           IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Patricia L. Vasco,                           :
                                             : No. 2400 C.D. 2015
                            Petitioner       : Submitted: April 22, 2016
                                             :
                     v.                      :
                                             :
Pennsylvania Housing                         :
Finance Agency,                              :
                                             :
                            Respondent       :

BEFORE:       HONORABLE RENÉE COHN JUBELIRER, Judge
              HONORABLE MICHAEL H. WOJCIK, Judge
              HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE WOJCIK                                           FILED: August 11, 2016

              Patricia L. Vasco (Petitioner), proceeding pro se, petitions for review
of the decision of a Hearing Examiner of the Pennsylvania Housing Finance
Agency (PHFA) affirming the PHFA’s denial of her application for emergency
mortgage assistance under the statute known as the Homeowner’s Emergency
Mortgage Assistance Loan Program (HEMAP) Act (Act 91).1 We affirm.
              In 2006, Petitioner inherited the house in which she resides
unencumbered by a mortgage. Before obtaining title, she resided with family at
the residence for some time and paid the property taxes and insurance. In 2002,
the property taxes increased from $2,200 per year to $4,000 per year. After the
taxes had become delinquent for three to four years, Petitioner obtained a mortgage

       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.
from Clearview Federal Credit Union (Clearview) in 2006 to pay the delinquent
taxes and other debts. Her monthly mortgage payment was $570.00. In February
2015, Petitioner refinanced the mortgage through Midwest Loan Services
(Midwest) as Clearview’s servicing agent which increased her monthly mortgage
payment to $695.19.
                 In June 2015, Petitioner was notified by her lender that the mortgage
was in default and that the lender intended to foreclose. Supplemental Reproduced
Record (S.R.R.) at 10b-16b. As a result, Petitioner sought assistance from a
consumer credit counseling agency and applied to PHFA for a HEMAP loan. Id.
at 17b-19b.
                 PHFA denied Petitioner’s application on the basis that there was no
reasonable prospect of her resuming full mortgage payments within 24 months
from the date of delinquency and paying the mortgage by maturity2 because: (1)
Petitioner’s income is insufficient to maintain the mortgage because her total
monthly expenses exceed her net monthly income by $1,849.66; (2) Petitioner’s

       2
           Section 404-C(a)(5) of Act 91 states:

                 (a) No assistance may be made with respect to a mortgage or
                 mortgagor under this article unless all of the following are
                 established:

                                                   ***

                 (5) The agency has determined that there is a reasonable prospect
                 that the mortgagor will be able to resume full mortgage payments
                 within twenty-four (24) months after the beginning of the period
                 for which assistance payments are provided under this article and
                 pay the mortgage . . . in full by its maturity date or by a later date
                 agreed to by the mortgagee . . . for completing mortgage payments.

35 P.S. §1680.404c(a)(5).


                                                    2
income has been insufficient to maintain the mortgage for the past 2 years because
her total monthly expenses exceed the highest reported income on the federal
income tax returns that she provided; and (3) Petitioner’s total debt indicates no
reasonable prospect of her resuming full mortgage payments within 24 months
from the date of delinquency and paying the mortgage by its maturity. S.R.R. at
21b.    PHFA also denied Petitioner’s application on the basis that she is not
suffering financial hardship due to circumstances beyond her control 3 because the
financial hardship is due to overextension. Id.
                 Petitioner appealed the adverse action and a Hearing Examiner
conducted a telephonic hearing at which Petitioner testified.             S.R.R. at 30b-57b.
By letter dated October 6, 2015, the Hearing Examiner advised Petitioner that
based on the findings of fact developed from the hearing record, PHFA properly

       3
           Section 404-C(a)(4) and (10) of Act 91 states:

                 (a) No assistance may be made with respect to a mortgage or
                 mortgagor under this article unless all of the following are
                 established:

                                                ***

                 (4) The mortgagor . . . is suffering financial hardship due to
                 circumstances beyond the mortgagor’s control which render the
                 mortgagor unable to correct the delinquency . . . within a
                 reasonable time and make full mortgage payments.

                                                ***

                 (10) [I]n 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).


                                                  3
denied her application for a HEMAP loan because there was no reasonable
prospect of her resuming full mortgage payments within 24 months from the date
of delinquency and paying the mortgage by its maturity4 and the mortgage
delinquency was not due to circumstances beyond her control.5 Id. at 1b-9b.

         4
             With respect to Petitioner’s eligibility under Section 404-C(a)(5), the Hearing Examiner
found:

                  [Petitioner] lost a job during 2002, but received unemployment
                  benefits from June 2002 until September 2002. . . . From
                  December 2002 until February 2005 [Petitioner] was employed.
                  Following a period of unemployment (beginning February 2005),
                  [Petitioner] secured new employment during September 2005 and
                  remained steadily employed until October 22, 2013. . . . In
                  December 2013 [Petitioner] began employment with Morgan
                  Stanley. In February 2014 [Petitioner] broke her leg and was off
                  work for six (6) month will full pay. However, she was not
                  working and generating new business/assets and her employer
                  terminated her employment in July 2015. Also, during 2014
                  [Petitioner] incurred veterinary expenses of $6,900 that are a part
                  of her monthly installment debts. . . . Plumbing expenses were
                  incurred in December 2014, January, February and April 2015.
                  The mortgage was refinanced and the monthly payments increased
                  in February 2015 from $570 to $659.19. . . . When [Petitioner]
                  completed her HEMAP application on June 24, 2015 her average
                  net monthly income from Morgan Stanley was $2,257.51. The
                  monthly expenses reported totaled $4,107.17. Thus, [PHFA]
                  found that the average net monthly income was not sufficient to
                  support the monthly expenses.

                  The [monthly] income history is as follows: 2010 - $1,773, 2011 -
                  $1,817, 2012 - $1,778, 2013 - $1,756 and 2014 - $1,997. As
                  stated, the monthly expenses that were reported at the date of
                  application totaled $4,107.17 (housing expenses of $922.19,
                  Installment Debt - $1,080, Living Expenses - $1,866.00 and
                  Payroll Deductions - $238.98). The income history verifies that at
                  no time from 2010 through 2014 was [Petitioner] generating
                  sufficient income to maintain the mortgage payments and the level
                  of monthly expenses. While [Petitioner] attributes the mortgage
(Footnote continued on next page…)
                                                   4
(continued…)

                  delinquency to circumstances that she referred to as “once in a
                  lifetime specific emergencies,” (which based on her statements
                  began as far back as 2002) the insufficient income to maintain the
                  monthly obligations is ongoing. As of appeal hearing [Petitioner]
                  reported being unemployed. Her average net monthly income
                  from unemployment compensation benefits is $1,324.98. The
                  monthly expenses were reviewed and revised during the appeal
                  hearing and totaled $2,286.19. However, it is noted that the total is
                  inclusive of installment debt of $1,000. Based on [Petitioner]
                  currently paying only $458 of installment debt, the overall monthly
                  expenses total $1,744.19. . . . Based on the review of the
                  employment history, the income history from tax returns, the
                  income at the date of application (June 2015) and on the income at
                  the date of appeal hearing, this appears to be an ongoing situation
                  and it does not appear likely that the income will increase to the
                  level necessary to resume the mortgage payments and maintain all
                  other obligations. Any future income from a law suit, settlements,
                  disability claims or other employment must remain speculative at
                  this time. In this context, the mortgage assistance loan was
                  properly denied on the basis: No reasonable prospect of applicant
                  resuming full mortgage payments within twenty-four (24) months
                  from the date of the mortgage delinquency and paying mortgage(s)
                  by maturity.

S.R.R. at 7b, 8b.

         5
             With respect to Petitioner’s eligibility under Section 404-C(a)(4), the Hearing Examiner
found:

                  [PHFA] believes that in order to successfully maintain the
                  mortgage and all other household expenses, the housing expense
                  alone should require no more than 40% of the average net monthly
                  income, leaving the remaining 60% of the monthly income to
                  support the other monthly expenses. [Petitioner]’s housing
                  expense totals $922.19, which represents 52% of the average net
                  monthly income of $1,773 generated during 2010, 51% of the
                  $1,817 average net monthly income during 2011, 52% of the
                  average net monthly income $1,778 during 2012, 53% of the
                  average net monthly income of $1,756 during 2013, 46% of the
(Footnote continued on next page…)
                                                   5
                 In this appeal,6 Petitioner argues7 that the Hearing Examiner erred in
failing to properly consider or explain her findings regarding Petitioner’s
ineligibility for a HEMAP loan under Section 404-C(a)(5). Specifically, Petitioner
contends that although the Hearing Examiner considered information regarding
Petitioner’s lawsuit8 and her work history and efforts at reemployment, the Hearing


(continued…)

                 average net monthly income of $1,997 during 2014 and 41% of the
                 average net monthly income through June 2015. The comparison
                 of the income versus the monthly expenses exhibits that at no time
                 was [Petitioner] generating the level of income necessary to
                 successfully support her mortgage payments and this level of
                 monthly expenses. Thus, financial overextension is evidenced and
                 appears to have been a factor in the mortgage delinquency. In this
                 context, the mortgage assistance loan was properly denied on the
                 basis: Applicant is not suffering financial hardship due to
                 circumstances beyond applicant’s control based on:           Total
                 mortgage delinquency is not due to circumstances beyond
                 applicant’s control.

S.R.R. at 8b-9b.

       6
         “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. Pennsylvania Housing Finance Agency, 740 A.2d 302, 305 n.2
(Pa. Cmwlth. 1999), appeal denied, 754 A.2d 390 (Pa. 2000).

       7
           We reorder Petitioner’s claims for the sake of clarity.

       8
          Petitioner asserts that there is a “credible prospect of recei[ving] damages pursuant [to]
her lawsuit in connection with her broken leg.” Petitioner’s Brief at 13. However, at the
hearing, Petitioner’s counsel stated that with respect to this injury, the “medical records are being
[] compiled”; “there are dealings with the insurance company as they collect the medical records
. . . now that it appears that [Petitioner] has reached an MI”; and concluded that “there is not an
actual complaint, obviously, that is forthcoming in the near future.” S.R.R. at 45b. At the
hearing, Petitioner acknowledged that “I was ignorant in how long these things take and [] I
hadn’t asked [counsel].” Id.


                                                   6
Examiner failed to make any findings regarding the reasonable prospect of
Petitioner’s ability to resume full mortgage payments within 24 months from the
date of delinquency and paying the mortgage by its maturity.
             An applicant for a HEMAP loan has the burden of establishing the
facts necessary to qualify under Act 91. Koch v. Pennsylvania Housing Finance
Agency, 505 A.2d 649, 650 (Pa. Cmwlth. 1986). In addition, a hearing examiner
cannot consider “speculative income” that an applicant may make in the future
when determining whether the applicant satisfies the requirements of Section 404-
C(a)(5). R.M., 740 A.2d at 308; Cullins v. Pennsylvania Housing Finance Agency,
623 A.2d 951, 954-55 (Pa. Cmwlth. 1993). As a result, a hearing examiner does
not abuse her discretion or commit an error of law when the applicant’s evidence
of future income is speculative and/or legally insufficient to demonstrate that there
is a reasonable probability that the mortgage payments will resume and the
mortgage will be paid off in a timely fashion. See R.M., 740 A.2d at 308 (holding
that although the applicant presented evidence that he had significant earning
potential, the applicant failed to present evidence as to when he could expect to
earn this income; therefore, “[i]t was reasonable for the hearing examiner to
conclude that [the applicant’s] future income was speculative” and “the hearing
examiner did not err as a matter of law in denying [the] application for mortgage
assistance.”); Cullins, 623 A.2d at 954-55 (holding that PHFA “cannot base its
determination on speculative income”; determining that the applicant’s evidence
failed to establish that she would be guaranteed hours by an employer and that
future employment was merely a possibility; and concluding from these premises
that the hearing examiner did not err in considering the applicant’s only source of




                                         7
guaranteed income and financial debt and finding that the applicant was
disqualified under Section 404-C(a)(5)).
              As outlined above, the Hearing Examiner in this case found that
Petitioner had no reasonable prospect of resuming mortgage payments in 24
months and satisfying the mortgage debt by its maturity date because her monthly
expenses and mortgage payment for the 5 years preceding application dramatically
exceeded her income. S.R.R. at 7b.9 As a result, the Hearing Examiner concluded:

              Based on the review of the employment history, the
              income history from tax returns, the income at the date of
              application (June 2015) and on the income at the date of
              appeal hearing, this appears to be an ongoing situation
              and it does not appear likely that the income will increase
              to the level necessary to resume the mortgage payments
              and maintain all other obligations. Any future income
              from a law suit, settlements, disability claims or other
              employment must remain speculative at this time.
Id.



       9
           PHFA will generally determine that an applicant has demonstrated a reasonable
prospect of resuming payments and paying the mortgage by maturity despite unemployment by
presenting evidence of: (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; and (4) that she is actively seeking work as evidenced by a written statement to
that effect. 12 Pa. Code §31.206. As we have explained:

              Satisfaction of these factors, however, does not necessarily compel
              the conclusion that homeowner is qualified for mortgage
              assistance. Rather, [PHFA] is free to consider in toto those four
              factors, as well as others, and then, based on that guidance and [its]
              own judgment, decide whether an applicant is qualified for
              mortgage assistance.

R.M., 740 A.2d at 307.


                                                8
              Significantly, Petitioner did not adduce any evidence, even
speculative evidence, to suggest that she could obtain income in excess of her
documented expenses or that she has the financial wherewithal through a
settlement or any other means to meet the statutory requirements of Section 404-
C(a)(5). Absent such evidence, the Examiner had no factual basis upon which to
conclude that she could. Therefore, given this record, the Hearing Examiner did
not err in determining that Petitioner was ineligible for a HEMAP loan under
Section 404-C(a)(5) and made ample findings in this regard. See R.M., 740 A.2d at
308; Cullins, 623 A.2d at 954-55. See also Mull v. Pennsylvania Housing Finance
Agency, 529 A.2d 1185, 1188 (Pa. Cmwlth. 1987) (holding that the hearing
examiner did not err in determining that there was no reasonable prospect of
applicant resuming mortgage payments within the required time frame where the
applicant’s income was insufficient to meet her monthly expenses).10
              Accordingly, PHFA’s order is affirmed.




                                            MICHAEL H. WOJCIK, Judge

       10
           Petitioner also claims that the Hearing Examiner erred in determining that she is
ineligible under Section 404-C(a)(4) of Act 91 as well. See Petitioner’s Brief at 8-12. However,
because Petitioner was properly found to be ineligible under Section 404-C(b)(5) as outlined
above, she is not entitled to a HEMAP loan as a matter of law regardless of any purported error
with respect to Section 404-C(a)(4). See, e.g., Phillips v. Pennsylvania Housing Finance
Agency, 554 A.2d 607, 610-11 (Pa. Cmwlth. 1989) (“Accepting as true every bit of the above
noted testimony, we hold, as a matter of law, that it is insufficient to establish a reasonable
prospect that Petitioners could resume full mortgage payments . . . after the beginning of the
period for which assistance payments would be provided. . . . Because of our resolution of this
issue, we need not address the other issues raised by Petitioners.”).


                                               9
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Patricia L. Vasco,                        :
                                          : No. 2400 C.D. 2015
                          Petitioner      :
                                          :
                     v.                   :
                                          :
Pennsylvania Housing                      :
Finance Agency,                           :
                                          :
                          Respondent      :


                                       ORDER


            AND NOW, this 11th day of August, 2016, the order of the
Pennsylvania Housing Finance Agency dated October 6, 2015, at No.
HE0003014727 is AFFIRMED.




                                        __________________________________
                                        MICHAEL H. WOJCIK, Judge
