Pennsylvania Foreclosure Laws
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Pennsylvania is referred to as a lien theory state wherein the property will stay as guarantee for the loan in question. A mortgage is the document through which the lien is placed on the property.
Lenders in Pennsylvania go through a judicial foreclosure process that is pursued through the court and the final ruling on the foreclosure is made by the court. The sale of the property then is through a publicly notified sale. The Court of Common Pleas within the county where the property is situated has jurisdiction over foreclosures in that area. A complaint, along with a lis pendens (a legal document which is used to provide public notice about the property being foreclosed) needs to be registered with the prothonotary in the Court of Common Pleas.
The legal paperwork is called mortgage or note, and in commercial transactions, a security agreement. There are instances when the security agreement is fused with the mortgage document. In order to authenticate the loan in question and its repayment terms, which are included in the note, a mortgage needs to be filed.
With the schedule of the court in mind, it generally takes about 120 days for an uncontested foreclosure to come into effect. If the borrower chooses to contest the action, and if a delay or adjournment of the hearing is sought, or if the borrower ends up filing for bankruptcy, the process can be delayed.
A defendant is given twenty days for filing an answer in return to a foreclosure complaint, failing which, a default is entered. The borrower in default has to be given a minimum of a ten day notice prior to entering the default, and a thirty day notice prior to the foreclosure sale being conducted by a sheriff.
Pennsylvania has two specific requirements for pre-foreclosure.
As per the Act 6 notice, a notice with intention of foreclosure must be sent through certified mail within sixty days of the occurrence of a default. This usually gives the borrowers thirty days to work on setting up payment plans or curing the default.
As per the Act 91 notice, which needs to be sent through regular-mail with a mailing certificate, the borrower in default is advised of assistance that might be available as part of a loan through HEMAP (Homeowners Emergency Mortgage Assistance Program) in order to cure the default in question.
Both these notices are applied differently to different loans guaranteed by the government. FHA default loans which are under $50,000 generally require an Act 6 notice whereas Conventional/VA loans under $50,000 require an Act 91 notice.
There is no statutory right of redemption in place in Pennsylvania where a foreclosed property can be reclaimed by the owner upon full payment of the balance on the unpaid loan and costs.
If the amount on the loan, which is secured by the mortgage in question, is more than what the property sells for at the public sale, then the lender can obtain a deficiency judgment. The borrower then owes to the lender the difference of what the property sells for at the public auction and the original loan amount. A deficiency action has to be brought about within a period of six months from the sale of the foreclosure.
Foreclosures in Pennsylvania are governed by laws that are part of Pa. R.C.P. 1141-1164 (Actions to Foreclose a Mortgage), 8103 et. seq. (Deficiency Judgments) and 3180-3183 (Judgments in Mortgage Foreclosure). (Rules for civil procedure).
The Homeowners Emergency Assistance Act, 35 P.S. § 1680.401 et. seq. (Act 91) and the Loan Interest & Protection Law, 41 P.S. §101 et. seq. (Act 6) are statutory references.
