PHFA Proposes Use of HAF Funds for Pennsylvania Homeowners in Need of Assistance

The Pennsylvania Housing Finance Agency (PHFA) has set forth a proposal on how to distribute American Rescue Plan Act of 2021 funds to Pennsylvania residents in need of assistance. The attached is the proposal. The public comment period on the proposal will run from September 11, 2021 to October 11, 2021.  Any comments on the proposal may be made to https://www.phfa.org/haf/.

Please be advised that the proposal does not limit proceeding with foreclosures or Sheriff Sales in Pennsylvania.  As drafted, the proposal will require the eligible homeowner to take affirmative steps to reach out and request assistance.

Addressed in the proposal are the eligibility requirements, as well as what expenses qualify for assistance, which does include mortgage payment assistance for qualified individuals. The proposed eligibility of participants is as follows:

  1.  Homeowner must be a natural person or trustee of a living trust that holds title to the property. Heirs, equitable owners, and successors-in-interest, as that term is defined in section 1024.31 of Title 12 of the Code of Federal Regulations (12 CFR 1024.31), meet this ownership requirement. A reverse mortgage, a loan secured by a manufactured home, or a contract for deed (also known as a land contract) may fall within this definition.
  2.  Homeowner must have experienced a Qualified Financial Hardship after January 21, 2020 (including a hardship that began before     January 21, 2020, but continued after that date).
  3.  Homeowner must currently own and occupy the property as their primary residence and be located in Pennsylvania.
  4.  Homeowner must meet the Homeowner Income Eligibility Requirements.
  5.  Homeowner must agree to provide all necessary documentation to satisfy program guidelines within timeframes established by the   State, including self-attestation.
  6.  The original, unpaid principal balance of the homeowner’s first mortgage or housing loan, at the time of origination, was not greater   than the conforming loan limits in effect at time of origination.
  7.  Based on Treasury guidance, HAF funds should supplement other loss-mitigation efforts. Thus, homeowners will be encouraged to   utilize other loss mitigation resources, if available, while simultaneously applying for HAF.

Additionally, there will be income requirements based upon the location of the homeowners property. As PHFA works towards finalizing rules for the program we will keep you updated.

Questions?

Should you have any questions or concerns, please do not hesitate to reach out to Andrew Marley, Managing Attorney for Pennsylvania Foreclosure or our Value Department.

Supreme Court Rules CDC Has Exceeded its Authority with Eviction Moratorium – Eviction Moratorium Held Invalid

August 27, 2021

On September 4, 2020, the CDC issued an order seeking to halt evictions under a statute that appeared to be limited in scope.  Stern & Eisenberg sent the attached announcement setting forth our position that the order was beyond the authority of the CDC.  The efforts of the CDC to extend this inappropriate continuation of authority has finally been put to an end by the Supreme Court.

On Thursday, the Alabama Association of Realtors successfully challenged the CDC Moratoriums whereby the Supreme Court held that the CDC’s action were well beyond the scope of the CDC’s authority.  The CDC’s new moratorium has been held unlawful and is now suspended.  We are glad that the Highest Court has taken decisive action to put an end to the overreach by the CDC.

Attached you will find the Supreme Court’s decision.

For additional information on how Stern & Eisenberg may assist you, please feel free to reach out to us for further detail  Our value team can be reached at (SEValue@SternEisenberg.com).

U.S. Supreme Court Declines to Strike Down National Eviction Moratorium, Warns CDC it Lacks Authority to Extend the Ban Past July 31

By: Lucas Anderson, Esquire

The Supreme Court on June 29 declined to grant an application to vacate a stay of eviction proceedings based upon the nationwide eviction ban imposed by the Centers for Disease Control and Prevention (CDC).  The application was brought by the Alabama Association of Realtors, who contended that the CDC lacks the authority to impose such a sweeping moratorium, which implicates the property rights of thousands of land owners across the country.  Although the court denied the Association’s application, four of the court’s more conservative justices—Thomas, Alito, Gorsuch, and Barrett, voted to vacate the stay.  Justice Brett Kavanaugh joined Chief Justice John Roberts and the court’s liberals denying the application, but his concurring opinion argues that the CDC exceeded its existing statutory authority in issuing the nationwide eviction moratorium.  Kavanaugh wrote that the CDC plans to end the moratorium in a few weeks, allowing for “additional and more orderly distribution of the congressionally appropriated rental assistance funds.”  Kavanaugh concluded that the CDC lacks the authority to extend the eviction ban past July 31 absent “clear and specific congressional authorization (via new legislation).”  The case is Alabama Association of Realtors, et al. v. Department of Health and Human Services, et al., No. 20A169.

Establishment of the Statewide Landlord Tenant Legal Specialist Program in New Jersey

By: Christopher Saliba, Esquire

Through a Notice to the Bar dated June 4, 2021, the Supreme Court of New Jersey approved the establishment of a statewide Landlord Tenant Legal Specialist Program (the “Program”), as recommended by the Judiciary Special Committee on Landlord Tenant. This new Program was created to assist in the review and administrative processing of all landlord-tenant actions, including the current pending cases and the massive influx of new filings expected once the moratorium has expired.

The Program will be administered at the vicinage level under the authority of the Assignment Judge, who will appoint the Landlord Tenant Legal Specialist(s) for the vicinage using the regular recruitment and appointment process for vicinage staff. The Specialists main focus will be to perform nonjudicial administrative functions. Such duties will include:

  • Reviewing landlord tenant pleadings to determine compliance with legal requirements, including the all statutes, Court Rules and any Executive Orders.
  • Conducting case management conferences to collect and confirm information, such as claims and defenses.
  • Conducting settlement conferences in an attempt to reach an amicable resolution without trial.

It is noted that landlords can still file complaints for possession for evictions in the Special Civil Part Landlord-Tenant Division, but no evictions and lockouts can take place, absent certain circumstances.

New Jersey Supreme Court Clarifies Ethical Expectations in Email Communications with Represented Parties and their Attorneys

By: David Lambropoulos, Esquire

 

It is perhaps the first ethical rule taught to recently matriculated law school students:  it is inappropriate and unethical to communicate directly with a party who is represented by an attorney.  This rule has seemingly endured for as long as the practice of law itself and its necessity and propriety are self evident. In New Jersey, this ethical commandment is codified as Rule of Professional Conduct 4.2.  Significantly, this basic mandate predates the creation of email and its subsequent adoption as a generally accepted (and often preferred) mode of communication.

With this canon of legal conduct deeply ingrained into attorneys’ behavior, it does not take much creativity to envision a practical dilemma.  Late one night a dramatically overworked partner is toiling away at his desk and IT happens: an email joins the thousands of others in the partner’s inbox.  This email, however, is different:  it is from an opposing attorney who has copied her client!   A bead of sweat drips down the partner’s furrowed brow…what is he to do?!  Replying all would be as ethically bereft as commingling client funds or double billing, right?!  Believe it or not, the answer depends on where the attorney is practicing.  In some jurisdictions, “replying all” and thereby communicating directly with opposing counsel and her client would constitute an ethical violation.

After receiving an inquiry from an attorney who advised that he often copies his client on emails to opposing counsel, the Supreme Court of New Jersey had cause to consider this issue.  The attorney complained that opposing counsel often utilized  “reply all,” thus directing their responsive email to both the complaining attorney and his client.  The complaining attorney thus suggested that his adversary had committed an ethical violation for which sanctions would be appropriate.  In Advisory Committee on Professional Ethics (“ACPE”) opinion 739, the Supreme Court of New Jersey resoundingly disagreed.  As the court clearly and succinctly stated, “reply all in a group email should not be an ethics trap for the unwary or a ‘gotcha’ moment for opposing counsel.” Thus, lawyers who include their clients in the “to” or “cc” lines of a group email are deemed to have provided implied consent to a “reply all” response from opposing counsel. Likewise, if a lawyer were to initiate a conference call and include her client on the call, the lawyer would be deemed to have impliedly consented to opposing counsel’s communication with both the attorney and her client. In contrast, a lawyer who receives a written letter from opposing counsel that copies the sending lawyer’s client may not send a responsive letter to both the attorney and their client.   The Committee thus expressly recognized the informal and conversational usage of email correspondence and decided  its use should be treated differently (from an ethics perspective)  than a formal letter.

In its March 10, 2021 opinion, the Committee acknowledged that other jurisdictions have rejected the notion of implied consent of represented parties.  Ultimately, however, the Committee concluded that those opinions failed to fully appreciate the informal nature of group email chains or to recognize the unreasonableness of exposing responding lawyers to ethical violations for such conduct.  In the view of the Committee, if a sending lawyer does not want opposing counsel to reply all, they have the ability (and the responsibility) to take the extra step to separately forward or blind copy their client.

Alas, the ethically enlightened partner from our example above is free to “reply all” and continue the Sisyphian daily clearing of his inbox (in New Jersey, at least).  If our partner happened to be practicing in another jurisdiction, however, they would need to review that venue’s local rules to avoid unwittingly drifting into an ethical iceberg.

**This article is provided for informational purposes only and is not intended (and may not be inferred) as providing legal advice. If you need legal advice, please call our office to speak with an attorney or retain alternate counsel of your choosing***

 

David Lambropoulos is the Managing Attorney of Stern & Eisenberg’s New Jersey practice and can be reached at (609) 397-9200.

New Jersey Bill A-5777

By: Salvatore Carollo, Esquire

Just recently, the controversial and fast tracked bill A-5777 originally touted by lawmakers as a feasible plan to terminate New Jersey’s public health emergency over Covid-19 was abruptly pulled from a planned vote scheduled on May 20, 2021 due to rampant backlash from state lawmakers in both major parties as well as opposition from prominent NJ business organizations.  The proposed bill would purportedly revoke nearly all of Gov. Phil Murphy’s executive orders related to the pandemic, but it wouldn’t necessarily eliminate all remaining restrictions as drafted.  Instead, the bill sought to keep 15 of Gov. Murphy’s executive orders until January 2022 – including a moratorium on evictions and utility shutoffs, as well as whatever current masking and social distancing measures were currently in place.

 

The bill in its original form would have also allowed Gov. Murphy to revoke or alter any of his remaining orders before the end of the year without getting any input from the Legislature. This perceived attempt at unfettered power garnered a stark response from Republican lawmakers who remarked that such a measure would continue a “dictatorship” that Gov. Murphy has enjoyed for more than a year and that the bill ‘looks more like Stockholm syndrome than true oversight by a supposedly co-equal branch of government.”  The New Jersey Business & Industry Association (NJBIA) immediately criticized the bill noting that it was bad for business and “did nothing to limit Gov. Phil Murphy’s unilateral power well beyond the health crisis.”  The NJBIA’s chief complaint with the original bill was the continuation of Executive Order 192, which mandates that employers abide by certain health and safety standards through the end of the year.  In practical terms, the continuation of EO 192 means that employers would have to continue daily health screening of workers and it would continue a mask mandate to be imposed indoors in places of business while many other states have gotten rid of the mandate entirely.

 

However, on May 24, 2021, New Jersey announced that it would lift its mask mandate on Friday, May 28, 2021 and no longer require masks indoors after already having lifted its outdoor mask mandate. During the formal announcement, Gov. Murphy stressed that businesses and private offices may continue to require employees and customers to wear masks and they will still be required in certain settings including health care, public transportation, airports, train stations, public-facing state offices and some private worksites.  Plus, masking will continue at public and private elementary schools, child care facilities, and youth summer camps in accordance with CDC recommendations as children under age 12 are not yet eligible to be vaccinated and children 12 to 15 have only been eligible for vaccination for less than two weeks.  New Jersey will also lift its six-foot social distancing requirements on May 28th and remove all indoor gathering limits on June 4, 2021.  All in all, the lifting of these major restrictions translates into a much welcomed return to “normal” for the majority of New Jerseyans who have endured a long road to recovery during this unprecedented pandemic.

Changes to the CFPB’s Regulation F (Debt Collection Practices) Due to the COVID-19 Pandemic

By: Christopher Saliba, Esquire

On April 19, 2021, the Consumer Financial Protection Bureau (“CFPB”) issued an amendment to Regulation F, as identified by Docket CFPB-2021-0008. The interim final rule (“IFR”) now requires that debt collectors provide written notice to certain consumers about temporary eviction protections under the Centers for Disease Control and Prevention (“CDC”)’s eviction moratorium. The IFR also prohibits a debt collector from misrepresenting that a consumer is ineligible for eviction protection under the moratorium.

The IFR provides that debt collectors who evict tenants that may have rights under the CDC moratorium without providing notice of the moratorium or who misrepresent tenants’ rights under the moratorium can be prosecuted for violations of FDCPA and are also subject to private lawsuits by tenants. Debt collectors who are seeking to evict tenants for non-payment of rent must provide tenants who may have rights under the CDC order with clear and conspicuous written notice of those rights. The notice must be provided in writing. Phone calls or electronic notice such as text messages or emails are not sufficient. The notice must be provided on the same date as the eviction notice, or, if no eviction notice is required by law, on the date that the eviction action is filed.

The amendment to the rule will take effect on May 3, 2021.

Some states and localities have adopted their own eviction moratoria, where debt collectors may be required to provide certain notices. The CFPB advised that IFR does not preempt more protective state law.

Federal National Mortgage Association v. Kathleen Halbert

By: Salvatore Carollo, Esquire

On April 9, 2021, the New Jersey Appellate Division issued an unpublished opinion in Federal National Mortgage Association v. Kathleen Halbert, 2021WL 1327160 which affirmed the trial court’s order granting a judgment of eviction in favor of plaintiff and remanded for the court to enter an amended judgment awarding defendant/tenant an additional sum for rent paid during a period of uninhabitability in 2018. The crux of defendant’s appeal involved her challenge with a part of the trial court order directing the plaintiff to pay her $9,000.00 for nine-months’ rent she paid prior to the eviction because the premises had been deemed uninhabitable since January of 2019.

The appellate court took particular note of the evidence presented at trial which in relevant part, established that defendant’s counsel identified fourteen “defective conditions” in a letter submitted to plaintiff’s counsel on December 1, 2016 that he asserted rendered the home uninhabitable. These conditions included damage to the property from pipes that burst due to cold weather, a leaking hot water heater, a septic tank that required cleaning in accordance with the “the town ordinance,” two of three bathrooms that did not function, and an inoperable oven, dishwasher, washer-dryer. Defendant’s correspondence requested remediation of the conditions, but plaintiff failed to take any action in response to the request. Defendant’s counsel submitted additional letter and email requests to plaintiff for remediation which continued to go ignored, including a January 9, 2018 email informing plaintiff’s counsel that the burst pipes caused the septic system to overflow causing sewage to flow into the first floor of the home.

Testimony from the township fire marshal and plaintiff’s own real estate broker demonstrated that the home was found to be “unsanitary for human occupancy, due to the septic backup,” and that plaintiff permitted the property to become unfit for human occupancy in January 2018 and likely prior to that date. Following a bench trial, the court found that the “home is simply uninhabitable,” and that it makes no sense for defendant to live on the second floor, and put water in the toilet so it flushes.” The court also found the home “beyond disgusting,” and determined the believable evidence” established the “property should be vacated due to mold remediation” and that “[t]here’s no question … the place has to be emptied.” As a result, the trial court granted plaintiff’s request for an order of eviction pursuant to N.J.S.A. 2A:18-61.1(g)(2), which permits removal of a tenant where the landlord “seeks to comply with local or State housing inspectors who have cited [the landlord] for substantial violations affecting the health and safety of tenants and it is unfeasible to so comply without removing the tenant. The court also concluded that, as a condition of defendant vacating the premises, plaintiff must reimburse defendant for the rent she paid ($9,000) for the nine-month period from January 2019 through the September 2019 trial. The court did not offer a reason for limiting the rental reimbursement to that period.

On appeal, the court considered the narrow issue raised by defendant that the trial court erred by limiting her recovery of rent paid to the nine-month period prior to trial. The tenant argued that she was entitled to a return of rent paid while the home was uninhabitable and that the court’s award was not supported by the evidence, which shows the property was uninhabitable for the twenty-one-month period commencing on January 8, 2018, when the pipes burst in the home. The appellate court found that the evidence overwhelmingly established that the deplorable conditions at the property rendered it uninhabitable in January 2018 and those conditions were never remediated by plaintiff. Further, the appellate court found no evidentiary support for the trial court’s unexplained decision to limit the return of rent to defendant to the nine-month period between January 2019 and the trial in September. Accordingly, the appellate court affirmed the trial court’s order directing that defendant vacate the property and requiring plaintiff to pay defendant $9,000 for the rent paid from January 2016 through September 2019 and remanded for the lower court to determine the amount of rent paid by defendant from January 2018 through December 2018 and for entry of an amended final judgment also awarding defendant the full amount of rent paid during that period.

New Post-Sale Notice Requirements in New Jersey Mortgage Foreclosures Pursuant to New Jersey Assembly Bill A2964

By: Lucas Anderson, Esquire

 

The New Jersey legislature has recently passed Assembly Bill A2964, which amends N.J.S.A. 46: 10B-51.1 to add an additional post-sale notice requirement.  The statute applies to non-owner occupied properties, and requires lenders who take title to such properties as a result of a sheriff’s sale or deed in lieu of foreclosure to provide notice to the municipality, as well as to any Homeowners Association, Condominium Association, or other common interest community to which the property belongs.

The statutory notice must provide the new owner’s name and address.  If the owner is located out of state, they must designate an in-state agent who is authorized to accept service of process on behalf of the property owner.  The notice must be provided within 10 business days of receipt of the Sheriff’s Deed or Deed in Lieu of Foreclosure.  Stern & Eisenberg will monitor our files to ensure that the appropriate notices are sent.

NEW JERSEY BILL FOCUSED ON ENHANCING FORECLOSURE ASSISTANCE AWARENESS NOW LAW

By: David Lambropoulos, Esquire

On March 15, 2021, Governor Phil Murphy signed into law legislation which was sponsored by Senators Joe Cryan (D-Union) and Troy Singleton (D-Burlington).  The legislation  (S-2961 / A-1063), which becomes effective September 1, 2021, enhances the notification requirements for the state’s foreclosure mediation program.  Specifically, the legislation requires homeowners facing foreclosure to be advised that there is no cost to participate in the mediation program and that their cooperation with a foreclosure default mitigation counselor is a pre-requisite to entry.  This notice must be provided (in English and Spanish) at the time the notice of intent to foreclose is sent and again following the filing of a residential foreclosure complaint. The plain language of the prior and amended legislation excludes application to commercial loans.

One of the Bill’s primary sponsors, Senator Troy Singleton said “During this time, many were struggling with unemployment and could not pay their mortgage. We must give homeowners every tool possible to stay in their homes.  By making sure homeowners are aware of free mediation services, we can help them avoid foreclosure.  We have worked too hard to address the previous foreclosure crisis, and must do all we can to avoid it from happening again.”

The altruistic aim of the bill is clear and the new legislative mandate – which seeks to enhance homeowners’ knowledge of publicly available tools to assist them in times of crisis – is tailored to increase participation in the mediation program.  Naturally, more robust participation in the program should facilitate a higher percentage of settlements and loan workouts, to the benefit of all parties involved.

Practically, the change supplements similar disclosures already required by existing law.  Given the relative simplicity of the additional notice requirements, which expand upon those first enacted in November of 2019, one may well question why the effective date is not for another six months?  Some believe that the effective date of this legislation offers the observer a window into the New Jersey government’s prediction as to when “regular” foreclosure activity will resume, while others believe a more significant lead time is simply a necessity to allow servicers to update their forms and procedures.  Regardless of the macro timeline questions the effective date of the legislation is sure to spur for the servicing industry,  few can argue with the bill’s intent.  Ultimately, the legislation will be viewed as a success if it increases participation in the mediation program and facilitates increased settlement. While these remain welcome propositions for all parties involved, only time will tell if this legislation has delivered upon its noble goals.