First Step for Mortgage Foreclosure
If you are a Pennsylvania residence who is behind on mortgage payments, it’s important to know how mortgage foreclosure generally works and what the procedures are. If you are generally three full months behind on your mortgage payments, then your mortgage company will send you a letter entitled “Notice of Intention to Foreclose” via regular mail. At the same time, they will also refuse to accept payments from you, unless you are able to fully pay all of the missed months of payments. You will generally have 30 days to respond to your mortgage company’s Notice of Intention to Foreclose document.
Act 91 Notice
After the 30 days has passed, then your mortgage company must send you an “Act 91 Notice”. Act 91 is the Pennsylvania law relating to emergency homeowners assistance through the Pennsylvania Housing Finance Agency (PHFA). You will have 30 days to choose to apply for emergency homeowners funding through PHFA. This is basically a home equity loan to help you catch up on your mortgage arrears. PHFA has to review your application and decide whether you qualify.
Complaint for Mortgage Foreclosure
After the 30 days has passed from the mailing of the Act 91 notice, then your mortgage company can file with your County Court of Common Pleas a “Complaint in Mortgage Foreclosure”. This is the legal document relating to foreclosure. The sheriff will personally deliver this complaint to your residence and serve it on you or one of your family members. You will have 20 days from the date of the personal delivery to respond to the foreclosure in court. If you fail to do that within the 20 day period, then your mortgage company must send you a “10 day warning” letter, indicating that unless you respond within 10 days, then it will file a final judgment with the Court.
At this point, if you have failed to respond at the end of the 10 day period, then the mortgage company can file their judgment and schedule a sheriff’s sale. Your local county will have rules determining the schedule of sheriff’s sales. In Allegheny County for example, where I do the majority of my work, a bank can only schedule a sheriff’s sale two full months into the future. In other words, if the bank obtained a foreclosure judgment on June 15th, then the earliest possible sheriff’s sale would be in early September.
You Can Still File a Chapter 13 Case Up To the Date of the Sheriff’s Sale
If you want to save your home from foreclosure, then meet as quickly as possible with a qualified attorney, who can advise you accordingly. And yes, a Chapter 13 bankruptcy filing will automatically stop a foreclosure or sheriff’s sale from proceeding. Obviously, it’s best to file a Chapter 13 as early as possible in the process in order to minimize your mortgage arrears. But a lot of folks wait until the very end, in the hopes of getting a mortgage loan modification. This is not the best tactic, because the longer you wait, the more difficult it will be to repay the higher amount of mortgage arrears. Remember that you can still file a Chapter 13 case and start to make payments on the mortgage, and still apply for a loan modification at the same time. In fact, this is often the best strategy.
Please call my office at 412-920-6565 to discuss this matter if you have questions.