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FLEET REAL ESTATE FUNDING CORP. v. ROBERT SMITH AND VERGIE SMITH. APPEAL VERGIE SMITH (09/03/87)

filed: September 3, 1987.

FLEET REAL ESTATE FUNDING CORP., APPELLEE,
v.
ROBERT SMITH AND VERGIE SMITH. APPEAL OF VERGIE SMITH



Appeal from the Order Entered May 29, 1986 in the Court of Common Pleas of Philadelphia County, Civil No. 3556 Oct. 1985.

COUNSEL

Irv Ackelberg, Philadelphia, for appellant.

Gary E. McCafferty, Philadelphia, for appellee.

Cavanaugh, Olszewski and Tamilia, JJ. Cavanaugh, J., files a dissenting opinion.

Author: Olszewski

[ 366 Pa. Super. Page 118]

Instantly, Vergie Smith appeals an order granting appellee's motion for summary judgment and denying her crossmotion for partial summary judgment in a mortgage foreclosure action. The trial court held that appellee had complied with the notice provisions of Act 6 of 1974, 41 P.S. § 101 et seq., and that summary judgment was appropriate because appellant admitted that she was in default on the mortgage. Appellant contends on appeal that the trial court erred in: (1) declining to consider her defense that appellee failed to service the mortgage in accordance with federal law; and (2) concluding without discussion that she was not entitled to a $1,000 recoupment plus costs and attorney's fees due to violations of the federal Truth in Lending Act, 15 U.S.C. § 1601 et seq. Having reviewed the record and considered the arguments raised on appeal, we

[ 366 Pa. Super. Page 119]

    reverse and remand for further proceedings. Jurisdiction is relinquished.

On October 23, 1970, appellant and her husband, who is now deceased, executed and delivered to the Fidelity Bond and Mortgage Company a mortgage upon their newly purchased residence. The mortgage is insured against default by the Federal Housing Administration (FHA) under Subchapter II of the National Housing Act, 12 U.S.C. § 1701 et seq. In conjunction with the mortgage transaction, appellant received a disclosure statement mandated by the Truth in Lending Act, 15 U.S.C. § 1601 et seq. Appellee, Fleet Real Estate Funding Corporation, subsequently obtained the mortgage by assignment from Fidelity Bond and Mortgage Company in November 1979.

Appellant defaulted upon the mortgage beginning in January of 1985.*fn1 Appellee sent appellant a notice of intention to foreclose on September 10, 1985 and then commenced foreclosure proceedings on October 24, 1985. This appeal followed the trial court's entry of summary judgment for appellee.

[ 366 Pa. Super. Page 120]

A motion for summary judgment may properly be granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Pa.R.C.P. 1035(b). See also Washington Federal Savings & Loan Association v. Stein, 357 Pa. Super. 286, 288-90, 515 A.2d 980, 981 (1986); Rybas v. Wapner, 311 Pa. Super. 50, 54, 457 A.2d 108, 109 (1983). In passing upon a motion for summary judgment, the court must examine the record in the light most favorable to the nonmoving party. Pocono International Raceway, Page 120} Inc. v. Pocono Produce, Inc., 503 Pa. 80, 83, 468 A.2d 468, 470 (1983); Zimmerman v. Zimmerman, 322 Pa. Super. 121, 124, 469 A.2d 212, 213 (1983). "It is not part of the court's function to decide issues of fact but solely to determine whether there is an issue of fact to be tried." Thorsen v. Iron and Glass Bank, 328 Pa. Super. 135, 141, 476 A.2d 928, 931 (1984); Wilk v. Haus, 313 Pa. Super. 479, 482, 460 A.2d 288, 290 (1983). Any doubt must be resolved against the moving party. Washington Federal Savings & Loan Association, supra, 286 Pa. Super. at 288-90, 515 A.2d at 981; Chorba v. Davlisa Enterprises, Inc., 303 Pa. Super. 497, 500, 450 A.2d 36, 38 (1982).

Appellant argues that summary judgment for appellee was improper because she has raised disputed factual issues regarding appellee's servicing of her FHA-insured mortgage. Appellant contends that appellee failed to follow certain regulations and guidelines issued by the Department of Housing and Urban Development (HUD), which administers the National Housing Act's mortgage insurance program. The regulations are set forth at 24 C.F.R. §§ 203.500 through 203.660, while the guidelines are contained in HUD Handbook 4330.1, on Administration of Insured Home Mortgages. Both the regulations and the Handbook provisions identify practices, including methods of forbearance relief, which HUD considers acceptable for lending institutions servicing HUD-insured mortgages. Appellant maintains that she may raise appellee's alleged failure to follow these regulations and Handbook provisions as a defense to this foreclosure action.

While our appellate courts have never addressed this argument, federal courts have determined that the HUD Handbook is merely a statement of HUD policy, which does not have the force of law and which does not establish procedural prerequisites to foreclosure. In Brown v. Lynn, 385 F.Supp. 986 (N.D.Ill.1974) (hereinafter Brown I), plaintiffs contended that the mortgagee defendants had violated legally binding federal regulations by failing to pursue the prescribed alternatives to foreclosure outlined in the existing

[ 366 Pa. Super. Page 121]

HUD Guidebook. The court rejected this contention, stating that:

Brown I, supra, 385 F.Supp. at 998. The plaintiffs subsequently requested clarification and reconsideration of this aspect of the opinion. In Brown v. Lynn, 392 F.Supp. 559 (N.D.Ill.1975) (hereinafter Brown II), the court denied plaintiffs' motion for reconsideration, explaining that:

[i]n the absence of impracticality or emergency, HUD's failure to publish the Guide or Handbook in the Federal Register violates the provisions of § 10.5 [of HUD's own "mini APA"], and consequently these publications cannot constitute rules or regulations. They are thus not legally binding upon the mortgagees and are not enforceable in a lawsuit such as this seeking monetary damages and injunctive relief.

Brown II, supra, 392 F.Supp. at 562. The court also noted that HUD's intention not to make the Handbook obligatory was further reflected in an affidavit submitted in another case by Fred W. Pfaender, Director of Loan Management for HUD and the person responsible for publishing the HUD Handbook. In that affidavit, Pfaender stated that:

The Department does not intend to create, nor to imply the creation of vested rights in private citizens based on a mortgagee's ...


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