Pennsylvania Litigation Blog : Pennsylvania Litigation Lawyer & Attorney : Barley Snyder Law Firm : Serving Lancaster, York, Reading, Hanover, Malvern

On August 9, 2012, Governor Tom Corbett announced the re-start of the Pennsylvania Homeowner’s Emergency Assistance Program ("HEMAP") administered by the Pennsylvania Housing Finance Agency ("PHFA"). HEMAP was discontinued in August of 2011 as a result of PHFA’s determination that it lacked the necessary funding for the program. In June of 2012, Governor Corbett signed the Homeowner Assistance Settlement Act. This act, among other things, allocates to HEMAP the lion’s share of Pennsylvania’s portion of the cash settlement received in the litigation brought by states and the federal government against the nation’s five largest mortgage servicers for alleged misconduct in connection with home foreclosures. According to the announcement, Pennsylvania’s share of the funds has been received and PHFA will begin accepting applications for HEMAP immediately.

Another important part of HEMAP is the Notice of Intention to Foreclose, also known as the Act 91 Notice (the "Act 91 Notice"), which a mortgage lender is required to send to the borrower before initiating a foreclosure against the borrower’s home. The Act 91 Notice provides notice to the borrower of the nature of their default and the time and method to cure such default. It also informs the borrower of HEMAP and how to apply for assistance under the program. The requirement to send the Act 91 Notice was suspended at the time HEMAP was discontinued. As part of the re-start of HEMAP, mortgage lenders will again be required to send the Act 91 Notice before instituting foreclosure in cases where the mortgage is secured by real estate that is the borrower’s primary residence. In the August 18, 2012 issue of the Pennsylvania Bulletin, PHFA published its formal notice of the resumption of HEMAP. According to the published notice, October 2, 2012 is the official date for resumption of the Act 91 Notice Requirement. As a result, lenders will not be able to institute foreclosures against a borrower’s home, unless it has sent the borrower an Act 91 Notice and has otherwise complied with the Act 91 Notice requirements. The form of Act 91 Notice that is required to be sent is the same form notice that was in effect when the notice requirement was suspended in 2011. A copy of PHFA’s published notice, which includes a copy of the form Act 91 notice is attached to this Alert.

One obvious timing question raised by this is how to handle loans that become eligible for foreclosure prior to the October 2, 2012 effective date. If the foreclosure is not filed prior to the effective date, either because it could not be filed (e.g. due to the pendency of another notice period) or for some other reason, the foreclosure will not be able to be filed until the Act 91 Notice is sent and all applicable notice or stay periods have run. This could delay the process for at least thirty (30) days or more. A possible solution to this situation would be to begin sending the Act 91 Notices prior to the date such notices are actually required. Beginning to send the Act 91 Notices no less than 30 days prior to the effective date (i.e., by September 2, 2012) should alleviate the problem of any "notice gap." Also, since PHFA is apparently already accepting applications for HEMAP, lenders may decide to begin sending the Act 91 Notices as soon as possible after publication of the official notification by PHFA.

Sending the Act 91 Notice prior to the actual effective date, as outlined above, will serve two purposes. First, it will make it less likely that a particular foreclosure will fall through the cracks during the transition. Second, it will comply with PHFA’s request that lenders give notice to homeowners who are currently in the foreclosure process of the possible availability of HEMAP assistance. Such voluntary notification on the part of mortgage lenders is being encouraged and recommended by some banking and lending organizations as a possible stop-gap to the fear that some courts may unilaterally impose blanket stays on foreclosure proceedings during the transition.

A final area to be discussed involves the inter-relationship between the Act 91 Notice and the notice required under Act 6. The Notice of Intention to Foreclose under Act 6 (the "Act 6 Notice") has been a part of the law since before Act 91. The resumption of requiring the Act 91 Notice does not eliminate Act 6. However, as was the case before the suspension of Act 91, the Act 6 Notice is not required where the Act 91 Notice is being sent. Act 91 expressly states that the Act 91 Notice is to be in lieu of any other notices. The Act 91 Notice also contains all of the information that is required to be included in the Act 6 Notice. For this reason, it seems clear that where the Act 91 Notice is sent no other notice is required, even where the notice is sent before the effective date of the Act 91 Notice requirement. Lenders who are concerned that discontinuing the Act 6 Notice prior to the effective date of the Act 91 Notice requirement could open their foreclosures to a technical challenge, may opt to send both notices during that time period. One other point to keep in mind - Act 6 is not going away. Where Act 91 does not apply, an Act 6 Notice could still be required where: a) the real estate being foreclosed upon meets the definition of "residential real estate" under the act; and b) the original mortgage amount is less than the "base figure" (currently $230,110).

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On August 9, 2012, Governor Tom Corbett announced the re-start of the Pennsylvania Homeowner’s Emergency Assistance Program (“HEMAP”) administered by the Pennsylvania Housing Finance Agency (“PHFA”).  HEMAP  was discontinued in August of 2011 as a result of PHFA’s determination that it lacked the necessary funding for the program.  In June of 2012, Governor Corbett signed the Homeowner Assistance Settlement Act.  This act, among other things, allocates to HEMAP the lion’s share of Pennsylvania’s portion of the cash settlement received in the litigation brought by states and the federal government against the nation’s five largest mortgage servicers for alleged misconduct in connection with home foreclosures.  According to the announcement, Pennsylvania’s share of the funds has been received and PHFA will begin accepting applications for HEMAP immediately.   
    
Another important part of HEMAP is the Notice of Intention to Foreclose, also known as the Act 91 Notice (the “Act 91 Notice”), which a mortgage lender is required to send to the borrower before initiating a foreclosure against the borrower’s home.  The Act 91 Notice provides notice to the borrower of the nature of their default and the time and method to cure such default.  It also informs the borrower of HEMAP and how to apply for assistance under the program.  The requirement to send the Act 91 Notice was suspended at the time HEMAP was discontinued.  As part of the re-start of HEMAP, mortgage lenders will again be required to send the Act 91 Notice before instituting foreclosure in cases where the mortgage is secured by real estate that is the borrower’s primary residence.  In the August 18, 2012 issue of the Pennsylvania Bulletin, PHFA published its formal notice of the resumption of HEMAP.  According to the published notice, October 2, 2012 is the official date for resumption of the Act 91 Notice Requirement.  As a result, lenders will not be able to institute foreclosures against a borrower’s home, unless it has sent the borrower an Act 91 Notice and has otherwise complied with the Act 91 Notice requirements.   The form of Act 91 Notice that is required to be sent is the same form notice that was in effect when the notice requirement was suspended in 2011.  A copy of PHFA’s published notice, which includes a copy of the form Act 91 notice is attached to this Alert.  

One obvious timing question raised by this is how to handle loans that become eligible for foreclosure prior to the October 2, 2012 effective date.  If the foreclosure is not filed prior to the effective date, either because it could not be filed (e.g. due to the pendency of another notice period) or for some other reason, the foreclosure will not be able to be filed until the Act 91 Notice is sent and all applicable notice or stay periods have run.  This could delay the process for at least thirty (30) days or more.  A possible solution to this situation would be to begin sending the Act 91 Notices prior to the date such notices are actually required.  Beginning to send the Act 91 Notices no less than 30 days prior to the effective date (i.e., by September 2, 2012)  should alleviate the problem of any “notice gap.”  Also, since PHFA is apparently already accepting applications for HEMAP,  lenders may decide to begin sending the Act 91 Notices as soon as possible after publication of the official notification by PHFA. 

Sending the Act 91 Notice prior to the actual effective date, as outlined above, will serve two purposes.  First, it will make it less likely that a particular foreclosure will fall through the cracks during the transition.  Second, it will comply with PHFA’s request that lenders give notice to homeowners who are currently in the foreclosure process of the possible availability of HEMAP assistance.  Such voluntary notification on the part of mortgage lenders is being encouraged and recommended by some banking and lending organizations as a possible stop-gap to the fear that some courts may unilaterally impose blanket stays on foreclosure proceedings during the transition.

A final area to be discussed involves the inter-relationship between the Act 91 Notice and the notice required under Act 6.  The Notice of Intention to Foreclose under Act 6 (the “Act 6 Notice”) has been a part of the law since before Act 91.  The resumption of requiring the Act 91 Notice does not eliminate Act 6.  However, as was the case before the suspension of Act 91, the Act 6 Notice is not required where the Act 91 Notice is being sent.  Act 91 expressly states that the Act 91 Notice is to be in lieu of any other notices.  The Act 91 Notice also contains all of the information that is required to be included in the Act 6 Notice.  For this reason, it seems clear that where the Act 91 Notice is sent no other notice is required, even where the notice is sent before the effective date of the Act 91 Notice requirement.  Lenders who are concerned that discontinuing the Act 6 Notice prior to the effective date of the Act 91 Notice requirement could open their foreclosures to a technical challenge, may opt to send both notices during that time period.  One other point to keep in mind - Act 6 is not going away.  Where Act 91 does not apply, an Act 6 Notice could still be required where:  a) the real estate being foreclosed upon meets the definition of “residential real estate” under the act; and b) the original mortgage amount is less than the “base figure” (currently $230,110). 

To read the complete notice click here.

Please feel free to contact a member of the Barley Snyder Finance and Creditors Rights Group if you have any questions about this.                 

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Do you want to lower your property taxes? Would it surprise you to learn that you could do so at little to no net cost? There may be an opportunity to do exactly this if your property is currently assessed too high. Your property’s tax assessment forms the basis for all of your real estate taxes. The assessment, which is different than the appraised value of your property and in most cases does not equal 100 percent of the fair market value of your property, is established by the County once every few years and remains fixed as property values move up and down. So if your assessment is too high (either because it was originally assessed too high or because of a decrease in your property’s value), you are paying too much in taxes each year that the assessment remains the same. The assessment will remain the same until the property is changed (improvements are added or removed), the County undergoes a county wide reassessment, or your file an appeal of your assessment. County wide reassessments usually occur only once or twice a decade although in some counties, a county wide reassessment has not occurred in nearly 20 years. If you lower your assessment, you will lower your real estate taxes until the next County wide reassessment occurs which could be several years. You are entitled to challenge the assessment every year if you believe the assessment is too high. The amount of costs involved in the appeal are often far less than the total savings you will receive if the appeal is successful.  In most cases, the only costs are an appraisal of the property and legal fees.   
 
To determine whether an appeal is appropriate, you must first estimate what your property is worth. Then, find the common level ratio[1] for your county below:
 
 

• Adams - 100%
   
• Berks - 73.2%
   
• Lancaster - 76.5%
   
• York - 83.7%

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[1] The common level ratio is used to determine assessments in the years following a county wide reassessment. In the first two years following the county wide reassessment, your assessment should equal 100 percent of the fair market value of the property. In all subsequent years, the assessment should equal the common level ratio then in effect multiplied by the fair market value. The common level ratio, which is determined by the state, varies by county and changes in July every year.

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Now multiply your estimated fair market value by the common level ratio. For example, if your property is located in York County and is worth $500,000, multiply $500,000 by .837 and your assessed value should be $418,500. This figure should be close to your assessed value. If it is significantly lower than your assessed value, you may want to consider challenging your assessment. If you are unsure what your assessed value is, check your most recent property tax bill or call your County’s assessment office and ask.
 
Another way to determine if your assessment is too high is to take the assessment and multiply it by the number listed below for the County in which the property is located:
 
 

• Adams - 1
   
• Berks - 1.37
   
• Lancaster - 1.31
   
• York - 1.19
   
   

Again, if your property is located in York County and is assessed at $500,000, you multiply $500,000 by 1.19 and your property is being taxed as though it is worth $595,000. If the figure is higher than what you believe the property is currently worth, it might make sense to appeal your assessment.
 
So how do you challenge your tax assessment? The process is started by filing an appeal to the County’s Board of Assessment Appeals. The Board will review your assessment and determine if it is too high. For a successful appeal, you will most likely need a recent appraisal of the property. If the Board’s decision is not satisfactory, you can appeal this decision to the Court of Common Pleas which then determines the fair market value and applies the common level ratio to establish your new assessment.
 
Keep in mind that any reduction in your assessment will most likely result in tax savings not just in the year in question but in future years as well. While in general you can not receive a refund for past taxes paid if your assessment is too high, your assessment will be reduced for future years which will save you money. To determine how much savings you could receive, determine your local milage rates and multiply these by the difference between the current assessment and what you believe the assessment should be and you can determine the savings for one year. For example, if the combined millage rates in your municipality (School, County and Municipal millage rates) are 25 mills (or 2.5%), you would save $250 for every $10,000 that you reduce your assessment.
 
Barley Snyder has attorneys with experience handling tax assessment appeals throughout central Pennsylvania. If you believe your assessment is too high, give us a call to see if we can help lower your assessment and lower your taxes.

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In an opinion issued by Chief Justice Castille, the Supreme Court reversed the decision of the Commonwealth Court and determined that the Zoning Hearing Board of Exeter Twp. was correct in determining that the Exeter Township Zoning Ordinance was exclusionary in limiting the size of a billboard to 25 square feet. The Supreme Court held that the owner of the billboard in question, Land Displays, was successful in presenting substantial evidence to enable the ZHB to conclude that a billboard is a legitimate means of displaying and communicating an advertising message to passing drivers on roads and highways, that a 25 sq. ft. sign is too small to convey this message and that a 300 sq. ft. sign is large enough for that purpose. The Court concluded that Land Displays proved a de facto exclusion.

Had the Supreme Court concluded otherwise it would have had a severe adverse impact upon the billboard industry in Pennsylvania. Ordinances in local municipalities would have been able to prevent industry standard size signs and thereby effectively preventing any new bill board signs to be erected. The industry had filed an amicus curiae brief in support of Land Displays.

The Court also remanded the case back to the Commonwealth Court because it had not rendered a decision on the issue raised by the Township that Route 422 presents a safety issue when signs are erected anywhere along that route and not just in the areas of Route 422 which the ZHB concluded there was no safety issue. We see no evidence on record which would enable the Court to overrule the well reasoned opinion of the ZHB on that issue. 

 

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In Toll Brothers, Inc. v. DEP and Bushkill Township, EHB Docket No. 2007-163-MG (Issued October 1, 2008) , the EHB denied Toll Brothers, Inc.s’ (“Toll Bros.”) appeal of DEP’s denial of Toll Bros. private request that the Township provide public sewer service to Toll Bros.’s proposed development. Toll Bros. filed a private request with DEP seeking to have the Department determine that Bushkill Township was not properly implementing the Township’s approved 537 Plan. The Township maintained that the area Toll Bros. proposed for development was in an area to have on-lot septic systems. Toll Bros. did not argue that the 537 Plan was inadequate to meet its proposed sewage needs.

The EHB found that the 537 Plan was not “concise” in relation to the areas to be publicly sewered. The 537 Plan made reference to areas that were developed at the time the plan was developed in 1973. Toll Bros. argued that portions of its proposed development were identified as being within the area to be publicly sewered and that the term “developed” was not defined in the Township’s 537 Plan.

The EHB found that DEP properly interpreted the 537 Plan in deciding that the area proposed by Toll Bros. was not within the area to be publicly sewered. There was no evidence that the area was “developed” in or prior to 1973, nor that the area was intended to be served by public sewers based on the description of the sewer service area.

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The recent closing and bankruptcy of mortgage broker, OPFM, Inc. (a.k.a. Personal Financial Management, Image Masters, etc.), has left more than 800 homeowners in Central Pennsylvania with higher than expected mortgage balances and payments, and increasing fears that they might ultimately lose their homes.   

Scams to separate home-owners from their equity are not new.  The OPFM case is a little different than traditional equity theft schemes in that its plan was dependent upon attracting homeowners with excellent credit.  Many schemes, on the other hand, target homeowners who are facing foreclosure or other distress situations.  The basic method is the same, however, in that through promises to make mortgage payments on  a homeowner’s behalf, a scam artist is able to gain control over a home’s value and the homeowner is ultimately robbed of any value or equity the home may have had.  In order to avoid such equity theft scams, homeowners should take the following precautions:

1.    Make sure you know the identity of your actual lender and the actual terms of your mortgage.  Read all mortgage documents at your closing and retain copies for future reference.  Seek the advice of an attorney if you have any questions.  Two ways that you can verify who actually holds your mortgage are to run a free credit report and to check the records at your local recorder of deeds office.  Many recorder of deeds offices offer online access to these records.  Mortgages are routinely sold, and it is not unusual for your current lender to be different from the original, but you should receive some official notice if your mortgage is ever sold.

2.    Be extremely careful in entrusting a third party to make your mortgage payment.  Make sure such a person is properly bonded or insured.  Insist on periodic proof, in the form of official statements from your actual lender, that payments are being made and properly credited to your mortgage account.

3.    Be wary of programs or systems that seem overly complicated or unusually creative, or claims that seem to promise more than they can deliver.  There is much wisdom in the expressions “There is no free lunch” and “If it seems too good to be true, it probably is.”  Assume that there may be a catch when a broker, consultant or other party is offering substantially below-market interest rates, or is claiming that they can save your house from foreclosure. 

This story excerpted from the Barley Snyder November Business & Litigation newsletter.  For the full text of the newsletter click here.  The article can be found on page 2.

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The Department of Environmental Protection provided two new guidance documents to assist in the implementation of the Chesapeake Bay Tributary Strategy.  The following is a link to DEP's website which has links to the two new policies:  http://www.depweb.state.pa.us/chesapeake/cwp/view.asp?a=3&Q=442886&chesa

The first new policy relates to DEP's implementation plan for sewage facilities planning.  The plan for sewage facilities planning is significant in that it directs municipal governments and permittees to design for compliance with new cap loads for nitrogen and phosphorus as well as zero net load increases beyond the current design flow of existing systems.   Facilities will need to perform an alternatives analysis for all alternatives identified in  sewage facilties planning for compliance with applicable water quality standards, including the NPDES permit limits to be placed in NPDES permits issued within the Bay watershed going forward.  This requirement will apply to existing base plans as well as new land development plans.  The policy does not spell out the terms by which existing POTWs should handle the long term requirement for the purchase of credits, which together with the limited number of credits currently availibility, causes some concerns about the adequacy of planning and potential problems with compliance.  The policy also sets out new information regarding the credits to be obtained by retiring existing on-lot systems.  The Department also forshadowed the possibility of regulating the TP and TN loadings from on-lot systems which are currently exempt under the existing policy.

The second new policy relates to NPDES permitting, it breaks down the five phase implementation schedule DEP has adopted.  This first phase is already underway.  Phase 1 addressess the largest 168 treatment plants located in the Bay watershed.  The compliance deadline for these facilities is 10/1/2010, though the Department has indicated in the policy that it intends to negotiate Consent Order and Agreements with faclities that can not meet that deadline, however, the plan is to wait until non-compliance occurs, rather than address the issue at the permitting stage.  Clearly there are real risks associated with this approach from the perspective of the permittees.  Each of the next four phases address increasingly smaller facilities and extends the compliance deadline through 10/1/2013.

Barley Snyder has assisted its clients in negotiating one of the first nutrient trades to be approved by the DEP and has also represented two clients in appeals to the Environmental Hearing Board relating to DEP's December 20, 2006 directive to submit plans for compliance with DEP's proposed effluent loads, as addressed in correspondence from the Department and the draft NPDES permits which were issued in January 2007.  The December 20 letters directed the 168 largest facilities to submit plans for compliance with the new cap loads within 180 days of the date of the letters.  Those plans are due in late June.  

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Horst Realty manages the Village of Pineford, a rental community in Middletown Borough.  The Borough provides electric service to Borough residents, including residents of Pineford.  In an oversight most of us can identify with, Horst Realty mailed its roughly $124,000 September electric bill payment with insufficient postage.  Because the Borough ultimately received the payment four days late, it assessed Horst Realty a late fee to the tune of about $12,000 and threatened to cut off all electricity to Pineford if the fee was not immediately paid.  Although it reluctantly paid the fee to keep the power on, Horst was not amused.  Instead, the company retained Barley attorney Charles Haws to file suit under the Pennsylvania Utilities Service Tenants Rights Act ("PUSTRA").  It is Horst's position that the ordinance allowing Middleton to charge such late fees is illegal:

[t]he $12,000 doesn't have any reasonable relationship to the costs incurred by the borough due to the lateness of the payment.

Horst further alleges Middletown violated the PUSTRA by failing to provide Pineford residents with notice that they faced possible termination of electrical service.  We'll provides updates on this litigation as events warrant.

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