Being faced with a mortgage foreclosure, and the possible loss of a home, is a difficult experience. There are a number of options for someone who wants to defend against this.
The process begins with a formal notice from the bank, sent by certified mail. If no response is made in 30 days, the bank can then file a mortgage foreclosure complaint in the court, which is then served by the Sheriff. The homeowner has 20 days to respond: if no response is made, a default judgment can be entered. Thirty days after a judgment is entered, the bank can request that the property be listed for Sheriff’s sale. A further notice is served, and the property is advertised. At the sale, there are typically no buyers other than the bank: the bank can purchase the property for the amount of the mortgage, and will then try to sell it to recover their money.
The Pennsylvania Courts have not been receptive to some of the ideas which have been tried, e.g. “show me the note”, and other technical defenses. There are some things which the bank must prove: that there was a mortgage, that the borrower is in default, and that the required notices were sent.
Some counties have set up alternative procedures. For example, in Blair County, Pennsylvania, cases involving residential mortgages can be heard in mortgage foreclosure court, where options such as modification can be pursued while the case in temporarily stayed. This can be used to give the homeowner a chance to apply for Mortgage Modification, or reach an agreement to avoid foreclosure.
Curing the Default
In Pennsylvania, the homeowner can cure the default, and avoid foreclosure, by paying the amount by which they are behind prior to the sale. That amount can usually be obtained from the bank or their attorneys. The amount tends to increase the longer the process goes on; not only are there additional monthly payments, but the court costs and attorney fees increase, particularly when the property is listed for sale.
A mortgage foreclosure attorney can assist you by reviewing your options for avoiding foreclosure.
Mortgage Modification is an agreement with the bank to rewrite the terms of your mortgage. In some cases, the amount by which you are behind can be brought up to date, and at times, the payment can be lowered. A workout agreement does not change the terms of the loan, but allows an additional amount of time to get caught up. This is also a voluntary process, typically negotiated with the bank or its attorneys.
Act 91 (homeowners emergency mortgage assistance) is a state program, which can allow a homeowner to obtain state assistance to get caught up on their loan. There are some strict time limits, which are explained in the Notice the bank sends to the homeowner. This program works best for persons who had a temporary loss of income, but are now able to resume regular mortgage payments.
A Chapter 13 Bankruptcy Plan allows a homeowner to submit a plan to get caught up on their mortgage. Normally, this would involve resuming regular payments, plus an additional amount which would allow the homeowner to get caught up over a 3 to 5 year period.
If the plan meets the requirements of the bankruptcy code, and is submitted in good faith, it can be confirmed even without the agreement of the bank.