Wednesday, November 15, 2017

mortgage assistance - HEMAP - applicant not eligible

Bowman v. PHFA – Cmwlth. Court – November 14, 2017 – unreported memorandum opinion* 

Held:  Applicant not eligible for HEMAP mortgage assistance. Substantial evidence supported findings that  a) there was no reasonable prospect that applicant would be able to resume full mortgage payments within 24 month, or b) that she was suffering from financial hardship due to circumstances beyond her control.

*An unreported Commonwealth Court case may not be cited binding precedent but can be cited for its persuasive value.  See 210 Pa. Code § 69.414(b) and Pa. R.A.P.  3716

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Comments by Peter Schneider of CLS 

This is an interesting decision. HEMAP denial was affirmed on the basis that there was no reasonable prospect of resuming payments, but Commonwealth Court disagreed with the hearing examiner’s finding that hardship was not beyond borrower’s control:

B. Financial Hardship
Petitioner’s failure to satisfy the reasonable prospect element of Act 91 is
dispositive of her application for a HEMAP loan. However, we write briefly to
highlight the errors the Hearing Examiner made when considering the issue of
financial hardship.

Act 91 provides that the mortgagor must establish that she “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.” 35 P.S. § 1680.404c(a)(4). Act
91 does not define the phrase “circumstances beyond the mortgagor’s control.”
However, Act 91 indicates that PHFA “may consider information regarding the
mortgagor’s employment record, credit history and current income.” 35 P.S.
§ 1680.404c(a)(10). On the issue of the mortgagor’s employment record, PHFA’s
HEMAP Policy Statement adds that “[u]nemployment or underemployment,
through no fault of the homeowner” are examples of circumstances beyond the
mortgagor’s control that result in financial hardship to the mortgagor. 12 Pa. Code.
§ 31.205(b)(1).10

In contrast, PHFA will not consider “[t]ermination of employment
by the homeowner without a necessitous cause or termination of the homeowner’s
employment by an employer for willful misconduct” to be circumstances beyond the
mortgagor’s control. 12 Pa. Code § 31.205(c)(2). Section 31.205 of the Policy
Statement does not define “necessitous cause” or “willful misconduct.” However,
these same terms appear in Section 402(b) and (e) of the Unemployment
Compensation (UC) Law.11

In concluding that Petitioner did not suffer a financial hardship due to
circumstances beyond her control, the Hearing Examiner found both that Petitioner
“voluntarily terminated” her position with Human Services and that she was “forced
to resign.” (Examiner’s Decision at 2, 6.) These findings are inconsistent. See Pa.
Liquor Control Bd. v. Unemployment Comp. Bd. of Review, 648 A.2d 124, 126 (Pa.
Cmwlth. 1994) (noting that an employee who resigns in order to avoid an imminent
discharge has not voluntarily resigned but has been discharged and is entitled to UC
benefits if she has not committed willful misconduct). If Petitioner was forced to
resign in order to avoid an imminent discharge and did not commit an act of willful
misconduct, it may have been that the termination of her employment with Human
Services was through no fault of her own, and the loss of that employment, in
combination with the death of her mother and the resultant loss of $1,500 a month
in rental income, constituted a financial hardship due to circumstances beyond
Petitioner’s control. Thus, had Petitioner not failed to satisfy the reasonable prospect
element, we would have remanded this matter for the Hearing Examiner to resolve
this inconsistency on the issue of financial hardship.

9 A mortgagor may reapply for assistance from PHFA if “there is a material change in
circumstances.” 35 P.S. §1680.404c(b).
10 We have never held that 12 Pa. Code § 31.205 is a statement of policy and not a
regulation, but, as noted, we have held that the section that follows it, 12 Pa. Code § 31.206, is a
statement of policy, and all of subchapter B of chapter 31 of the Pennsylvania Code, which
addresses HEMAP, is referred to as a “policy statement.”
11 Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S.

§ 802(b), (e).