Subchapter B. POLICY STATEMENT ON HOMEOWNERS EMERGENCY MORTGAGE ASSISTANCE PROGRAM
31.202. Eligibility for mortgage loan assistance.
31.203. Notice; application procedures.
31.204. Agency review.
31.205. Financial hardship due to circumstances beyond the homeowners control.
31.206. Reasonable prospect of resuming mortgage payments and paying mortgage by maturity.
31.208. Insufficient funds.
31.210. Periods of high unemployment.
31.211. Act 91 Notices; information to be supplied to the Agency.
§ 31.201. Definitions.
The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:
Act 91 NoticeThe 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.
ApplicantA person who has received the notice described in Appendix A and who has submitted an application to the Agency under this subchapter.
Consumer credit counseling agencyA nonprofit corporation or governmental entity located in this Commonwealth which has been designated by the Agency to provide Homeowners Emergency Mortgage Assistance Program counseling. A qualified consumer credit counseling agency shall either be certified as a housing counseling agency by the United States Department of Housing and Urban Development or otherwise be determined acceptable by the Agency. A list of counseling agencies approved by the Agency is set forth in Appendix C. This list was last updated and includes all changes through April 1, 2016. Future updates of this list will only appear on the Agencys web site at www.phfa.org, and will be updated on a periodic basis as changes occur. The Agency will annually publish a schedule for updates to the list, and mortgagees will be expected to update their lists in accordance with the schedule.
Face-to-face meetingA meeting conducted either in-person or remotely using technological means, through which the applicant and consumer credit counseling agency communicate with each other contemporaneously, both audibly and visually.
Gross household incomeThe total income of the applicant, all other owners-occupants of the residence, any spouse and children residing in the same household as the applicant and other residents of the household declared by the mortgagor as dependents for Federal tax purposes. The term does not include the income of minor children. The income of adult children or other unrelated individuals residing in the household shall be considered part of gross household income only to the extent that their income is available to the household.
HomeownerThe owner occupant of a one- or two-family residential structure or the owner-occupant of a cooperative or condominium unit who is also the borrower, debtor or obligor on a mortgage encumbering the residence. The term is interchangeable with the term mortgagor.
Installment sales contract or agreementAn agreement or contract under which the seller of residential real property conveys ownership of or an equitable interest in real estate which constitutes the principal residence of the buyer wherein the seller finances the purchase by the buyer through contract, agreement, note or other security interest, if that contract or agreement does not constitute a default under the terms of a pre-existing mortgage between the seller and the sellers mortgagee.
MortgageA lien, other than a judgment, on a fee simple or leasehold interest in real property which constitutes the principal residence of the mortgagor, obligor or debtor, located in this Commonwealth together with credit instruments secured thereby. The term includes an installment sales agreement or installment sales contract. The term also includes an obligation evidenced by a security lien on real property upon which an owner-occupied mobile home is located.
MortgageeA lender whose debt is secured by a mortgage.
MortgagorThe owner occupant of a one- or two-family residential structure or the occupant of a cooperative or condominium unit who is also the borrower, debtor or obligor on a mortgage encumbering the residence. This term is interchangeable with the term homeowner.
Net effective incomeGross household income less city, State and Federal income and Social Security taxes.
Noncorporate sellerA person holding a mortgage who is not a bank, a savings and loan association, a mortgage bank, a consumer discount company or other entity in the mortgage lending business.
Reasonable attorneys fees and costsFees for legal services and reasonable and necessary costs related thereto, which are actually incurred by a mortgagee, in commencing or pursuing an action of mortgage foreclosure. The Agency will reimburse lenders for reasonable attorneys fees and reasonable and necessary costs, which are actually incurred by a mortgagee, in commencing or pursuing an action of mortgage foreclosure and which meet the requirements or limitations on the Agencys web site at www.phfa.org. The Agency will reimburse lenders based upon a reasonable hourly rate as may be established by the Agency annually and published by the Agency in the Pennsylvania Bulletin.
Total housing expenseThe sum of the mortgagors monthly mortgage payments, including escrows, utility costs, hazard insurance expenses, real property taxes and, in the case of cooperatives and condominiums, the maintenance expense shall consist of the monthly amount the unit is assessed for the maintenance of common elements.
The provisions of this § 31.201 amended through June 13, 1986, effective June 14, 1986, 16 Pa.B. 2126; amended July 1, 1994, effective July 2, 1994, 24 Pa.B. 3224; amended June 4, 1999, effective June 5, 1999, 29 Pa.B. 2859; amended August 29, 2008, effective September 6, 2008, 38 Pa.B. 4859; amended April 29, 2016, effective April 30, 2016, 46 Pa.B. 2171; amended April 2, 2021, effective April 3, 2021, 51 Pa.B. 1824. Immediately preceding text appears at serial pages (380293) to (380295).
Notes of Decisions
While the Pennsylvania Housing Finance Agency may not base a determination of ownership on compliance with the recording laws for purposes of 35 P.S. § 1680.402(c) governing mortgage assistance they may require recordation as evidence of ownership under the housing finance regulations in the Pennsylvania Code. Land v. Housing Finance Agency, 515 A.2d 1024 (Pa. Cmwlth. 1986).
§ 31.202. Eligibility for mortgage loan assistance.
(a) Property must be all of the following:
(1) A one- or two-family owner-occupied residence.
(2) Secured by a mortgage, or other security interest in the case of a cooperative or condominium.
(3) The principal residence of the mortgagor.
(4) Located within this Commonwealth.
(b) A mortgage which is insured under Subchapter II of the National Housing Act (12 U.S.C.A. § § 17071715z-25) and mortgages where the secured property is used primarily for commercial or business purposes are not eligible for assistance.
(c) A mortgage held by a noncorporate seller is not eligible for assistance unless the noncorporate seller elects, in writing, in the mortgage or elsewhere to be covered by sections 103 and 401-C409-C of the act (35 P.S. § § 1680.103 and 1680.401c1680.409c). This election may be indicated by the issuance of an Act 91 noticesee Appendix A.
(d) A mortgagor is not eligible for a mortgage assistance loan if any of the following apply:
(1) The mortgage is more than 24 months delinquent or in default for more than 24 months under the terms of the mortgage.
(2) The aggregate amount of assistance needed to bring the mortgage delinquencies current exceeds $60,000.
(3) The property is encumbered by more than two mortgages, other than a mortgage filed by the agency to secure repayment of the mortgage assistance loans, or by other liens or encumbrances which would unreasonably impair the security of the Agencys mortgage as determined by the Agency.
(e) The mortgagee shall have indicated to the homeowner, using the notice referred to in Appendix A, its intention to foreclose or initiate other legal action to take possession of the secured real property. This notice need not be sent to homeowners who do not qualify under subsection (a), (b), (c) or (d).
(f) If a homeowner is in bankruptcy and the automatic stay under 11 U.S.C.A. § 362 is still in effect, the lender is legally prevented from foreclosing. A homeowner who has been sent the notice referred to in Appendix A may apply to the Agency for a mortgage assistance loan while protected by the automatic stay. If the Agency approves the application and the homeowner is still protected by the automatic stay, the approval will be contingent upon the trustee and the bankruptcy court approving the incurring of the mortgage assistance loan by the homeowner.
(g) The homeowner shall meet all of the following requirements:
(1) Be a permanent resident of this Commonwealth.
(2) Have had a favorable residential mortgage credit history for the previous 5 years, as determined under § 31.205(c)(5) (relating to financial hardship due to circumstances beyond the homeowners control).
(3) Be suffering financial hardship due to circumstances beyond his control which renders the homeowner presently unable to correct the delinquencies within a reasonable time and unable to make full mortgage payments. In determining if circumstances are beyond the homeowners control, the Agency will consider the homeowners credit history, employment record, assets, current and past household income, net worth and other relevant factors.
(4) Have a reasonable prospect of resuming full mortgage payments within 24 months after the beginning of the period for which assistance payments are provided by the Agency and be capable of making any payments then remaining due on the mortgage in full by the maturity date or a later date to be agreed upon by the mortgagee.
(5) All owners of the residence shall executeeither personally or through a valid power of attorneythe mortgage and other related loan documents required by the Agency, except as follows:
(i) When the residence is owned by spouses who are separated and the applicant is occupying the mortgaged premises.
(ii) When the residence is jointly owned by former spouses, who are divorced, and the applicant, who is occupying the mortgaged premises, is unable to locate a former spouse or the applicant is unable to obtain a former spouses consent to join in the application or sign the Agencys loan documents.
(6) When an individual has acquired the residence through inheritance, is able to demonstrate ownership of the residence, has assumed the mortgage and is occupying the mortgaged premises, the individual may be eligible for mortgage assistance provided that all other eligibility criteria are fulfilled. When more than one individual acquires a residence through inheritance, all owners of the residence shall executeeither personally or through a valid power of attorneythe mortgage and other related loan documents required by the Agency.
The provisions of this § 31.202 amended through June 13, 1986, effective June 14, 1986, 16 Pa.B. 2126; amended July 1, 1994, effective July 2, 1994, 24 Pa.B. 3224; amended June 4, 1999, effective June 5, 1999, 29 Pa.B. 2859; amended April 29, 2016, effective April 30, 2016, 46 Pa.B. 2171. Immediately preceding text appears at serial pages (336302) to (336304).
Notes of Decisions
Requiring all co-owners to apply jointly for mortgage assistance is plainly within the scope of authority delegated to the Housing Finance Agency. Anela v. Housing Finance Agency, appeal granted 675 A.2d 1252 (Pa. 1996); reversed 690 A.2d 1157 (Pa. 1997). (Editors Note: The court cited former 16 Pa. Code § 40.202 in its decision. 16 Pa. Code § 40.202 was renumbered as 12 Pa. Code § 31.202, at 27 Pa.B. 2415 (May 17, 1997).)
A debtor in bankruptcy may only receive emergency mortgage assistance from the Housing Finance Agency if the automatic stay has been lifted. Watts v. Housing Finance Agency, 876 F.2d 1090 (3rd. Cir. (Pa.) 1989).
Construction with Statutes
The enabling statute, 35 P.S. § 168.401(c)(a)(2), will not be read narrowly by reason of a grammatical interpretation so as to exclude one-family dwellings from the owner-occupied requirement for emergency mortgage assistance; therefore this section is consistent with the statute. Hawkins v. Housing Finance Agency, 595 A.2d 712 (Pa. Cmwlth. 1991).
Evidence of Ownership
While the Housing Finance Agency may not base a determination of ownership on compliance with the recording laws for purposes of 35 P.S. § 1680.402(c) governing mortgage assistance they may require recordation as evidence of ownership under the housing finance regulations in the Pennsylvania Code. Land v. Housing Finance Agency, 515 A.2d 1024 (Pa. Cmwlth. 1986).
This policy statement requiring all co-owners, except separated spouses or ex-spouses, to jointly apply for mortgage assistance conflicts with 35 P.S. § § 1680.401c1680.411c. Anela v. Pennsylvania Housing Finance Agency, 663 A.2d 850 (Pa. Cmwlth. 1995).
The occupancy requirements which must be met in order to be eligible for emergency mortgage assistance require physical presence in the dwelling and assistance was properly denied to an incarcerated applicant. Hawkins v. Housing Finance Agency, 595 A.2d 712 (Pa. Cmwlth. 1991).
This section cited in 12 Pa. Code § 31.203 (relating to notice; application procedures); 12 Pa. Code § 31.204 (relating to Agency review); and 12 Pa. Code § 31.210 (relating to periods of high unemployment).
§ 31.203. Notice; application procedures.
(a) Before a mortgagee accelerates the maturity of a mortgage obligation, commences legal action including mortgage foreclosure to recover under the obligation or takes possession of a security of the mortgage debtor for the mortgage obligation, the mortgagee is required to give notice in accordance with the guidance and form set forth in Appendix A and subject to the following requirements:
(1) The notice is comprised of a one-page English language version with a Spanish language version on the reverse side. Following is an Account Summary which shall be completed by the mortgagee and which must contain all relevant account and default information. The form of notice is set forth in Appendix A. The form in Appendix A includes embedded instructions on format and fonts, which mortgagees should not include in final prepared notices to homeowners. The form in Appendix A may be available in downloadable form on the Agencys web site at www.phfa.org.
(2) Except for the entry of the date at the top of each page and the entry of the relevant homeowner account information on the Account Summary, the notice shall be sent without modification or alteration of its form or substance. The notice may not appear on company letterhead. Other changes including formatting changes to font or type size or the alteration of language contained in the body of the notice are not permitted.
(3) The portion of the notice entitled Account Summary may be amended to include the relevant homeowners complete account information only. The mortgagee may increase or decrease the height of cells within the table to accommodate the homeowner account information specifically indicated. In no circumstance may a mortgagee add or remove any additional fields or cells. Fields that do not apply to a homeowners account shall be filled Not Applicable or N/A.
(4) Each notice must include the English and Spanish language versions set forth in Appendix A, with the Spanish language version appearing on the reverse side of the English language version. In addition to the required mailing of the English and Spanish versions set forth in Appendix A, mortgagees are encouraged to send other translated versions of the first page of the notice when reasonably necessary. Several alternative language versions of the notice are available on the Agencys web site at www.phfa.org. Mortgagees are also encouraged to ensure information is available to homeowners who have limited English proficiency. Mortgagees are reminded that they are required to provide accommodations for persons with disabilities as may be required by law.
(5) Each notice must include the list of consumer credit counseling agencies as updated periodically on the Agencys web site at www.phfa.org. While this list of counseling agencies will be continuously available on the Agencys web site, a schedule of maintenance updates to the list will be provided by the Agency on an annual basis in the Pennsylvania Bulletin. It is the Agencys intention that the annual notice be provided to the industry to reflect new addresses, updates in contact information and other timely adjustments to the list. Mortgagees are expected to check the Agencys web site on the scheduled dates to ensure they are providing the most current counseling agency contact information in the notice. Counseling agencies shall provide the Agency with any updates to mailing addresses, phone numbers and any other pertinent updates as these changes occur.
(6) The notice shall be sent:
(i) By first class mail to the last known address of all homeowners and, if different, the residence which is the subject of the mortgage.
(ii) By registered or certified mail.
(iii) Without any other information or materials.
(iv) If using a window mailing envelope, with either of the following:
(A) An addressed single sheet of plain, white paper.
(B) A mailing insert containing either the last known address of the homeowner or the residence which is the subject of the mortgage.
(7) The notice should be sent at the point the homeowner is at least 60 days contractually delinquent in his mortgage payments or is in violation of other provisions of the mortgage. When the original mortgagor is deceased, mortgagees are encouraged to send the notice to the mortgaged premises at the point that mortgage payments are at least 60 days contractually delinquent.
(8) A mortgagee is not required to send the notice required by this subchapter (unless the homeowner has cured his mortgage delinquency, by means of a mortgage assistance loan or otherwise) as follows:
(i) To homeowners who do not qualify for mortgage assistance under § 31.202(a), (b) or (c) (relating to eligibility for mortgage loan assistance).
(ii) To homeowners who are more than 24 months delinquent or in default for more than 24 months under the terms of the mortgage.
(iii) If the aggregate amount of arrearages due to a mortgagee pursuant to the terms of the mortgage, without regard to any acceleration under the mortgage including the amount of principal, interest, taxes, assessments, ground rents, hazard insurance, any mortgage insurance or credit insurance premiums, exceeds the sum of $60,000.
(iv) To a homeowner who has already been sent the notice and who did not apply for a mortgage assistance loan, or who applied for a mortgage assistance loan but whose application was denied, or whose mortgage assistance disbursements were terminated by the Agency for any reason.
(9) Unless the homeowner has cured his mortgage delinquency, by means of a mortgage assistance loan or otherwise, receipt of partial payments of arrears from the homeowner, subsequent to the sending of the notice, does not mean that the mortgagee shall send a new notice to the homeowner prior to legal action being taken to enforce the mortgage.
(10) A notice sent to the homeowner, while the homeowner was in bankruptcy, shall be valid and no new notice need be provided as a result of any discharge or dismissal of the bankruptcy petition or relief from the automatic stay.
(11) A notice sent under this subchapter, in the form prescribed in Appendix A, shall be instead of any other notice required by State law. If notice is not required to be sent under this subchapter, the mortgagee may still be required to send the 30-day notice required by the act of January 30, 1974 (P.L. 13, No. 6) (41 P.S. § § 101605), known as the Usury Law.
(b) When the homeowner has been sent a notice as required under this subchaptersee Appendix Aby the lender holding the mortgage, the following apply:
(1) The homeowner shall arrange for and attend a face-to-face meeting with a consumer credit counseling agency listed in the notice. The meeting shall be held within 30 days of the date printed on the notice, plus an additional 3 days to allow for mailing period. The Agency presumes that the date printed on the notice is the same as the postmark date of the notice. When the date printed on the notice and the postmark date are not the same as determined by the Agency, the later date will be used to measure the timeliness of the face-to-face meeting.
(2) If the homeowner meets with a consumer credit counseling agency within the period specified in paragraph (1), notice of the holding of and date of the meeting shall be given within 5 business days of the meeting by the consumer credit counseling agency to known mortgagees holding a mortgage on the principal residence of the homeowner. For the purpose of this subchapter, it is the obligation of the mortgagor to notify the consumer credit counseling agency of the name and address of all mortgagees. A mortgagee may not pursue legal action against the homeowners property if the homeowner meets with the consumer credit counseling agency within 33 days of the postmark date of the notice and for an additional period of 30 days subsequent to the meeting between the homeowner and the consumer credit counseling agency, while the application is being prepared to be sent to the Agency. A mortgagee may not proceed with legal action against the homeowner once an application has been approved by the Agency and shall cooperate with the Agency in obtaining reinstatement figures and executing a reinstatement agreement.
(3) The consumer credit counseling agency noticesee Appendix Bto the mortgagee will indicate that the homeowner intends to apply for homeowners emergency mortgage assistance payments.
(4) If after a face-to-face meeting, the homeowner/mortgagor and mortgagee reach an agreement to resolve the delinquency or default as stated in paragraph (1) and if, because of circumstances beyond the homeowners control, the homeowner is unable to fulfill the obligations of that agreement, the homeowner may apply to the Agency or its authorized agent for homeowners emergency mortgage assistance payments within 30 days of a default in payment under the agreement previously reached. The mortgagee is not required to send an additional notice under this provision. The Agency encourages the mortgagee to advise the homeowner of this provision at the time any loss mitigation or forbearance agreement is arranged. If a consumer credit counseling agency is involved, the counseling agency shall notify both the homeowner and the mortgagee of this provision at the time the forbearance agreement is arranged.
(5) An application for assistance may only be obtained from a consumer credit counseling agency. The consumer credit counseling agency will assist the homeowner in preparing and submitting an application. This application shall be postmarked or filed at the offices of the Agency or at a location designated by the Agency within 30 days of the initial meeting between the homeowner and the consumer credit counseling agency.
(6) If the consumer credit counseling agency assists the homeowner in the preparation or submittal of an application for assistance, it will, within 5 business days, inform the known mortgagees of the date of the application submittal.
(7) If the homeowner does apply to the Agency, the Agency will notify known mortgagees holding a mortgage on the principal residence of the homeowner of the receipt of the application.
(8) The Agency will determine eligibility for assistance within 60 days of receipt of the application, during which time no mortgagee may pursue legal action to foreclose upon the mortgage on the homeowners principal residence.
(9) Within 5 business days of making the determination of the eligibility for assistance, the Agency will notify known mortgagees as to whether the application has been approved, disapproved or if funds are not available. If the mortgagee does not receive this notice of disposition or determination within 60 daysplus 5 business days for notificationof receipt of the application by the Agency, or if the notice indicates the application has been disapproved, the applicant was determined to be ineligible for assistance or that funds are not available, the mortgagees may then take legal action to enforce the mortgage.
(10) If after receiving an Appendix A notice the homeowner cures the delinquency or default with or without mortgage assistance from the Agency and the homeowner subsequently becomes more than 60 days delinquent, the mortgagee shall again provide the Appendix A notice before taking legal action.
(11) If the homeowner fails to meet with an approved consumer credit counseling agency within the period specified or fails to meet other time limitations in this subchapter, the mortgagee may take legal action to enforce the mortgage. A homeowner may file a late application and in that case the Agency will make a determination within 60 calendar days of receipt of the application. A late application will not prevent the lender from starting and pursuing a foreclosure action, but if the application is eventually approved at any time before a sheriffs sale, the foreclosure must be stopped.
(12) If the Agency determines that the applicant does not qualify for assistance, the following apply:
(i) The applicant may not reapply for assistance for 24 months from the date of eligibility determination under a mortgage obligation unless there is a material change in the applicants financial circumstances.
(ii) An applicant who is denied a mortgage assistance loan may request an administrative hearing under § 31.209 (relating to appeals). This request does not prohibit a mortgagee from pursuing legal action to enforce the mortgage.
(c) Payments under this subchapter shall be provided for a period not to exceed 24 months, either consecutively or nonconsecutively, whether the payments are on account of arrears, continuing monthly assistance or any combination thereof, and may not exceed the sum of $60,000 on behalf of any mortgagor.
The provisions of this § 31.203 amended December 13, 1985, effective December 14, 1985, 15 Pa.B. 4435; amended July 1, 1994, effective July 2, 1994, 24 Pa.B. 3224; amended June 4, 1999, effective July 1, 1999, 29 Pa.B. 2859; amended August 29, 2008, effective September 6, 2008, 38 Pa.B. 4859; amended April 29, 2016, effective April 30, 2016, 46 Pa.B. 2171. Immediately preceding text appears at serial pages (336304) to (336307).
Notes of Decisions
Administrative hearing provided after agency decision, which revised prior agency determination of qualification for mortgage assistance, satisfied due process consistent with Kentucky Fried Chicken of Altoona, Inc. v. Unemployment Compensation Board of Review, 10 Pa. Commw. 90, 309 A.2d 165 (1973). Hessler v. Housing Finance Agency, 500 A.2d 914 (Pa. Cmwlth. 1985).
Submission of Act 91 Notice is not required for emergency mortgage assistance because this section did not require its submission. Vianello v. Housing Finance Agency, 562 A.2d 441 (Pa. Cmwlth. 1989); appeal denied 575 A.2d 573 (Pa. 1990).
§ 31.204. Agency review.
(a) The applicant shall apply for a loan on the form provided by the Agency. An applicant-homeowner who intentionally misrepresents financial information in conjunction with the filing of an application for assistance may be denied assistance or be required to immediately repay the amount of assistance made as a result of the misrepresentation. The mortgagee may then take legal action to enforce the mortgage without further restrictions or requirements.
(b) Agency responsibilities include the following:
(1) The Agency shall receive from the homeowner full disclosure of assets and liabilities, whether singly or jointly held, and household income regardless of source. For purposes of this subsection, the following are included as assets:
(i) The sum of the households savings and checking accounts, market value of stocks, bonds and other securities, other capital investments, pensions and retirement funds, personal property and equity in real property including the subject mortgage property. Income derived from family assets is considered as income. Equity is the difference between the market value of the property and the total outstanding principal of loans secured by the property and other liens.
(ii) Lump-sum additions to family assets, such as inheritances, capital gains, insurance payments included under health, accident, hazard or workmens compensation policies, and settlements, verdicts or awards for personal or property losses or transfer of assets without consideration within 1 year of the time of application. Pending claims for these items shall be identified by the homeowner as contingent assets.
(2) The Agency will determine whether the homeowner is suffering financial hardship due to circumstances beyond the homeowners control which render the homeowner unable to correct the delinquency within a reasonable period of time.
(3) The Agency will determine whether the homeowner has a reasonable prospect of being able to resume full mortgage payments within 24 months after the beginning of the period for which assistance payments are provided by the Agency and of being able to pay the mortgage in full by the maturity date or by a later date agreed to by the mortgagee for completing mortgage payments. If the term of the mortgage matures prior to or during the period of assistance, the mortgagor may still be eligible for assistance under this subchapter, except as provided in § 31.206(d) (relating to reasonable prospect of resuming mortgage payments and paying mortgage by maturity).
(4) The Agency will make a determination of eligibility within 60 days of receipt of the application.
(c) If the Agency has determined that the homeowner is eligible, and if funds are available, the Agency will do the following:
(1) Pay the mortgagee an amount, negotiated between the mortgagor, the mortgagee and the Agency, sufficient to bring the mortgage current. This includes principal, interest, taxes, mortgage insurance, credit and hazard insurance, assessments, late charges, ground rents, reasonable court costs and reasonable attorney fees already incurred by the mortgagee.
(2) Make payments to the mortgagee on behalf of the homeowner for a period not to exceed 24 months after the beginning of the period for which assistance payments are provided the Agency. Payments may stop if the Agency determines that, because of changes in the homeowners financial circumstances, the payments are no longer necessary or because the homeowner no longer meets the eligibility criteria of § 31.202(a)(f) (relating to eligibility for mortgagee loan assistance). A recipient of assistance has a duty to inform the Agency of a material change in financial circumstances.
(3) Establish the homeowners monthly contribution in an amount which does not cause the homeowners total monthly housing expense to exceed 40% of the homeowners net effective income. Beginning February 1, 1999, and continuing thereafter, a mortgagor approved for continuing monthly mortgage assistance or whose continuing mortgage assistance is approved after being recertified by the Agency, shall pay to the Agency a minimum monthly payment of at least $25 for each mortgage being assisted. After the Agency has notified the homeowner in writing of loan approval and, in the case of a continuing loan, of the homeowners minimum required monthly contribution, the homeowner may agree in writing to contribute a greater percentage of net effective income or to waive receiving continuing monthly disbursements. The Agency will determine and collect monthly mortgage contributions from the homeowner to be forwarded to the mortgagee with the Agencys disbursement. Contributions shall be made at least 15 days before the monthly mortgage payment is due to avoid late charges being imposed by the mortgagee.
(4) Review the homeowners financial circumstances if the homeowner fails to make payment of an amount due within 15 days of the due date. If the delinquency is not a result of a material change in the homeowners financial circumstances, the Agency will notify the mortgagee, mortgagor and consumer credit counseling agency and terminate the assistance. The mortgagee may then commence foreclosure upon the mortgage. If the delinquency is the result of a material, adverse change in the homeowners financial circumstances, the Agency will modify the homeowners required payments, as the Agency will determine.
(5) Review the homeowners financial circumstances at least annually to determine the amounts of repayment required, or more frequently, if the homeowner requests so in writing. As a condition of continued assistance or forbearance of the entire amount of assistance, together with interest, becoming immediately due, the homeowner is required to fully disclose a change in the homeowners financial circumstances and to cooperate with the Agency in performing its annual review.
(d) As an alternative to monthly assistance payments, the parties may agree to restructuring of future payment requirements or, in cases when the balance of the mortgage is minimal in comparison to the monthly mortgage assistance disbursements to be made, to a purchase of the mortgage by the agency and an assignment of the mortgage debt to the agency.
(e) Net income shall be determined as follows:
(1) During the period that the homeowner may be eligible for assistance, and for purposes of calculating the amount of repayment to be required, the homeowner will not be required to pay more than 40% of net effective income toward total housing expenses.
(2) To determine the maximum total housing expense payment, multiply net effective income by .40. If the homeowners total housing expense is less than 40% of net effective income, the mortgagor shall repay to the Agency the difference between 40% of the mortgagors net effective income and the mortgagors total housing expense unless otherwise determined by the Agency after examining the mortgagors financial circumstances and ability to contribute to repayment of the mortgage assistance.
(f) The Agency 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 the Agency in advance of closing the Agencys loan or to bring the sum with him when the Agencys loan is closed. The Agency may waive or reduce the lump sum amount originally required if the homeowner needed to use the funds for necessities prior to closing.
(g) The Agency may establish a reasonable closing fee for loans that are approved to help defray the cost of administering the program. This closing fee will be advanced to the Agency as part of the loan disbursement, and subject to repayment by the homeowner as provided by § 31.207 (relating to repayment).
(h) A mortgagee entitled to payments under this subchapter shall provide to the Agency, within 30 days of the Agencys request, the following documents and information:
(1) An itemized statement of the amounts due under the mortgage including all corporate advances incurred for which reimbursement from the mortgagor is demanded by the mortgagee. Demands for attorney fees, court costs and other advances shall be reasonable and reflect the amount of work and expenses actually expended and may not include any amounts incurred during the period a stay is in effect under this subchapter.
(2) Copies of the following documents from the original mortgage transaction:
(i) The HUD 1 Settlement Statement
(ii) The mortgage and note
(iii) The appraisal, if an appraisal has been performed during the last 5 years
(3) Failure to provide in a timely fashion the documents and information required under this subsection, will result in the mortgagees forfeiture of the right to receive any late fees and attorney fees, costs and expenses.
(i) Upon the Agencys payment of the initial payment to the mortgagee, including any corporate advances allowed by the Agency, the mortgagee shall adjust its accounts to reflect that the mortgage obligation is, as of the date of receipt of the funds, reinstated and current for all purposes. The subsequent imposition by a mortgagee, its successors or assigns, of any charges, fees or other amounts that were paid or disallowed by the Agency, or waived by the mortgagee, shall be in violation of the Unfair Trade and Consumer Protection Law (73 P.S. § § 201-1209-6).
The provisions of this § 31.204 amended through June 13, 1986, effective June 14, 1986, 16 Pa.B. 2126; amended July 1, 1994, effective July 2, 1994, 24 Pa.B. 3224; amended June 4, 1999, effective July 1, 1999, 29 Pa.B. 2859; amended August 29, 2008, effective September 6, 2008, 38 Pa.B. 4859; amended April 29, 2016, effective April 30, 2016, 46 Pa.B. 2171; corrected May 13, 2016, effective April 30, 2016, 46 Pa.B. 2423. Immediately preceding text appears at serial pages (336308) to (336311).
Notes of Decisions
Debtor In Bankruptcy
A debtor in bankruptcy may only receive emergency mortgage assistance from the Pennsylvania Housing Finance Agency if the automatic stay has been lifted. Watts v. Housing Finance Co., 876 F.2d 1090 (1989).
§ 31.205. Financial hardship due to circumstances beyond the homeowners control.
(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 homeowners control, including the following:
(1) The homeowners 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.
(3) The homeowners credit history.
(4) The homeowners employment historyincluding unemployment, underemployment and the reasons thereforeand eligibility for other types of financial assistance.
(b) Examples. Examples of circumstances beyond the mortgagors control which result in financial hardship to the mortgagor include the following:
(1) Unemployment or underemployment, through no fault of the homeowner.
(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 paymentsfor 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.
(4) Unanticipated increases in payments to a mortgage escrow account to compensate for past underestimates of escrow requirements by the mortgagee.
(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 homeowners 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.
(8) Participation by the homeowner in a recognized labor action, such as a strike.
(c) Disallowance. The following circumstances will not be considered by the Agency to be beyond the mortgagors control:
(1) The mortgage of the property for commercial or business purposes.
(2) Termination of employment by the homeowner without a necessitous cause or termination of the homeowners employment by an employer for willful misconduct.
(3) When the homeowner had sufficient income to pay his mortgage, but failed to do so. In this regard, if the homeowners 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 homeowners control.
(4) When the homeowners 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 homeowners continued payment of normal and necessary living expenses after the financial hardship occurred will not be considered evidence of poor financial management. The homeowners 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, expenditures made by the homeowner for non-necessities or failure to evidence reasonable efforts to modify or reduce unnecessary expenses, during the financial hardship, which exceeded the homeowners ability to pay, will be considered evidence of poor financial management.
(5) When the homeowner has had an unfavorable mortgage credit history prior to the present delinquency. The Agency will determine that a homeowner has had an unfavorable residential mortgage credit history if, prior to the present mortgage delinquency, the homeowner was in arrears on a residential mortgage for more than 3 consecutive months within the previous 5 years, except for delinquencies which were the result of financial hardship due to circumstances beyond the homeowners control.
(d) Eligibility. The fact that a circumstance which was beyond the homeowners control occurred before the homeowner actually ceased making mortgage payments does not preclude eligibility. A homeowner may, for example, suffer a loss in income but continue to pay the mortgage from savings, inheritance or borrowing and then later fall behind when the savings or other sources of funds run out.
(e) Cause of financial hardship. In determining the cause of the financial hardship, the Agency will determine whether the cause is one eventsuch as the loss of a job, separation or divorce, sickness or injuryor whether a series of factors beyond the homeowners control, in combination, caused the financial hardship.
(f) Information required. The homeowner shall provide sufficient information, including tax returns, Internal Revenue Service Form W-2, tax transcripts and other documentation deemed acceptable by the Agency to allow the Agency to assess household income and the reasons for the mortgage delinquency. The Agency will base its decision on the information received from the homeowner or other sources. The lack of sufficient information from the homeowner which is reasonably available to the homeowner, or the receipt of knowingly false or misleading information from the homeowner may result in a denial of the application on the merits.
The provisions of this § 31.205 amended July 1, 1994, effective July 2, 1994, 24 Pa.B. 3224; amended June 4, 1999, effective July 1, 1999, 29 Pa.B. 2859; amended April 29, 2016, effective April 30, 2016, 46 Pa.B. 2171. Immediately preceding text appears at serial pages (336311) to (336313).
§ 31.206. Reasonable prospect of resuming mortgage payments and paying mortgage by maturity.
(a) In general, the Agency will consider all relevant factors when evaluating whether the homeowner has a reasonable prospect of being able to resume full mortgage payments within 24 months after the beginning of the period for which assistance payments are provided the Agency and of being able to pay the mortgage in full by maturity or by a later date agreed to by the mortgagee, including the following:
(1) The homeowners prior work history, experience, training, opportunities for retraining and similar factors which may affect the homeowners future employment opportunities.
(2) Potential for future changes in the homeowners financial prospects through re-employment, schooling, training or debt reduction, or other income changes sufficient to enable the homeowner to resume full mortgage payments.
(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.
(5) Potential for repayment of short-term or installment debt.
(6) Delinquencies in other debts which seriously jeopardize continued ownership of the home, which cannot be cured by a mortgage assistance loan.
(7) A homeowners demonstrated ability to make regular monthly mortgage payments, even though those payments represented most of the homeowners income. In determining whether the homeowners future job and income prospects will be sufficient to enable the homeowner to pay the mortgage debtincluding principal, interest, taxes and insurancethe Agency 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. If a homeowner is not required to file taxes, certification of this fact is mandatory at the time of application. In cases when nontaxable income is earned or financial government benefits are received, documentation evidencing receipt of the income or benefits shall be provided.
(b) The Agency will generally determine that a homeowner demonstrates a reasonable prospect of resuming mortgage payments and paying the mortgage by maturity, despite his current unemployment, if the homeowner is suffering a financial hardship through no fault of his own and can demonstrate the following:
(1) A favorable work and credit history.
(2) The ability and history of paying the mortgage when employed.
(3) The lack of an impediment or disability that prevents reemployment.
(4) That he is actively seeking work, as evidenced by a written statement to that effect.
(c) When the homeowner attributes the mortgage default to alcoholism or other chemical dependency and claims that the dependency impaired his ability to handle financial obligations, the homeowner shall provide the Agency with a physicians written diagnosis of the dependency condition and documentation of a pattern of behavior which supports the homeowners claim. The Agency will not consider rehabilitation efforts in determining whether the circumstances were beyond the mortgagors control, but will consider these efforts in evaluating the homeowners reasonable prospects of resuming mortgage payments.
(d) A mortgage will not be assisted unless installments of principal and interest due under the mortgage are structured so that the loan is fully amortized by regular and periodic payments over a designated period of time. A mortgage in which the balance is due upon demand or the balance is due in a lump sum or balloon payment at the end of a term is not eligible for mortgage assistance except as follows:
(1) In cases where the homeowner is in need of a noncontinuing loan to pay arrearages due, the loans are only eligible if the lump sum or balloon payment is not due or the demand for payment has not been made prior to the Agencys disbursement of funds.
(2) In cases where the homeowner is in need of continuing monthly mortgage assistance disbursements, the loans are only eligible if the lump sum or balloon payment comes due or the demand may be made more than 24 months after the beginning of the period for which assistance payments are provided the Agency.
(3) When the homeowner and mortgagee agree to reamortize the mortgage debt or extend the maturity date.
(e) The homeowner shall provide sufficient information to allow the Agency to assess the homeowners future ability to pay the mortgage debt. The Agency will base its decision on the information received from the homeowner or other sources. The lack of sufficient information from the homeowner which is reasonably available to the homeowner, or the receipt of knowingly false or misleading information from the homeowner may result in a denial of the application on the merits.
Notes of Decisions
The hearing examiner did not err as a matter of law in denying the application for mortgage assistance based on his conclusion that the applicants future income was speculative, where there was no evidence as to when the applicant could expect to earn $280,000 to $330,000 per year from the practice of law, or why he has been essentially unsuccessful in these endeavours since his return to work. R. M. v. Housing Finance Agency, 740 A.2d 302 (Pa. Cmwlth. 1999); appeal denied 754 A.2d 390 (Pa. 2000).
Statement of Policy
This section is a statement of policy, not a regulation, and thus it does not have the force and effect of law, since the Housing Finance Agency has consistently classified this section as a statement of policy, since the substantive content of the four factors favors a finding that this section does not create a binding norm, since the fact that the hearing examiner relied upon the criteria of this section is not particularly probative on whether the section is substantive, and since the agency is free to consider in toto the four factors, as well as other factors, and then, based on that guidance and their own judgment, decide whether an applicant is qualified for mortgage assistance. R. M. v. Housing Finance Agency, 740 A.2d 302 (Pa. Cmwlth. 1999); appeal denied 759 A.2d 390 (Pa. 2000).
The provisions of this § 31.206 amended July 1, 1994, effective July 2, 1994, 24 Pa.B. 3224; amended June 4, 1999, effective July 1, 1999, 29 Pa.B. 2859; amended April 29, 2016, effective April 30, 2016, 46 Pa.B. 2171. Immediately preceding text appears at serial pages (336313) to (336315).
§ 31.207. Repayment.
(a) The Agency will establish loan repayment schedules and prepare appropriate forms, instructions and documents concerning repayments or the security for its assistance.
(b) The Agency will enter into an agreement with the homeowner for repayment of mortgage assistance plus interest.
(1) Interest shall accrue at the rate of 9% per year except for loans closed starting January 1, 2009, and thereafter, in which case the rate of interest will be determined by the Agency under section 406-C(5) of the act (35 P.S. § 1680.406c(5)) and as set forth on the Agencys web site at www.phfa.org.
(2) Except as provided in subsection (c), interest shall start to accrue when the homeowner begins to make repayment, and will accrue only during the period in which the homeowner is required to make repayment. Interest will not accrue in an amount greater than the amount of repayment required.
(3) When the mortgage for which mortgage assistance was made under this program is paid, and the homeowners emergency mortgage assistance payments are still due to the Agency, interest will begin to accrue on the outstanding balance, including accrued interest, of the payments made on the homeowners behalf at the same interest rate and on the same basis as specified in the mortgage for which assistance payments were made.
(4) If the residence is no longer owner occupied, the entire balance of the homeowners emergency mortgage assistance loan will immediately be due and payable. The Agency will permit an assumption of the mortgage debt in appropriate cases, such as when the original mortgagor dies and a family member becomes the owner-occupant of the property and wishes to become legally responsible for the debt.
(c) Beginning February 1, 1999, and continuing thereafter, a mortgagor who has received mortgage assistance shall pay to the Agency a minimum monthly repayment of at least $25 for each mortgage that was assisted. The minimum monthly repayment shall be applied to the principal of the debt and will not result in the accrual of interest on the mortgage assistance loan.
(d) The Agency will require full or partial repayment of the mortgage assistance loan once the mortgagor has established credit to the extent that there is sufficient equity in the property for the mortgagor to be able to refinance their mortgage obligations at reasonable rates and terms as determined by the Agency.
The provisions of this § 31.207 amended July 1, 1994, effective July 2, 1994, 24 Pa.B. 3224; amended June 4, 1999, effective July 1, 1999, 29 Pa.B. 2859; amended August 29, 2008, effective September 6, 2008, 38 Pa.B. 4859; amended April 29, 2016, effective April 30, 2016, 46 Pa.B. 2171. Immediately preceding text appears at serial pages (336315) to (336316).
§ 31.208. Insufficient funds.
If, in the Agencys determination, the Homeowners Emergency Mortgage Assistance Fund contains insufficient funds to assist eligible applicants, a notice to this effect will be published by the Agency in the Pennsylvania Bulletin at least 60 days prior to the funds being depleted. The notice will include a date certain, which will be at least 90 days after publication of the notice, after which mortgagees will no longer be required to comply with the act. If funds are replenished in sufficient amount, the Agency will publish a similar notice, effective immediately, announcing that fact and that mortgagees are again subject to the requirements of the act. During the time after the initial notice is published and before a renewal notice is published, the selection of those to receive financial assistance will be determined by the Agency on a first-come, first-served basis.
§ 31.209. Appeals.
(a) An applicant who is denied a mortgage assistance loan or an applicant or lender aggrieved by another decision of the Agency in implementing the Homeowners Emergency Mortgage Assistance Program may request the Agency to conduct an administrative hearing on that grievance.
(b) A hearing may only be requested from a decision of the Agency on an issue of fact determined on that application that constitutes an adjudication under 2 Pa.C.S. § 101 (relating to definitions).
(c) The Executive Director of the Agency may designate Agency hearing examiners to hear grievances under this process.
(d) Requests for a hearing shall be made in writing and shall be submitted to the Agency within 15 days of the postmark date of the mailing of the decision or determination of the Agency. Requests for hearings shall state the reasons that a hearing is requested and be sent by first class, registered or certified mail to the following address: Chief Counsel-Appeal Requests Pennsylvania Housing Finance Agency 211 North Front Street P. O. Box 15628 Harrisburg, Pennsylvania 17105.
(e) The hearing examiner will notify the appellant as to the date and time of the hearing, as determined by the Agency. The Agency will attempt to schedule hearings within 30 days after the request is received. The hearing may be conducted by a telephone conference call. The hearing examiner shall also provide notice to the mortgagees that an administrative appeal has been filed.
(f) This appeals process and administrative hearings held thereunder will be administered under the requirements of 2 Pa.C.S. § § 501508 and 701704 (relating to the Administrative Agency Law) and 1 Pa. Code Part II (relating to General Rules of Administrative Practice and Procedure).
The provisions of this § 31.209 adopted July 1, 1994, effective July 2, 1994, 24 Pa.B. 3224; amended June 4, 1999, effective July 1, 1999, 29 Pa.B. 2859; amended August 29, 2008, effective September 6, 2008, 38 Pa.B. 4859; amended April 29, 2016, effective April 30, 2016, 46 Pa.B. 2171. Immediately preceding text appears at serial page (369709).
§ 31.210. Periods of high unemployment.
(a) Months of assistance available. The 24 month limit on mortgage assistance available under § 31.203(d), and the 24 month periods referred to in § § 31.202(d)(1), 31.203(a)(3)(ii), 31.204(c)(2) and 31.206(a) and (d)(2) shall increase to 36 months if during the month the homeowner submits an application for assistance the Agency has determined that a period of high unemployment exists.
(b) Housing expense formula. The 40% ratio referred to in § § 31.204(c) and (e) and 31.205(c)(3) (relating to agency review; and financial hardship due to circumstances beyond the homeowners control) shall be reduced to 35% if during the month the homeowner submits an application for assistance the Agency has determined that a period of high unemployment exists.
(c) Definition; declaration. There shall be a period of high unemployment if the average rate of unemployment in this Commonwealth equals or exceeds 6.5%. This determination will be made by the Agency on a monthly basis based upon seasonably adjusted unemployment figures for the most recent 3 months for which the data for this Commonwealth is published. If the Agency determines that a period of high unemployment exists, the Agency will immediately publish a notice to that effect in the Pennsylvania Bulletin consistent with this section.
§ 31.211. Act 91 Notices; information to be supplied to the Agency.
(a) Notification. The mortgagee or other person sending the Act 91 Notice shall either send a copy of the notice or information concerning notices sent to the Agency in either of the following manners:
(1) Electronic reporting. Instead of sending an actual copy of each notice as set forth in paragraph (2), the Agency recommends that the mortgagee or other person sending the Act 91 Notice provide the Agency with a report of notices sent as an e-mail attachment to Act91@phfa.org including the following information and in the following format:
(i) The date of the Act 91 Notice.
(ii) The name of lender/servicer on whose behalf it was sent.
(iii) The street address of the property being foreclosed upon, divided by Address Line 1 and Address Line 2. When there is not an Address Line 2, the field may be left blank.
(iv) The city, state and zip code, including the four-digit zip code extension (if available), of the address being foreclosed upon. If the four-digit zip code extension is not available, this field may be left blank.
Date of Act 91 Notice Address 1 Address 2 City State 5-digit zip 4-digit extension Current Lender
(2) Copy of the notice. The mortgagee may send an actual copy of each notice sent to the Agency by one of the following methods:
(i) Regular mail addressed as follows:
PHFA-HEMAP P.O. Box 15530 Harrisburg, PA 17105-5530
(ii) Overnight mail addressed as follows and hand deliveries to:
PHFA-HEMAP 211 North Front Street Harrisburg, PA 17101
(iii) Facsimile sent to either of the following fax numbers:
Toll free: (877) 207-0205 Local: (717) 780-4340
(iv) E-mail a scanned copy to Act91@phfa.org.
(b) Multiple notices. If more than one notice is sent (such as, when the mortgagors live somewhere other than the mortgaged property or when there are multiple mortgagors and individual notices are sent to each) only one entry should be made in the report since only one property is being foreclosed upon.
(c) Frequency of reports. The mortgagee may send a report as set forth in subsection (a)(2) on a monthly basis, for notices sent during the previous month, or they may send a report on a quarterly basis listing the notices sent during the prior calendar quarter. Quarterly reports shall be sent within 30 days after the end of each calendar quarter.
(d) Effective date. Copies of notices or reports, or both, as set forth in this section shall be sent for notices sent on or after October 1, 2008.
The provisions of this § 31.211 adopted August 29, 2008, effective September 6, 2008, but shall only apply to notices issued on or after October 1, 2008, 38 Pa.B. 4859; amended April 29, 2016, effective April 30, 2016, 46 Pa.B. 2171. Immediately preceding text appears at serial pages (369710) and (378795).
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