The opinion
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Albert LaTorre, :
Petitioner :
:
v. : No. 1143 C.D. 2021
: Submitted: February 10, 2023
Pennsylvania Housing :
Finance Agency, :
Respondent :
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE STACY WALLACE, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE WALLACE FILED: June 14, 2023
Albert LaTorre (LaTorre) petitions for review of the Pennsylvania Housing
Finance Agency’s (Agency) August 18, 2021 decision affirming the Agency’s May
13, 2021 denial of his application for an emergency mortgage assistance loan
(HEMAP Loan) under the portion of the Housing Finance Agency Law1 commonly
known as the Homeowner’s Emergency Mortgage Assistance Loan Program (Law).2
After review, we affirm.
1
Act of December 3, 1959, P.L. 1688, as amended, 35 P.S. §§ 1680.101-1680.603a.
2
Added by Section 2 of the Act of December 23, 1983, P.L. 385, Act 91.
BACKGROUND
In December 2015, LaTorre and his wife (collectively, the LaTorres)
purchased real property at 634 Elephant Road in Perkasie, Pennsylvania (Property)
and obtained a mortgage financed by Citadel Federal Credit Union (Citadel) in the
amount of $548,000. Supplemental Reproduced Record (S.R.R.) at 10b. On
February 24, 2021, Citadel issued the LaTorres a Notice3 under the Law advising
they had failed to make several mortgage payments and their mortgage was in
default. Id. at 47b. Specifically, the Notice provided that the LaTorres did not make
their monthly mortgage payments from February 1, 2020, through February 1, 2021,
resulting in a past due amount of $37,653.94.4 Id. Thereafter, the LaTorres filed
their HEMAP Loan application on March 25, 2021. Id. On May 13, 2021, the
Agency issued a Notice of Adverse Action denying the LaTorres’ HEMAP Loan
application. Id. at 4b. The Agency indicated its reason for denial was:
No reasonable prospect of applicant[s] resuming full mortgage payment
within thirty-six months from the date of the mortgage delinquency and
paying mortgage by maturity based on: Applicant[s’] income is
insufficient to maintain mortgage. $60,000 maximum assistance will
be exceeded in the next few months and the applicants are unable to
resume within that time frame.
Id. at 43b.
3
A lender provides a notice to a mortgagor to instruct the mortgagor of different means available
to resolve arrearages and avoid property foreclosure and to provide a timetable in which such
means must be accomplished. Section 403-C of the Law, 35 P.S. § 1680.403c. Notably, the notice
informs the mortgagor of the availability of financial assistance through HEMAP. 35 P.S. §
1680.403c(b)(1).
4
When LaTorre filed his appeal with this Court in September 2021, the arrearages on the LaTorres’
mortgage had increased to approximately $79,000. S.R.R. at 10b-15b, 26b.
2
The LaTorres appealed and the Agency held a hearing on June 23, 2021,
before an Agency hearing examiner (Examiner). After the hearing, the Examiner
made the following factual findings. LaTorre was self-employed in a dental practice
for approximately 26 years before selling his practice in 2016. S.R.R. at 23b.
LaTorre continued practicing dentistry until March 2020, when he was laid off due
to the COVID-19 pandemic. Id. LaTorre’s wife, who had worked as a dental
hygienist since 2018, was also laid off during the pandemic. Id. at 24b. After losing
their employment, the LaTorres both received unemployment compensation
benefits. Id. Subsequently, LaTorre was unable to return to work due to health
problems and began receiving $2,784 per month in social security disability benefits.
Id. LaTorre’s wife secured new employment, earning approximately $2,457 per
month, resulting in a combined monthly income of $5,421.5 At the time of their
appeal, the LaTorres reported total monthly living expenses of $6,205, including
housing expenses of $4,286, installment debt of $358, and living expenses of $1,561.
S.R.R. at 10b-15b, 26b.
The Examiner also made the following relevant findings of fact and legal
conclusions:
At [the time LaTorre’s federal stimulus payments are exhausted], the
average net monthly income will decrease to approximately $5,421
($2,784 social security disability and $2,457 earnings). This level of
monthly income will be insufficient to maintain the total monthly
expenses of $6,205 reported at appeal.
Additionally, [LaTorre] stated that [the LaTorres] are unable to resume
and maintain monthly payments at the current amount of $3,913 and
5
At the time of the appeal, LaTorre received unemployment compensation benefits including
federal stimulus payments of $3,763 per month, but those benefits were expected to be exhausted
in mid-September 2021; thus the Agency did not include those payments in its income calculation.
S.R.R. at 26b.
3
are meeting with the lender in hopes of securing a modification. This
situation evidences insufficient income.
Also, the Agency believes that in order for a homeowner to successfully
maintain the mortgage payments, no more than 35% of the average net
monthly income should be devoted to maintaining the monthly housing
expense (mortgage payment, real estate taxes, hazard insurance and
utilities), leaving the remaining 65% of the income to maintain any
monthly living expenses and installment debt. The total monthly
housing expense of $4,286 reported at appeal encumbers 48% of the
current household income of $9,004 which includes the extended
unemployment compensation benefits and federal stimulus
unemployment compensation benefits. However, the federal stimulus
will end in early September 2021 and it appears that the regular
unemployment benefits will be exhausted by mid-September 2021. At
that time, the monthly housing expense of $4,286 will encumber 82%
of the net monthly income of $5,241 leaving only $955 remaining to
cover the monthly living expenses and installment debt totaling $1,919.
This situation further evidences insufficient income.
Furthermore, according to information submitted to the record, the
mortgage payments on the Fay Servicing [sic] mortgage remain due for
February 1, 2021 in the amount of $71,192.43, including the July 1,
2021 payment. The August 1, 2021 and September 1, 2021 payments
of $3,913 would increase the total amount needed to reinstate the
mortgage to approximately $79,018.43 through September 2021.
Although [LaTorre] stated that [the LaTorres] could provide sufficient
funds to cover the delinquent payments that exceed the $60,000
maximum available under the [HEMAP], the unemployment
compensation benefits will be exhausted as of September 2021. At that
time, the monthly income will be insufficient to maintain the total
monthly expenses. Therefore, in view of the record at this time, a
mortgage assistance loan was properly denied on the basis: No
reasonable prospect of applicant resuming full mortgage payments
within thirty-six (36) months from the date of the mortgage delinquency
and paying mortgage(s) by maturity based on: Applicant[s’] income is
insufficient to maintain mortgage. (Act 91, Section 404-C(A)).
S.R.R. at 26b-27b (emphasis added). Thus, the Examiner affirmed the Agency’s
May 13, 2021 determination denying the LaTorres’ HEMAP Loan application.
4
On appeal to this Court, LaTorre asserts the Agency should have granted the
HEMAP Loan as he has “sufficient funds to pay back mortgage payments in order
to qualify for the HEMAP loan.” LaTorre’s Br. at 6; Petition at 2. In response, the
Agency asserts this Court should affirm its decision to deny LaTorre the HEMAP
Loan for two reasons. First, it asserts this Court should affirm its decision on the
basis that payment of the present delinquency would exceed the $60,000 statutory
maximum of HEMAP assistance. Agency’s Br. at 2. Second, the Agency asserts
this Court should affirm its decision based on LaTorre’s inability to demonstrate that
he has a reasonable prospect of resuming full mortgage payments within 36 months
and paying the mortgage by maturity. Agency’s Br. at 2.
DISCUSSION
In reviewing the Agency’s decision to deny a HEMAP loan, we consider
whether substantial evidence supports the Agency’s findings of fact that are
necessary to support its adjudication and whether the Agency violated a party’s
constitutional rights, or committed an error of law. 2 Pa. C.S. § 704. The Law’s
purpose 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). The Agency’s “interpretation of
[the Law] is entitled to great weight and should be disregarded or overturned only if
such construction is clearly erroneous.” Horton v. Pa. Hous. Fin. Agency, 511 A.2d
917, 918 (Pa. Cmwlth. 1986) (citation omitted).
An applicant seeking to obtain a HEMAP loan under the Law bears the burden
of establishing that the applicant meets the Law’s requirements. Section 404-C(a)
of the Law, 35 P.S. § 1680.404c(a). First, relevant to this appeal, under Section 404-
5
c(f) of the Law, the amount of assistance to any mortgagor under the HEMAP cannot
“exceed the sum of $60,000.” 35 P.S. § 1680.404c(f). Additionally, under Section
404-C(a)(5) of the Law, assistance will only be made to an applicant if
[t]he 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 the article and pay the
mortgage or mortgages in full by its maturity date or by a later date
agreed to by the mortgagees for completing mortgage payments.
35 P.S. § 1680.404c(a)(5) (emphasis added). Relevant to this appeal, Section 405-
C(f.1) of the Law extends the 24-month period to a 36-month period when the
unemployment rate exceeds 6.5%.6
While the Law does not define “reasonable prospect,” the Agency “shall
develop uniform notices and rules and regulations in order to implement the
provisions of this article.” Section 401-C(c) of the Law, 35 P.S. § 1680.401c(c). In
the Agency’s Policy Statement on Homeowner’s Emergency Assistance Program
(Policy Statement) interpreting “reasonable prospect,” Section 31.206(a) states that
the Agency will consider:
(1) The homeowner’s prior work history, experience, training,
opportunities for retraining and similar factors which may affect the
homeowner’s future employment opportunities.
6
This provision states:
The twenty-four (24) month limit on assistance available under this act established
in subsection (f) and referenced in sections 401-C(a)(5), 403-C(f) and 404-C(a)(5)
and (12) shall increase to thirty-six (36) months if during the month the homeowner
submits an application for assistance the average rate of total unemployment in the
Commonwealth, as seasonally adjusted, for the period consisting of the most recent
three (3) months for which such data for the Commonwealth is published before
the close of such month equals or exceeds six and one-half (6.5) percent.
Section 405-C(f.1) of the Law, 35 P.S. § 1680.405c(f.1), added by Section 4 of the Act of
December 21, 1998, P.L. 1258.
6
(2) Potential for future changes in the homeowner’s financial prospects
through re-employment, schooling, training or debt reduction, or other
income changes sufficient to enable the homeowner to resume full
mortgage payments.
(3) Noncash benefits that may reduce household expenses, such as food
stamps, free medical services for military or low-income families, a
company-provided automobile, or receipt of food or clothing from
family members living outside the household.
(4) Changes in income or recurring expenses, or both, that may be
affected by changes in the age, composition or employment of members
of the household.
(5) Potential for repayment of short-term or installment debt.
(6) Delinquencies in other debts which seriously jeopardize continued
ownership of the home, which cannot be cured by a mortgage assistance
loan.
(7) A homeowner’s demonstrated ability to make regular monthly
mortgage payments, even though those payments represented most of
the homeowner’s income. In determining whether the homeowner’s
future job and income prospects will be sufficient to enable the
homeowner to pay the mortgage debt--including principal, interest,
taxes and insurance--the Agency will take into consideration the
amount of household income available to the homeowner for a
reasonable period of time not to exceed 24 months prior to the
circumstances which caused the mortgage delinquency and whether the
income was sufficient as evidenced by documentation, including tax
returns, Internal Revenue Service Form W-2 and tax transcripts. If a
homeowner is not required to file taxes, certification of this fact is
mandatory at the time of application. In cases when nontaxable income
is earned or financial government benefits are received, documentation
evidencing receipt of the income or benefits shall be provided.
12 Pa. Code § 31.206(a).7 Additionally, the Policy Statement provides:
7
Section 31.206 of the Policy Statement “is a statement of policy, not a regulation, and thus does
not have the force and effect of law.” R.M. v. Pa. Hous. Fin. Agency, 740 A.2d 302, 308
(Footnote continued on next page…)
7
The homeowner shall provide sufficient information to allow the
Agency to assess the homeowner’s future ability to pay the mortgage
debt. The Agency will base its decision on the information received
from the homeowner or other sources. The lack of sufficient
information from the homeowner which is reasonably available to the
homeowner, or the receipt of knowingly false or misleading
information from the homeowner may result in a denial of the
application on the merits.
12 Pa. Code § 31.206.
In making its determination regarding whether an applicant has a reasonable
prospect of resuming full mortgage payments, this Court has previously held that
“the Agency cannot base its determination on speculative income[.]” R.M. v. Pa.
Hous. Fin. Agency, 740 A.2d 302, 308 (Pa. Cmwlth. 1999). In R.M., this Court
concluded that the hearing examiner reasonably decided homeowner’s future
income was speculative where there was no evidence as to when he expected to earn
it, nor an explanation of why he had previously been unable to do so. Id. Our Court
has also held that it is within a hearing examiner’s discretion to determine that a
petitioner does not meet the eligibility requirements for a HEMAP loan when the
petitioner’s past income was insufficient to maintain monthly expenses. Mull v. Pa.
Hous. Fin. Agency, 529 A.2d 1185, 1188 (Pa. Cmwlth. 1987). Accordingly, the
Agency does not abuse its discretion or commit an error of law when it denies an
application where the applicant’s evidence of income is speculative or insufficient
to demonstrate a reasonable probability that the mortgage payments will resume and
the mortgage will be paid off on time. R.M., 740 A.2d at 308.
(Pa. Cmwlth. 1999).
8
Here, as Examiner noted, the arrearages on the mortgage were $79,018.43
through September 2021. S.R.R. at 27b. In addition, the LaTorres’ monthly
expenses at the time of the appeal hearing: mortgages and utilities ($4,286),
installment debt ($358) and living expenses ($1,561), exceeded their monthly
income of $5,421. There is substantial evidence in the record to support these
findings. Notably, LaTorre does not dispute the accuracy of these amounts. Rather,
LaTorre argues he has “sufficient funds to pay back mortgage payments in order to
qualify for the HEMAP loan.” Petition at 2. However, at the Agency’s hearing,
Examiner asked whether LaTorre had any money saved that could be applied toward
the mortgage delinquency and LaTorre stated, “Yeah, we have some savings. Not
$66,000 but we have some savings.” S.R.R. at 10b. When Examiner asked if
LaTorre knew how much he had that could be applied toward the mortgage
delinquency, LaTorre answered, “No, not off the top of my head.” Id. At the
conclusion of the hearing, Examiner requested LaTorre to provide recent checking
and savings account information. Nothing in the record suggests that LaTorre
provided this information to the Agency nor does LaTorre claim that he did so.
LaTorre does not indicate where the funds would have come from or why he was
unable to utilize the funds to pay the mortgage previously. Thus, these funds are
speculative and LaTorre’s assertion that some amount of funds exist is insufficient
to show that LaTorre satisfies the Law’s criteria, as payment of the arrearages would
exceed the HEMAP’s statutory maximum of $60,000.
Moreover, despite these funds being speculative, Examiner considered
LaTorre’s statement that he could provide sufficient funds to cover the delinquent
payments that exceed the maximum available under the HEMAP and Examiner
concluded that once LaTorre’s unemployment compensation benefits were
9
exhausted in September 2021, the LaTorres’ “monthly income [would] be
insufficient to maintain the total monthly expenses.” S.R.R. at 27b. Thus, even
giving LaTorre the benefit of assuming he had the funds to cover the delinquent
payments, Examiner concluded the LaTorres’ income would be insufficient to
resume paying full mortgage payments. This is further supported by the record, as
LaTorre testified that if his mortgage payments were not modified, he did not believe
he would be able to resume making the full monthly mortgage payment. See S.R.R.
at 10b-11b.
LaTorre asserts in his brief that “Social Security has a ‘Ticket to Work’
program that encourages taxpayers to return to work despite their disability” and
alleges that by not considering this program the Agency “essentially condemned
[LaTorre and his wife] to a lifetime of homelessness as [they] likely would not be
able to qualify for a mortgage or even a lease.” LaTorre asserts that his receipt of
social security disability was “not necessarily a permanent arrangement” and that he
returned to work in November 2021 in a modified capacity to work as a pediatric
dentist. However, at the Agency’s hearing, when Examiner questioned his receipt
of unemployment benefits and disability benefits, LaTorre stated, “Well from what
I’ve read you are able to receive unemployment if you are unable to work in a
particular field meaning, you know I’m a dentist, so I can’t do dentistry because of
my disability but I can still teach.” S.R.R. at 7b. Besides his assertion in his brief
to this Court that he has obtained employment, there was no evidence presented to
the Agency that he was seeking future employment in dentistry nor any reference to
the “Ticket to Work” program. It was LaTorre’s burden to establish that he met the
Law’s criteria, and his post-hearing assertions do not alter the fact that he failed to
do so. See 35 P.S. § 1680.404c(a)(5). While we recognize the unfortunate
10
challenges the LaTorres have faced, the statute does not provide any exceptions to
the mandatory statutory requirements for an applicant to receive a HEMAP loan.
CONCLUSION
The Agency’s findings that the LaTorres’ monthly expenses exceed their
monthly income and that their mortgage arrearages exceed the Law’s $60,000
statutory maximum are supported by substantial evidence in the record. Because the
Agency cannot consider speculative income in determining whether an applicant has
a reasonable prospect of resuming full mortgage payments, the Agency properly
determined that the LaTorres lacked a reasonable prospect of being able to resume
full mortgage payments within 36 months and that the assistance they required
exceeded HEMAP’s statutory maximum. Therefore, the Agency did not abuse its
discretion or err as a matter of law in denying the LaTorres a HEMAP Loan.
Accordingly, we affirm the Agency’s decision.
______________________________
STACY WALLACE, Judge
11
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Albert LaTorre, :
Petitioner :
:
v. : No. 1143 C.D. 2021
:
Pennsylvania Housing :
Finance Agency, :
Respondent :
ORDER
AND NOW, this 14th day of June 2023, the August 18, 2021 decision of the
Pennsylvania Housing Finance Agency is AFFIRMED.
______________________________
STACY WALLACE, Judge