§ 31.204. Agency review.
(a) The applicant shall apply for a loan on the form provided by the Agency. An applicant-homeowner who intentionally misrepresents financial information in conjunction with the filing of an application for assistance may be denied assistance or be required to immediately repay the amount of assistance made as a result of the misrepresentation. The mortgagee may then take legal action to enforce the mortgage without further restrictions or requirements.
(b) Agency responsibilities include the following:
(1) The Agency shall receive from the homeowner full disclosure of assets and liabilities, whether singly or jointly held, and household income regardless of source. For purposes of this subsection, the following are included as assets:
(i) The sum of the household’s savings and checking accounts, market value of stocks, bonds and other securities, other capital investments, pensions and retirement funds, personal property and equity in real property including the subject mortgage property. Income derived from family assets is considered as income. Equity is the difference between the market value of the property and the total outstanding principal of loans secured by the property and other liens.
(ii) Lump-sum additions to family assets, such as inheritances, capital gains, insurance payments included under health, accident, hazard or workmen’s compensation policies, and settlements, verdicts or awards for personal or property losses or transfer of assets without consideration within 1 year of the time of application. Pending claims for these items shall be identified by the homeowner as contingent assets.
(2) The Agency will determine whether the homeowner is suffering financial hardship due to circumstances beyond the homeowner’s control which render the homeowner unable to correct the delinquency within a reasonable period of time.
(3) The Agency will determine whether the homeowner has a reasonable prospect of being able to resume full mortgage payments within 24 months after the beginning of the period for which assistance payments are provided by the Agency and of being able to pay the mortgage in full by the maturity date or by a later date agreed to by the mortgagee for completing mortgage payments. If the term of the mortgage matures prior to or during the period of assistance, the mortgagor may still be eligible for assistance under this subchapter, except as provided in § 31.206(d) (relating to reasonable prospect of resuming mortgage payments and paying mortgage by maturity).
(4) The Agency will make a determination of eligibility within 60 days of receipt of the application.
(c) If the Agency has determined that the homeowner is eligible, and if funds are available, the Agency will do the following:
(1) Pay the mortgagee an amount, negotiated between the mortgagor, the mortgagee and the Agency, sufficient to bring the mortgage current. This includes principal, interest, taxes, mortgage insurance, credit and hazard insurance, assessments, late charges, ground rents, reasonable court costs and reasonable attorney fees already incurred by the mortgagee.
(2) Make payments to the mortgagee on behalf of the homeowner for a period not to exceed 24 months after the beginning of the period for which assistance payments are provided the Agency. Payments may stop if the Agency determines that, because of changes in the homeowner’s financial circumstances, the payments are no longer necessary or because the homeowner no longer meets the eligibility criteria of § 31.202(a)—(f) (relating to eligibility for mortgagee loan assistance). A recipient of assistance has a duty to inform the Agency of a material change in financial circumstances.
(3) Establish the homeowner’s monthly contribution in an amount which does not cause the homeowner’s total monthly housing expense to exceed 40% of the homeowner’s net effective income. Beginning February 1, 1999, and continuing thereafter, a mortgagor approved for continuing monthly mortgage assistance or whose continuing mortgage assistance is approved after being recertified by the Agency, shall pay to the Agency a minimum monthly payment of at least $25 for each mortgage being assisted. After the Agency has notified the homeowner in writing of loan approval and, in the case of a continuing loan, of the homeowner’s minimum required monthly contribution, the homeowner may agree in writing to contribute a greater percentage of net effective income or to waive receiving continuing monthly disbursements. The Agency will determine and collect monthly mortgage contributions from the homeowner to be forwarded to the mortgagee with the Agency’s disbursement. Contributions shall be made at least 15 days before the monthly mortgage payment is due to avoid late charges being imposed by the mortgagee.
(4) Review the homeowner’s financial circumstances if the homeowner fails to make payment of an amount due within 15 days of the due date. If the delinquency is not a result of a material change in the homeowner’s financial circumstances, the Agency will notify the mortgagee, mortgagor and consumer credit counseling agency and terminate the assistance. The mortgagee may then commence foreclosure upon the mortgage. If the delinquency is the result of a material, adverse change in the homeowner’s financial circumstances, the Agency will modify the homeowner’s required payments, as the Agency will determine.
(5) Review the homeowner’s financial circumstances at least annually to determine the amounts of repayment required, or more frequently, if the homeowner requests so in writing. As a condition of continued assistance or forbearance of the entire amount of assistance, together with interest, becoming immediately due, the homeowner is required to fully disclose a change in the homeowner’s financial circumstances and to cooperate with the Agency in performing its annual review.
(d) As an alternative to monthly assistance payments, the parties may agree to restructuring of future payment requirements or, in cases when the balance of the mortgage is minimal in comparison to the monthly mortgage assistance disbursements to be made, to a purchase of the mortgage by the agency and an assignment of the mortgage debt to the agency.
(e) Net income shall be determined as follows:
(1) During the period that the homeowner may be eligible for assistance, and for purposes of calculating the amount of repayment to be required, the homeowner will not be required to pay more than 40% of net effective income toward total housing expenses.
(2) To determine the maximum total housing expense payment, multiply net effective income by .40. If the homeowner’s total housing expense is less than 40% of net effective income, the mortgagor shall repay to the Agency the difference between 40% of the mortgagor’s net effective income and the mortgagor’s total housing expense unless otherwise determined by the Agency after examining the mortgagor’s financial circumstances and ability to contribute to repayment of the mortgage assistance.
(f) The Agency may determine that a homeowner can reasonably contribute a lump sum towards the mortgage arrearage and may either require the homeowner to pay that sum into the Agency in advance of closing the Agency’s loan or to bring the sum with him when the Agency’s loan is closed. The Agency may waive or reduce the lump sum amount originally required if the homeowner needed to use the funds for necessities prior to closing.
(g) The Agency may establish a reasonable closing fee for loans that are approved to help defray the cost of administering the program. This closing fee will be advanced to the Agency as part of the loan disbursement, and subject to repayment by the homeowner as provided by § 31.207 (relating to repayment).
(h) A mortgagee entitled to payments under this subchapter shall provide to the Agency, within 30 days of the Agency’s request, the following documents and information:
(1) An itemized statement of the amounts due under the mortgage including all corporate advances incurred for which reimbursement from the mortgagor is demanded by the mortgagee. Demands for attorney fees, court costs and other advances shall be reasonable and reflect the amount of work and expenses actually expended and may not include any amounts incurred during the period a stay is in effect under this subchapter.
(2) Copies of the following documents from the original mortgage transaction:
(i) The HUD 1 Settlement Statement
(ii) The mortgage and note
(iii) The appraisal, if an appraisal has been performed during the last 5 years
(3) Failure to provide in a timely fashion the documents and information required under this subsection, will result in the mortgagee’s forfeiture of the right to receive any late fees and attorney fees, costs and expenses.
(i) Upon the Agency’s payment of the initial payment to the mortgagee, including any corporate advances allowed by the Agency, the mortgagee shall adjust its accounts to reflect that the mortgage obligation is, as of the date of receipt of the funds, reinstated and current for all purposes. The subsequent imposition by a mortgagee, its successors or assigns, of any charges, fees or other amounts that were paid or disallowed by the Agency, or waived by the mortgagee, shall be in violation of the Unfair Trade and Consumer Protection Law (73 P.S. § § 201-1—209-6).
Source The provisions of this § 31.204 amended through June 13, 1986, effective June 14, 1986, 16 Pa.B. 2126; amended July 1, 1994, effective July 2, 1994, 24 Pa.B. 3224; amended June 4, 1999, effective July 1, 1999, 29 Pa.B. 2859; amended August 29, 2008, effective September 6, 2008, 38 Pa.B. 4859; amended April 29, 2016, effective April 30, 2016, 46 Pa.B. 2171; corrected May 13, 2016, effective April 30, 2016, 46 Pa.B. 2423. Immediately preceding text appears at serial pages (336308) to (336311).
Notes of Decisions Debtor In Bankruptcy
A debtor in bankruptcy may only receive emergency mortgage assistance from the Pennsylvania Housing Finance Agency if the automatic stay has been lifted. Watts v. Housing Finance Co., 876 F.2d 1090 (1989).
Cross References This section cited in 12 Pa. Code § 31.210 (relating to periods of high unemployment).
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