Opinion
No. 402 C.D. 2013
02-10-2014
Dee Ann Ebersole, Petitioner v. Pennsylvania Housing Finance Agency, Respondent
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE SIMPSON
Dee Ann Ebersole (Petitioner), representing herself, petitions for review of an adjudication of the Pennsylvania Housing Finance Agency (Agency) denying her application for emergency mortgage assistance under the Homeowner's Emergency Mortgage Assistance Loan Program (Act 91). Petitioner primarily asserts the Agency erred in determining she was not suffering financial hardship due to circumstances beyond her control that rendered her unable to correct her mortgage delinquency within a reasonable time. Discerning no error below, we affirm.
Act of December 3, 1959, P.L. 1688, added by the Act of December 23, 1983, P.L. 385, as amended, 35 P.S. §§1680.401c-1680.410c. The purpose of Act 91 is "to establish a program which will through emergency mortgage payments prevent widespread mortgage foreclosures ... which result from default caused by circumstances beyond a homeowner's control." Crawl v. Pa. Hous. Fin. Agency, 511 A.2d 924, 927 (Pa. Cmwlth. 1986) (emphasis in original).
We glean the following summary of facts from the hearing examiner's decision and the record. In June 2010, Petitioner applied for and received a mortgage loan from Wells Fargo Bank, N.A. in the amount of $162,807 to purchase her personal residence located at 714 South Spruce Street, Elizabethtown, Pennsylvania (property). The monthly mortgage payments are $1,206.
In March 2011, Petitioner filed for a protection from abuse (PFA) order against her husband and co-borrower on the mortgage loan, Mark R. Ebersole. After a temporary PFA was granted, Petitioner's husband moved from the property to another residence. Ultimately, Petitioner's application for a PFA was dismissed. Although separated from Petitioner, Mark Ebersole continued making monthly mortgage payments until October 2011.
Petitioner worked as an independent insurance sales contractor for Insphere Insurance Solutions (Insphere). In March 2011, Insphere placed Petitioner on suspension for contacting multiple departments within the company and engaging in conversations that gave rise to concerns about Petitioner's ability to represent the company. About a month later, Insphere canceled its contract with Petitioner. Between April 2011 and June 2012, Petitioner's income consisted of child support in the amount of $921 per month and certain residual income of approximately $147 per month from insurance policies Petitioner sold.
Petitioner testified her estranged husband was behind the events that led to her suspension.
In November 2011, Petitioner's son was in a severe automobile accident. Petitioner believes her son continues to suffer from soft tissue brain damage. He requires ongoing treatment.
Petitioner subsequently applied for Social Security disability benefits for herself as well as Social Security benefits for her two children, which were granted. Specifically, Petitioner received a lump sum payment of $18,516 in early June 2012, followed by ongoing monthly payments. Petitioner did not use or save any of the lump sum she received toward the mortgage delinquency. According to Petitioner's testimony she was unaware that the mortgage was delinquent at that time. Of the lump sum of Social Security benefits she received, Petitioner used $4,300 to purchase a four-wheel drive vehicle for her daughter. She also purchased various consumer electronic devices, and she took her children on vacation.
In October 2012, Petitioner received an Act 91 Notice indicating that Wells Fargo intended to foreclose on the property based on a default in mortgage payments beginning in October 2011. Petitioner testified she was unaware that her estranged husband ceased paying the mortgage until she received the Act 91 Notice. Petitioner subsequently contacted a consumer counseling agency and applied for a HEMAP loan.
In its brief, the Agency points out that the lender mistakenly provided Petitioner with an Act 91 Notice because Petitioner's mortgage is FHA-insured, and, therefore, ineligible for HEMAP. See Section 404-C(a)(3) of Act 91, 35 P.S. §1680.404c(a)(3). Instead, the Agency states, the lender should have provided Petitioner notice as required by the Act of January 30, 1974, P.L. 13, No. 6, 41 P.S. §§101-605 (Act 6). Nevertheless, the Agency correctly notes that, although the lender provided Petitioner with the incorrect notice, the lender's error did not affect Petitioner's rights, as the Act 91 Notice incorporates the Act 6 Notice provisions. See Section 403-C(b)(1) of Act 91, 35 P.S. §1680.403c(b)(1).
Petitioner further testified she made approximately 10 attempts to contact the lender regarding the status of the mortgage, but the lender would not speak with her because, although she is named as a co-borrower on the mortgage and named on the deed for the property, she is not on the mortgage note.
As of the time of her HEMAP loan application, Petitioner received a total of $4,195 in monthly income, which included Social Security benefits for her and her children, child support payments and residual income from Insphere. At that time, Petitioner's monthly expenses totaled $3,950, including her mortgage payment and average utilities.
Nevertheless, Petitioner did not make any payments toward curing her mortgage default after receiving the Act 91 Notice. Further, she spent approximately $2,500 of savings to purchase items for Christmas in 2012.
In addition, in January 2013, Petitioner received an $18,000 inheritance from her grandfather, but she testified that she was unsure if she wanted to use any of her inheritance to cure the mortgage delinquency because doing so would be against her grandfather's wishes. Petitioner's mortgage remains due for all monthly payments from October 2011 to present.
Ultimately, the Agency denied Petitioner's application for a HEMAP loan on the grounds that Petitioner was not suffering financial hardship beyond her control because she received a lump sum of $18,156 in Social Security benefits in June 2012 and did not save or use any of that amount toward the mortgage delinquency. Additionally, the Agency stated Petitioner's household income was sufficient to pay the mortgage since June 2012, yet the mortgage remained due from October 2011, and Petitioner saved no funds toward the delinquency.
Petitioner subsequently requested and was granted a hearing to contest the Agency's denial of her HEMAP application. Shortly thereafter, a hearing examiner affirmed the denial of Petitioner's HEMAP application on the ground that Petitioner is not suffering financial hardship from circumstances beyond her control. The hearing examiner also stated that, because Petitioner's mortgage was insured by the Federal Housing Authority (FHA) under Title II of the National Housing Act, see 12 U.S.C. §§ 1707-1715z-18, she was ineligible for assistance under Act 91. Petitioner now appeals to this Court.
On appeal, Petitioner states five issues. However, the argument section of Petitioner's brief does not correspond to these issues. Rather, in the argument section of her brief, Petitioner sets forth in detail various circumstances, which, she contends, show she was suffering from financial hardship beyond her control.
Our review is limited to determining whether constitutional rights were violated, whether an error of law was committed, and whether necessary findings were supported by substantial evidence. R.M. v. Pa. Hous. Fin. Agency, 740 A.2d 302 (Pa. Cmwlth. 1999).
As factfinder, the hearing examiner has complete authority over questions of witness credibility and evidentiary weight. A&J Builders, Inc. v. Workers' Comp. Appeal Bd. (Verdi), 78 A.3d 1233 (Pa. Cmwlth. 2013); see Coyne v. Pa. Hous. Fin. Agency, 826 A.2d 925 (Pa. Cmwlth. 2003). It is irrelevant whether there is evidence to support contrary findings; if substantial evidence supports the hearing examiner's necessary findings, we will not disturb those findings on appeal. A&J Builders.
In the Summary of Argument section of her brief, Petitioner asserts the Agency did not look at the "complete scope of [her] issues." Pet'r's Br. at 13. Rather, the Agency "'micro'd' in on one item: The fact that [Petitioner] received Social Security [benefits], and [Petitioner] had adequate means to pay the mortgage." Id. Petitioner maintains the Agency did not "compute" that she suffered financial hardship for 15 months prior to the award of Social Security benefits, and she was unaware the mortgage was delinquent because her estranged husband prevented the lender from releasing any information to her regarding the status of the mortgage. Id. Petitioner also contends she maintained the property, repaired all necessary items, including an electrical wiring problem for which she incurred a cost of $700, which she was required to pay out of her lump sum of Social Security benefits.
Petitioner also points out that Pennsylvania foreclosure law requires payment in full to rectify an arrearage. Petitioner asserts the Agency noted she had the means to pay the mortgage, but that as of October 2012, the mortgage remained unpaid. Contrary to this statement, Petitioner contends she could not merely make one mortgage payment, and she did not have sufficient funds to cure the entire delinquency. Petitioner also cites what she refers to as the Agency's "guidelines" (set forth in 12 Pa. Code §31.205(b)(2), (3), (5), (6), (7)), which provide examples of circumstances beyond a mortgagor's control that result in financial hardship. Petitioner argues her circumstances fall within five of the eight examples, and the Agency failed to abide by its own guidelines in denying her HEMAP loan application.
In response, the Agency contends that Act 91 specifically states that mortgages insured by the FHA under Title of the National Housing Act are ineligible for HEMAP. Because Petitioner's mortgage is FHA-insured, see Supplemental Reproduced Record (S.R.R.) at 26b, the Agency argues, she is ineligible for assistance.
The Agency further maintains that a HEMAP loan may only be extended to a homeowner suffering financial hardship caused by circumstances beyond her control. Here, Petitioner received more than $36,000 in two separate lump sum payments, in June 2012 and January 2013, yet has failed to make any mortgage payments since receiving notice of the lender's intent to foreclose on her property in October 2012. Thus, the Agency asserts, Petitioner is not suffering financial hardship caused by circumstances beyond her control and is, therefore, ineligible for assistance.
To qualify for a HEMAP loan, a homeowner must show she meets the eligibility criteria in Act 91. Coyne v. Pa. Hous. Fin. Agency, 826 A.2d 925 (Pa. Cmwlth. 2003); Crawl v. Pa. Hous. Fin. Agency, 511 A.2d 924 (Pa. Cmwlth. 1986). Further, the Agency's interpretation of Act 91 is entitled to great weight and may only be overturned if such construction is clearly erroneous. Horton v. Pa. Hous. Fin. Agency, 511 A.2d 917 (Pa. Cmwlth. 1986).
First, with regard to the hearing examiner's determination that Petitioner is not eligible for HEMAP because her mortgage is insured by the FHA, Section 404-C(a)(3) of Act 91 states: "No assistance may be made with respect to a mortgage or mortgagor under this article unless all of the following are established: ... The mortgage is not insured by the Federal Housing Administration under Title II of the National Housing Act (12 U.S.C. §§ 1707-1715z-18)." 35 P.S. §1680.404c(a)(3). Here, the hearing examiner stated:
A copy of the mortgage, provided by [Petitioner], lists the mortgage as a FHA Title II loan as evidenced by the FHA Case# 446-0232679-703. Based on the laws which govern the [HEMAP], mortgages insured by the [FHA] under Title II of the National Housing Act are not eligible for a [HEMAP] loan. In addition, loans that were formerly insured by [FHA] Title II are also not eligible. Therefore, the mortgage is ineligible for a [HEMAP] loan because the mortgage is a FHA Title II loan.Hearing Examiner's Dec., 2/5/13, at 7-8; S.R.R. at 7b-8b. Our review of the record confirms that the first page of Petitioner's mortgage bears an "FHA CASE NO." S.R.R. at 26b. Because the record supports the hearing examiner's determination that Petitioner's mortgage is insured by the FHA, we discern no error in the hearing examiner's determination that Petitioner is not eligible for a HEMAP loan. 35 P.S. §1680.404c(a)(3).
Further, even if Petitioner's mortgage was not FHA-insured, we would not disturb the hearing examiner's determination that Petitioner did not prove she was suffering from financial hardship due to circumstances beyond her control which rendered her unable to cure the mortgage delinquency within a reasonable time and make her mortgage payments.
To that end, Sections 404-C(a)(4) and (10) of Act 91 state:
(a) No assistance may be made with respect to a mortgage or mortgagor under this article unless ....
35 P.S. §§1680.404c(a)(4) & (10) (emphasis added).
* * * *
(4) The mortgagor ... is suffering financial hardship due to circumstances beyond the mortgagor's control which render the mortgagor unable to correct the delinquency or delinquencies within a reasonable time and make full mortgage payments.
* * * *
(10) For purposes of this section, in order to determine whether the financial hardship is due to circumstances beyond the mortgagor's control, the agency may consider information regarding the mortgagor's employment record, credit history and current income.
In addition, the Agency's policy statement on HEMAP, contained in the Pennsylvania Code and vaguely referenced (in part) by Petitioner, states, as relevant:
(a) General. The Agency will consider all relevant factors when evaluating whether the homeowner is suffering financial hardship and whether the financial hardship is due to circumstances beyond the homeowner's control, including the following:
(1) The homeowner's past and present household income and reasons for reductions in household income.
(2) Assets which were or are available and could have been or can be liquidated to correct the mortgage delinquency. The Agency will not consider assets in a pension, profitsharing, annuity or similar retirement plan or contract as available for liquidation to the extent that these funds are reasonably necessary for the support of the homeowner, or dependents or the surviving spouse of the homeowner.
* * * *
(4) The homeowner's employment history—including unemployment, underemployment and the reasons therefore—and eligibility for other types of financial assistance.
(b) Examples. Examples of circumstances beyond the mortgagor's control which result in financial hardship to the mortgagor include the following:
* * * *
(2) Loss, reduction or delay in receipt of Federal, State or other Government benefits (for example, Social Security, Supplemental Security Income, Public Assistance, Government Pensions), or of private benefit payments—for example, pensions, annuities, retirement plans.
(3) Loss, reduction or delay in receipt of income because of the death or disability of a person who contributed to the household income.
* * * *
(5) Expenses actually incurred related to uninsured damage or costly repairs to the mortgaged premises affecting its habitability.
(6) Expenses related to death or illness in the homeowner's household or of family members living outside the household which reduce the amount of household income.
(7) Loss of income or substantial increase in total housing expenses because of a divorce, abandonment, separation from a spouse or failure to support.
* * * *
(c) Disallowance . The following circumstances will not be considered by the Agency to be beyond the mortgagor's control:
* * * *
(3) When the homeowner had sufficient income to pay his mortgage, but failed to do so. In this regard, if the homeowner's total housing expense is less than or equal to 40% of net effective income, and no reasonable cause for financial hardship is demonstrated by the homeowner, nonpayment of the mortgage debt will not be considered to be a circumstance beyond the homeowner's control.
(4) When the homeowner's financial hardship was a result of money mismanagement or an over extension of credit to the homeowner. In this regard, the Agency will consider the following in determining whether the homeowner used prudent financial management:
(i) The homeowner's continued payment of normal and necessary living expenses after the financial hardship occurred will not be considered evidence of poor financial management. The homeowner's continuing to make reasonable payments on debts reasonably incurred prior to the financial hardship also will not be considered evidence of poor financial management.
(ii) Debts incurred or expenditures made by the homeowner for non-necessities, during the financial hardship, which exceeded the homeowner's ability to pay, will be considered evidence of poor financial management.
12 Pa. Code §31.205.
* * * *
(e) Cause of financial hardship. In determining the cause of the financial hardship, the Agency will determine whether the cause is one event—such as the loss of a job, separation or divorce, sickness or injury—or whether a series of factors beyond the homeowner's control, in combination, caused the financial hardship.
Here, based on the evidence received at the hearing, the hearing examiner explained:
The foregoing findings of fact exhibit two lump sums received by [Petitioner], $18,516 received from Social Security on June 6, 2012 and $18,000 received as an inheritance from her grandfather on January 17, 2013. [Petitioner's] only income from April 2011 through May 2012 was child support, $921 per month, and residual income from Insphere, approximately $147 per month, to meet total monthly expenses of $3,950. From April 2011 until August 2011, the child support was further reduced while [Petitioner's] daughter was living with her father. It is understandable that when [Petitioner] received $18,510 in June 2012, she would need to use some of the funds to bring bills current and make necessary repairs to the subject property. However, [Petitioner] saved none of the lump sum. She spent $4,300 on a vehicle for her daughter, who did not have her driver's license. She loaned $435 to 2 individuals. She spent $700 on a vacation. She purchased a TV, IPAD, X Box and an $800 washing machine, all non-essential items.
[Petitioner] stated at the time she received the lump sum, she assumed her estranged husband was paying the mortgage in a timely manner. However, [Petitioner] had him evicted from the property on a temporary Protection From Abuse order on March 28, 2011. He did pay the mortgage through September 2011. However, it is reasonable to assume that her estranged husband would have no interest in maintaining the mortgage on a property he was unable to live in. [Petitioner] stated that she was not aware that the mortgage was delinquent until she received the Act 91 Notice dated [October] 17, 2012. However, even after receiving the Act 91 Notice, she stated that she spent the $2,500 she had saved toward the mortgage delinquency for Christmas. This is not a circumstance beyond [Petitioner's] control, but a conscious decision to use the funds she had for purposes other than resolving the mortgage delinquency.
In addition, [Petitioner] stated that in January 2013, she received another $18,000 in an inheritance from her grandfather. The mortgage remains 16 months delinquent
through January 31, 2013. Excluding late charges and attorney fees, 16 months @ $1,205.64 equates to $19,290.24. With the lump sum of $18,516 received in June 2012 and the $18,000 received in January 2013, [Petitioner] had more than sufficient funds to bring the mortgage current on her own, if the payment of the mortgage had been made a priority. In this context the mortgage assistance loan was properly denied on the basis: [Petitioner] is not suffering financial hardship due to circumstances beyond [Petitioner's] control based on: Total mortgage delinquency is not due to circumstances beyond [Petitioner's] control: [Petitioner] received $18,515 Social Security lump sum in June 2012 and did not use or save any of it toward the mortgage delinquency. (Act 91, Section 404-C(A)).
Since June 2012, net monthly income of $4,195, at application, exceeds total monthly expenses of $3,950 by $245. In addition, the expenses of $3,950 include the monthly mortgage payment of $1,206. However, [Petitioner] has not paid a monthly mortgage payment since June 2012. Eight months of mortgage payments from June 2012 through January 31, 2013 would equate to $9,648. Adding the excess of $245 per month from June 2012 through January 31, 2013 equates to a total of $11,608, the amount [Petitioner] could have saved to apply toward the mortgage delinquency. This excludes the lump sums of $18,516 received in June 2012 and $18,000 received in January 2013. As of the date of the appeal hearing, [Petitioner] had no funds saved specifically earmarked to apply toward the mortgage delinquency. Although [Petitioner] had sufficient income since June 2012 to set aside $1,451 per month toward the payment of the mortgage, [Petitioner] saved nothing. The payment of the mortgage is not being made a priority. This is not a circumstance beyond [Petitioner's] control but it is a conscious decision to spend the household income on other items.
Although [Petitioner] stated that she was unaware the mortgage was delinquent until she received the Act 91 Notice dated October 17, 2012, she did not save any funds after October 17, 2012 to apply toward the mortgage delinquency. Therefore, the mortgage assistance loan was properly denied on the basis: [Petitioner] is not suffering financial hardship due to circumstances beyond [Petitioner's] control based on:
Household income has been more than sufficient to pay mortgage since June 2012, yet mortgage remains due for 10/2011 and [Petitioner] has no funds saved towards the delinquency. (Act 91, Section 404-C(A)).Hearing Examiner's Dec. at 6-7; S.R.R. at 6b-7b. The record amply supports the hearing examiner's factual determinations. See S.R.R. at 41b, 42b, 43b, 45b, 49b-50b, 51b, 54b, 55b, 57b, 59b, 60b, 62b, 63b-64b, 74b-75b; see also Certified Record at Item Nos. 5, 6, 10, 13, 20.
Further, contrary to Petitioner's assertions, we discern no error in the hearing examiner's determination that Petitioner did not prove she was "suffering financial hardship beyond [her] control which render [her] unable to correct the delinquency ... within a reasonable time and make full mortgage payments." 35 P.S. §1680.404c(a)(4). To that end, the hearing examiner did not focus solely on the timeframe after which Petitioner began receiving Social Security benefits in June 2012. Rather, as the above excerpt reveals, the hearing examiner considered the entire relevant timeframe, including the period from April 2011 until Petitioner began receiving Social Security benefits in June 2012. In that regard, the hearing examiner explained that it was "understandable" that when Petitioner received the lump sum of Social Security benefits in June 2012, she would need to use some of the funds to bring her bills current and make necessary repairs to the property. Hearing Examiner's Dec. at 6; S.R.R. at 6b. However, Petitioner saved none of the lump sum. Instead, she spent $4,300 on a vehicle for her daughter who did not have her driver's license, she loaned $435 to two individuals, she spent $700 on a vacation, and she purchased a television and other electronic devices, all of which were "non-essential." Id. Additionally, Petitioner spent $2,500 on items for Christmas after receiving the Act 91 Notice.
Also, while Petitioner asserts her circumstances fall within several of the enumerated examples set forth in 12 Pa. Code §31.205(b), the hearing examiner determined that Petitioner received more than $36,000 (the lump sum of Social Security benefits in June 2012 and the inheritance from her grandfather in January 2013), an amount sufficient to correct the mortgage delinquency, yet she failed to use or save any of those funds toward the mortgage. Further, beginning in June 2012, Petitioner received sufficient monthly income to pay her expenses, including the mortgage and average utilities; however, Petitioner did not save or use any of this income toward the mortgage delinquency. Based on these circumstances, we discern no error in the hearing examiner's determination that Petitioner was not suffering from financial hardship due to circumstances beyond her control that rendered her unable to correct the mortgage delinquency within a reasonable time and make full mortgage payments. See 35 P.S. §1680.404c(a)(4).
Accordingly, we affirm.
/s/_________
ROBERT SIMPSON, Judge ORDER
AND NOW, this 10th day of February, 2014, the order of the Pennsylvania Housing Finance Agency is AFFIRMED.
/s/_________
ROBERT SIMPSON, Judge