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.
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