.2d at 1188. In Mull, the petitioner failed to have a timely face-to-face meeting with a consumer credit counseling agency as required by Act 91 and PHFA's related rules. Id. at 1187. Section 31.204(f) of the Policy Statement says:
(f) [PHFA] may determine that a homeowner can reasonably contribute a lump sum towards the mortgage arrearage and may either require the homeowner to pay that sum into [PHFA] in advance of closing the [PHFA's] loan or to bring the sum with [the homeowner] when the [PHFA's] loan is closed. [PHFA] may waive or reduce the lump sum amount originally required if the homeowner needed to use the funds for necessities prior to closing.12 Pa. Code § 31.204(f). Consistent with this provision, the March 5, 2020 letter and subsequent communication required Petitioner to submit a lump sum of $3,000 toward the arrearage in order to receive a HEMAP loan. It is undisputed that Petitioner did not make this payment.
Petitioner argues that the Hearing Examiner did not provide enough time for Petitioner to pay the base contribution as the inability to pay the base contribution was due to circumstances beyond Petitioner's control. The authorization of the HEMAP loan contingent on Petitioner's payment of the base contribution was premised on Petitioner's statements that funds for the base contribution were immediately available. The record supports the Hearing Examiner's finding that, instead of putting any of the surplus of funds toward the base contribution, Petitioner paid loan companies thousands of dollars in order to get a loan that would then be used to make the base contribution. As our Court held in O'Brien, a petitioner's inability to save or apply any funds to the overdue mortgage when there was a surplus of income was "the cause of [the petitioner's] predicament," and not attributable to circumstances beyond the petitioner's control. O'Brien, slip op. at 15. While the Court empathizes with Petitioner's predicament, we are constrained to hold, under these circumstances, that the Hearing Examiner did not err in concluding that Petitioner failed to meet a procedural requirement of PHFA or in denying the HEMAP loan application on that basis.
V. CONCLUSION
In sum, the Hearing Examiner did not err in denying Petitioner's application for a HEMAP loan because the record supports the Hearing Examiner's findings and conclusions that there is no reasonable prospect of Petitioner resuming full mortgage payments within 24 months of delinquency and by maturity and Petitioner failed to meet a procedural requirement of PHFA. Accordingly, we regretfully must affirm.
ORDER
NOW, September 1, 2021, the August 20, 2020 Order, entered in the above captioned matter, is AFFIRMED.