Philadelphia foreclosure attorney David M. Offen offers this Guide to your rights under Philadelphia law.
Are you at risk of foreclosure?
During the 2008 Financial crisis, the Federal Consumer Financial Protection Bureau found that mortgage servicers were committing frequent and egregious errors in the foreclosure process. Federal guidelines issued in 2014 are meant to ensure borrowers understand the consequences of missed payments and the alternative options available to them.
PA foreclosure laws and procedures are similar in every county.
From the time your first payment is missed:
- Within 36 days, your lender must attempt to call you to discuss loss mitigation options like refinancing or a short sale.
- Within 45 days, the lender must notify you of your options in writing.
- After 90 days, the lender will send an Act 91 notice, telling you they intend to foreclose and listing state mortgage assistance programs.
- After 120 days your lender can begin the foreclosure process.
As a homeowner, don’t ignore notices or calls from your lender. They are indicators that the lender is considering foreclosure, and can be an important early notice.
When can the foreclosure process begin?
After 120 days of delinquency, your bank can file with the courts for foreclosure, but they must express their intent to do so no later than 30 days before filing.
In Pennsylvania, the notice must include information on the PA Homeowner’s Emergency Assistance Program, known as an Act 91 notice. This is the last chance the lender must give you to bring your mortgage out of delinquency.
What is the Homeowner’s Emergency Mortgage Assistance Program?
Pennsylvania’s housing finance agency has a program to issue mortgage assistance loans. If a homeowner qualifies for this program, their lender will be barred from proceeding with foreclosure as long as the homeowner makes their HEMAP payments.
- The program can loan up to $60,000 to qualifying homeowners.
- Homeowners are expected to pay up to 40% of monthly income towards HEMAP.
- Loans can last up to 36 months from the date of delinquency.
If you are a Pennsylvania homeowner and you fell behind on your mortgage due to a short-term emergency, HEMAP could help save your home.
What are the steps in the foreclosure process?
Pennsylvania’s foreclosure process follows a similar course wherever you are in the state.
- After the first missed mortgage payment, your lender will begin sending notices and calling you.
- 30 days before your mortgage becomes 120 days delinquent, the lender will send you an Act 91 notice informing you of the Homeowner’s Assistance program and listing the Housing Finance Agency offices for your county.
- 120 Days after the mortgage has become delinquent, the bank will file for foreclosure with the court in the county in which the property is located.
- After filing, the bank must serve court papers, typically through the county sheriff.
- In many counties, including Philadelphia, homeowners may be entitled to a Conciliation Conference and/or a temporary stay of the foreclosure proceeding. Delaware County offers a 30-day stay, Fayette County a 90-day stay, and many other counties have special diversion programs for homeowners to attempt to rectify their delinquent mortgage.
- The homeowner will have 30 days to legally respond to the foreclosure with any objections or counterclaims.
- After a court’s judgment in favor of the lender, the property can be listed for Sheriff’s Sale. The sheriff must give all occupants at least 30 days written notice, posted both on the property and in the county sheriff’s office.
- If the property remains occupied after the Sheriff’s Sale, a complaint in ejectment must be filed. This civil action could end with a legal eviction served by the Sheriff.
- Tenants residing in a foreclosed property must be given at least 90 days notice, and in certain cases may remain until the end of their lease.
How long does foreclosure take in PA?
The PA foreclosure process can take anywhere from several months to over a year, depending on the specific circumstances and any legal challenge to the foreclosure filing.
- From the first missed payment, it takes 120 days before the bank can file a foreclosure.
- From the date you receive an Act 91 notice of intent, the foreclosure can (and barring holidays or weekends usually will) be filed in 30 days.
- After you have been served with the foreclosure complaint, you will have 30 days to respond to the court filing.
- Contested foreclosures can take months, depending on the court’s schedule and how many motions are filed.
- From the final judgment of the court, the Sheriff must give the residents 30 days notice of the sale date, and if they do not leave after the sale, the purchaser can then start eviction proceedings.
- Tenants with a lease must be given at least 90 days notice, though it is possible they could be allowed to stay until the end of their lease.
Can you stop the foreclosure process in PA?
Yes, there are several ways to stop or stay a foreclosure.
- Bringing the mortgage current within 30 days of being notified of the intent to foreclose will prevent a foreclosure from proceeding.
- State and Federal programs, like PA’s Emergency Mortgage Assistance, will temporarily stop foreclosure until the program successfully brings the mortgage current or the homeowner fails to make a payment to the program.
- Several Pennsylvania counties offer conciliation conferences and potential stays of foreclosure to bring the mortgage current.
- Filing for bankruptcy will freeze the foreclosure (and any other debt-related lawsuits) from proceeding with a temporary stay.
- Filing for Chapter 13 Bankruptcy can freeze the foreclosure and give you up to 5 years to get current on the mortgage while resuming your regular mortgage payments.
Is Pennsylvania a redemption state?
Some states allow homeowners a redemption period after foreclosure, during which they can buy back their home. Delaware and New Jersey offer limited rights of redemption.
Unfortunately, neighboring Pennsylvania only allows redemption after a home is auctioned in a sheriff’s tax sale. There is no redemption statute for foreclosed houses.
Have you considered bankruptcy?
Many people are unaware that declaring bankruptcy can actually save their home. Filing bankruptcy will stop an ongoing foreclosure or prevent a lender from filing a foreclosure.
Chapter 7 is the most common type of bankruptcy, in which a person’s debts are discharged. A Chapter 7 Bankruptcy filing is typically filed when there is a foreclosure if the person intends to get fully current on their mortgage or if they intend to walk away from the home. Chapter 7 can discharge personal loans, credit card debt and many other types of bills.
Chapter 13 bankruptcy allows you to create a repayment plan to get caught up on your mortgage. It is usually based on your disposable income, and will also discharge unsecured debts upon its successful completion. Both types of bankruptcy provide many benefits and the ability to allow you to get a fresh financial start.
Philadelphia Foreclosure Lawyer Saves Seniors’ House
An example of how bankruptcy stops the Pennsylvania foreclosure process:
Someone recently came in to see us whose father and mother’s house was in foreclosure. They were also in arrears on their car payment loan. The father was retired and the mother was on social security, and the mortgage company was not making it easy for them – they fell behind and the mortgage company refused to work with them unless the mortgage was completely paid up to date.
We advised that we could stop the foreclosure. He brought his parents back in to see us and we filed a Chapter 13 case, which stopped the foreclosure process immediately due to the “automatic stay,” which “stays” or stops and collection efforts, including lawsuits. Due to the automatic stay, the auto loan company was prohibited from repossessing the car. We proposed a plan providing for payment of the mortgage and car arrears over five years, and the couple was able to catch up and save their home and their car.
Contact us to schedule your free, no-obligation consultation with a foreclosure lawyer in Philadelphia
For a bankruptcy and/or foreclosure consultation in Philadelphia and surrounding areas, call Philadelphia foreclosure lawyer David M. Offen at (215) 625-9600. Our firm helps people save their homes and get a fresh start!