J-A17040-14
2014 PA Super 215
HSBC BANK, NA AS TRUSTEE IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
AMY C. DONAGHY
Appellant No. 2761 EDA 2013
Appeal from the Judgment entered September 6, 2013
In the Court of Common Pleas of Delaware County
Civil Division at No: 12-000866
BEFORE: GANTMAN, P.J., PANELLA, and STABILE, JJ.
OPINION BY STABILE, J.: FILED SEPTEMBER 29, 2014
Appellant Amy C. Donaghy appeals from the judgment entered
September 6, 2013, following the Court of Common Pleas of Delaware
for summary judgment in this in rem mortgage foreclosure action. For the
reasons set forth below, we reverse and remand.
On January 31, 2012, Appellee1 filed a mortgage foreclosure complaint
against Appellant in the trial court, requesting judgment against her for
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1
As the trial court noted by way of background:
Appellant executed a mortgage and promissory note in favor of
Mortgage Electronic Registration Systems, Inc., as nominee for
Shelter Mtg. Co., LLC, d/b/a Guaranty Northeast Mtg. on March
29, 2007, in the amount of $568,000 with regard to real
property located at 3 East Spring Oak Circle, Media, Delaware
County, Pennsylvania. The mortgage was assigned to
[Appellee], HSBC Bank USA, National Association as Trustee for
(Footnote Continued Next Page)
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daily per diem amount of $95.25
plus additional late charges, and costs (including escrow advances),
complaint, Appellee specifically alleged that Appellant failed to make the
scheduled payments on the mortgage since August 2011 and consequently,
under the terms of the mortgage agreement, the entire loan balance became
due and payable. Id. at ¶ 7. Moreover, Appellee alleged that it was not
required to provide Appellant a written notice of foreclosure under Act 6 (41
2
Id. at
¶ 9.
t entered
default judgment against Appellant, because she had failed to answer the
complaint. On August 2, 2012, Appellant petitioned the trial court to vacate
the default judgment against her, alleging, inter alia, Appellee failed to
provide her with notices required under Sections 20 and 22 of the mortgage
_______________________
(Footnote Continued)
Wells Fargo Asset Securities Corporation, Mortgage Pass-
Through Certificates, Series 2007-7 [] on August 17, 2011.
Trial Court Opinion, 12/3/13, at 1.
2
The threshold or principal base rate amount is $217,873 or less for
residential mortgages, as adjusted annually for inflation. See 41 P.S. § 101.
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October 24, 2012, the trial court issued an order granting the petition and
opening the judgment.
On November 13, 2012, Appellant filed an answer to the complaint,
she averred, inter alia, that Appellee failed to provide her notices required
s Answer,
11/13/12, at ¶¶ 14-15. On November 29, 2012, Appellee replied to the new
On February 1, 2013, Appellee moved for summary judgment against
raise a genuine issue of
material fact in her [a]nswer and [n]ew [m]atter and has effectively
admitted all material allegations against her by virtue of her general
addressing Appella
notice provisions of the mortgage agreement, Appellee asserted it indeed
provided to Appellant a notice of intent to foreclose.3 Id. at ¶ 13.
reiterated her argument that Appellee had failed to comply with the notice
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3
Appellee attached to its motion for summary judgment a sworn affidavit of
Tammy Q. Flim Lockhart, Vice President Loan Documentation, who declared
provided [Appellant] with a [n]otice of [i]ntention to [f]oreclose [m]ortgage,
but [Appellant] did not take the necessary affirmative steps to avoid
ion for Summary Judgment, 2/1/13, Exhibit D, at ¶¶ 7-8.
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provisions (Sections 20 and 22) of the mortgage agreement. Moreover,
Appellant, for the first time, asserted that Appellee violated federal law,
because it had failed to comply with HAMP.4 Specifically, Appellant claimed
that Appellee failed to complete her eligibility evaluation for HAMP. See
upon the Making Home Affordable (MHA) handbook,5 Appellant claimed that
Appellee could not foreclose on her home prior to evaluating her for HAMP.
Id. On May 8, 2013, the trial court granted the parties 60 days to conduct
additional discovery and to supplement the record. The parties, however,
did not file any additional documents.
summary judgment and entered an in rem judgment in its favor and against
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4
which is a program of the United States Departments of the Treasury &
Housing and Urban Development. See
http://www.makinghomeaffordable.gov/programs/lower-
payments/Pages/hamp.aspx. HAMP was created pursuant to the Emergency
Economic Stabilization Act, 12 U.S.C. § 5201, for the purpose of assisting
homeowners who defaulted on their mortgages, or are in imminent risk of
default, by reducing their monthly payments to sustainable levels. See
Kendzior v. Pennsylvania Hous. Fin. Agency, 2782 C.D. 2010, 2011 WL
10893902, *1 n2 (Pa. Cmwlth. July 20, 2011) (unreported opinion) (citing
Williams v. Geithner, Civil No. 09 1959 ADM/JJG, 2009 WL 3757380
(D. Minn. 2009) (memorandum opinion)).
5
Making Home Affordable Program Handbook for Servicers of Non-GSE
Mortgages (MHA Handbook), Version 4.1, 86-88 (Dec. 13, 2012), available
at
https://www.hmpadmin.com/portal/programs/docs/hamp_servicer/mhahand
book_41.pdf. The handbook contains directives and guidelines pertaining to
HAMP. The HAMP program is not codified as a public law and therefore, it is
neither a federal statute nor regulation.
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Appellant. Appellant appealed to t
Pa.R.A.P. 1925(b) statement of errors complained of on appeal, in which she
raised a plethora of issues, the trial court issued a Pa.R.A.P. 1925(a)
opinion. In its 1925(a) opinion, the trial court addressed, among other
provisions of the mortgage agreement and HAMP. With respect to the issue
of notice, the trial court concluded:
A review of the pleadings reveals that the notices to which
reference is apparently made were not required or were in fact
made. Moreover, and in spite of being afforded the opportunity
averments as to notice requirements.
Trial Court Opinion, 12/3/13, at 6-
support for the conclusion that possible loan modification is a bar to
fore Id. at 6. On appeal,6 Appellant essentially raises a single
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6
It is well-settled that
[o]ur scope of review of
summary judgment is plenary, and our standard of review is
established that the court committed an error of law or abused
its discretion.
Summary judgment is appropriate only when the record clearly
shows that there is no genuine issue of material fact and that
the moving party is entitled to judgment as a matter of law. The
reviewing court must view the record in the light most favorable
to the nonmoving party and resolve all doubts as to the
existence of a genuine issue of material fact against the moving
party. Only when the facts are so clear that reasonable minds
(Footnote Continued Next Page)
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issue for our review.7 She argues that the trial court erred in granting
establish the absence of genuine issues of material fact. Particularly,
_______________________
(Footnote Continued)
could not differ can a trial court properly enter summary
judgment.
Hovis v. Sunoco, Inc., 64 A.3d 1078, 1081 (Pa. Super. 2013) (quoting
Cassel-Hess v. Hoffer, 44 A.3d 80, 84-85 (Pa. Super. 2012)).
7
petition to vacate judgment rendered admitted or deemed admitted
averments contained therein, we must reject such argument as waived.
Appellant failed to raise this argument in her 1925(b) statement. See
Majorsky v. Douglas, 58 A.3d 1250, 1259 (Pa. Super. 2012) (failure to
raise an issue in a Rule 1925(b) statement shall result in waiver of that
issue), appeal denied, 70 A.3d 811 (Pa. 2013); see also Commonwealth
v. Lord
Nevertheless, assuming,
arguendo, this argument was not waived, we would observe that under
the petition may be deemed admitted for the purposes of [the petition] and
the court shall enter an appropriate
(emphasis added). Moreover, the comment to Rule 206.7(a) provides that
.C.P.
No. 206.7(a) cmt.
summary judgment motion. Specifically, Appellant argues, among other
authorized to make the affidavit in support of this summary judgment
motion, nor does the affiant provide a foundation to support her personal
argument as waived. Appellant failed to not only raise the argument in her
1925(b) statement, see Majorsky, supra, but also failed to include it in the
statement of questions section of her brief. See
v. Birmingham Fire Ins. Co. of Pennsylvania, 926 A.2d 977, 983 n.5
(Pa. Super. 2007) (holding that issue not explicitly raised in appellant's
statement of the questions involved is waived); Pa.R.A.P. 2116(a).
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Appellant argues there was factual dispute whether Appellee complied with
the notice provisions of the mortgage agreement prior to filing the
foreclosure action. In addition, Appellant argues that there was a genuine
8
issue of
establish the absence of a genuine issue of material fact as to whether it had
provided to Appellant notices required under Sections 20 and 22 of the
mortgage agreement. Differently put, Appellant contends that Appellee
violated the mortgage agreement, which required Appellee to provide
Appellant with a notice of default and an opportunity to cure (any violations
arising under the mortgage agreement) prior to instituting judicial
proceedings.
Section 20 of the mortgage agreement provides in relevant part:
Neither Borrower nor Lender may commence, join, or be joined
to any judicial action (as either an individual litigant or the
pursuant to this Security Instrument or that alleges that the
other party has breached any provision of, or any duty owed by
reason of, this Security Instrument, until such Borrower or
Lender has notified the other party (with such notice given in
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8
notices under the mortgage agreement and HAMP, arguing that such
arguments are waived because Appellant did not raise them below. Based
on our review of the record, and as discussed supra, we disagree.
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compliance with the requirements of Section 15[9]) of such
alleged breach and afforded the other party hereto a reasonable
period after the giving of such notice to take corrective
action. . . . The notice of acceleration and opportunity to cure
given to Borrower pursuant to Section 22 and the notice of
acceleration given to Borrower pursuant to Section 18 [(relating
to transfer of property)] shall be deemed to satisfy the notice
and opportunity to take corrective action provisions of this
Section 20.
Mortgage Agreement, 3/29/07, at 13 (emphasis added). Section 22 of the
mortgage agreement provides:
Acceleration; Remedies. Lender shall give notice to Borrower
prior to acceleration following
or agreement in this Security Instrument (but not prior to
acceleration under Section 18 unless Applicable Law provides
otherwise). Lender shall notify the Borrower of, among other
things: (a) the default; (b) the action required to cure the
default; (c) when the default must be cured; and (d) that failure
to cure the default as specified may result in acceleration of the
sums secured by this Security Instrument, foreclosure by judicial
proceeding and sale of the Property. Lender shall further inform
Borrower of the right to reinstate after acceleration and the right
assert in the foreclosure proceeding the non-existence of a
default or any other defense of Borrower to acceleration and
foreclosure. If the default is not cured as specified, Lender at its
option may require immediate payment in full of the all sums
secured by this Security Instrument without further demand and
may foreclose this Security Instrument by judicial proceeding.
Lender shall be entitled to collect all expenses incurred in
pursuing the remedies provided in this Section 22, including, but
extent permitted by Applicable Law.
Id. at 14.
Here, based on our review of the entire record, we must agree with
Appellant that there is a factual dispute as to whether Appellee complied
with the foregoing notice provisions of the mortgage agreement prior to
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9
Borrower or Lender in connection with [the mortgage agreement] must be in
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initiating this foreclosure action against Appellant. Specifically, with respect
to Section 22 of the agreement, it is unclear from the record whether
Appellee, inter alia, provided Appellant with a notice of default, an
explanation of the action required to cure the default, and a reasonable
timeframe by which to cure the default prior to accelerating the mortgage.
matter denied having failed to comply with the required notices under the
agreement.10 Such denial was sufficient to create a factual dispute that
would bar the entry of summary judgment.
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10
To buttress its position that it provided Appellant with the required notices
under the agreement, Appellee attached to its summary judgment motion an
affidavit of Ms. Lockhart. As referenced above, the affidavit did not
specifically refer to notices sent to Appellant pursuant to the mortgage
[n]otice of [i]ntention to [f]oreclose [m]ortgage. Motion for Summary
Judgment, 2/1/13, Exhibit D, at ¶ 8. Nonetheless, it is settled that under
Nanty-Glo v. American Surety Co., 163 A. 523 (Pa. 1932), the party
moving for summary judgment must present more than its own testimonial
affidavits or depositions to establish the absence of a genuine issue of
material fact, because such items necessitate credibility determinations by
the trier of facts. See Krentz v. CONRAIL, 910 A.2d 20, 36-37 (Pa. 2006);
but see InfoSAGE, Inc. v. Mellon Ventures, L.P., 896 A.2d 616, 631 (Pa.
summary judgment by using the admissions of the opposing party or the
, entry of summary judgment may be based
Also, the record does not contain a copy of any
notices sent to Appellant under the agreement.
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establish an absence of a genuine issue of material fact as to whether it fully
complied with HAMP.11
To begin, we observe:
Congress enacted the Emergency Economic Stabilization
Act in the midst of the financial crisis of 2008. The centerpiece
of the statute, the Troubled Asset Relief Program (TARP),
delegated to the Secretary of the Treasury broad powers to
mitigate the impact of the foreclosure crisis and preserve
homeownership. One component of TARP requires the Secretary
to implement a plan that seeks to maximize assistance for
homeowners and encourage the servicers of the underlying
mortgages to take advantage of available programs to minimize
foreclosures. Congress also granted authority to use loan
guarantees and credit enhancements to facilitate loan
modifications to prevent avoidable foreclosures.
Acting under this authority, the Secretary introduced the
Making Home Affordable Program in February 2009. Within this
initiative is HAMP, which is administered by Fannie Mae. HAMP
aims to provide relief to borrowers who have defaulted on their
mortgage payments or who are likely to default by reducing
mortgage payments to sustainable levels. Under HAMP, loan
servicers receive incentive payments for each permanent loan
modification completed. HAMP modifications derive from a
uniform process designed to identify eligible borrowers and
render their debt obligations more affordable and sustainable.
Mortgage lenders approved by Fannie Mae must participate
in HAMP. This obligation stems from the Mortgage Selling and
Servicing Contract (MSSC), a form contract entered into by
Fannie Mae and approved lenders
basic legal relationship. The contract incorporates by reference
Fannie Mae's Selling and Servicing Guides. The latter guide
requires servicers of mortgage notes owned by Fannie Mae to
participate in HAMP and to abide by HAMP directives and
guidelines. Lenders servicing mortgages not owned or
guaranteed by Fannie Mae or Freddie Mac may elect to
participate in HAMP by executing a Servicer Participation
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11
Neither Appellant nor Appellee explain to this Court what HAMP is, or
whether HAMP carries any force of law. Nonetheless, as noted earlier, HAMP
is not a codified public law. Rather, it merely is a contract between the
federal government and lenders, as explained infra.
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Agreement [(SPA)] with Fannie Mae in its capacity as financial
agent for the United States.
The Department of the Treasury and Fannie Mae have
issued a series of directives that provide guidance to mortgage
servicers implementing HAMP. Under the guidelines, servicers
may identify and solicit borrowers who are in default on their
mortgage payments, or soon will be, and evaluate their eligibility
to participate in HAMP. A borrower may be eligible for a HAMP
modification if, among other things, her mortgage loan
originated before January 1, 2009; the mortgage is secured by
her primary residence; the mortgage loan has not previously
been modified under HAMP; and the mortgage payments amount
participate in HAMP, borrowers must open an escrow account
and submit, among other documents, an affidavit attesting to
financial hardship. The servicer conducts a Net Present Value
test, which assesses whether the expected cash flow from a
modified loan would exceed the cash flow from the unmodified
loan.
If the homeowner qualifies under these eligibility criteria,
the guidelines direct the servicer to offer that individual a Trial
Period Plan (TPP). Under the TPP, the homeowner undertakes to
pay modified mortgage payments, calculated based on financial
documentation submitted during the eligibility phase, for a
three-month trial period. The standard-form TPP represents to
borrowers that they will obtain a permanent modification at the
end of the trial period if they comply with the terms of the
agreement.
A servicer participating in HAMP may not proceed with a
foreclosure sale on a property in default until the borrower has
been evaluated for HAMP eligibility. The guidelines require
servicers to use reasonable efforts to contact borrowers facing
foreclosure to determine their eligibility.
Markle v. HSBC Mortgage Corp. (USA), 844 F. Supp. 2d 172, 176-77
(D. Mass. 2011) (emphasis added) (internal citation, footnotes, and
quotation marks omitted); see also Wigod v. Wells Fargo Bank, N.A.,
673 F.3d 547, 556 (7th Cir. 2012) (noting that the Treasury Department
dozens of home loan services, including Wells
In support of her argument, Appellant points out that, under Section 3
of the MHA handbook, relating to protections against unnecessary
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foreclosure, Appellee was required to halt foreclosure proceedings until
handbook provides, inter alia
foreclosure or conduct a scheduled foreclosure sale unless and until . . .
[t]he borrower is evaluated for HAMP and is determined to be ineligible for
handbook provides in pertinent part:
With respect to a borrower who submits a request for HAMP
consideration after a loan has been referred to foreclosure, the
TPP based on verified income, and for the duration of the trial
period, take those actions within its authority that are necessary
to halt further activity and events in the foreclosure process,
whether judicial or non-judicial, including but not limited to
refraining from scheduling a sale or causing a judgment to be
entered.
Id. (emphasis added). Instantly, we glean from the record that Appellant
requested to be evaluated by Appellee for HAMP and that, in response,
Appellee sought certain documents from Appellant for that purpose. See
Letter from Wells Fargo, 3/8/12; Letter from Wells Fargo Home Mortgage,
3/8/12; Making Home Affordable Program Request for Mortgage Assistance
(RMA), 7/13/2012; Letter from Wells Fargo Home Mortgage, 4/20/12; Letter
from Wells Fargo Home Mortgage, 4/12/12; Letter from Wells Fargo Home
Mortgage, 7/6/12; Letter from Wells Fargo, 7/19/2012. The record,
however, is not clear as to the result of that evaluation i.e., whether
Appellant was deemed eligible for HAMP. In fact, it is not even clear
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HAMP. Also, it is unclear from the record whether Appellant requested to be
foreclosure action.
Regardless, it is well-settled that borrowers do not have a private
federal right of action under HAMP, a federal program created pursuant to
the Emergency Economic Stabilization Act. See Spaulding v. Wells Fargo
Bank, N.A., 714 F.3d 769, 776 n.4 (4th Cir. 2013); Sinclair v. Citi Mortg.,
Inc. cert. denied, 134 S.Ct. 245
(2013). The primary reason upon which courts have relied to deny
borrowers a right of action is that borrowers are not intended third party
beneficiaries of HAMP contracts between the federal government and
lenders. See Wigod, 673 F.3d at 559 n.4.
Instantly, as stated above, Appellant cites to HAMP only as a defense
i.e., Section 3 of MHA
handbook.12
a factual dispute by asserting HAMP as a defense. Our review of the law
indicates that, even if Appellee failed to comply with Section 3 of MHA
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12
judgment that Appellee was subject to HAMP. See Memorandum of law in
3/4/13, at 10. It is, however, unclear from the record whether Appellee was
bound to HAMP because it is unclear whether the mortgage was owned or
guaranteed by Freddie or Fannie, or because Appellee executed a SPA.
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handbook prior to proceeding with its foreclosure action against Appellant,
Appellant does not have a right to bring an action against Appellee for such
enforce compliance.
Accordingly, viewing the record in the light most favorable to the non-
moving party and resolving all doubts as the existence of a genuine issue of
material fact against the moving party, we conclude that the trial court erred
e
complaint. There is a factual dispute as to whether Appellee complied with
Sections 20 and 22 of the mortgage agreement.
Judgment reversed. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/29/2014
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