J-A22008-19


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    HSBC BANK USA, NATIONAL                    :   IN THE SUPERIOR COURT OF
    ASSOCIATION, AS TRUSTEE FOR                :        PENNSYLVANIA
    ACE SECURITIES CORP. HOME                  :
    EQUITY LOAN TRUST, SERIES 2005 -           :
    HE5, ASSET BACKED PASS-                    :
    THROUGH CERTIFICATES                       :
                                               :
                                               :
                v.                             :   No. 3226 EDA 2018
                                               :
                                               :
    AIMEE M. AVELLINO AND DREW                 :
    AVELLINO                                   :
                                               :
                       Appellants              :

             Appeal from the Judgment Entered November 28, 2018
      In the Court of Common Pleas of Montgomery County Civil Division at
                              No(s): 2015-01936

BEFORE:      MURRAY, J., STRASSBURGER, J.*, and PELLEGRINI, J.*

MEMORANDUM BY MURRAY, J.:                             FILED OCTOBER 04, 2019

        Aimee M. Avellino and Drew A. Avellino (Mr. Avellino) (collectively,

Appellants) appeal from the judgment entered in favor of Appellee HSBC Bank

USA, National Association (Bank) and against Appellants. After careful review,

we affirm.

        The parties stipulated to the facts of this case at trial. On April 13, 2005,

Appellants executed a mortgage and note on real property owned by

Appellants in Bala Cynwyd, Montgomery County, Pennsylvania in favor of




____________________________________________


*   Retired Senior Judge assigned to the Superior Court.
J-A22008-19


Fremont Investment and Loan, for a principal amount of $446,500.00. Bank

is the current holder of the mortgage and promissory note for the loan.

      On April 11, 2008, Appellants entered into a loan modification

agreement with Bank. The purpose of the loan modification agreement was

to provide Appellants relief with their mortgage payments, on which they were

in default. Because of the default, Appellants were also behind on their escrow

payments for items such as taxes and insurance premiums.             The loan

modification agreement changed the interest rate from an adjustable rate to

a 6.5% fixed rate, reduced the monthly principal and interest payments, and

established an outstanding principal and interest balance of $521,964.31. The

loan modification agreement did not, however, adjust Appellants’ outstanding

escrow balance of $9,027.75. Consequently, following execution of the loan

modification agreement, Bank sent Appellants notice of the escrow shortage,

and increased Appellants’ monthly payment from $4,198.08 to $4,880.02 so

that Appellants could pay off the escrow shortage over a 12-month period.

      Appellants, however, disputed Bank’s determination that there was an

escrow shortage. Appellants asserted that the loan modification agreement

resolved any issue regarding the escrow shortage by establishing a new

monthly payment, which they believed covered any amounts due relating to

escrow, in addition to their outstanding principal and interest. Bank claimed

that the loan modification agreement only addressed Appellants’ monthly

principal and interest payment, and did not address Appellants’ escrow


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shortage. Consequently, following this dispute, Appellants tendered monthly

mortgage payments that did not include payment for the escrow shortage.

Unable to resolve this dispute, Bank eventually rejected Appellants’

insufficient payments and called the loan in default.   Appellants last made

payment on their mortgage in March 2009.

      On February 2, 2015, Bank filed a mortgage foreclosure action against

Appellants. On August 18, 2015, Appellants filed an answer and new matter,

and on September 29, 2015, Bank filed a reply to the new matter. On June

1, 2018, the case proceeded to a bench trial. The parties stipulated to the

facts and agreed that all exhibits were admissible, but reserved challenges to

the accuracy of the information contained in the exhibits.

      On August 21, 2018, the trial court ruled in favor of Bank, concluding

that Appellants were in default of the mortgage and the loan modification

agreement. The trial court explained:

         [Bank] was entitled to judgment if “the mortgage is in default,
      the mortgagor has failed to pay on the obligation, and the
      recorded mortgage is in the specified amount.” Gerber v.
      Piergrossi, [142 A.3d 854, 859 (Pa. Super. 2016), appeal
      denied, 166 A.3d 1215 (Pa. 2017)]. [Appellants] clearly were in
      default of the terms of the Mortgage and Loan Modification.
      Additionally, the very terms of the Loan Modification excluded the
      cost of escrow from the calculations within the Loan Modification.
      Therefore, the increase in monthly payments to account for
      escrow is not a breach of the Loan Modification.

Trial Court Opinion, 12/4/18, at 4.

      On August 31, 2018, Appellants filed timely post-trial motions, which

the trial court denied on October 1, 2018. On October 24, 2018, Appellants

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filed a timely notice of appeal.1        Both the trial court and Appellants have

complied with Pa.R.A.P. 1925.

       On appeal, Appellants present the following issues for review:

       A.    Whether the [t]rial [c]ourt committed an error of law or
       abused its discretion by finding that [Bank]’s increases in the
       escrow amounts due were not a breach of the loan modification,
       especially when the increases in escrow were in violation of the
       Real Estate Settlement Procedures Act?

       B.    Whether the [t]rial [c]ourt committed an error of law or
       abused its discretion by finding that [Bank] proved the precise
       amount due on the mortgage despite the [c]ourt not finding a
       specific date of default and imposing an artificial default date?

       C.   Whether the [t]rial [c]ourt committed an error of law or
       abused its discretion by finding that [Appellants] are in default of
       the mortgage and loan modification and that [Bank] did not
       breach the terms of the loan modification?

Appellants’ Brief at 1.

       We begin with our standard of review:

       Our appellate role in cases arising from non-jury trial verdicts is
       to determine whether the findings of the trial court are supported
       by competent evidence and whether the trial court committed
       error in any application of the law. The findings of fact of the trial
       judge must be given the same weight and effect on appeal as the
       verdict of a jury. We consider the evidence in a light most
       favorable to the verdict winner. We will reverse the trial court
____________________________________________


1 Appellants filed a notice of appeal from the trial court’s October 1, 2018
order denying their post-trial motions. “An appeal to this Court can only lie
from judgments entered subsequent to the trial court’s disposition of post-
verdict motions, not from the order denying post-trial motions.” Stahl Oil
Co. v. Helsel, 860 A.2d 508, 511 (Pa. Super. 2004). Because the trial court
ultimately entered judgment on November 28, 2018, “in the interests of
judicial economy, we will consider this appeal as filed after entry of judgment.”
Tohan v. Owens-Corning Fiberglas Corp., 696 A.2d 1195, 1197 n.1 (Pa.
Super. 1997).

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      only if its findings of fact are not supported by competent evidence
      in the record or if its findings are premised on an error of law.
      However, [where] the issue . . . concerns a question of law, our
      scope of review is plenary.

      The trial court’s conclusions of law on appeal originating from a
      non-jury trial are not binding on an appellate court because it is
      the appellate court’s duty to determine if the trial court correctly
      applied the law to the facts of the case.

Stephan v. Waldron Elec. Heating & Cooling LLC, 100 A.3d 660, 664-65

(Pa. Super. 2014).

      In their first issue, Appellants argue that the trial court erred in

concluding that Bank did not violate the loan modification agreement and the

Federal Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601, et

seq., by requiring Appellants to pay off their escrow shortage.       Appellants

raise several points in support of these contentions.

      First, Appellants argue that “Bank breached the Loan Modification

contract by demanding additional escrow of $769.04 per month which

[Appellants] could not afford.” Appellants’ Brief at 10. Appellants assert that

the loan modification agreement brought their account, including their escrow

shortage, current, and Bank breached the agreement by requiring Appellants

to repay that shortage in addition to the newly agreed upon monthly

payments.

      In finding no merit to this issue, the trial court explained:

         [Appellants’] . . . allege this [c]ourt erred in not finding the
      adjustments in escrow payments to be a breach of the loan
      modification. The loan modification required [Appellants] to
      comply with their agreements to pay escrow items under their

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      security items. Under their original mortgage, [Appellants] were
      obligated to pay for escrow items, and to pay to the Lender the
      amount necessary to make up a shortage or deficiency in no more
      than 12 monthly payments. See P-4 ¶ 3 Funds for Escrow Items.
      [Bank was] entitled to seek payments for escrow under the terms
      of the loan modification, and thus, the adjustments in the escrow
      payments were permitted under the loan modification. The
      adjustments were in accordance [with], not in breach of, the
      modification. Thus, the evidence supports this [c]ourt’s findings
      of fact, and the findings are not against the weight of the
      [evidence] or an abuse of discretion.

Trial Court Opinion, 12/4/18, at 8.

      It is well-settled that:

      In interpreting a contract, the ultimate goal is to ascertain and
      give effect to the intent of the parties as reasonably manifested
      by the language of their written agreement. When construing
      agreements involving clear and unambiguous terms, this Court
      need only examine the writing itself to give effect to the parties’
      understanding. This Court must construe the contract only as
      written and may not modify the plain meaning under the guise of
      interpretation.

Sw. Energy Prod. Co. v. Forest Res., LLC, 83 A.3d 177, 187 (Pa. Super.

2013) (quotations and citations omitted)

      Here, the record reflects that Paragraph 4 of the mortgage required

Appellants to repay Bank any escrow shortages in no more than 12 monthly

installments:

      If there is a shortage of Funds held in escrow, as defined under
      RESPA, [Bank] shall notify [Appellants] as required by RESPA, and
      [Appellants] shall pay to [Bank] the amount necessary to make
      up the shortage in accordance with RESPA, but in no more than
      12 monthly payments. If there is a deficiency of Funds held in
      escrow, as defined under RESPA, [Bank] shall notify [Appellants]
      as required by RESPA, and [Appellants] shall pay to [Bank] the
      amount necessary to make up the deficiency in accordance with
      RESPA, but in no more than 12 monthly payments.

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Trial Exhibit P-4 (Mortgage), 4/13/05, at 6 ¶ 3.

      Additionally, there is no language in the loan modification agreement

that removes or amends Appellants’ obligation to repay escrow shortages

under the original mortgage.       See Trial Exhibit P-8 (Loan Modification

Agreement), 4/11/08.      To the contrary, the loan modification agreement

specifically instructed Appellants to:

      comply with all other covenants, agreements, and requirements
      of the Security Instrument [(Mortgage)], including without
      limitation, Borrower’s covenants and agreements to make all
      payments of taxes, insurance premiums, assessments, escrow
      items, impounds, and all other payment that Borrower is
      obligated to make under the Security Instrument.

Id. at 2 ¶ 4 (emphasis added).

      In short, the plain language of the loan modification agreement does

not change or eliminate Appellants’ obligation to pay any escrow shortages in

12 monthly payments upon notice from Bank. See id. We are bound by the

plain language of both the mortgage and the loan modification agreement,

and their clear and unambiguous terms. See Sw. Energy Prod. Co., 83 A.3d

at 187.

      Moreover, Mr. Avellino acknowledged during his testimony at trial that

the loan modification agreement only resolved issues relating to the principal

and interest of the loan and did not reference any adjustments to Appellants’

escrow obligations:

      Q. Would [the witness] agree that there is no escrow amount
      designated in P-8 [(the loan modification agreement)].

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J-A22008-19



      A. Yes. Like I said, I am having a hard time reading this, but
      from what I can see, I just see the principal amount.

      Q. And that would make sense that [the] escrow amount is not
      designated in the [loan modification] agreement because the
      escrow is going [to] fluctuate over time up or down, depending on
      your taxes, or your insurance; right?

      A. Slightly, yes. One way or the other, slightly, yes, I agree with
      that.

N.T., 6/1/18 (Vol. 2), at 94.

      Mr. Avellino further acknowledged Appellants’ original default, which

impacted the escrow shortages:

      Q. And you realized that in 2006 and 2007 you were in default
      which means that you were not actually paying the amounts that
      were due to pay your taxes and the escrow; right?

      A. For a month, correct.

      Q. At some point you had to catch up with these amounts; right?

      A. Right.

Id. at 90.

      Mr. Avellino’s testimony indicated that Appellants had no expectation

that the loan modification agreement would resolve escrow shortages, as the

agreement did for Appellant’s principal and interest payments. See id. at 90.

Thus, not only did the plain language of the loan modification agreement fail

to reveal any changes to Appellants’ escrow obligations, but the testimony of

Mr. Avellino reflects that the parties never expected that it would. See Sw.

Energy Prod. Co., 83 A.3d at 187.


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J-A22008-19


      Therefore, based upon our review of the record, including the original

mortgage, the loan modification agreement, and Mr. Avellino’s testimony, we

conclude that the record supports the trial court’s determination that the loan

modification agreement did not resolve or terminate Appellants’ escrow

shortage, and their obligation to repay the shortage remained following the

loan modification agreement. Accordingly, the trial court did not err in finding

that Bank did not breach the loan modification agreement by requiring

Appellants to repay their escrow shortage.

      Second, although far from a model of clarity, Appellants assert there

were several inconsistencies and inaccuracies in the testimony of Tonya

Johnson (Johnson), who testified at trial on behalf of Bank, regarding the

amount of Appellants’ escrow shortage. Appellants appear to argue that these

inconsistencies somehow excuse their default.

      We find this argument waived, as Appellants did not raise it in their

Pa.R.A.P. 1925(b) statement. This Court has summarized the prevailing law:

      Pa.R.A.P. 1925(b) provides that a judge entering an order giving
      rise to a notice of appeal “may enter an order directing the
      appellant to file of record in the trial court and serve on the judge
      a concise statement of the errors complained of on appeal
      (‘Statement’).” Rule 1925 also states that “[i]ssues not included
      in the Statement and/or not raised in accordance with the
      provisions of this paragraph (b)(4) are waived.”            Pa.R.A.P.
      1925(b)(4)(vii). In Commonwealth v. Lord, [] 719 A.2d 306
      ([Pa.] 1998), our Supreme Court held that “from this date
      forward, in order to preserve their claims for appellate review,
      [a]ppellants must comply whenever the trial court orders them to
      file a Statement of Matters Complained of on Appeal pursuant to
      Rule 1925. Any issues not raised in a 1925(b) statement will be
      deemed waived.”          Lord, 719 A.2d at 309; see also

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      Commonwealth v. Castillo, [] 888 A.2d 775, 780 ([Pa.] 2005)
      (stating any issues not raised in a Rule 1925(b) statement are
      deemed waived). This Court has held that “[o]ur Supreme Court
      intended the holding in Lord to operate as a bright-line rule, such
      that ‘failure to comply with the minimal requirements of Pa.R.A.P.
      1925(b) will result in automatic waiver of the issues raised.’”
      Greater Erie Indus. Dev. Corp. v. Presque Isle Downs, Inc.,
      88 A.3d 222, 224 (Pa. Super. 2014) (en banc) (emphasis in
      original) (quoting Commonwealth v. Schofield, [] 888 A.2d
      771, 774 ([Pa.] 2005).

U.S. Bank, N.A. for Certificateholders of LXS 2007-7N Tr. Fund v. Hua,

193 A.3d 994, 996–97 (Pa. Super. 2018).

      Appellants’ Rule 1925(b) statement makes no claim of error regarding

any inconsistencies in Johnson’s testimony as it related to Appellants’ escrow

shortage.    Thus, we conclude that Appellants have not preserved this

argument for appeal.     Moreover, even if Appellants had included such an

argument in their Rule 1925(b) statement, Appellants’ brief fails to develop

how such inconsistencies provide them with a basis for relief. It is well settled

that “[t]his Court will not act as counsel and will not develop arguments on

behalf of an appellant.” Bombar v. W. Am. Ins. Co., 932 A.2d 78, 93 (Pa.

Super. 2007). Therefore, this argument fails.

      Third, Appellants cryptically argue that Bank violated RESPA by

adjusting Appellants’ escrow payments more than once per year, and the

alleged violation somehow excuses Appellants’ default. Appellants assert that

RESPA permits a lender to change escrow payments only once per year.

      Pertinent to this issue, RESPA states:




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     (c) Escrow account statements

                                    *    *    *

        (2) Annual statement

           (A) In general

           Any servicer that has established or continued an escrow
           account in connection with a federally related mortgage loan
           shall submit to the borrower for which the escrow account
           has been established or continued a statement clearly
           itemizing, for each period described in subparagraph (B)
           (during which the servicer services the escrow account), the
           amount of the borrower’s current monthly payment, the
           portion of the monthly payment being placed in the escrow
           account, the total amount paid into the escrow account
           during the period, the total amount paid out of the escrow
           account during the period for taxes, insurance premiums,
           and other charges (as separately identified), and the
           balance in the escrow account at the conclusion of the
           period.

           (B) Time of submission

           The statement required under subparagraph (A) shall be
           submitted to the borrower not less than once for each
           12-month period, the first such period beginning on the
           first January 1st that occurs after November 28, 1990, and
           shall be submitted not more than 30 days after the
           conclusion of each such 1-year period.

12 U.S.C.A. § 2609(c)(2) (emphasis added).

     Section 2609 also states:

     (b) Notification of shortage in escrow account

     If the terms of any federally related mortgage loan require the
     borrower to make payments to the servicer (as the term is defined
     in section 2605(i) of this title) of the loan for deposit into an
     escrow account for the purpose of assuring payment of taxes,
     insurance premiums, and other charges with respect to the


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      property, the servicer shall notify the borrower not less than
      annually of any shortage of funds in the escrow account.

12 U.S.C. § 2609(b) (emphasis added).

      Nothing in Section 2609 or any of the authority cited by Appellants

precludes a lender from changing escrow payment amounts more than once

per year. Moreover, even if RESPA did limit changes to escrow payments to

once per year, Appellants cite no authority for the proposition that violating

such a provision excuses default or constitutes a defense in a mortgage

foreclosure action. Accordingly, this argument lacks merit.

      In their second issue, Appellants argue that the trial court erred in

finding Appellants in default because Bank failed to prove the amount due on

the loan.    Specifically, Appellants contend that Bank failed to present

complete, accurate, and trustworthy records of the actual amount Appellants

owed to Bank.

      In a mortgage foreclosure complaint, the mortgagee must set forth the

following:

      (1) the parties to and the date of the mortgage, and of any
      assignments, and a statement of the place of record of the
      mortgage and assignments;

      (2) a description of the land subject to the mortgage;

      (3) the names, addresses and interest of the defendants in the
      action and that the present real owner is unknown if the real
      owner is not made a party;

      (4) a specific averment of default;

      (5) an itemized statement of the amount due; and

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      (6) a demand for judgment for the amount due.

Pa.R.Civ.P. 1147(a).

      Appellants cite U.S. Bank, N.A. v. Pautenis, 118 A.3d 386 (Pa. Super.

2015) in support of their argument. In Pautenis, this Court stated that “proof

of the amount of indebtedness is an essential element of a claim in mortgage

foreclosure.” Id. at 394 (quotations and citation omitted). We explained:

      “The sole purpose of the judgment obtained through an action of
      mortgage foreclosure is to effect a judicial sale of the mortgaged
      property,” as the judgment is de terris (against the land), not in
      personam. Meco Realty Co. v. Burns, 200 A.2d 869, 871 (Pa.
      1964). The precise amount due on a mortgage is therefore
      “essential,” as “[a] sheriff could not possibly distribute the
      proceeds of a foreclosure sale among the various parties in
      interest without knowing the exact extent of the claim of the
      foreclosing mortgagee.” 4 Goodrich Amram 2d § 1147(6):1
      (Amram commentary).

Id. at 94 (citation modified).

      In Pautenis we upheld the trial court’s dismissal of U.S. Bank’s

mortgage foreclosure complaint based, in part, upon the determination that

the borrower was unable to determine the precise amount owed to U.S. Bank

because the payment history reports did not cover the entire duration of the

loan. Id. at 397. Thus, we concluded that the borrower’s general denial in

her answer as to the amount owed to U.S. Bank did not constitute an




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admission because she “did not have sufficient knowledge upon which to base

a specific denial as to the amount owed on the loan.”2 Id.

       This case, however, is readily distinguishable from Pautenis, as Bank

provided evidence of the precise amount Appellants owed to Bank in terms of

unpaid    principal    ($507,791.54),          interest   ($306,937.65),   and   escrow

($103,628.62), as well as records of each payment Appellants made during

the lifetime of the loan. See Trial Exhibits P-16 & P-17. As mentioned above,

the parties stipulated to the admission of this evidence.              This Court has

explained that “stipulations are binding upon the court as well as on the parties

agreeing to them.” Kershner v. Prudential Ins. Co., 554 A.2d 964, 966

(Pa. Super. 1989) (en banc). Accordingly, we conclude there is no merit to

Appellants’ claim that Bank failed to provide evidence of the precise amount

due.

       In their third and final issue, Appellants argue that the trial court erred

in determining that Appellants defaulted on their mortgage loan. Appellants

assert that they fully complied with the loan modification agreement, which

they maintain resolved all issues relating to their past due balances, including

the escrow shortage.         Appellants also fault Bank for refusing to accept



____________________________________________


2 “[A] borrower’s general denial in an answer to a complaint in a mortgage
foreclosure action is considered an admission, as the borrower and the
mortgage company are the only entities that would have sufficient information
upon which to base a specific denial of the averments.” Pautenis, 118 A.3d
386, 395 (Pa. Super. 2015).

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payments from Appellants after March 2009 because of Appellants’ failure to

repay their escrow shortage.

      We reiterate that the loan modification agreement did not address any

shortages on the part of Appellants as it related to their escrow account. See

supra, at 9. Likewise, Bank did not breach the loan modification agreement

when Bank sought repayment from Appellants for their escrow shortage. See

id.   Thus, any payments Appellants made in accordance with the loan

modification agreement did not resolve their escrow shortage. Additionally,

we find unavailing Appellants’ claim that they are excused from default

because of Bank’s refusal to accept payment from Appellants after March

2009. The terms of the mortgage expressly gave Bank the right to “return

any payment or partial payment if the payment or partial payments are

insufficient to bring the Loan current.” Trial Exhibit P-4 (Mortgage), 4/13/05,

at 4 ¶ 1.

      In sum, Appellants have not paid their mortgage in over a decade. The

parties entered into a loan modification agreement that resolved Appellants

past due principal and interest payments, but did not affect Appellants escrow

shortage. Bank was entitled to seek payment of the escrow shortage, and

when Appellants did not pay it, Bank was entitled to refuse further payment

from Appellants and file a mortgage foreclosure action. See id.; see also

Bank of Am., N.A. v. Gibson, 102 A.3d 462, 464 (Pa. Super. 2014) (“The

holder of a mortgage has the right, upon default, to bring a foreclosure


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action.”). Accordingly, as the record supports the trial court’s determination

that Appellants were in default, Appellants final issue lacks merit.     See

Stephan, 100 A.3d at 664-65.

      Judgment affirmed.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 10/4/19




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