           IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Eric M. O’Brien,                     :
                       Petitioner    :
                                     :
            v.                       :           No. 2089 C.D. 2015
                                     :           Submitted: March 4, 2016
Pennsylvania Housing Finance Agency, :
                       Respondent :

BEFORE:       HONORABLE ROBERT SIMPSON, Judge
              HONORABLE MICHAEL H. WOJCIK, Judge
              HONORABLE DAN PELLEGRINI, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE SIMPSON                             FILED: April 18, 2016

              Eric M. O’Brien (Homeowner), representing himself, petitions for
review of an order of the Pennsylvania Housing Finance Agency (Agency) that
denied his application for emergency mortgage assistance under the act known as
the Homeowner’s Emergency Mortgage Assistance Loan Program (HEMAP or
Act 91).1 The Agency denied Homeowner’s application for a HEMAP loan on the
ground that Homeowner’s mortgage delinquency could not be attributed to
circumstances beyond his control. Homeowner contends the Agency erred in
denying his loan application on the basis that he was not suffering a financial
hardship caused by circumstances beyond his control. Upon review, we affirm.



       1
        Act of December 3, 1959, P.L. 1688, added by the Act of December 23, 1983, P.L. 385,
as amended, 35 P.S. §§1680.401c-1680.410c. The purpose of Act 91 is “to establish a program
which will through emergency mortgage payments prevent widespread mortgage foreclosures ...
which result from default caused by circumstances beyond a homeowner’s control.” Crawl v.
Pa. Hous. Fin. Agency, 511 A.2d 924, 927 (Pa. Cmwlth. 1986).
                                      I. Background
                In June 2015, Homeowner applied to the Agency for a HEMAP loan.
In his brief, Homeowner asserts he fell behind on his residential mortgage in
September 2014 after incurring unplanned expenses for health reasons. At that
time, Homeowner traveled to the Mayo Clinic and was ultimately diagnosed with
Parkinson’s disease. Homeowner’s wife, Victoria O’Brien (Wife), helped finance
his trip with a 401k loan.


                However, Wife suffered a loss of income after her layoff from a
second job. In addition, beginning in April 2014, Wife began living and working
in Columbus, Ohio. As such, Wife now paid rent for an apartment and had a
second set of household expenses. In addition, Wife took family medical leave to
accompany Homeowner on his trip to the Mayo Clinic. This resulted in a smaller
paycheck for that period.2


                Homeowner’s financial problems worsened over the winter.
Homeowner and Wife met with a credit counseling agency in June 2015.
Homeowner, through the credit counselor, applied to the Agency for a HEMAP
loan.       In July 2015, the Agency denied Homeowner’s HEMAP application.
Homeowner requested an appeal, and the Agency scheduled a hearing.



        2
         Homeowner also points out that he suffered a loss of approximately $298,000 in the
early 2000s as a result of criminal activities by his stockbroker. Although the perpetrator was
ordered to pay Homeowner restitution, he received, at most, $2,000. See Supplemental
Reproduced Record at 50b. Nonetheless, Homeowner maintained his mortgage payments until
September 2014.



                                              2
             In August 2015, Homeowner participated in a telephonic hearing
before Agency Hearing Examiner Resa Kepner (Hearing Examiner). In her
September 2015 decision affirming the Agency’s decision denying Homeowner’s
HEMAP application, Hearing Examiner made the following findings, calculations
and conclusions.


             Upon his mother’s death, Homeowner inherited one half of his
childhood home in Pittsburgh. In July 1988, Homeowner purchased the remaining
half of the property. At the time of Hearing Examiner’s decision, First Merit Bank
held a mortgage on Homeowner’s property in the amount of $38,190.97. The
mortgage originated at the time of Homeowner’s purchase.


             According to a November 2014 Act 91 notice, mortgage payments
were due from September 2014. An April 2015 bank statement reflected a total
amount due of $11,265.24 through May 1, 2015. In addition, First Merit Bank
completed a mortgage information sheet reflecting a total delinquency of
$12,069.27 through June 30, 2015.


             Homeowner’s monthly housing expense of $1,200, reported at the
time of application and at the time of appeal, included the following items:

             Subject                     Monthly Expenditure
                                         At Application

             Mortgage Payment            $730
             Real Estate Taxes           Escrowed
             Hazard Insurance            Escrowed
             Utilities                   $470
             Total                       $1,200


                                         3
Supplemental Reproduced Record (S.R.R.) at 4b.

                In addition, Homeowner had a monthly installment debt consisting of
an auto loan payment of $535. S.R.R. at 4b. Homeowner also had monthly living
expenses of $631 at the time of his application and $756 at the time of appeal. Id.
This resulted in the following total monthly expenses at the times of application
and appeal:

                Subject                   Monthly Expenditure
                                          At Application/Appeal

                Total Monthly Housing Expenses       $1200/$1200
                Monthly Installment Debt             $535/$535
                Monthly Living Expenses              $631/$756
                TOTAL HOUSEHOLD EXPENSES             $2,366/$2,491
                Wife’s payroll deductions            $0/$301
                Wife’s expenses for Ohio residence   $0/$1,225
                TOTAL                                $2,366/$4,017

S.R.R. at 5b.


                In determining Homeowner’s monthly income, Hearing Examiner
reviewed Homeowner’s W-2 statements and trust distributions. Hearing Examiner
found that Homeowner’s monthly income from employment, self-employment and
trust distributions totaled approximately $2,750 in 2013, $2,885 in 2014 and
$2,881 in 2015 (to date of decision). S.R.R. at 5b. Hearing Examiner reasoned
that this income alone should have been sufficient to cover the monthly household
expenses of $2,491. Id. In fact, Homeowner’s income should have left a monthly
surplus of $259 in 2013, $390 in 2014 and 2015, for a total surplus of $3,108 in
2013, $4,680 in 2014 and $2,730 through July 2015. Id. However, Homeowner’s


                                          4
mortgage payments remained due from September 2014 through the time of
appeal. Id.


              Further, based on a review of Homeowner and Wife’s joint federal tax
returns, W-2 statements and trust distributions, Hearing Examiner calculated
Homeowner and Wife’s net monthly income from employment, self-employment
and trust distributions as approximately $5,267 in 2013, $6,217 in 2014 and $5,475
through July 2015. S.R.R. at 6b. Even considering their increased expenses
beginning in 2014, when Wife began working and residing in Columbus, Ohio,
Hearing Examiner calculated Homeowner and Wife’s monthly income as $6,217 in
2014 and $5,475 in 2015. Id. Based on these calculations, Hearing Examiner
determined Homeowner and Wife would have had a surplus of $2,200 per month
or $26,400 in 2014, and a surplus of $1,458 per month through July 2015, for a
total of $10,206 through July 2015. Id. However, Homeowner had a mortgage
delinquency of 11 months, or approximately $12,799.66 through July 2015.


              Therefore, Hearing Examiner observed, Homeowner and Wife should
have had sufficient income to maintain the mortgage payment, meet their total
monthly expenses and save enough funds to reduce the mortgage delinquency.
S.R.R. at 6b. However, at the time of application, Homeowner had no money that
could be applied toward the mortgage delinquency. Id. Hearing Examiner noted
these facts reflected money mismanagement.         Id.    Consequently, Hearing
Examiner determined the Agency properly denied Homeowner’s application for a
mortgage assistance loan under Section 404-C(a)(4) of Act 91, 35 P.S.




                                         5
§1680.404c(a)(4), on the ground that Homeowner’s financial hardship could not be
attributed to circumstances beyond his control. Homeowner petitions for review.3


                                      II. Discussion
                                      A. Argument
              Homeowner contends Hearing Examiner erred in failing to find his
financial hardship resulted from circumstances beyond his control where
Homeowner and Wife encountered a series of events making it impossible for
them to pay down their mortgage delinquency without emergency assistance. In
particular, Homeowner asserts the Agency, in denying his loan, failed to take into
account several factors.


              First, although Hearing Examiner’s decision incudes Wife’s income in
calculating the total household income, Homeowner argues Wife’s income should
have been excluded because she lives and works outside the Pittsburgh area during
the week. Second, Hearing Examiner’s decision failed to account for the cost of
household healthcare.




       3
           Our review is limited to determining whether constitutional rights were violated,
whether an error of law was committed, and whether necessary findings were supported by
substantial evidence. R.M. v. Pa. Hous. Fin. Agency, 740 A.2d 302 (Pa. Cmwlth. 1999).
        As fact-finder, the hearing examiner has complete authority over questions of witness
credibility and evidentiary weight. A&J Builders, Inc. v. Workers’ Comp. Appeal Bd. (Verdi),
78 A.3d 1233 (Pa. Cmwlth. 2013); see Coyne v. Pa. Hous. Fin. Agency, 826 A.2d 925 (Pa.
Cmwlth. 2003). It is irrelevant whether there is evidence to support contrary findings; if
substantial evidence supports the hearing examiner’s necessary findings, we will not disturb
those findings on appeal. A&J Builders.



                                             6
             Third, although Wife received a taxable $10,000 bonus in 2014, this
should not have been considered income because Wife’s employer required that
this money be used for moving expenses. In fact, Wife used this money for
approximately one year’s rent. However, Homeowner asserts Hearing Examiner’s
decision does not reference the bonus money or indicate that it was not considered
in calculating Homeowner’s actual income for 2014.


             Additionally, in 2014, Wife lost her second job, which paid her about
$9,000 to $10,000 per year. This job helped pay off Wife’s car loan. Homeowner
further asserts that if Wife would have kept her second job, that money would have
been applied to additional costs related to her job transfer or to home expenses.


             Further, in early 2015, Homeowner learned that his mortgage lender
required more than the amount originally in arrears to reactivate his account. The
amount exceeded anything Homeowner could afford in a single payment.
Homeowner contends the Agency overlooked this fact.


             In sum, Homeowner argues, he and his wife suffered several setbacks
since 2014, including health and job issues.       These setbacks, which occurred
closely together, were beyond Homeowner’s control.          Therefore, Homeowner
requests that we reverse the Agency’s decision denying him a HEMAP loan.


                                    B. Analysis
             In order to qualify for a HEMAP loan, a homeowner must show he
meets the eligibility criteria in Act 91. Coyne v. Pa. Hous. Fin. Agency, 826 A.2d



                                          7
925 (Pa. Cmwlth. 2003); Crawl v. Pa. Hous. Fin. Agency, 511 A.2d 924 (Pa.
Cmwlth. 1986). Further, the Agency’s interpretation of Act 91 is entitled to great
weight and may only be overturned if such construction is clearly erroneous.
Horton v. Pa. Hous. Fin. Agency, 511 A.2d 917 (Pa. Cmwlth. 1986).


            In the present case, Hearing Examiner determined Homeowner failed
to establish that his financial hardship resulted from circumstances beyond his
control. Sections 404-C(a)(4) and (10) of Act 91 state:

            (a) No assistance may be made with respect to a
            mortgage or mortgagor under this article unless ….

                                      ****

            (4) The mortgagor … 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)(4) & (10) (emphasis added).


            In addition, the Agency’s regulations governing financial hardship
due to circumstances beyond the homeowner’s control, set forth in the
Pennsylvania Code, pertinently provide:



                                          8
       (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
homeowner’s control, including the following:

(1) The homeowner’s 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.
                          ****

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

       (b) Examples. Examples of circumstances beyond
the mortgagor’s control which result in financial hardship
to the mortgagor include the following:

                         ****

(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
payments—for 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.

                         ****


                            9
(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
homeowner’s 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.

                         ****

      (c) Disallowance. The following circumstances
will not be considered by the Agency to be beyond the
mortgagor’s control:

                         ****

(3) When the homeowner had sufficient income to pay
his mortgage, but failed to do so. In this regard, if the
homeowner’s 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 homeowner’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.


                            10
            (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.

                                      ****

                   (e) Cause of financial hardship. In determining
            the cause of the financial hardship, the Agency will
            determine whether the cause is one event—such as the
            loss of a job, separation or divorce, sickness or injury—
            or whether a series of factors beyond the homeowner’s
            control, in combination, caused the financial hardship.


12 Pa. Code §31.205.


            In the instant case, Hearing Examiner determined Homeowner was
not suffering from financial hardship beyond his control because his monthly
income from trust distributions, employment and self-employment exceeded his
total expenses, including total housing expenses by $4,680 in 2014 and by $2,730
through July 2015. S.R.R. at 4b-6b.


            Further, Homeowner and Wife’s combined total income, exceeded
their combined expenses, including Wife’s separate living expenses, by $2,200 per
month or $26,400 annually in 2014, and by $1,458 per month or $10,206 through
July 2015. S.R.R. at 5b. However, at the time of Homeowner’s July 2015 appeal,
he had $0 that he could apply toward his mortgage delinquency. Id. Therefore,
Hearing Examiner determined Homeowner’s financial hardship resulted from
money mismanagement rather than from circumstances beyond his control. Id.




                                       11
              On appeal here, Homeowner first argues Hearing Examiner should not
have included Wife’s income in calculating his total household income because she
works and maintains a separate residence in Columbus, Ohio. Homeowner further
maintains that Hearing Examiner’s decision failed to account for the costs of
household healthcare.


              In her decision, Hearing Examiner noted Homeowner and Wife’s
federal tax return, processed as married filing jointly, reflected a total annual
income of $74,517 for an average net monthly income of $5,657.4 S.R.R. at 2b.
Based on their W-2 Forms and trust distributions, Hearing Examiner calculated
Homeowner and Wife’s actual combined net monthly income during 2014 as
$6,217, and $5,475 through July 2015. S.R.R. at 6b. Homeowner and Wife’s
combined net monthly income exceeded their total monthly expenses of
approximately $4,020 by more than $2,000 per month at the time of Homeowner’s
June 2014 application and by more than $1,400 per month at the time of
Homeowner’s July 2015 appeal. Because Homeowner and Wife had sufficient
income to maintain Homeowner’s mortgage and meet Wife’s second household
expenses, we discern no error or abuse of discretion in Hearing Examiner’s
inclusion of Wife’s income in calculating Homeowner and Wife’s total monthly
expenses.


              More to the point, even excluding Wife’s income and expenses,
Hearing Examiner determined Homeowner’s average net monthly income, $2,939

       4
        In its brief, the Agency explained that these figures are an estimate based on a 25% tax
deduction. Respondent’s Br. at 7, n.3.



                                              12
at the time of application, should have been sufficient to cover his total monthly
expenses of $2,366, including the $730 per month mortgage payment. S.R.R. at
5b.   Also, review of Homeowner’s W-2 Forms alone (not reflecting trust
distributions and self-employment) reflected an average net monthly income of
$2,885 in 2014 and $2,881 to date in 2015, which should have been sufficient to
cover Homeowner’s total expenses of $2,366 at time of application and $2,491 at
time of appeal. See S.R.R. at 3b-5b. Therefore, Homeowner should have been
able to maintain his mortgage payments based on his income alone.


            Sensitive to Homeowner’s health-related arguments, we examine
evidence regarding his healthcare costs. Homeowner testified he was covered
under his wife’s employer’s health insurance plan. See Agency Hr’g, 8/11/15,
Notes of Testimony (N.T.) at 9; S.R.R. at 33b. Homeowner also testified that other
than the trip to the Mayo Clinic, which his wife paid for with a 401k loan in the
amount of $2,000, he had no medical expenses other than co-pays. N.T. at 9-10,
S.R.R. at 33b-34b. Further, Homeowner did not testify that Wife had any other
medical expenses.     See N.T. at 9; S.R.R. at 34b.         Therefore, we reject
Homeowner’s contention that Hearing Examiner’s decision failed to account for
the costs of household healthcare.


            Homeowner next contends Wife received a taxable $10,000 bonus in
2014, which she used as approximately one year’s rent for her Columbus, Ohio
apartment. Homeowner asserts Hearing Examiner’s decision does not reference
the bonus money or indicate whether Hearing Examiner considered it in




                                       13
calculating his 2014 income. Homeowner further asserts Wife lost her second job,
which paid her about $9,000 to $10,000 per year.


            In response, the Agency indicated in its brief that Wife’s $10,000
lump sum payment “should have offset any costs associated with her relocation
and covered some of the rent payments.”        Respondent’s Br. at 16.     Hearing
Examiner determined Homeowner had no expenses for Wife’s apartment at the
time of his June 2015 application.      S.R.R. at 5b.     This is consistent with
Homeowner’s testimony that Wife used the $10,000 bonus for approximately one
year’s rent. As discussed above, Homeowner had sufficient monthly income at
application ($2,885) to meet his total monthly expenses of $2,366. Id.


            Also, at the time of Homeowner’s August 2015 appeal, Homeowner
and Wife had sufficient net monthly income ($5,475) to cover their total expenses
of $4,017, which included expenses for Wife’s Ohio residence. Id.        Moreover,
Hearing Examiner’s decision included only Wife’s income from Verizon, her
primary employer. Nothing in the record indicates Hearing Examiner included any
income derived from Wife’s second job.             See Respondent’s Br. at 16.
Accordingly, we discern no error or abuse of discretion in Hearing Examiner’s
calculations or ultimate decision related to Wife’s $10,000 lump sum payment or
income from her second job.


            Finally, Homeowner contends his mortgage lender required the full
amount originally in arrears to reactivate his account. Homeowner asserts the




                                        14
amount required exceeded what he could afford in a single payment and that
Hearing Examiner overlooked this fact.


            We disagree. Hearing Examiner’s calculations are borne out by the
record and support her determination that Homeowner’s income alone should have
been sufficient to maintain his mortgage at the time of his June 2015 application.
Moreover, Hearing Examiner’s calculations indicate that Homeowner and Wife’s
combined net monthly income should have been sufficient to cover their total
monthly expenses at the time of Homeowner’s application with a surplus of at least
$2,000 per month. See S.R.R. at 3b-6b. Even with Wife’s additional relocation
expenses, Homeowner and Wife’s combined income should have been sufficient to
meet their total monthly expenses at the time of Homeowner’s July 2015 appeal
with a surplus of at least $1,400 per month. Id. Nevertheless, at the time of
Homeowner’s application, he had no money saved that could be applied to the
mortgage, which after 11 months reached a total of $12,799.66 through July 2015.
Id.


            Given these circumstances, the Hearing Examiner did not commit
error in concluding that Homeowner’s failure to pay anything toward his mortgage
for an extended time, coupled with his failure to save any money in lieu of making
mortgage payments, was the cause of his predicament. The bank’s interest in
bringing the mortgage current was not the operative problem.


            The provisions of Act 91, and the Agency regulations, quoted above,
dictate our conclusion: we find no error or abuse of discretion in the Hearing



                                         15
Examiner’s determination that Homeowner failed to establish that his mortgage
delinquency arose from a financial hardship caused by circumstances beyond his
control.   Accordingly, the Agency properly denied Homeowner’s HEMAP
application under Section 404-C(a)(4) of Act 91, 35 P.S. §1680.404c(a)(4).


            For these reasons, we affirm the Agency’s final order.




                                     ROBERT SIMPSON, Judge




                                       16
       IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Eric M. O’Brien,                     :
                       Petitioner    :
                                     :
            v.                       :    No. 2089 C.D. 2015
                                     :
Pennsylvania Housing Finance Agency, :
                       Respondent :


                                  ORDER

            AND NOW, this 18th day of April, 2016, for the reasons stated in the
foregoing opinion, the order of the Pennsylvania Housing Finance Agency is
AFFIRMED.




                                    ROBERT SIMPSON, Judge
