PENNSYLVANIA MORTGAGE FORECLOSURE PROCESS
1. Notice of Intent to Foreclose
The first step in the Pennsylvania residential mortgage foreclosure process in Pennsylvania is for the mortgagor/lender to give the mortgagee/borrower a 30 day notice of intention to foreclose. Under Act 6 of 1974, 41 P.S. Section 403, during this 30 day period the lender must give the borrower an opportunity to cure the mortgage default. Further, the Notice of Intent to Foreclose shall contain the following information:
a. The particular obligation or real estate security interest,
b. The nature of the default claimed,
c. The right of the borrower to cure the default,
d. The time within which the Borrower must cure the default,
e. The method(s) by which the borrower’s ownership or possession of the real estate may be terminated and
f. The right of the borrower to transfer the real estate to another person subject to the security interest or to refinance the security obligation.
2. Contents of the Complaint
The Mortgage Complaint is the next step in the foreclosure process. The Complaint is filed by the current holder of the delinquent mortgage in the county in which the real property at subject to the foreclosure is located. In the mortgage foreclosure complaint the lender generally avers the following:
a. Name, address of the Plaintiff,
b. Name, address of the Defendant,
c. The date of the Mortgage,
d. The place of record of the mortgage or a copy thereof,
e. Date of any assignments and parties to the assignment of mortgage
f. Legal Description of the property,
g. Itemization of the amount due
h. Demand for Judgment due.
3. Defending a Mortgage Foreclosure Action:
There are several different ways which our law office defends a Mortgage Foreclosure Action. Our legal strategy depends on the client’s goals and financial ability and likelihood of keeping their home. Below are a few examples of the strategies which we employ to achieve our client’s goals.
CHAPTER 13 BANKRUPTCY
Chapter 13 Bankruptcy is a payment plan and is commonly used to stay mortgage foreclosure or lower overall monthly expenses. A Chapter 13 Plan is filed with the court and later confirmed allowing the Petitioner to repay mortgage arrears or only cents on the dollar of their unsecured debts (credit cards, medical bills, personal loans, collection accounts, and certain tax obligation, among others). A Petitioner usually qualifies for Chapter 13 Bankruptcy protection based on equity in real estate (house) or based on higher income qualifications.
STATE COURT LITIGATION DEFENSE
Litigation strategies depend on the particular situation at hand. Sadek and Cooper has successfully defended Mortgage Foreclosure Actions through State Court Litigation. State Court Litigation defense is generally more effective earlier in the mortgage foreclosure litigation process. Our defense commences with filing an Entry of Appearance on behalf of the homeowner in the Court of Common Pleas and filing Preliminary Objections and/or an Answer, Counterclaim to the Foreclosure Complaint.
A mortgage modification is requested by a mortgagor or borrower usually once they have fallen behind on mortgage payments or in danger of mortgage foreclosure proceedings. A successful modification generally takes 3-8 months to complete. A mortgage modification may include placing mortgage arrears, interest, delinquent taxes and/or insurance in the principal balance. Further, a mortgage modification may reduce the interest rate on the subject loan. Although a mortgage modification can lead to a reduced monthly mortgage expenses, generally it results in a lengthened mortgage repayment term. Our office has handled mortgage modifications for both residential and investment properties. Lastly, mortgage modifications are often granted during the course of a Chapter 7 or Chapter 13 Bankruptcy Proceeding.
PRE-FORECLOSURE FORBEARANCE PLAN
Prior to a mortgage foreclosure taking place the mortgagee may be amenable to postponing a sale based on the reinstatement amount being repaid over a short period of time. The pre-foreclosure forbearance plan repayment is different than a modification in that it does not alter the overall terms of the loan. A pre-foreclosure forbearance plan is usually extended up to 6 months and requires that regular monthly mortgage payments plus the amount needed to cure all arrearages be paid within the time agreed upon.
A short sale of property is a tool used to stay an imminent mortgage foreclosure. A short sale is where the mortgagor sells the subject property “short” of the mortgage amount. For example, if one owes $100,000.00 on their home, but they have an agreement of sale states a purchase price of $80,000.00, a short sale may be a possibility. A short sale has several obstacles, primarily; it must be approved by the mortgagee. Further, the sale is dependent on the potential buyer receiving a mortgage in order to buy the subject property.
If you have any questions regarding defending a Mortgage Foreclosure Proceeding call the lawyers at Sadek & Cooper at 215-545-0008. We offer a FREE and confidential consultation with one of our lawyers to discuss your situation in detail and devise a legal strategy which best suits your needs.