Tuesday, January 31, 2012

foreclosure - HEMAP notice - jurisdiction

Beneficial Consumer Discount Company v. Vukmam - Superior Court - January 30, 2012

The sheriff's sale of a home was properly set aside by the trial court, which held that it lacked subject matter jurisdiction over the matter because the mortgagee failed to comply with the notice requirements of the Homeowner’s Emergency Mortgage Act, 35 P.S. §§ 1680.401c et seq. (“Act 91”), in that it failed to inform her that she had thirty days to have a face-to-face meeting with Appellant.

Subject matter jurisdiction

In the context of discussing subject matter jurisdiction, the Superior Court has held that the notice requirements pertaining to foreclosure proceedings are jurisdictional, and, where applicable, a failure to comply therewith will deprive a court of jurisdiction to act.” Philadelphia Housing Authority v. Barbour, 592 A.2d 47, 48 (Pa. Super. 1991) (citation omitted), affirmed without opinion, 615 A.2d 339 (Pa. 1992); see also, Marra v. Stocker, 615 A.2d 326 (Pa. 1992) (concluding that, despite the fact that a judgment had been entered in the underlying mortgage foreclosure action, the trial court erred by refusing to set aside a sheriff’s sale where the mortgagee failed to provide to the mortgagor the mortgage foreclosure notice required by 41 P.S. § 403). The trial court thus properly considered whether the pertinent Act 91 notice was deficient.

At the time relevant to this appeal,** Act 91 provided that: Before any mortgagee may accelerate the maturity of any mortgage obligation covered under this article, commence any legal action including mortgage foreclosure to recover under such obligation, or take possession of any security of the mortgage debtor for such mortgage obligation, such mortgagee shall give the mortgagor notice as described in section 403-C. [35 P.S. § 1680.403c], which states that the "notice shall also advise the mortgagor of his delinquency or other default under the mortgage and that such mortgagor has thirty (30) days to have a face-to-face meeting with the mortgagee who sent the notice or a consumer credit counseling agency to
attempt to resolve the delinquency or default by restructuring the loan payment schedule or otherwise." [emphasis added]

In this case, the parties agree that the Act 91 notice told the homeowner that she had thirty days to have a face-to-face meeting with a consumer credit counseling agency but did not tell her that that she could meet face-to-face with the mortgagee, i.e., Appellant. The trial court interpreted the language highlighted above to mean that the Act 91 notice had to tell the homeowner about both options and held that, because the Act 91 notice failed to inform the homeowner of the second option, the notice was deficient and it lacked subject matter jurisdiction to
entertain the matter. The trial court set aside the sheriff’s sale and the judgment and then dismissed Appellant’s complaint without prejudice.

Wells Fargo Bank v. Monroe distinguished - The court distinguished its opinion in Wells Fargo Bank v. Monroe, 966 A.2d 1140 (Pa. Super. 2009), where it held that a homeowner who actually met with a mortgagee had to prove that she was prejudiced by the deficiency in the Act 91 notice. The court said "We find Wells Fargo Bank to be sufficiently distinguishable from the matter sub judice, such that the decision in Wells Fargo Bank has no impact on our decision in this case. As best we can discern, the deficiencies cited by the Monroes, with regard to the Act 91 notice they received, did not implicate Act 91’s explicit requirement that the mortgagee’s Act 91 notice must inform the mortgagor that the mortgagor can meet face-to-face with the mortgagee or a consumer credit counseling agency. Moreover, unlike in Wells Fargo Bank, there is no failure on the part of the parties to this appeal to provide this Court with pertinent legal authority. ,. . . .Act 91 explicitly states that, before a mortgagee can even commence a mortgage foreclosure action, it must give the mortgagor the notice described in Section 1680.403c; Subsection 1680.403c(b)(1) clearly and unambiguously mandates that the notice must inform a mortgagor, inter alia, that the mortgagor can meet face-to-face with the mortgagee."

The court held that the trial court had properly set aside the sheriff's sale.


Note that the HEMAP statutuory provisions may not be operative at the present time, because of the dormancy of the program due to a lack of adequate funding. See, the statement of Brian Hudson, exec. director of PHFA. PHFA published a notice to this effect in the Pennsylvania Bulletin on May 28, 2011, stating that, because the “Agency will have insufficient money available in [HEMAP] . . . to accept new applications for emergency mortgage assistance,” it will only accept applications “up to and including” June 30th. In fact, some previously approvals are being rescinded, back to around March 2011. As Brian Hudson's June 30th statement says: Lenders and servicers are reminded that . . . Act 91 requires compliance with the Act 91 Notice prior to instituting a foreclosure action in accordance with Section 409-C. . . August 27, 2011, [is the date] after which mortgagees may take legal action to enforce a mortgage without any additional restriction or requirement under Act 91. [emphasis added]