Opinion
No. 1438 C.D. 2013
04-14-2014
William E. McNulty, Petitioner v. Pennsylvania Housing Finance Agency, Respondent
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY SENIOR JUDGE COLINS
William E. McNulty, pro se, petitions for review of a final adjudication of the Pennsylvania Housing Finance Agency (PHFA) affirming the denial of his application for emergency mortgage assistance under what is commonly known as the "Homeowner's Emergency Mortgage Assistance Act" (Act 91). On appeal, McNulty argues that PHFA erred in determining that he failed to meet the requirements of Section 404c(a)(4) of Act 91. Discerning no error, we affirm.
Act of December 3, 1959, P.L. 1688, as amended, 35 P.S. §§ 1680.401c-1680.412c.
Section 404c(a)(4) of Act 91 provides, in pertinent part:
(a) No Assistance may be made with respect to a mortgage under this article unless all of the following are established:
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35 P.S. § 1680.404c(a)(4)(4) The mortgagor is a permanent resident of this Commonwealth and 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.
We are able to glean the following summary of facts from the hearing examiner's decision and the record. On February 21, 2013, CitiMortgage sent McNulty a letter, in accordance with Act 91, notifying him that his mortgage was in default because he had not made monthly mortgage payments for the period beginning December 1, 2011 through February 1, 2013. With the addition of late charges for the aforesaid fifteen month period, previous late charges, and a delinquency expense, and reduced by the amount of $1,213.64 identified on the notice as "unapplied funds," the total past due amount was listed as $16,150.22. CitiMortgage also advised McNulty of the steps that he could take to try to avoid foreclosure, which included obtaining a Homeowner's Emergency Assistance Program (HEMAP) loan. (Record Item No. 29, February 21, 2013 Act 91 Notice, Supplemental Reproduced Record (S.R.R.) at 4b-10b.)
On March 25, 2013, McNulty met with Advantage Credit Counseling Services (ACCS), a credit counseling agency, which assisted him in preparing an application for a HEMAP loan. ACCS subsequently forwarded McNulty's application to PHFA.
On April 26, 2013, PHFA notified McNulty that his application had been denied. PHFA determined that McNulty was not suffering from financial hardship due to circumstances beyond his control based on: (1) McNulty's income being sufficient to maintain his monthly financial obligations; and (2) the mortgage delinquency being a result of a dispute between McNulty and the mortgagee and thus not considered an emergency mortgage assistance situation. (Record Item No. 34, Denial Letter of April 26, 2013, S.R.R. at 16b.) McNulty appealed, and an evidentiary hearing was held before a hearing examiner on June 13, 2013. In her Notice of Decision issued on June 27, 2013, affirming the denial of the mortgage assistance loan, the hearing examiner referred to the circumstances outlined by McNulty in the course of his testimony:
[McNulty] entered into a trial modification with [CitiMortgage] in July 2010. [McNulty] stated he paid $582.45 per month in July, 2010, August 2010 and September 2010. After the 3 month trial period ended, [McNulty] stated he was advised by the lender to continue paying $582.45 which he stated he has paid every month. He stated the lender never notified him that the modification ended and his mortgage payment increased.(Record Item No. 38, Notice of Decision of Hearing Examiner, S.R.R. at 2b-3b.)
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[McNulty] stated that he was not notified to pay any payment other than $582.45. Based on the [second] Act 91 Notice, dated March 19, 2013, the lender lists 16 delinquent monthly payments of $789.84, beginning on December 1, 2011 through March 1, 2013.
The hearing examiner concluded that her findings demonstrated an ongoing dispute between McNulty and the mortgage lender, and stated that PHFA "does not act as a mediator" between the mortgagor and mortgagee. (Id., S.R.R. at 3b.) Thus, the hearing examiner concluded, based on the fact that the mortgage delinquency is the result of a dispute between McNulty and his mortgagee and is not considered an emergency mortgage assistance situation, the mortgage loan was properly denied on the basis that McNulty is not suffering financial hardship due to circumstances beyond his control.
Further, the hearing examiner determined, based on McNulty's testimony and the income and expense information he submitted, that his net monthly income of $1,963 exceeds his monthly expenses of $1,816 (with a monthly mortgage payment of $790 included therein) by $147, and is therefore sufficient to maintain his monthly housing expenses. The hearing examiner stated:
[McNulty's] net monthly income has been sufficient to maintain the higher monthly mortgage payment of $790 or to set aside the difference between the modified mortgage payment of $582, which he stated he has consistently paid, and the higher mortgage payment of $790. However, [McNulty] has no funds saved. Therefore, the mortgage assistance loan was properly denied on the basis: [McNulty] is not suffering financial hardship due to circumstances beyond [McNulty's] control based on: Total mortgage delinquency is not due to circumstances beyond [McNulty's] control: [McNulty's] income is sufficient to maintain the monthly housing expenses.(Id.)
McNulty now petitions this Court for review of PHFA's final adjudication. He challenges the determination of the hearing examiner that he is involved in a dispute with his lender, and asserts that, on the contrary, he was paying his mortgage lender $582.45 per month pursuant to an approved modification arrangement up until June 2012. McNulty requests this Court to reverse the decision of the hearing examiner, and asserts that he cannot afford to pay the delinquent amount as required in order to avoid foreclosure.
A review of PHFA's determination by this Court is limited to determining "whether constitutional rights were violated, an error of law committed, or the findings of fact are not supported by substantial evidence." Fish v. Pennsylvania Housing Finance Agency, 931 A.2d 764, 767 n.3 (Pa. Cmwlth. 2007).
As evidence of the existence of an approved mortgage modification arrangement, McNulty points to a notice from CitiMortgage dated June 6, 2012, titled "Home Affordable Modification Program Urgent Notice" that states:
Thank you for your interest in a mortgage modification under the government's Home Affordable Modification Program (HAMP). As part of the program you are required to make monthly scheduled Trial Payments. As of 06/06/12, we have not received your scheduled trial payment which is required so you can remain in the program. If you fail to make a Trial Payment by the last day of the month in which it is due, you will be considered to have failed the trial period and will not be eligible for a HAMP modification...(Record Item 21.)
To qualify for a HEMAP loan, a homeowner must show he meets the eligibility criteria in Act 91. Coyne v. Pennsylvania Housing Finance Agency, 826 A.2d 925 (Pa. Cmwlth. 2003). The hearing examiner determined that McNulty failed to meet this criteria because he was not suffering from financial hardship due to circumstances beyond his control. PHFA's regulations specify that, in making a determination on financial hardship, "the Agency will consider the homeowner's credit history, employment record, assets, current and past household income, net worth, and other relevant factors." Here, the findings of the hearing examiner regarding McNulty's household income and expenses and ability to make the monthly mortgage payments, even at the higher amount of $790, are supported by substantial evidence. Indeed, McNulty testified that he is able to pay the $790 monthly mortgage payment. (Record Item No. 44, Appeal Hearing Transcript of Testimony (H.T.) at 10, S.R.R. at 28b.)
16 Pa. Code § 40.202(e)(3).
The hearing examiner further determined that McNulty's mortgage delinquency was a result of a dispute with his lender, and therefore not considered an emergency mortgage assistance situation. Here, the record supports the hearing examiner's determination. Notwithstanding McNulty's assertion that he made modified monthly payments of $582.45 for thirty-three months - by McNulty's account, beginning in July, 2010 and ending in March, 2013 - with no reason to believe that the modified amount might no longer be acceptable to his lender, the record contains evidence otherwise.
Before the hearing examiner McNulty testified that he had been denied an emergency loan request made in May 2011 for a then-delinquent amount of $8,200. (H.T. at 8-9, S.R.R. at 26b-27b.) The June 2012 notice from CitiMortgage, upon which McNulty relies, references the borrower's "interest in mortgage modification," suggesting a newly applied-for modification agreement with a trial period. (Record Item No. 21.) Moreover, the record contains a July 2012 mortgage statement from the lender which acknowledges receipt of a $582.45 payment on July 5, 2012, but specifies a "current payment due" date of August 1, 2012 for the higher mortgage payment amount of $789.84, and further lists accumulated delinquency expenses of $3,782.14, late charges of $1,306.19; and a "past due" amount of $7,108.56, for a total amount due of $12,986.73. (Record Item No 5.) In sum, there is ample reason to conclude that there was significant, longstanding disagreement between mortgagor and mortgagee as to the amount of the monthly payment, and that McNulty took no steps to resolve the situation.
McNulty testified that he was approved for a trial modification in July 2010, made the three trial period payments, and then called his lender to ask what to do next. He stated that he was told to make the same modified payment, which he did, and was told the same thing when he called to inquire for each of the following two months. He stated that on the following month, the lender sent a foreclosure notice, which included the information that he had a delinquency of $8,200. Nevertheless, McNulty stated that he continued to make monthly payments at the modified amount. (H.T. at 18, S.R.R. at 36b.) --------
PHFA's interpretation of Act 91 is entitled to great weight and may be disregarded only if such construction is clearly erroneous. Valentine v. Pennsylvania Housing Finance Agency, 511 A.2d 915, 916 (Pa. Cmwlth. 1986). Act 91 was enacted to assist homeowners, who because of the sharp downturn in economic activity in the Commonwealth were suffering financial hardship due to circumstances beyond their control that has rendered them unable to maintain their mortgage obligations. Act 91, preamble. Here, the record amply supports the hearing examiner's factual determination that McNulty had sufficient income to maintain his monthly mortgage obligation, and that McNulty was clearly involved in a dispute with his lender. Because McNulty's financial hardship was not caused by circumstances beyond his control, PHFA properly denied him emergency mortgage assistance. PHFA's order is affirmed.
/s/_________
JAMES GARDNER COLINS, Senior Judge ORDER
AND NOW, this 14th day of April, 2014, the final adjudication of the Pennsylvania Housing Finance Agency in the above-captioned matter is hereby affirmed.
/s/_________
JAMES GARDNER COLINS, Senior Judge