On Thursday, April 30, NPLS will be hosting “Foreclosure Basics Without the Headache” from 2:00 PM- 3:00 PM. This Distance Learning CLE is aimed at educating non-foreclosure practicing attorneys on the foreclosure process. You can register for the Zoom through this link.
Mortgage Foreclosure – Overview of the Process
In late 2024, Ms. Williams lost her job and was unable to make her mortgage payments in full when she received notices from the lender and then a notice of a foreclosure action in Lycoming County. Lycoming is one of the counties in Northeast PA that has a mortgage foreclosure diversion program (Mortgage Foreclosure Program Procedures - Lycoming Law Association).
Ms. Williams applied for legal help and our attorney agreed to help her negotiate a resolution to the foreclosure. Because she was now back to work, she agreed to temporarily pay extra money each month toward the arrears, and if she made on-time payments for six months, the foreclosure action would be marked settled and discontinued. She and her child were relieved to have resolved the case without additional costs and litigation.
In Northeast PA, in addition to Lycoming, the following counties offer diversion programs; Lackawanna, Lehigh, Luzerne, Monroe, and Northampton. Each program has variations, but all seek to provide opportunities to resolve foreclosures for owners who live in their residential property.
The conciliation conference will likely be overseen by a court-appointed attorney who will see if the parties can reach an agreement. After the conference, one of three things can happen: the foreclosure action will continue and the borrower will be removed from the diversion program, the foreclosure proceeding will be stayed to give the parties more time to reach an agreement, or a settlement can be reached, and the foreclosure proceedings will end.
Before Foreclosure Action is filed in Court
If a borrower falls behind on mortgage payments, the lender may start the foreclosure process. The lender must provide the borrower with the proper pre-foreclosure notice. There are two different Pennsylvania laws that require very specific pre-foreclosure notices (Act 6 and Act 91), depending on the type of mortgage the borrower has.
An Act 6 notice is generally given to borrowers who get loans from the Federal Housing Administration or U.S. Department of Agriculture. Act 91 notices apply to those who have conventional loans with banks with loans up to a certain amount. These notices are very important, and include, for example, that the Act 91 notice has deadlines for the homeowner to arrange to meet with a housing counselor to apply for HEMAP assistance, if eligible, and limitations on the Mortgage company’s attorneys’ fees prior to the expiration of the notice period.
HEMAP – Homeowner’s Emergency Mortgage Assistance
Pennsylvania has a loan program called the Homeowner’s Emergency Mortgage Assistance Program (HEMAP) that can provide emergency assistance to homeowners who face foreclosure through no fault of their own, such as unemployment. Borrowers have limited time to apply to the Pennsylvania Housing Finance Agency (PHFA), with the help of certified housing counselors. PHFA then has 60 days to review the application, and, during that time, the lender cannot file foreclosure. HEMAP may help pay arrears or future mortgage payments, and money provided will be a loan that is usually repaid when the property is sold or refinanced.
A different option that would reduce monthly payments is a modification. A modification may lower your interest rate, increase the term, or change your loan type.
Foreclosure Complaint at the Court of Common Pleas
33 days after the mailing of the notice, the lender can file a “Complaint in Mortgage Foreclosure” with the Court of Common Pleas, which the Sheriff will deliver to the borrower’s residence. The borrower will then have 20 days after the service of the complaint to respond to the foreclosure in court. If they do not respond within the 20 days, the mortgage company must send a “10-day warning” letter that says unless the borrower responds within 10 days, it will file a final judgment with the court.
If the borrower does not respond to the complaint, the lender can receive a default judgment. This means the foreclosure can continue because the borrower failed to make any arguments against it. However, if the borrower wants to contest the foreclosure in the Court of Common Pleas, they should contact an attorney as soon as possible to respond to the complaint. The borrower and their attorney will file an answer with the court clerk, which will include the defenses as to why the foreclosure should not take place. After, the foreclosure lawsuit will go to trial in the same court where the complaint was filed.
Sherriff Sale
If the borrower is foreclosed on, their home will be sold at a Sheriff’s sale. The Sheriff will then transfer the deed to the new purchaser between 20 and 40 days. The purchaser can then file an ejectment action with the Court of Common Pleas if the previous resident does not leave voluntarily.
Still, there are certain actions that a borrower can take to potentially avoid a foreclosure. Seeking a legal professional to help defend against the denial of assistance or the foreclosure lawsuit should be one of the first steps taken after the foreclosure notice is delivered.
