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October 14, 1994


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.


 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 September 3, 1993.


 A Complaint in Mortgage Foreclosure was filed in this Court on November 3, 1993. *fn7" Named as Defendants were Jones-Williams and Murphy, the co-owners of the encumbered property.

 Murphy failed to answer the Complaint. *fn8" On January 6, 1994, this Court granted HUD's Motion for Service by Posting (Dkt. Entry # 9) with respect to Murphy. On April 25, 1994, a Default (Dkt. Entry # 24) was entered against Murphy and on May 4, 1994, Judgment (Dkt. Entry # 25) was entered in favor of HUD and against Murphy, only, in the amount of $ 44,127.92 plus interest and for foreclosure and sale of the mortgaged property. *fn9"

 On November 29, 1993, Jones-Williams filed a "Motion Asserting Defenses to Plaintiff's Complaint in Foreclosure." (Dkt. Entry # 4). *fn10" A supporting brief was filed on December 9, 1993. (Dkt. Entry # 5.)

 Jones-Williams' motion sought dismissal for insufficiency of process (F.R.C.P. 12(b)(4), insufficiency of service of process (F.R.C.P. 12(b)(5), and lack of subject matter jurisdiction (F.R.C.P. 12(b)(1), based upon HUD's alleged failure to comply with the notice requirements set forth in 41 P.S. § 403(c). Specifically, Jones-Williams contends that the HUD Notice was deficient because it did not clearly and conspicuously state the debtor's right to cure the default; did not state exactly what performance and sum of money must be tendered to cure the default; did not state the method or methods by which the debtor's ownership could be terminated; and did not apprise the debtor of her right to transfer the real estate to another person or refinance the obligation. Jones-Williams also asserts that the notice of debtor's right to prevent foreclosure was late and, in effect, no notice was given. *fn11"

 On December 30, 1993, HUD filed a Motion for Summary Judgment (Dkt. Entry # 7). HUD asserts that because the mortgage in question is administered under a federal program, Pennsylvania notice requirements are superseded by the federal notice requirements, which it claims to have satisfied.

 On January 13, 1994, Jones-Williams filed a document captioned "Brief in Support of Motion for Summary Judgment" (Dkt. Entry # 13), which will be construed as having been submitted in opposition to HUD's summary judgment motion. Jones-Williams contends that this case "is not ripe for summary judgment." (Id. at p.4.) She notes, in this regard, that she has not yet answered the Complaint and "there are disputes as to the facts of the case as set forth in plaintiff's Complaint." (Id.) *fn12" In addition, Jones-Williams attempts to distinguish cases cited by HUD in support of the proposition that the Pennsylvania notice requirements are superseded by Federal law. *fn13"

  On February 14, 1994, HUD filed a document titled "Memorandum in Opposition to the Motion for Summary Judgment" (Dkt. Entry # 18), which will be treated as a Reply Brief in Support of HUD's Summary Judgment Motion. The issue to be resolved on the pending motions of Jones-Williams and HUD is whether the notice requirements of 41 P.S. § 403(c) are applicable here.


 "The Secretary [of HUD] is authorized to foreclose on any property or commence any action to protect or enforce any right conferred upon him by . . . law . . . ." 42 U.S.C. § 3535(i)(1). "Federal law governs questions involving the rights of the United States arising under nationwide federal programs." United States v. Kimbell Foods, Inc., 440 U.S. 715, 726, 59 L. Ed. 2d 711, 99 S. Ct. 1448 (1979). "HUD has adopted procedures which comport with due process pursuant to which a mortgagor receives adequate notice and an opportunity to be heard prior to any foreclosure." United States v. Stohr, 1993 U.S. Dist. LEXIS 2228 (E.D.Pa. 1993). *fn14"

 In United States v. Black, 622 F. Supp. 669 (W.D.Pa. 1985), the court addressed the argument that HUD failed to comply with Pennsylvania statutes which imposed preconditions to the institution of an action in mortgage foreclosure. The court held that federal law preempted state law imposing conditions to a mortgage foreclosure action where a federal agency sought foreclosure in a federal district court pursuant to federal statutes and regulations. The court observed, "it is an established rule that the federal law as administered by United States Courts governs the remedies available upon default of a federally held or insured loan." Id. at 673. See also, United States v. Scholnick, 606 F.2d 160 (6th Cir. 1979).

 In Kimbell the Supreme Court identified three factors that guide the determination of whether Congress intended to have state law apply to certain federal programs:


1) Whether the nature of the federal program demands a single, nationwide standard;


2) Whether application of state law would frustrate the specific objectives of the federal program; and


3) The extent to which application of the federal rule would disrupt commercial relationships based on state laws. 440 U.S. at 728-729.

 Kimbell dealt with the relative priority of private and contractual liens arising from federal loan programs. The Court found that priority was largely determined under state law because plaintiffs were third-party lien holders and not federal program participants. By way of contrast, where the parties to an action are the United States and a debtor, and no third party commercial interests are affected, "the factors that favor applying state law are considerably weakened if not removed entirely from consideration." United States v. Spears, 859 F.2d 284, 290 (3rd Cir. 1988); Ayers v. Philadelphia Housing Authority, 908 F.2d 1184, 1191 (3rd Cir. 1990), cert. denied, 498 U.S. 1103, 112 L. Ed. 2d 1086, 111 S. Ct. 1003 (1991).

 Spears concerned issues similar to those in the case at hand. The defendants were a husband and wife who obtained their original mortgage from the Farmers Home Administration ("FmHA"). *fn15" In October 1982 and January 1983, the FmMA advised the defendants that they had violated the mortgage agreement and could either sell the property or refinance the mortgage and pay the government in full. In March 1984, FmHA informed defendant that she had defaulted on the mortgage.

 Foreclosure proceedings began in the district court in the summer of 1985. The district court held that FmMA was required to comply with two Pennsylvania statutes, Act 6, 41 P.S. § 401, et seq., and Act 91 of 1983, 35 P.S. § 1680.401c. Relying on Kimbell, the district court found that the statutes neither afforded additional substantive benefits to FmMA mortgagors nor imposed a substantial administrative burden on the government. Spears, 859 F.2d at 285-286.

 On appeal, the Third Circuit held that FmMA did not need to comply with Pennsylvania state statutes, including Act 6, when it chose to utilize the federal court to foreclose on a mortgage in Pennsylvania. In our Court of Appeals' analysis, the critical factor in determining whether state law should control is whether there is a "threat to commercial relationships founded on expectations of third parties relying on existing state statutes." Id. at 290. The court stated, "because no commercial interests or third parties are affected by the utilization of federal procedures, the rationale [in Kimbell]. . . is not controlling. . . . This case presents no compelling reason [to adopt state law]." Id. at 291.

 Contrary to the assertions of Jones-Williams, the analysis in Spears is fully applicable here. While, as Jones-Williams notes, the Third Circuit questioned the applicability of Act 6 to the facts presented in Spears, 859 F.2d at 288, the Court specifically held that the federal agency "need not comply with Act 6 . . . whenever it chooses to utilize the federal court to foreclose on a mortgage in Pennsylvania." Id. at 291 (emphasis added). Moreover, our Court of Appeals did not hold, as Jones-Williams suggests, that FmHA procedures offered greater procedural protections than Act 6. Instead the Court of Appeals noted that payment moratorium provisions and "interest credit subsidies" did not seem to be "less favorable than the state refinancing scheme." Id. at 291. In any event, the Third Circuit ruling in Spears did not turn upon a comparison of whether state or federal law provided greater procedural protections.

 As in Spears, this case does not present any "threat to commercial relationships founded on expectations of third parties relying on existing state statutes." Id. at 290. Since, as the Court of Appeals has held, "the FmHA need not comply with Act 6 . . . whenever it chooses to utilize the federal court to foreclose on a mortgage in Pennsylvania," Id. at 291, HUD, in administering a similar federal loan program, need not comply with Act 6.

 In short, "the respective rights and obligations of a federal mortgagee and a defaulting mortgagor under a national housing program . . . are governed by federal law which preempts state laws in the field, such as Act 6." Stohr, 1993 U.S. Dist. Lexis 2228, 4-5. Accordingly, Jones-Williams motion to dismiss will be denied.

 As noted above, Jones-Williams has not yet answered the complaint and the record in this case does not include evidence to support all of HUD's factual assertions. Accordingly, HUD's summary judgment motion will be denied, without prejudice to its right to move for summary judgment after Jones-Williams has answered the complaint. *fn16"

 An appropriate Order is attached.

 Thomas I. Vanaskie

 United States District Court

 DATED: October 14, 1994


 NOW, THIS 14th DAY OF OCTOBER, 1994, for the reasons set forth in the accompanying Memorandum, IT IS HEREBY ORDERED:

 1. The Motion of Defendant Annette Medley Jones-Williams to Dismiss (Dkt. Entry # 4) is DENIED.

 2. Plaintiff's Motion for Summary Judgment (Dkt. Entry # 7) is DENIED.

 3. In accordance with Rule 12(a)(4) of the Federal Rules of Civil Procedure, defendant Annette Medley Jones-Williams shall file an answer to the Complaint within ten (10) days after receipt of this Order.

 4. Nothing herein is intended to preclude plaintiff or defendant from moving for summary judgment based upon an adequate evidentiary record.

 Thomas I. Vanaskie

 United States District Judge

 DATED: October 14, 1994

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