POST No. 900: HEMAP IS BACK; SO SOON WILL BE ACT 91.

No. 900

In June, Act 70 of 2012 funded the Pennsylvania Housing Finance Agency’s (PHFA) Homeowner’s Emergency Mortgage Assistance Program (HEMAP), which had been shut down for a year. The mailing of Act 91 Notices by lenders to delinquent borrowers had been discontinued, since PHFA was not financially able to accept any new HEMAP applications.

This reversal of fortune is the result of the National Attorneys General Settlement with the five largest mortgage services which settled claims by participating states against the servicers for widespread practices such as robosigning. Pennsylvania’s share was placed into a Homeowner’s Assistance Settlement Fund, 90% of which was dedicated to HEMAP.

On August 8, 2012, Brian A. Hudson, Sr., Executive Director of PHFA wrote to the 67 County President Judges announcing that applications are being taken immediately for HEMAP loans and that a notice would appear in the Pennsylvania Bulletin on an expected publication date of August 18, 2012 announcing the reinstatement of Act 91 Notices, together with their mandatory provisions, On October 2, 2012.

“Beginning October 2, 2012,” Hudson stated,” all mortgages and mortgagees shall again be required to comply with all provisions of the HEMAP law and to provide the notices required by law (35 P.S. Section 1680.401 et seq.).”

In the meantime, Hudson requested that the Judges encourage persons going through the foreclosure process to apply to PHFA. Those Counties which have diversion programs are also encouraged to provide stays so that foreclosure defendants can apply for HEMAP assistance. A similar letter has been sent to Pennsylvania sheriffs.

A diversion program is a court supervised arrangement whereby foreclosure actions are delayed in order to give debtors an opportunity to propose a plan to lenders for mortgage modification or other relief. Philadelphia County established the first such program which, according to Mr. Hudson and many other observers, has been quite successful. Allegheny County established the second program, which has mentored a significant number of modification agreements. Butler County, Washington County and Fayette County also have diversion programs. Luzerne County is reportedly in the process establishing one, too. However, the rest of the Commonwealth has not followed suit, leading some to call for a state-wide diversion program.

During the time when Act 91 was suspended, lenders and services have been required to send Act 6 Notices. Act 6 of 1974 requires a notice containing specified information be sent to the homeowner at least 30 days prior to filing foreclosure. Act 6 never actually went out of existence and because its scope includes residential property that is not owner-occupied, some properties (such as 1 – 4 family rental properties) may require Act 6 Notices but not Act 91 Notices. To avoid confusion over which notice to send, the PHFA created a combined Act 91/Act 6 Notice. The Act 91 Notice has been modified from time to time and was last changed in 2008, for use after January 1, 2009. It reflected 2008 amendments to Act 91 and sought to clarify certain existing provisions of the amended Act 91.

We will have to wait and see whether the Notice in the Pennsylvania Bulletin will make changes in the Act 91 Notice or procedures.

Bowing to the Right

No. 899 Photo: Getty

Republican presidential candidates usually have a delicate balance to achieve. They must stake out a position that is moderate enough to attract independent voters and disaffected Democrats. But they must at the same time mollify the party’s right wing. So Bush 41 brought on board an unknown Indiana Senator (Dan Quail) who caused him many problems. And last time, Sarah Palin provided that ingredient.

So now its Rep.Paul Ryan. It may turn out to be a brilliant choice. Ryan should solidify the party, in the way it happened four years ago with Palin. But, being the prime architect of the plan to establish a deficit-ending budget, he does carry some political baggage. Expect Obama to raise fears of that Social Security and Medicare will be gutted with senior voters in Florida, Pennsylvania and elsewhere. Unlike Quail and Palin, he brings with him a specific record that will provide plenty of material for attack ads.

On the other hand, he may be smarter than Quail and Palin combined. He may also turn out to be as good as Palin on the podium and will be a far better Vice-Presidential debater than either. I’ll bet he can spell, too.

CLT

Category: 2012
Tags: Paul Ryan > Vice Presidency

Assessment Appeals: Look for Low Sales Prices that the Assessors Culled.

No. 898

Photo: Third Chair Pittsburgh Blog

Traditionally, assessors have culled sales prices that they think are too low to represent fair market value. In normal times, they may have been right. But not now. In the past four years, extreme low prices have been the market in many places — especially in lower priced areas. But the trend extends to all levels.

Everyone who has tried to sell a house in the past four years (and even longer in many places) has been aware that there are so many distressed and bank owned houses on the market that they influence the the market price of everything.

Fair market value is what a buyer not under compulsion to buy will pay and a seller not under compulsion to sell will accept.

When investors are able to buy cheap houses that need lots of work, in order to upgrade and resell, they are responding to market conditions of our time. We should be glad about this. They are risking their own money while improving OUR neighborhood. Yes, they may make a profit. But they are only getting what the marketplace gives them. They must compete in the marketplace to buy and after they have rehabilitated a property, they must compete in the same marketplace to sell.

Yet, for some reason, Assessors consider a purchase by an investor of a house needing work as an aberration. This is absolutely not true! Supply and demand are at work here just as much as when a homeowner sells at an excellent price. As long as properties are exposed to genuine market conditions, they ought to be considered to be market value prices by assessors — not as sub-market aberrations.

If assessors continue to hold this unreasonable position in the face of the evidence, you may wish to appeal their decision to the Board of View. While you may have to wait a two or three years for the case to come up, the Board’s decision will pick up the intervening years.

In practice, the Board often brokers a settlement that the assessors and other parties (usually suburban school districts this time) won’t consider until put under pressure.

However, you must appeal within 30 days after the initial decision. So, don’t put off appealing.

CLT

Category: Property Assessments, Real Estate, Reassessment 2012

Time Millionaire’s Tips for Creating Extra Time.

No. 897

I received a follow today from the Time Millionaire, a consultant who teaches people how to use time more effectively. Here are some time tips that she discusses on a free mp3 you can download from time millionaire.com. The comments are mine.

TIME MILLIONAIRE’s TIPS TO CREATE EXTRA TIME.
1. Stop whining.

A real time-waster if ever there was one. You gain nothing. You lose time.

2. Limit email checking.

She suggests every two or 3 hours will be enough for office workers.

3. Work out emotions once per week, not by calling friends, co-workers, etc.

She suggests a therapist or a journal.

4. Positive emotions make time, negative ones waste time.

There is no payoff to going around feeling mad or frustrated. Feel gratitude, feel free.

5. Quit multitasking. — do one thing at a time.

Its a myth that multitasking people get more done. Focused people do.

6. Dump something that you hate to do.

Hurrah!

7. Delegate something.

Tough when you work alone. So hire somebody to cut the grass. Then use the time to read something worth it.

8. Use morning hours for hardest stuff. Get trouble out of the way.

Maybe the best advice of all. The earlier the better.

9. Recharge by getting some exercise during the day.

A short walk will do it. Relieves the fatigue in the muscles in the lower back, hips, legs. It also gives you time to think about what to do next.

THANKS, TIME MILLIONAIRE!

CLT

Category: Personal Productivity

Pennsylvania Civil Procedure Rule Changes effective August 1, 2012 Regarding Electronically Stored Information.

No. 896

FYI, new Rules of Civil Procedure 4009.1, 4009.11, 4009.12, 4009.21, 4009.23, and 4011have been adopted by Pennsylvania effective August 1, 2012. Here are the Comments, followed by the Rules.

Category: Civil Litigation

College Files Suit over Abortion Insurance Requirement in Obamacare.

No. 895

Wheaton College, an evangelical Christian institution of higher education, has filed a Petition for Injunction against application of the provisions of the Health Care Act regarding abortion to the health insurance provided by the College.

CLT

Category: Constitutional Law, insurance

Commonwealth Court Ruling on Act 13 Oil and Gas Regulation is Not the Last Word.

No. 894

On July 26, 2012, the Pennsylvania Commonwealth Court decided a Constitutional challenge to Act 13, the latest legislative attempt to regulate the booming oil and gas industry. By a 4-3 vote it found certain provisions of the statute unconstitutional. See Robinson Township et al. v. Commonwealth, No. 248 MD 2012, not yet found in the Atlantic Reporter. A link to the slip opinion has been provided at the bottom of this post.

The Governor promptly announced that the Commonwealth will appeal to the Supreme Court. This would seem to be an appeal that the Supreme Court is likely to accept.

The challenge came from a group of municipalities and related parties who view Act 13 as an infringement upon zoning power, conferred by the Municipal Planning Code.

Oil and gas regulation and zoning have a history. The Department of Environmental Protection claims expertise in the field of oil and gas regulation. Municipalities claim expertise in the field of community planning. From the perspective of the DEP, the municipalities should defer to it on issues regarding well setbacks from houses and streams, regulation of wastewater disposal and the like. From the perspective of municipalities, the community planning mission cannot be properly exercised if they cannot exclude oil and gas operations from what they view as incompatible land use — including planned future land use.

The Pennsylvania Supreme Court has previously denied preemption to the oil and gas statute in force before Act 13 over municipal zoning functions. In Huntley v. Oakmont Borough, in 2007, the Commonwealth Court refused to allow Oakmont to regulate well-siting. The Supreme Court reversed on preemption, but affirmed the Commonwealth Court on other issues.

Act 13 rewrote and modernized Pennsylvania’s existing oil and gas law in response to two emerging technologies — horizontal drilling and hydo-fracking in the deep Marcellus Shale horizon. It drew a distinction between “conventional wells” that were drilled into relatively shallow formations where natural gas had migrated from below and “unconventional wells” that yielded much larger quantities from deep gas-generating formations.

With the increasing number of unconventional wells, the Legislature sought to re-gain complete control over the regulation of oil and gas development from municipal zoning boards and to establish uniformity of oil and gas regulation. In particular, the statute declared oil and gas development (subject to DEP regulation) to be available in any zoning district.

The Petitioners filed a Petition for Review in the Commonwealth Court and sought an Injunction against enforcement of the Act. The Commonwealth filed Preliminary Objections. The Preliminary Objections raised issues of standing and justiciability, which were resolved for the plaintiffs. It then raised numerous constitutional objections. In Counts I, II and III it contends that the enactment violates the due process rights of members of the community. The Commonwealth Court majority agreed.

The Commonwealth contends that Act 13’s requirement that municipal zoning ordinances be amended to include oil and gas operations in all zoning districts does not violate due process under Article 1 Section 1 of the Pennsylvania Constitution and the 14th Amendment of the U.S. Constitution because they have a rational basis and constitute a proper exercise of the Commonwealth’s Police Powers.

The municipalities can still enact ordinances, argues the Commonwealth, in accord with Act 13 and other state law. The state preempts the field of environmental regulation, which the municipalities cannot constitutionally refuse to observe.

The municipalities respond that the requirement that gas operations be a permitted use in any zoning district makes zoning regulation “irrational.”

President Judge Pellegrini, author of the majority opinion, likened the presence of an oil and gas well in an incompatible zoning district to a “pig in a parlor.” He views the purpose of zoning to keep pigs in the barnyard. However, in order to exclude the pig from the parlor, “a substantive due process inquiry must take place.”

The court noted that there are legitimate reasons for the exercise of police power in both oil and gas regulation and zoning. But the goals of the two are to some degree incompatible.

Quoting the Pennsylvania Supreme Court in Hopewell Township Supervisors v. Golla, the Commonwealth Court opinion said:

“The Court went on to state that under that standard for zoning to be constitutional, it ‘must be directed toward the community as a whole, concerned with the public interest generally, and justified by a balancing of community costs and benefits. These considerations have been summarized as requiring that zoning be in conformance with a comprehensive plan for growth and development of the community.'” Id. (Emphasis added). Thus, to render due process, the interests of the community must be balanced.

“If the Commonwealth-proffered reasons are sufficient,” states PJ Pellegrini, “then the Legislature could make similar findings requiring coal portals, tipples, washing plants, limestone and coal strip mines, steel mills, industrial chicken farms, rendering plants and firework plants in residential zones for a variety of police power reasons advancing those interests in their development. It would allow the “proverbial pig in the parlor instead of the barnyard.”

The opinion goes on to argue that requiring municipalities to “violate their comprehensive plans for growth and development, 58 Pa. C.S. Sec. 3304 denies substantive due process because it does not protect the interests of neighboring property owners from harm, alters the character of neighborhoods and makes irrational classifications — irrational because it requires municipalities to allow all zones, drilling operations and impoundments, gas compressor stations, storage and use of explosives in all zoning districts,and applies industrial criteria to restrictions on height of structures, screening and fencing, lighting and noise.” Thus, the Court overruled Preliminary Objections to Counts I – III of the Complaint, relating to Article I, Section 1 of the Pennsylvania Constitution and the Fourteenth Amendment to the United States Constitution.

After sustaining the Commonwealth’s Preliminary Objections under Counts IV through VII, the majority overruled the Preliminary Objections at Count VIII on grounds that the statute fails to provide sufficient guidance to the DEP in waiving statutory requirements, such as setback of operations from streams, houses, wetlands and similarly protected structures and monuments.

In this regard, the court relies upon Pennsylvanians Against Gambling Expansion Fund (PAGE) v Commonwealth, 583 Pa. 275, 877 A.2d 383 (2005) wherein the Supreme Court found that the statute providing that zoning powers cannot be used to exclude a gaming facility from a location did not contain sufficient language to provide guidance to the state agency in performing the functions ordinarily performed by zoning ordinances.

After a review of Act 13, the majority concluded that Act 13 did not provide adequate guidance to the regulators. The Commonwealth Court thus provided summary relief to the Petitioners with respect to Counts I. II, III and VIII.

Of course, this was a 4-3 decision with a dissenting opinion and anything can happen in the Supreme Court. Since the new Act was written with the purpose of reinstating DEP control after Huntley, it would be surprising if it didn’t have something to say.

The arguments advanced by the majority for the primacy of zoning under the new statute are not unassailable. One of the driving forces behind this provision was to take away the decision-making power from hundreds of municipalities who would decide questions such as the proper setback for a gas well from a house with little or no technical expertise. However, it also permits the municipalities to exercise all other powers not inconsistent with the Act. Thus, the DEP could specify uniform setbacks, while the municipalities addressed land use questions that did not contradict the narrow adjudications of the DEP. The Supreme Court, notwithstanding its prior holding on preemption in Hunltley, might well be willing to wait and see whether the exercise of power by two agencies, with different functions, will work. In other words, while unable to exclude oil and gas operations entirely from any district, the Boards would be able to establish use criteria in some districts that oil and gas operations could not meet.

The accusation that the DEP might be expected to permit a whole array of surface facilities such as strip mines and compressors to pop up in urban and suburban residential neighborhoods belies a lack of awareness of the comprehensive regulation of the extractive industries in Pennsylvania, including Federal Regulation. There are minimum acreages for siting gas wells and for surface mining, too. Under DEP regulations, gas well permits won’t be available in Downtown Pittsburgh or, for that matter, in any densely populated area.

Quite simply, the author of the opinion doesn’t trust the DEP to do its job. If he had been a coal or oil and gas lawyer in his younger days, rather than a City zoning lawyer, he probably wouldn’t have such concerns. Long experience with the DEP and other regulators, as well as with the regulatory web that they have spun, would have convinced him long ago of the exact opposite conclusion. He might also take consolation in the Commonwealth Court’s surface mining opinion in Hoffman Mining Corporation v. ZHB of Adams Township. It held that setbacks of surface mining was a quintessential zoning function and was not pre-empted by federal surface mining law and regulations. The Supreme Court affirmed.

Moreover, with respect to the comprehensiveness of Act 13 and adequate direction, there is room for differing impressions whether this statute is sufficiently detailed to give proper guidance to the regulator. There are many short statutes that have given birth to hundreds or thousands of pages of regulations. Moreover, oil and gas operations have been going on for over 100 years and the state regulatory framework is well-established. When the subject matter is complex, scientific in nature and involves changing technology, attempts at micro-management by the lay Legislature of a professional and technically proficient regulator create trouble.

CLT

Click Here for Robinson Township v. Commonwealth, then run you cursor along the bottom of the page. You can either open the file containing the opinion or download it. For further instructions, consult a teenager.

Time Management Ninja on Procrastination.

No. 893

Get out of the midsummer doldrums. Here’s a list by Craig Jarrow, the Time Management Ninja, of 21 strategies to get going. Some of them may surprise you.

CLT

Category: Personal Productivity

Doc Review, Is There No End to the Humiliation?

No. 892

I suspect that most lawyers who participate in doc review projects find the experience, well, not good for the ego. So here’s a study that says that High School students can do better. Of course, even geniuses go through high school, so perhaps the sample was not statistically valid. Then again, there is a chance certain well-motivated high schoolers might find the work interesting.

Attitude is everything, you know. Many years ago, as my National Guard unit was packing up the trucks to return home, a group of boy scouts arrived, bubbling over with excitement. They set up camp quickly, expertly, much more efficiently than we did. For them it was an adventure. For us it was, perhaps, a humiliation.

Next, will they be experimenting with chimpanzees?

CLT

Category: Practice of Law

Unintended Consequences: Freeh Report Becomes the Oracle.

No. 891

When the Penn State Board commissioned the Freeh Report, it could not have know the havoc it would unleash. The Report contains strong accusations, but they are nevertheless only accusations. Many witnesses either refused to talk to Freeh or were not asked. Now some of those are crying out that the Freeh Report is incomplete, half-baked or wrong.

What the Board did not expect is that the sweeping conclusions of the Freeh Report would be accepted as adjudications (which they are not) rather than accusations.

So they hired an ex-director of the FBI and then, surprise, they get a one-sided brief for the prosecution. Where was the defense in the process? Where was the Devil’s Advocate? Nowhere.

Yet the NCAA, among others, used it in lieu of its own investigation and Penn State will have to live with the consequences. They skipped the trial and went straight to the execution.

What difference does it make? Every difference. Its called due process.

In the meantime, new leadership at Penn State is going to have to straighten out problems that they didn’t create. They will and we should stand behind these leaders.

Why us? This is our State University.

Yes, all of us — we are Penn State.

CLT

Category: News Commentary
Tags: Freeh Report > McCarthyism

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CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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