                IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Donna Powell and Roger Powell,                :
                       Petitioners            :
                                              :
                     v.                       :
                                              :
Pennsylvania Housing Finance                  :
Agency,                                       :   No. 2374 C.D. 2014
                       Respondent             :   Submitted: July 24, 2015



BEFORE:       HONORABLE DAN PELLEGRINI, President Judge
              HONORABLE MARY HANNAH LEAVITT, Judge
              HONORABLE ANNE E. COVEY, Judge


OPINION NOT REPORTED

MEMORANDUM OPINION BY
JUDGE COVEY                                       FILED: September 1, 2015

              Donna and Roger Powell (collectively, the Powells) petition this Court,
pro se, for review of the Pennsylvania Housing Finance Agency (Agency) Hearing
Examiner’s November 15, 2014 decision affirming the Agency’s September 22, 2014
denial of the Powells’ application for emergency mortgage assistance under the act
known as the Homeowner’s Emergency Mortgage Assistance Program (HEMAP/Act
91).1 Essentially, the Powells present five2 issues for this Court’s review: (1) whether
the Agency erred by considering allegations that the Powells failed to make mortgage
payments when funds were available; (2) whether the Agency erred by using the
undefined term “financial overextension;” (3) whether the Agency erred by not
considering the Powells’ unemployment and subsequent underemployment as a

       1
          Act of December 3, 1959, P.L. 1688, added by Section 2 of the Act of December 23, 1983,
P.L. 385, as amended, 35 P.S. §§ 1680.401c-1680.409c, 1680.412c.
        2
           The Powells presented six issues for review; however, the first and second issues are
virtually the same.
circumstance beyond the Powells’ control; (4) whether the Agency erred in not
considering the Powells’ financial ability to purchase the mortgaged property before
their loss of employment and subsequent underemployment; and (5) whether the
Agency erred by not specifying the legislative clause that made the Powells ineligible
for assistance. After review, we affirm.
              The Powells own real property at 140 Cassell Road in Harleysville,
Pennsylvania (Property). The Property is subject to a mortgage with a balance of
$395,000.00. According to the record, the Powells’ last mortgage payment was made
in May 2014. On September 2, 2014, the Powells applied for emergency mortgage
assistance under HEMAP. On September 22, 2014, the Agency denied the Powells’
HEMAP application because:

              1. [The Powells are] not suffering financial hardship due to
              circumstances beyond [the Powells’] control based on: [The
              Powells] [have] been employed and [have] had sufficient
              income to pay [the] mortgage.
              2. [The Powells are] not suffering financial hardship due to
              circumstances beyond [their] control based on: Total
              mortgage delinquency is not due to circumstances beyond
              [their] control: [The Powells] year[-]to[-]date household
              income exceeds total monthly expenses. This implies [the]
              mortgage could have been maintained had [the] mortgage
              been considered a priority.

Supplemental Reproduced Record (S.R.R.) at 16b. The Powells appealed, and a
hearing was held on October 30, 2014.               On November 15, 2014, the Hearing
Examiner affirmed the Agency’s decision. The Powells appealed to this Court. 3


       3
          The Powells subsequently filed a Request for Advancement - Under Rule 2313.
Advancement (Motion to Expedite). The Motion to Expedite is dismissed as moot.
        “This Court’s scope of review is limited to determining whether constitutional rights were
violated, an error of law was committed, or necessary findings of fact are not supported by
substantial evidence.” R.M. v. Pa. Hous. Fin. Agency, 740 A.2d 302, 305 n.2 (Pa. Cmwlth. 1999).


                                                2
              The Powells first argue that the Agency erred by considering allegations
that they failed to make mortgage payments when funds were available. Specifically,
the Powells contend that the Agency went beyond the temporal scope of the appeal
when in making its determination it considered whether mortgage payments were
made after June 1, 2014. The Powells assert that had they known those dates were
being considered, they would have provided proof of mortgage payments made on
June 30, July 28 and October 2, 2014. See Powells’ Br. Ex. D (Customer Account
Activity Statement).
              The Powells averred that “findings during the agency appeal that are
beyond [] the time period ending on July 31, 2014 are beyond the scope of the agency
appeal process[]” because “[a]ll of the information provided [] by [the Powells] to
[the Agency] was for the time period prior to July 31, 2014.”4 Powells’ Br. at 15. It
appears the Powells are misconstruing Section 31.209(b) of the Agency’s Regulations
which provides: “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).” 12 Pa. Code § 31.209(b) (emphasis
added). Clearly, any change in circumstances between the application date and the
hearing date is relevant to the issue of whether the Powells are entitled to emergency
mortgage assistance. For example, if either of the Powells had obtained higher paid
employment or was laid off from their current positions at Lowe’s after their
application was filed, the Agency would be permitted to consider said circumstances
in making its determination. See Melrose v. Pa. Hous. Fin. Agency Homeowners
Emergency Mortg. Assistance Program, 511 A.2d 290 (Pa. Cmwlth. 1986) (matter
remanded to Agency for making of a new record where applicant testified he



       4
        This averment does not support the Powells’ argument that the June 30 and July 28, 2014
mortgage payments should not have been considered.
                                              3
obtained employment after his application for mortgage assistance was filed but
hearing examiner made no finding regarding said employment).
             At the October 30, 2014 hearing, the Hearing Examiner asked the
Powells if they had “been able to bring the mortgage payments current[,]” to which
Roger Powell replied, “um we have not.” S.R.R. at 53b. Further, the Hearing
Examiner stated: “The Act 91 notice is dated July 14, 2014 and it stated that the
monthly payments are due for June 1st 2014. So what happened that they became
delinquent in June?” S.R.R. at 58b. Roger Powell answered: “Basically[,] we just
ran out of money.” Id.        Finally, the Hearing Examiner inquired of the Powells:
“Now when do you feel you could resume making the full mortgage payments of
$2,230.00?” S.R.R. at 60b. Donna Powell retorted: “I have no idea.” Id. Roger
Powell rejoined: “Uh we would be able to do that, I explained that, the different
options that we would have to repay the loan and get back on track and that’s
probably something on the order of twelve to eight [sic] months.” Id. At no time did
either of the Powells mention the fact that they had actually made mortgage payments
in the amount of $2,300.00, $2,320.00 and $2,130.00 since June 1, 2014. Thus, the
Agency’s failure to consider those payments was due to the Powells’ neglect in not
presenting the evidence to the Hearing Examiner. Moreover, given the Agency’s
extensive review of the Powells’ income and expenses from 2010 through 2014, the
conclusion that the Powells failed to make mortgage payments when funds were
available would not be undermined by consideration of the three mortgage payments
made after June 1, 2014. Rather, the fact that the Powells made said mortgage
payments further substantiates the Agency’s determination. Accordingly, the Agency
did not err in this regard.
             The Powells next assert that the Agency erred by using the undefined
term “financial overextension” and by not accepting said “financial overextension” as
a circumstance beyond the Powells’ control. Specifically, the Powells contend that
                                           4
the term is “without documented support within the . . . Agency or the enabling
legislation, and [is] arbitrary and capricious.” Powells’ Br. at 18 (emphasis omitted).
             Section 404–C(a) of HEMAP provides that a mortgagor may not receive
assistance unless:

             (4) The mortgagor is a permanent resident of this
             Commonwealth and 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.

35 P.S. § 1680.404c(a) (emphasis added).         Section 31.205(c) of the Agency’s
Regulations states, in relevant part:

             Disallowance. The following circumstances will not be
             considered by the Agency to be beyond the mortgagor’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.

                                           5
               (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(c) (emphasis added). The Agency’s Regulations expressly
provide that financial mismanagement and overextension are not circumstances
beyond an applicant’s control. Thus, the Agency did not err by using the term
“financial overextension,” and by not accepting it as a circumstance beyond the
Powells’ control.
               The Powells next maintain that the Agency erred by not considering the
Powells’ unemployment and subsequent underemployment as a circumstance beyond
their control. Initially, Section 31.205(a) of the Agency’s Regulations provides in
relevant part:

               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:

               ....

               (4) The homeowner’s employment history--including
               unemployment, underemployment and the reasons
               therefore--and eligibility for other types of financial
               assistance.

12 Pa. Code § 31.205(a) (emphasis added). Underemployment is not defined in the
regulations.
               According to Roger Powell’s testimony, the Powells “were both earning
roughly $70,000.00 [annually] each” before they lost their jobs. S.R.R. at 55b. The
Hearing Examiner established on the record that “[a]t the time of application review”
Donna Powell was earning “$2,160.58” per month at Lowe’s, and Roger Powell was
“averaging $930.62 per month” from Lowe’s.          S.R.R. at 53b.    Donna Powell
                                           6
previously worked for a builder selling new construction and presently she is a sales
person in the retail industry. See S.R.R. at 55b. Roger Powell was an engineering
manager for a pharmaceutical company until the company closed. See S.R.R. at 56b.
Thus, the Powells’ reference to their underemployment relates to their current lesser
paying employment at Lowe’s.
             The Hearing Examiner found the following facts:

             The [Powells] stated that they both lost their full-time jobs
             in November 2009 . . . .
             According to the testimony, Donna Powell was employed
             for a builder for approximately 15 years. In November
             2009, the company closed and [Donna] Powell was laid off.
             After her layoff, she received unemployment compensation
             benefits. In October 2010, [Donna] Powell secured
             employment with Lowe’s. . . .
             Roger Powell was employed at Hull Corp for approximately
             5 1/2 years prior to November 2009. In November 2009 the
             company closed and [Roger] Powell was laid off. After his
             layoff    [Roger]     Powell    received   unemployment
             compensation benefits. In April 2011 [Roger] Powell
             secured employment with Lowe’s.

Hearing Examiner Dec. at 2. Clearly, the Hearing Examiner considered the Powells’
unemployment and subsequent underemployment.
             However, the Hearing Examiner also considered the fact that although
the Powells lost their jobs in 2009, and have been underemployed since 2010 and
2011 respectively, they have not produced evidence that they have reduced their
expenses in any way to accommodate these losses. Rather, they have continued to
drain their savings and retirement accounts as well as overextend their credit to
maintain their lifestyle.   In December 2013, the Powells were approved for an
$8,500.00 auto loan for which they incurred an additional monthly payment of
$250.00. Further, after their lawnmower broke, they hired a lawn service costing


                                          7
over $300.00 per month between March and September 2014, the months
immediately prior, during and after their mortgage delinquency. Thereafter, they
purchased a new lawnmower on credit, thereby incurring additional monthly debt.
Moreover, when their daughter became unemployed in May 2014, the Powells repaid
her $3,000.00 which she had loaned them to purchase a new water heater the previous
year. While the Powells’ unemployment and subsequent underemployment may have
been circumstances beyond their control, their failure to reduce their expenses, hiring
a lawn service, continued credit card use, an $8,500.00 car purchase and a lump sum
$3,000.00 loan repayment immediately prior to their mortgage delinquency were not.
               In determining whether an applicant’s financial hardship is due to
circumstances beyond the applicant’s control, the Agency may consider the
applicant’s employment record as well as credit history and current income. 35 P.S.
§ 1680.404c(a).     The Agency did not err because it did consider the Powells’
unemployment and subsequent underemployment. The fact that the Agency did not
find that the Powells’ unemployment and underemployment were circumstances
beyond their control which resulted in their financial hardship does not constitute
legal error.
               The Powells next claim that the Agency erred in not considering their
ability to purchase the Property before their loss of employment and subsequent
underemployment. Specifically, the Powells aver that because the Agency only
reviewed tax returns from the period of their underemployment, it did not consider
their financial qualifications to purchase their Property before their emergency
mortgage application. However, there is no statutory or regulatory requirement that
the Agency consider applicants’ financial ability to purchase their home before
making application for emergency mortgage assistance. Indeed, the Powells aver in
their brief that: “It is obvious that this inquiry and calculation should be a
requirement in the application review in order to determine the financial condition
                                          8
prior to the unemployment and underemployment period.”                      Powells’ Br. at 21
(emphasis added).
               The Powells appear to infer this requirement from a statement made in
the Hearing Examiner’s decision. See Powells’ Br. at 20. The Hearing Examiner
opined:

               The Agency also reviews [] Federal Income Tax Returns to
               determine the historical income to the household. The
               income, as it is reported to the federal government, displays
               whether the [Powells] demonstrated an ability to
               successfully maintain the mortgage payments when they
               entered into [the] mortgage, their ability to maintain their
               overall expenses and whether they can be expected to
               generate sufficient income in the future to support their
               obligations.

Hearing Examiner Dec. at 6. While this excerpt explains the Agency’s purpose in
examining personal income tax returns, it in no way implies or imposes a requirement
on the Agency to examine the Powells’ financial ability to purchase the Property
before their unemployment and subsequent underemployment. Rather, the subject
statement was the Agency’s introduction to its discussion of the Powells’ 2011, 2012
and 2013 income tax returns.5 Accordingly, the Agency did not err in not considering
the Powells’ qualifications to purchase the Property before their unemployment and
subsequent underemployment.
               Finally, the Powells argue that the Agency erred by not specifying the
legislative clause that rendered them ineligible for assistance. However, Section 404-
C(a)(4) of HEMAP, expressly provides that an applicant will not receive assistance
unless “[t]he mortgagor . . . is suffering financial hardship due to circumstances
beyond the mortgagor’s control[.]” 35 P.S. § 1680.404c(a)(4) (emphasis added).
Here, the Agency specifically denied the Powells’ HEMAP application because:


      5
          Although the Agency also requested the Powells’ 2010 tax return, it was not produced.
                                                 9
              1. [The Powells are] not suffering financial hardship
              due to circumstances beyond [the Powells’] control
              based on: [the Powells] [have] been employed and [have]
              had sufficient income to pay [the] mortgage.
               2. [The Powells are] not suffering financial hardship
              due to circumstances beyond [their] control based on:
              Total mortgage delinquency is not due to circumstances
              beyond [their] control: [the Powells] year to date household
              income exceeds total monthly expenses. This implies [the]
              mortgage could have been maintained had [the] mortgage
              been considered a priority.

S.R.R. at 16b (emphasis added). Moreover, the Hearing Examiner concluded:

              Therefore, based on a review of the record at this time, a
              mortgage assistance loan was properly denied on the basis:
              [The Powells are] not suffering financial hardship due to
              circumstances beyond [their] control based on: Total
              mortgage delinquency is not due to circumstances beyond
              [their] control. (Act 91, Section 404-C([a])).

Hearing Examiner Dec. at 7.         Clearly, Section 404-C(a)(4) of HEMAP is the
legislative authority under which the Agency deemed the Powells ineligible for
assistance.
              For all of the above reasons, the Agency’s decision is affirmed.


                                        ___________________________
                                        ANNE E. COVEY, Judge




                                           10
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Donna Powell and Roger Powell,        :
                       Petitioners    :
                                      :
                     v.               :
                                      :
Pennsylvania Housing Finance          :
Agency,                               :   No. 2374 C.D. 2014
                       Respondent     :


                                     ORDER

            AND NOW, this 1st day of September, 2015, the Pennsylvania Housing
Finance Agency Hearing Examiner’s November 15, 2014 decision is affirmed.
Donna and Roger Powell’s Request for Advancement (Motion to Expedite) is
dismissed as moot.


                                      ___________________________
                                      ANNE E. COVEY, Judge
