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The Process
Pennsylvania's judicial foreclosure is not easy for
lenders. All actions to foreclose, accelerate or take possession are stayed
until the borrower is sent an "Act 91" notice giving the borrower 30 days to
meet the lender or a consumer credit agency listed on the notice.
Starting from the day of the first meeting, the borrower
has another 30 days delay to try and resolve the problem by restructuring loan
payments. Otherwise, the borrower can apply for a Homeowner's Emergency
Mortgage Assistance Program Loan and gain an extra 60-day delay on foreclosure
to process the application. If the borrower has had good residential credit for
the past 5 years, is 60 days delinquent and has a reasonable prospect of
resuming loan payments in full within 36 months, then the borrower should be
approved. If the loan is disapproved, or no meetings took place after the first
30 days, the lender may foreclose.
Reimbursement
Under "Act 6," which applies to home loans under
$50,000, the borrower must be sent a 30-day notice of the foreclosure, during
which time attorney's fees are limited to $50. Also, the borrower may pay the
past due payments and stop the foreclosure up to one hour before the bidding at
the sheriff's sale and may do this up to three times in a calendar year.
The Foreclosure Lawsuit
The foreclosure complaint (lawsuit) must be filed and
served on the borrower. It must describe the property to be foreclosed on. It
must state the names of the borrower and the lender, the itemized amounts due,
the fact that the mortgage is in default and a demand for judgment. Although
the lender may state more than one reason to foreclose, the lender may not sue
to collect the money owed on the loan in addition to the suit to force the sale
of the property by foreclosure. The defendant may file a counterclaim against
the lender. The lawsuit however, must be tried before a judge, without a jury.
If the court orders foreclosure, then at least 30 days before foreclosure the
sheriff must give notice by putting a handbill on the property, serving a copy
on the borrower and advertising the property for sale for three consecutive
weeks. The sale takes place a month or two after the court's order.
Redemption
There is no right of redemption after the sale.
Deficiency
Pennsylvania passed the Pennsylvania Deficiency Judgment
Act. The lender may file a lawsuit to collect on the promissory note signed by
the borrower within six months of foreclosure. This lawsuit must be separate
from the foreclosure lawsuit. The borrower has the right to force the lender
to-credit the fair market value of the property sold at the foreclosure sale
against what is owed on the note. The suit must be filed within six months
after the foreclosure. |