Source: http://stopforeclosurefraud.com/tag/pennsylvania/
Timestamp: 2019-04-19 16:16:03+00:00

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BENEFICIAL CONSUMER DISCOUNT COMPANY D/B/A BENEFICIAL MORTGAGE COMPANY OF PENNSYLVANIA, Appellant, v. PAMELA A. VUKMAM, Appellee.
No. 259 WDA 2011.Superior Court of Pennsylvania.Filed: January 30, 2012.
BEFORE: MUSMANNO, DONOHUE and COLVILLE*, JJ.
This is an appeal from an order that sustained Appellee’s “Motion to Set Aside Judgment and Sheriff’s Sale.” We affirm.
The relevant background underlying this matter can be summarized in the following manner. In October of 2006, Appellant filed a complaint in mortgage foreclosure against Appellee. According to the complaint, Appellee owns a home subject to a mortgage for which Appellant is the mortgagee. Appellant averred that Appellee’s mortgage was in default due to Appellee’s failure to pay her monthly mortgage costs. The parties eventually agreed to settle the matter. In short, the parties agreed to enter a judgment in favor of Appellant for $217,508.81 together with interest. They further agreed that, so long as Appellee made regular payments to Appellant, Appellant would not execute on the judgment. The trial court approved the parties’ settlement on May 7, 2009.
On April 5, 2010, Appellant filed an affidavit of default wherein it alleged that Appellee had defaulted on her payment obligations. The following day, Appellant filed a praecipe for writ of execution. On August 2, 2010, the subject property was sold by sheriff’s sale; Appellant was the successful bidder.
A. Did Section 403c of Act 91 require [Appellant] to notify [Appellee] of an option to have a face to face meeting with [Appellant] where both the plain language of the statute and the history of such Act evidence a legislative intention to vest in the Agency the discretion to select which of these options should have been offered to homeowners in the Uniform Notice adopted by the Agency for use by all Lenders under the Act?
B. Was not the determination of the Pennsylvania Housing Finance Agency to remove any reference in its model Uniform Act 91 notice to homeowners having a face to face meeting with their lenders reasonable and consistent with the stated purpose and goals of such Act?
C. Should not the court below have deferred to the experience and expertise of the Agency in its administration of the Act, and should not the court below have upheld the validity of the Act 91 Notice sent to [Appellee] herein where such notice was entirely consistent with the model Uniform Notice adopted by the Agency for use by all lenders?
D. Even if the Act 91 notice should have offered [Appellee] the option of having a face to face meeting with her lender, should the court below have dismissed this action for lack of subject matter jurisdiction where [Appellee] had fully exercised her rights under Act 91 and was not in any way prejudiced by such omission?
E. Should not [Appellee] have been estopped from raising any objection to the Act 91 notice provided to her, and should not [Appellee’s] objection to such notice have been barred by laches, where [Appellee] admitted to the validity of such notice in discovery and consented to the entry of judgment, and where [Appellee’s] objection to such notice was made for the first time after a sheriff’s sale had been held almost four (4) years after the commencement of the action?
As an initial matter, we will consider whether the trial court properly entertained the Act 91 notice issue that Appellee presented in her “Motion to Set Aside Judgment and Sheriff’s Sale.” The trial court determined that, when a mortgagee provides to a mortgagor a deficient Act 91 notice and then files a mortgage foreclosure action, the court lacks subject matter jurisdiction to entertain the action. In its argument to this Court, Appellant raises a number of doctrines, including laches and res judicata, in arguing that Appellee untimely presented her Act 91 notice issue. Appellant’s Brief at 31-33.
We begin our analysis of this threshold issue by noting the following principles of law.
The test for whether a court has subject matter jurisdiction inquires into the competency of the court to determine controversies of the general class to which the case presented for consideration belongs.
In re Administrative Order No. 1-MD-2003, 936 A.2d 1, 5 (Pa. 2007) (citation omitted).
It is the law of this Commonwealth that a judgment may be attacked for lack of jurisdiction at any time, as any such judgment or decree rendered by a court that lacks subject matter or personal jurisdiction is null and void.
Bell v. Kater, 943 A.2d 293, 298 (Pa. Super. 2008) (citation omitted).
Appellee has never questioned the competency of the trial court to entertain mortgage foreclosure actions. Indeed, the Rules of Civil Procedure govern such actions, Pa.R.C.P. 1141 et seq., and save for exceptions that are irrelevant to this matter, the courts of common pleas have unlimited original jurisdiction over all actions and proceedings in this Commonwealth. 42 Pa.C.S.A. § 931(a). Appellee’s complaints regarding the deficiencies in the Act 91 notice sound more in the nature of a jurisdictional challenge based upon procedural matters. Procedurally based jurisdictional challenges can be waived. See, e.g., Hauger v. Hauger, 101 A.2d 632, 633 (Pa. 1954) (“It is the rule that consent or waiver will not confer jurisdiction of the cause of action or subject matter where no jurisdiction exists. However, this rule does not apply to . . . jurisdiction based upon procedural matters, as to which defects can always be waived.”) (citation omitted).
However, Appellee correctly highlights that, in the context of discussing subject matter jurisdiction, this Court has concluded, “[T]he notice requirements pertaining to foreclosure proceedings are jurisdictional, and, where applicable, a failure to comply therewith will deprive a court of jurisdiction to act.” Philadelphia Housing Authority v. Barbour, 592 A.2d 47, 48 (Pa. Super. 1991) (citation omitted), affirmed without opinion, 615 A.2d 339 (Pa. 1992); see also, Marra v. Stocker, 615 A.2d 326 (Pa. 1992) (concluding that, despite the fact that a judgment had been entered in the underlying mortgage foreclosure action, the trial court erred by refusing to set aside a sheriff’s sale where the mortgagee failed to provide to the mortgagor the mortgage foreclosure notice required by 41 P.S. § 403). We are bound by these decisions. See, e.g., Commonwealth v. Hull, 705 A.2d 911, 912 (Pa. Super. 1998) (“It is beyond the power of a panel of the Superior Court to overrule a prior decision of the Superior Court.”). For this reason, we conclude that the trial court properly considered whether the pertinent Act 91 notice was deficient.
Before any mortgagee may accelerate the maturity of any mortgage obligation covered under this article, commence any legal action including mortgage foreclosure to recover under such obligation, or take possession of any security of the mortgage debtor for such mortgage obligation, such mortgagee shall give the mortgagor notice as described in section 403-C. [35 P.S. § 1680.403c.] Such notice shall be given in a form and manner prescribed by the [Pennsylvania Housing Finance Agency (“agency”)]. Further, no mortgagee may enter judgment by confession pursuant to a note accompanying a mortgage, and may not proceed to enforce such obligation pursuant to applicable rules of civil procedure without giving the notice provided for in this subsection and following the procedures provided for under this article.
35 P.S. § 1680.402c (amended July 8, 2008, effective September 8, 2008) (emphasis added).
(a) Any mortgagee who desires to foreclose upon a mortgage shall send to such mortgagor at this or her last known address the notice provided in subsection (b): Provided, however, That such mortgagor shall be at least sixty (60) days contractually delinquent in his mortgage payments or be in violation of any other provision of such mortgage.
(b)(1) The agency shall prepare a notice which shall include all the information required by this subsection and by section 403 of the act of January 30, 1974 (P.L. 13, No. 6), referred to as the Loan Interest and Protection Law. This notice shall be in plain language and specifically state that the recipient of the notice may qualify for financial assistance under the homeowner’s emergency mortgage assistance program. This notice shall contain the telephone number and the address of a local consumer credit counseling agency. This notice shall be in lieu of any other notice required by law. This notice shall also advise the mortgagor of his delinquency or other default under the mortgage and that such mortgagor has thirty (30) days to have a face-to-face meeting with the mortgagee who sent the notice or a consumer credit counseling agency to attempt to resolve the delinquency or default by restructuring the loan payment schedule or otherwise.
(ii) begins any legal action, including foreclosure, for money due under the mortgage obligation or to take possession of the mortgagor’s security.
(3) The proposed notice under paragraph (1) shall be published by the agency in the Pennsylvania Bulletin within one hundred twenty (120) days of the effective date of this paragraph. The notice actually adopted for use by the agency shall be promulgated as part of the program guidelines required by [35 P.S. § 1680.401c]. . . .
35 P.S. § 1680.403c (amended July 8, 2008, effective September 8, 2008) (emphasis added).
As to the facts of this case, the parties agree that Appellant sent to Appellee an Act 91 notice and that the notice informed Appellee that she had thirty days to have a face-to-face meeting with a consumer credit counseling agency. They further agree that the Act 91 notice did not inform Appellee that she could meet face-to-face with the mortgagee, i.e., Appellant. The trial court interpreted the language highlighted above to mean that the Act 91 notice sent by Appellant to Appellee had to inform Appellee that she had thirty days either to have a face-to-face meeting with Appellant or to have a face-to-face meeting with a consumer credit counseling agency. Because the Act 91 notice Appellant sent to Appellee failed to inform Appellee that she could meet with Appellant, the trial court concluded that the notice was deficient and that the court thus lacked subject matter jurisdiction to entertain the matter, presumably from the time that Appellant filed its complaint. Consequently, the court set aside the sheriff’s sale and the judgment and then dismissed Appellant’s complaint without prejudice.
Appellant begins its argument to this Court by documenting the history of Act 91 and its notice requirements. Appellant next challenges the trial court’s interpretation of the relevant version of the Act 91 notice provision. According to Appellant, the trial court’s interpretation of Section 1680.403c of Act 91 failed to give effect to the word “or.” Appellant maintains that the Legislature intended to vest the agency with the discretion to decide whether the notice sent from a mortgagee to a mortgagor should include the option of the mortgagor meeting face-to-face with the mortgagee or the alternate option of the mortgagor meeting face-to-face with a consumer credit counseling agency. Appellant believes that the agency reasonably chose to include in the notice that it promulgated the option of the mortgagor meeting face-to-face with a consumer credit counseling agency. Appellant argues that the trial court failed to give the agency’s interpretation and prerogative due deference. Jumping forward a bit in Appellant’s brief, Appellant contends that it was entitled to rely on the notice promulgated by the agency. We pause at this point to address these aspects of Appellant’s argument.
While there are multiple layers to Appellant’s argument, a relatively straightforward statutory construction analysis reveals whether the trial court erred in its interpretation of Act 91. All matters requiring statutory interpretation are guided by the provisions of the Statutory Construction Act, 1 Pa.C.S.A. § 1501 et seq.2 Swords v. Harleysville Insurance Companies, 883 A.2d 562, 567 (Pa. 2005) (citations omitted).
Under the Statutory Construction Act, the object of all statutory construction is to ascertain and effectuate the General Assembly’s intention. 1 Pa.C.S.[A.] § 1921(a). When the words of a statute are clear and free from all ambiguity, the letter of the statute is not to be disregarded under the pretext of pursuing its spirit. 1 Pa.C.S.[A.] § 1921(b).
At the time relevant to this matter, Section 1680.402c of Act 91 clearly and unambiguously provided that, before a mortgagee could, inter alia, commence a mortgage foreclosure action against a mortgagor, the mortgagee was required to give the mortgagor a notice as described in Section 1680.403c of Act 91. Pursuant to the plain language employed in Subsection 1680.403c(b)(1), this notice was to, inter alia, advise the mortgagor that the mortgagor has thirty days to have a face-to-face meeting with the mortgagee who sent the notice or a consumer credit counseling agency to attempt to resolve the delinquency or default. In other words, Subsection 1680.403c(b)(1) clearly and unambiguously required a mortgagee to provide to a mortgagor notice that the mortgagor had a choice of whether to meet face-to-face with the mortgagee or a consumer credit counseling agency. While Act 91 undeniably empowered the agency to prepare a uniform notice, the Legislature mandated that the notice include all of the information outlined by Act 91’s notice provision. 35 P.S. § 1680.403c(b)(1) (amended July 8, 2008, effective September 8, 2008) (“The agency shall prepare a notice which shall include all the information required by this subsection . . ..”).
Here, the notice that Appellant provided to Appellee failed to inform Appellee that she could choose to meet face-to-face with Appellant. Consequently, the notice was deficient. Yet, such a conclusion does not end our inquiry.
Relying on Wells Fargo Bank v. Monroe, 966 A.2d 1140 (Pa. Super. 2009), Appellant maintains that Appellee was required to prove that she was prejudiced by the deficiency in the Act 91 notice. According to Appellant, Appellee could not meet her burden of proof in this regard because she, in fact, met with Appellant’s representatives, which led to the parties entering the agreed upon judgment.
In Wells Fargo Bank, the Monroes defaulted on their mortgage. The mortgage servicer sent to the Monroes an Act 91 notice. Wells Fargo later filed a mortgage foreclosure action against the Monroes. The parties filed competing motions for summary judgment. The Monroes argued, inter alia, that the Act 91 notice was deficient. The trial court nonetheless granted summary judgment in favor of Wells Fargo. The Monroes appealed to this Court.
Specifically, the Monroes contend that the Act 91 Notice they received “did not identify the Mortgagee, it only identified the Servicer, Countrywide.” Monroes’ brief at 8. Therefore, they claim that they “did not have the address of the note-holder where they could have sent items pursuant to the Real Estate Settlement Procedures Act or more importantly, a Truth-in-Lending request to rescind their mortgage.” Id. The Monroes further assert that “the Act 91 Notice did not provide a place of cure within Westmoreland County where the property is located, nor did it provide a place of cure within a County contiguous to Westmoreland County” and that it “included additional proscribed costs and fees.” Id. Based upon these identified errors and in addition to them, the Monroes argue that the trial court required them to show that they were prejudiced by the improper notice, a requirement that they claim does not comply with Pennsylvania law. Id. at 9. Essentially, the Monroes assert that if the Act 91 Notice is improper, prejudice should be presumed.
Wells Fargo Bank, 966 A.2d at 1143.
In response to the Monroes’ assertions regarding the Act 91 Notice and the requirement that they show prejudice, we agree with the trial court’s conclusion.FN1 The Monroes received an Act 91 Notice and, even if it was defective, they were given and availed themselves of the opportunity to pursue mortgage assistance through the Pennsylvania Homeowners’ Emergency Mortgage Assistance Program. They met with a credit counseling agency within the thirty days as provided by the Act 91 Notice and applied for the mortgage assistance. Moreover, the Monroes have provided no legal authority for their position, nor do they suggest what rights they were due above and beyond those that were afforded to them. See Pa.R.A.P. 2119; Bombar v. West American Ins. Co., 932 A.2d 78, 93 (Pa. Super. 2007) (stating that failure to cite relevant authority may result in waiver of the issue). Accordingly, we conclude that the Monroes’ first issue is without merit.
FN1. Specifically, the trial court indicated that any issues regarding fees and costs would be addressed at the accounting which takes place after a sheriff’s sale and at the time of distribution of the proceeds. T.C.O. at 3. Moreover, we note as to the assertion that the Act 91 Notice failed to provide a local location at which the mortgagor could cure a default, the Pennsylvania Code indicates that an address to which the cure may be sent by mail is sufficient. See 10 Pa.Code § 7.2(ii) (definition of “performance”). Here, an address for Countrywide in Dallas, Texas, was provided as the location to which any cure could be mailed. The Monroes did not take advantage of this option.
Wells Fargo Bank, 966 A.2d at 1143-44.
We find Wells Fargo Bank to be sufficiently distinguishable from the matter sub judice, such that the decision in Wells Fargo Bank has no impact on our decision in this case. As best we can discern, the deficiencies cited by the Monroes, with regard to the Act 91 notice they received, did not implicate Act 91’s explicit requirement that the mortgagee’s Act 91 notice must inform the mortgagor that the mortgagor can meet face-to-face with the mortgagee or a consumer credit counseling agency. Moreover, unlike in Wells Fargo Bank, there is no failure on the part of the parties to this appeal to provide this Court with pertinent legal authority.
Act 91 contains no language that suggests that an Act 91 notice which fails to advise a mortgagor that the mortgagor can meet with the mortgagee will suffice so long as, during the course of the mortgage foreclosure litigation, the mortgagor cannot prove that he or she was prejudiced by the deficient notice. In fact, Act 91 explicitly states that, before a mortgagee can even commence a mortgage foreclosure action, it must give the mortgagor the notice described in Section 1680.403c; Subsection 1680.403c(b)(1) clearly and unambiguously mandates that the notice must inform a mortgagor, inter alia, that the mortgagor can meet face-to-face with the mortgagee.
We conclude that the trial court did not make an error of law or abuse its discretion by sustaining Appellee’s “Motion to Set Aside Judgment and Sheriff’s Sale.” In conjunction with its ruling, the court properly set aside the sheriff’s sale, vacated the judgment, and dismissed Appellant’s complaint without prejudice. Accordingly, we affirm the court’s order.
* Retired Senior Judge assigned to the Superior Court.
A petition to set aside a sheriff sale is governed by our rules of civil procedure which provide that [u]pon petition of any party in interest before delivery of the . . . sheriff’s deed to real property, the court, may upon proper cause shown, set aside the sale and order a resale or enter any other order which may be just and proper under the circumstances. In Doherty v. Adal Corp., 437 Pa. 109, 261 A.2d 311 (1970) we held that a petition to set aside a sheriff sale is an equitable proceeding, governed by equitable principles. Appellate review of equitable matters is limited to a determination of whether the lower court committed an error of law or abused its discretion.
Marra v. Stocker, 615 A.2d 326, 328 (Pa. 1992) (citations, quotation marks, and footnote omitted).
2. As with all questions of law, when we interpret a statute, “our standard of review is de novo. Our scope of review, to the extent necessary to resolve the legal question before us, is plenary.” Swords v. Harleysville Insurance Companies, 883 A.2d 562, 567 (Pa. 2005).
temporarily deny such allegation by the Trustee.
order by the Court, as to both of the Trustee’s avoidance actions.
INDYMAC MORTGAGE SERVICES, a division of OneWest Bank, FSB, Defendant.
PETRESE B. TUCKER, District Judge.
1. This is an action for damages in connection with the mortgage refinancing services received by Plaintiffs, Jose and Maria Tellado, for their residential real property located at 519 Morris Street, Philadelphia, Pennsylvania (the “Property”).
2. Plaintiffs, who are husband and wife, are also low-income senior citizens who speak primarily Spanish.
3. On or around June 2007, Plaintiff Jose Tellado heard a Spanish-language radio advertisement for mortgage refinance services. Plaintiff Mr. Tellado called the telephone number provided in the advertisement and reached a man named Carlos Enrique, and the two conversed exclusively in Spanish.
4. Mr. Enrique assisted Plaintiff Jose Tellado with the submission of a loan application. Mr. Enrique also arranged for a closing agent to visit the Tellado home with the loan documents.
5. On July 3, 2007, Mr. Philip Bloom, a closing agent and notary, came to the Property with the loan documents. Mr. Bloom acted as a representative of Indymac Bank, F.S.B., and had been provided instructions on how to conduct the loan closing. Plaintiffs received a copy of these instructions.
6. Plaintiffs saw the final loan terms for the first time in their home at closing.
7. The loan transaction, from the initial contact with Mr. Enrique until the loan closing, was conducted in Spanish.
8. The loan documents provided at the loan closing, including the Note, the Mortgage, and the Notice of Right to Cancel, were provided in English.
9. One of the loan documents received by the Plaintiffs was a Notice of Right to Cancel, a model form mandated by the Truth in Lending Regulation Z, referenced in section 226.23 of title 12 of the Code of Federal Regulations, Appendix H.
10. Plaintiffs’ daughter, Marcelina Fuster, was present at the closing, at the suggestion of Mr. Enrique, to act as an interpreter. She assisted in translating the closing agent’s verbal instructions, as well as his explanations of the loan documents, from English to Spanish for the Plaintiffs. Ms. Fuster did not have the opportunity to read, nor to translate the loan documents themselves.
11. Plaintiffs are unable to read English and did not understand the contents of the documents that they were signing at closing. At the time of the closing, Plaintiffs had the intention of entering into a fixed rate mortgage. Plaintiffs were unaware that the first ten years of payments under the loan would not be applied to the principal, that the loan had an adjustable rate, or that the loan documents contained falsified information concerning their monthly income.
12. In connection with the July 3, 2007 transaction, Plaintiffs purchased the mortgage refinancing services for a price in excess of $25. The original lender in this transaction was Indymac Bank, F.S.B.
13. Subsequently, on July 11, 2008, Indymac Bank, F.S.B. went into receivership, and the Federal Deposit Insurance Corporation (FDIC) was appointed its receiver. As a result, certain assets and liabilities of Indymac Bank, F.S.B., including the Plaintiffs’ mortgage loan, were transferred to Indymac Federal Bank, F.S.B., for which the FDIC served as conservator.
14. Under a Master Purchase Agreement (the “MPA”) dated March 18, 2009, Defendant OneWest Bank, FSB (“OneWest Bank”), acquired the Plaintiffs’ loan, formerly held by Indymac Bank, F.S.B., from the FDIC.
15. In the MPA, Defendant agreed to assume certain liabilities associated with loans acquired from the FDIC. In Section 4.02 of the MPA, there are enumerated certain liabilities that the Defendant did not assume, however, such excluded liabilities are unclear, as Schedule 4.02(a) referenced in the MPA detailing excluded liabilities was not provided to the Court.
16. On August 5, 2009, Plaintiffs sent a Notice of Cancellation to Indymac Mortgage Services, a division of Defendant OneWest Bank, alerting the entity of Plaintiffs’ intention to file suit if a favorable response was not received within ten (10) days.
17. OneWest Bank failed to provide any response to the Notice of Cancellation within (10) ten days after receiving such notice. OneWest Bank responded to Plaintiffs in a letter dated October 15, 2009, denying Plaintiffs’ request to rescind the mortgage loan transaction.
18. After commencing this action on August 24, 2009, Plaintiffs began escrowing their monthly payments.
19. Plaintiffs ceased escrowing payments upon receipt from OneWest Bank of a Notice of Intention to Foreclose. Plaintiffs continued to make monthly payments to prevent foreclosure on the Property during the pendency of this action.
20. As of November 8, 2010, the bench trial date in this matter, Plaintiffs were up to date on their payment obligations under the loan at issue.
a) Determination that the mortgage on their home is void following their submission to OneWest Bank of a notice of cancellation, as required under 73 P.S. § 201-7(g).
b) Determination that, by failing to honor the Notice of Cancellation and inform Plaintiffs of their intent to collect the proceeds of the loan within ten (10) business days as required under 73 P.S. § 201-7 (g), OneWest Bank has forfeited the right to any further payment.
i) Triple damages based on the amount of payments made by Plaintiffs to date, at least $30,043.36, for a total of $90,130.08, pursuant to 73 P.S. § 201-9.2(a).
ii) Actual damages in the amount of the security instrument that OneWest failed to terminate, and which OneWest retains as a lien against Plaintiff’s home, in the amount of $115,000.00, pursuant to 73 P.S. § 201-9.2(a).
a) Generally, the law of preemption, which has its roots in the Supremacy Clause, dictates that federal law preempts state law when Congress has shown intent to create federal regulation in a particular field so pervasive as to leave no room for state supplementation.
c) The OTS, however, makes an exception for, inter alia, state contract and commercial laws which only incidentally affect the lending operations of Federal savings associations or are otherwise consistent with the purpose of the regulation. 12 C.F.R. § 560.2(c)(1).
d) While the Third Circuit has not yet ruled on the preemptive relationship between the Home Owners Loan Act (“HOLA”) and the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. §201-7 (“UTPCPL”), the Southern District of New York held that the New York Consumer Fraud Statute is not directly aimed at lenders, and has only an incidental impact on lending relationships without creating any conflict with the federal objectives identified in 12 C.F.R. § 560.2. Binetti v. Wash. Mut. Bank, 446 F. Supp. 2d 217 (S.D.N.Y. 2006).
e) In Binetti, the Southern District of New York pointed to a December 24, 1996, OTS opinion which concluded that the New York Consumer Fraud Statute is the type of commercial law designed to “establish the basic norms that undergird commercial transactions” that the OTS has indicated it does not intend to preempt. Id. at 219.
f) A state law that generally dictates the underpinnings of fair trade practices is distinguishable from a state law that is directly aimed at lenders, which courts See have consistently held to be preempted by HOLA and similar federal acts. Binetti v. Wash Mut. Bank at 220 (citing 1999 OTS LEXIS 4).
g) The Court, finding Binetti instructive, holds thatthe Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) governs the customs and practices surrounding commercial transactions generally, and thus is not preempted by HOLA.
h) Similarly, the UTPCPL is not preempted by the Truth in Lending Act.
I) The Truth in Lending Act preempts state law only where the state law is in conflict. Jamal v. WMC Mortg. Corp., 2005 U.S. Dist. LEXIS 5076 (E.D. Pa. Mar. 28, 2005).
l) The Truth in Lending Act, which focuses on consumer credit disclosures, is not preempted by the UTPCPL, a state law only which generally governs commercial transactions, and is not aimed at federal consumer credit practices.
2. Plaintiffs have a valid claim under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-7 (UTPCPL) against OneWest Bank.
a) The loan transaction which Plaintiffs entered into on July 3, 2007 is governed by the door-to-door sales provisions of the UTPCPL. 73 P.S. § 201-7.
b) Under 73 P.S. § 201-7, the right to cancel is afforded “to any consumer who agrees to purchase goods or services with a value of $25 or more `as a result of or in connection with’ contact between the seller and the consumer at the consumer’s home.” Burke v. Yingling, 446 Pa. Super. 16, 21 (1995).
c) At trial, the Court determined that OneWest Bank qualifies as a seller within e definition of the UTPCPL.
d) In this case, the service provided, mortage refinancing, had a value of well over twenty-five dollars ($25).
e) Additionally, such services were contracted as a result of contacts between the Plaintiffs and One West Banka Plaintiffs’ residence, including a telephone call placed by Mr. Tellado from his joome, and the loan closing which occurred at the residence. Thus, as in Fowler v. Rauso, 425 B.R. 1657 (Bankr. E.D. Pa. 2010), the contacts made at the residence of the consumers result in this transaction falling within the scope of 73 P.S. § 201-7.
e) Under the door-to-door sales provision of the UTPCPL, at the time of the sale or contract the buyer shall be provided with a notice of cancellation written in the same language as that principally used in the oral sales presentation and also in English. 73 P.S. § 201-7(b).
f) The buyer shall also be informed in the notice to cancel that he may avoid the contract or sale by providing the seller with a written notice of cancellation within three business days after the date of the transaction. 73 P.S. § 201-7(b).
g) IndyMac Bank, F.S.B., the original mortgagee, did not provide any documents in Spanish, the language of the sales presentation, nor did IndyMac Bank, F.S.B. provide additional notifications of the right to cancel within three business days near the signature line of the Note or Mortgage, as required by the UTPCPL. 73 P.S. § 201-7(b).
h) Thus, IndyMac Bank F.S.B., a division of OneWest Bank, failed to provide proper notice of Plaintiffs’ right to cancel the transaction under the UTPCPL.
i) Further, the door-to-door sales notice to cancel requirements of the UTPCPL are not preempted by HOLA because they only incidentally affect the lending operations of OneWest and are consistent with the purpose of the HOLA.
j) The Court finds that “[t]he UTPCPL is a law of general applicability, and not targeted directly at banking or lending.” Poskin v. TD Banknorth, N.A., 687 F. Supp. 2d 530 (W.D. Pa. 2009).
k) While the Third Circuit has not issued a ruling directly addressing the issue at hand, courts within the Ninth Circuit have provided some guidance.
l) In Reyes v. Premier Home Funding, Inc., 640 F. Supp. 2d. 1147 (N.D.Cal. 2009), the Court considered HOLA’s preemption of the California Translation Law (CTA), which requires that a translation of a contract or agreement be provided in the language in which the contract or agreement was negotiated. The Court held that the CTA was not preempted by HOLA because it did not require any specific statements, information or other content to be disclosed and because it only affects lending incidentally. Id. at 1155 (emphasis added).
m) Reyes, as well as the case at issue, is distinguishable from several other Ninth Circuit cases which called for federal preemption of state regulations.
n) Where the state regulation in question regards specific processing, servicing, or disclosure policies or concerns the substantive financial terms of the loan, preemption has been deemed necessary. See Parcray v. Shea Mortg., Inc., 2010 WL 1659369 (E.D. Cal. Apr. 23, 2010)(concluding that HOLA preempts Cal. Civ. Code § 2923.5 because it “concerns the processing and servicing of [the plaintiff]’s mortgage”); Odinma v. Aurora Loan Servs., 2010 WL 1199886 (N.D. Cal. Mar. 23, 2010); Murillo v. Aurora Loan Servs., LLC, 2009 WL 2160579 (N.D. Cal. July 17, 2009); Silvas v. E*Trade Mortg. Corp., 421 F. Supp. 2d 1315 (S.D. Cal., 2006) (concluding that where federal law preempts an “entire field,” a state’s provision of remedies for a violation of federal law amounts to a form of state regulation of the affected area and is thus preempted).
o) As in Reyes, the Court finds that notice of right to cancel in this matter was incidental to the larger mortgage refinancing transaction, and thus is not preempted by HOLA or TILA, as discussed above.
2. Because Plaintiffs never received the proper notification of their right to cancel under the UTPCPL, the cancellation period provided for in 73 P.S. § 201-7(e) had not begun to run at the time Plaintiffs sent a Notice of Cancellation to Defendant on August 5, 2009.
3. Because no valid notice of cancellation was issued to Plaintiffs, Plaintiffs’ Notice of Cancellation was sent within the required time constraints pursuant to 73 P.S. § Plaintiffs are not required to show actual losses for remedies to be triggered under 73 P.S. § 201-7(g).
a) Defendant OneWest Bank shall refund all payments made under the contract, cancel and return any negotiable instrument executed by the Plaintiffs in connection with the mortgage refinancing, and take any action necessary or appropriate to terminate promptly any security interest created in the mortgage refinancing transaction. 73 P.S. § 201-7(g).
b) Under 73 P.S. 201-9.2(a), the Court may, in its discretion, award up to three times the actual damages sustained [due to “deceptive practices”, as statutorily defined], but not less than one hundred dollars ($100). The Court may provide such additional relief as it deems necessary or proper.
c) Because the acts in question do not rise to the level of unlawful deceptive practices required under 73 P.S. § 201-9.2(a), the Court declines to award damages permissible under this section.
In re: MICHELIN ALCIDE, Chapter 7, Debtor.
In order to place the present dispute in the proper procedural perspective, it is helpful to summarize certain background information regarding this chapter 13 case.
On July 27, 2010, less than four weeks after the commencement of the case, Everhome, as Servicer for Everbank, filed a proof of claim (Claim No. 3) (“the Proof of Claim”). The Proof of Claim is in the amount of $103,973.26 and states that the claim is secured by the Property. The Proof of Claim also states that instalment payments on the loan are delinquent from March 1, 2005 at $677.07 per month and that the total pre-petition delinquency on the loan is $63,703.80.
The Debtor filed his bankruptcy schedules on August 3, 2010 and a chapter 13 plan on August 4, 2010. (Doc. #’s 15, 16).
In his bankruptcy schedules (“the Schedules”), the Debtor disclosed a one-half ownership interest in the Property. (Doc. # 15, Schedule A). He disclosed the current value of his one-half interest in the Property as $50,000.00. I infer from the Debtor’s disclosure that he calculated the value of his interest in the property by dividing in half the value of the entire Property (i.e., $100,000.00 divided by two).
(3) Everhome Mortgage Co., Inc.
(Doc. # 15, Schedule D).
In Schedule D, the Debtor also disclosed that the Property was encumbered by three municipal liens (two in favor of “Philadelphia Gas Works” and one in favor of “Water Revenue”) in the aggregate amount of $12,364.30.
The Debtor filed a chapter 13 plan (“the Plan”) on August 4, 2010. (Doc. # 16). In substance, the Plan proposed for the Debtor to pay $5.00 per month for 60 months ($300.00 total) to the Chapter 13 Trustee. In addition, the Plan provided for the Debtor to sell the Property and distribute the proceeds in full satisfaction of the allowed secured claim of the holder of the note and mortgage on the Property and the other claims secured by the Property, with any remaining sale proceeds to be turned over to the Trustee.
The Plan made no reference to value the of the Property or the fact that the total amount due on the secured claims, as disclosed on his Schedules, exceeds the value of the Property. The Plan did not explain how the Debtor would be able to consummate the proposed sale or how any net proceeds would be available to the Trustee from the sale of a $100,000 asset encumbered by more than $116,000.00 in liens. The Plan set no deadline for the sale of the Property. But see In re Erickson, 176 B.R. 753, 757 (Bankr. E.D. Pa. 1995) (suggesting that a chapter 13 plan that features the sale of the debtor’s property must state the terms and time of the contemplated sale).
I find the following facts based on the testimony presented and the documents introduced into evidence at the March 17, 2011 hearing.
1. Everhome and Everbank are separate entities.
2. Everbank is the parent company of Everhome.
3. Everhome “services” mortgages held by Everbank, by accepting payments from borrowers and tracking those payments and any defaults that arise under the mortgage.
4. On November 18, 1998, the Debtor entered into a mortgage loan transaction (“the Original Transaction”) with Home Mortgage, Inc. (“HMI”).
5. The mortgage loan transaction was guaranteed by the Federal Housing Administration.
6. In the Original Transaction, the Debtor signed a note (“the Note”) and a mortgage (“the Mortgage”) against the Property in favor of HMI. (See Ex. M-2).
7. The Mortgage states that it secures repayment of a debt evidenced by the Note. (Id.).
8. On June 30, 2000, HMI, acting through its Vice President, Teresa N. Jones, executed a written assignment, assigning the Mortgage to PrimeWest Mortgage Corporation (“PrimeWest”).
9. The HMI — PrimeWest assignment was recorded in the Philadelphia Department of Records on July 28, 2000. (Ex. M-4).
10. On June 1, 2005, PrimeWest, acting through its Vice President, Tanya Ault, executed a written assignment, assigning the Mortgage to Mortgage Electronic Registration Systems, Inc. (“MERS”), “as nominee for Everhome Mortgage Company.” (Ex. M-5).
11. The PrimeWest — MERS/Everhome assignment was recorded in the Philadelphia Department of Records on October 25, 2005. (Ex. M-5).
12. On March 8, 2011, MERS, again as “as nominee for Everhome Mortgage Company,” and acting through Ann Johnson, Assistant Secretary, and Marcie Metcalf, Vice President, executed a written assignment, assigning the Mortgage to Everbank. (Ex. M-7).
13. The March 8, 2011 MERS — Everbank mortgage assignment was unrecorded as of March 17, 2011, the date of the hearing in this contested matter.
14. Attached to the Note is a blank endorsement executed by an individual purportedly acting on behalf of PrimeWest.
15. Everhome does not have physical possession of the Note.
16. U.S. Bank has physical possession of the Note.
17. Everhome considers U.S. Bank to be acting as Everhome’s “custodian” in maintaining physical possession of the Note.
18. The record does not reflect when U.S. Bank came into possession of the Note.
19. On September 14, 2005, MERS, acting in its own name (and without the qualifying reference “as nominee”) filed a complaint in mortgage foreclosure (“the Complaint”) against the Debtor in the Court of Common Pleas, Philadelphia County, Pennsylvania, docketed at No. 1150, Sept. Term 2005. (Ex. D-1).
20. In the Complaint, MERS alleged, without any qualification, that it is “the original Mortgagee named in the Mortgage, the legal successor in interest to the original Mortgagee, or is the present holder of the mortgage by . . . Assignment(s).” (Ex. D-1, Complaint ¶2).
21. As of July 2, 2010, MERS’ motion for summary judgment, which the Debtor contested, was pending.
22. The Debtor commenced this chapter 13 bankruptcy case on July 2, 2010.
23. On July 27, 2010, Everhome, acting “as servicer for Everbank,” filed a proof of claim, asserting a claim secured by the Property in the amount of $103,973.26, with pre-petition arrears of $63,703.80.
24. On October 4, 2010, Everhome, again acting “as servicer for Everbank,” initiated this contested matter by filing the Motion, alleging that it is the “holder of a secured claim” against Debtor, secured by a first mortgage on the Property.
26. Since the commencement of this bankruptcy case, the Debtor has made no payments to Everhome or Everbank.
On the present record, Everhome has not established that it is a party in interest entitled to seek relief from the automatic stay under 11 U.S.C. §362(d) in order to prosecute a foreclosure action against the Property. Everhome has not presented sufficient evidence to permit a finding that it is either: (1) the holder of the mortgage, with the concomitant right to enforce it under Pennsylania law or (2) an agent authorized by the holder of the Mortgage to initiate court proceedings to enforce the Mortgage on the holder’s behalf.
When it filed the Motion, Everhome had a record interest in the Mortgage in the form of the 2005 mortgage assignment from PrimeWest to MERS “as nominee for Everhome.” As stated above, Pennsylvania law unequivocally provides that a mortgage holder may enforce the mortgage in a judicial foreclosure proceeding. See Part III.B.2., supra. Thus, at first blush, Everhome would have appeared to be a party in interest when it filed the Motion. However, other evidence presented conclusively contradicted Everhome’s apparent status as the mortgage holder.
Most significantly, during the hearing, Everhome made no claim that it is the mortgage holder. All of the evidence it presented, through Mr. Ricketson’s testimony, was designed to prove that Everhome is servicing the Mortgage on behalf of its parent company, Everbank. Everhome made no effort to harmonize this position with the inconsistent language in the 2005 mortgage assignment from PrimeWest to MERS — Everhome. Everhome’s own position in the litigation, by itself, makes it impossible to accord it “party in interest” status as the holder of the Mortgage.
Further, by the time the hearing was held in this contested matter, another mortgage assignment had been executed, which on its face removed Everhome as the beneficial mortgagee. Although the March 2011 assignment from MERS to Everbank was not recorded, under Pennsylvania law, the allegation that a party is the owner of a mortgage that is not yet recorded is sufficient to permit that party to proceed as a plaintiff in an action in mortgage foreclosure. Mallory, 982 A.2d at 993. Thus, Everhome’s own evidence tended to prove that Everbank, not Everhome, is the party in interest with the right to enforce the Mortgage under applicable nonbankruptcy law.
Everbank has not made a preliminary showing that it is a holder of the Mortgage with a right of enforcement. Therefore, Everhome may be a party in interest only if the evidence shows that Everhome has been authorized by the party that has the right to enforce the Mortgage to initiate legal proceedings on its behalf.
Everhome’s position is that the Mortgage is held by Everbank and that as the servicer of the Mortgage, it has authority to file a motion for relief from the automatic stay. The Debtor does not concede this.
A number of courts have upheld the authority of a mortgage loan servicer to file a proof of claim on behalf of the mortgage holder. Most of the reported decisions also hold that a mortgage loan servicer has standing and is a party in interest entitled to prosecute a motion for relief from the automatic stay.
After reviewing the relevant case law, I conclude that a servicer’s financial interest in the debtor’s unpaid stream of mortgage payments satisfies the initial, and most fundamental, requirement for “party in interest” status (“injury in fact”), but does not automatically meet the prudential requirement that the movant assert its own legal rights, not that of a third party.
Most commonly, as in this case, a motion for relief from the automatic stay requests that the bankruptcy court authorize the movant to initiate or resume a foreclosure against the secured property. The purpose of the foreclosure action is to subject the secured property to sale, thereby permitting the secured creditor to realize its collateral. In Pennsylvania, it is the mortgage holder that has the right to pursue an action in mortgage foreclosure. Therefore, even though the servicer has an economic interest in the revenue stream generated by the mortgage, the relief requested in a stay relief motion — the right to pursue foreclosure proceedings against the collateral — involves the enforcement of the rights of the mortgage holder, not the servicer. Thus, the servicer’s economic stake in the mortgage does not necessarily mean that the servicer is a party in interest that may seek relief from the automatic stay in order to proceed with foreclosure.
That said, even though the in rem rights to be enforced following the grant of relief from the automatic stay may be those of the mortgage holder and not the servicer, the servicer may nonetheless be a party in interest in the bankruptcy case, with the right to prosecute a stay relief motion, if the servicer is acting within the scope of its authority as the mortgage holder’s agent. Whether it has such authority depends on the content of the servicing agreement between the mortgage holder and the servicer. That agreement may or may not be broad enough in scope as to delegate to the servicer the authority to initiate and manage foreclosure litigation on the mortgage holder’s behalf.
A servicer can establish its authority to initiate the legal action if it demonstrates that its contractual duties to the mortgage holder include not just the collection of payments, but also the conduct of mortgage foreclosure and other legal proceedings on the holder’s behalf. Such authority includes the power to move for relief from the automatic stay in the bankruptcy court. See Martinez, 2011 WL 996705, at *5; Jacobson, 402 B.R. at 367; Woodbury, 383 B.R. at 379. Stated in slightly different terms, a servicer may have standing and be a party in interest if it files the motion for relief from the automatic stay in its capacity as the holder’s attorney-in-fact. See Hwang I, 396 B.R. at 767.
(2) the principal itself is a party in interest (i.e., its principal is a party with the right to enforce the mortgage).
In this case, assuming arguendo that the record supports a finding that Everbank is the mortgage holder with the authority to enforce the Mortgage in foreclosure proceedings, but see n. 21, supra, there is a paucity of evidence regarding the scope of Everhome’s authority as servicer. The parties’ servicing agreement was not introduced into evidence; nor were its particulars described by Everhome’s trial witness. In his testimony, Mr. Ricketson described Everhome as having the authority to collect payments, track payments and determine when an the account is in default. There was no evidence that Everbank has appointed Everhome as its agent for the purpose of initiating legal proceedings to enforce the Mortgage.
This is a fatal gap in the evidence. I am unwilling to assume that the mere label of “servicer” is sufficient to cloak Everhome with authority to file a legal action on Everbank’s behalf.
At the pleading stage, plaintiffs in federal court may rely on the allegations of their complaint to establish standing. Similarly, stay relief movants may initially rely upon their motion. But if a trustee or debtor objects to a stay relief motion based upon lack of standing, the movant must come forward with evidence. Additionally, if the stay relief motion itself reveals a lack of standing, movants cannot rest on the pleadings.
407 B.R. at 400 (citation omitted); see also Jacobson, 402 B.R. at 370 (“At a minimum, there must be an unambiguous representation or declaration setting forth the servicer’s authority from the present holder . . . to collect on the note and enforce [the mortgage]”).
Accordingly, the Motion must be denied.
This is a case in which the Debtor was substantially in arrears on his home mortgage when he commenced this bankruptcy case, has not paid his monthly mortgage payment over a number of months since filing the case and proposed a chapter 13 plan that contemplates the sale of his residence and that, on its face, is of questionable feasibility due to the apparent lack of equity in the Property. Without prejudging the merits of the motion for relief from the automatic stay, there is no question that the mortgagee has a good faith basis for pressing a motion for relief from the automatic stay.
At the same time, however, it is understandable why the Debtor responded to the Motion by demanding proof that Everhome was the proper party to come before the court. From his perspective, Everhome’s role in the mortgage relationship is, at best, opaque. Prior to the bankruptcy filing it was MERS (purporting, at least initially, to act in its own right), not Everhome or Everbank, that filed the foreclosure action against Debtor in state court. And, as the evidence revealed, Everhome holds itself out as merely the mortgage servicer and not the mortgage holder. There is no doubt that the Debtor acted in good faith in disputing Everhome’s status as a party in interest. In fact, the Debtor’s position was meritorious. At trial, Everhome failed to come forward with sufficient evidence to establish its party in interest status, resulting in the denial of the relief Everhome requested from this court.
To the extent that the outcome in this matter may appear anomalous due to the apparent merits of the request for stay relief and the seemingly technical nature of the issue regarding the identity of the proper moving party, the fault lies with the moving party. When a party claiming to be a secured creditor seeks relief from the automatic stay, the Debtor and the bankruptcy court are entitled to insist that the moving party show that it is the holder of the secured claim or that it is the authorized agent of the holder. This imposes an evidentiary burden “that is not difficult to meet,” requiring only “present[ation of] the rudimentary elements of its claim.” In re Salazar, 2011 WL 1398478, at *2, 3 (Bankr. S.D. Cal. Apr. 12, 2011). Indeed, in this case, the evidentiary shortfall does not appear to have been insurmountable.
In the age of mortgage securitization, meeting the evidentiary burden imposed by the “party in interest” requirement of 11 U.S.C. §362(d) may be a somewhat more cumbersome task for certain stay relief movants than it was for residential mortgagee—movants in the past, but that does not justify diluting the fundamental constitutional and statutory requirement that a party be a “party in interest” before it may obtain redress from a federal bankruptcy court. Any added burden is a product of the business model chosen by the mortgage finance industry and therefore, is simply part of the mortgage loan industry’s cost of doing business. Presumably, the cost is offset by the benefits of the mortgage securitization system.
Furthermore, while a moving creditor may believe that its status as a party in interest is self-evident, the court cannot rule based on factual assumptions or evidentiary leaps. Our legal system is governed by the core principle that court decisions are based on the evidence presented to the court. That principle cannot be compromised because a particular industry has chosen a business model that complicates its legal affairs and makes it inconvenient to come forward with the evidence needed to establish its status as a proper party. In the final analysis, the Motion must be denied to protect the integrity of the legal process.
For these reasons, I will deny the Motion without prejudice.

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