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UNITED STATES v. MURPHY

October 14, 1994

UNITED STATES OF AMERICA, on behalf of its Agency, the UNITED STATES DEPARTMENT OF HOUSING & URBAN DEVELOPMENT, Plaintiff
v.
ANNETTE MEDLEY JONES-WILLIAMS and CARL MURPHY, SR., Defendants



The opinion of the court was delivered by: THOMAS I. VANASKIE

 This is an action brought by the United States of America on behalf of the Department of Housing and Urban Development to foreclose on a mortgage encumbering residential property. *fn1" Defendant Annette Medley Jones-Williams ("Jones-Williams") has filed a document titled "Motion Asserting Defenses to Plaintiff's Complaint in Foreclosure," which will be construed as a motion to dismiss the complaint. Also pending before the Court is HUD's motion for summary Judgment. Both Jones-Williams' motion to dismiss and HUD's motion for summary judgment concern the question of whether the notice requirements of the Pennsylvania Loan Interest and Protection Law, 41 P.S. §§ 101 et seq., are applicable to the HUD foreclosure action at issue in this litigation. *fn2" Because it is evident that the Act 6 notice provisions are preempted by federal law, defendant's motion to dismiss, based as it is on an alleged failure to comply with the Act 6 notice requirements, will be denied. Although HUD's position on this issue will be sustained, HUD's summary judgment motion will be denied because this case is not in a proper procedural posture for the entry of summary judgment.

 I. FACTUAL BACKGROUND

 On August 14, 1984, Defendants Jones-Williams and Carl Murphy, Sr. ("Murphy") obtained a loan in the amount of $ 21,900.00 from Colonial Mortgage Service Company Associates, Inc. ("Colonial Mortgage"). The loan was evidenced by a promissory note and secured by a mortgage. The promissory note bore the interest rate of fourteen (14) percent per annum, provided for monthly installments, and contained an acceleration clause. *fn3"

 The property secured by and subject to the mortgage is located at 202 Muench Street, Harrisburg, Pennsylvania. Jones-Williams and Murphy are the current record owners of that property.

 It appears undisputed that defendants' mortgage had been insured by HUD under the National Mousing Act. 12 U.S.C. § 1701, et seq.4 Pursuant to 12 U.S.C. § 1715u and implementing regulations, see 24 C.F.R. §§ 203.640 et seq., the Secretary is authorized to accept assignment of the insured mortgage and suspend monthly mortgage payments for a period of thirty-six (36) months. *fn5"

 It also appears undisputed that defendants Jones-Williams; and Murphy were accepted into this "mortgage assignment program" in November of 1985. The mortgage in question was assigned to HUD in December of 1985. (Exhibit "C" to the brief in support of HUD's summary judgment motion (Dkt. Entry # 8).) HUD suspended monthly mortgage payments for at least thirty-six (36) months.

 The complaint alleges that "the mortgage is in default because Defendants have failed to make monthly payments of principal and interest due on August 1, 1992 and thereafter." (P 11.) Jones-Williams does not appear to contest that the mortgage is in default, but does assert that she has made payments of approximately $ 9,000 against the mortgage. (See Exhibit "C" to the "Brief in Support of Motion for Summary Judgment" (Dkt. Entry 13).)

 HUD contends that it sent to Defendants "a thirty day late letter, a sixty day late letter and a ninety day late letter." (HUD's "Memorandum in Opposition to Motion for Summary Judgment" at 4 (Dkt. Entry # 18).) *fn6" On September 1, 1993, HUD sent by certified mail addressed to Jones-Williams a "NOTICE OF INTENTION TO FORECLOSE AND ACCELERATE MORTGAGE BALANCE AND TO REPORT TO CREDIT BUREAU." (Exhibit "D" to the memorandum in support of HUD's motion for summary judgment (Dkt. Entry # 8).) The Notice, in pertinent part, provided:

 
The minimum amount of money that you will have to pay to prevent foreclosure at this time is $ 10,583.99. If we do not receive this money by, 08/31/93, you will also need to include an additional monthly payment . . .
 
All funds MUST be RECEIVED at OUR office shown on this letterhead not later that [sic] thirty (30) days from the date of this letter. . . .
 
If you do not pay the amount specified [above] WITHIN THIRTY (30) DAYS from the date of this letter, or tender a deed-in-lieu of foreclosure . . . , we will accelerate the mortgage obligation (declare the entire mortgage due and payable immediately). We will do this without further demand and instruct our attorney to start foreclosure proceedings.

 Jones-Williams received the Notice on ...


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