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.
I have already filed bankruptcy but was trying to hold on to my home for as long as possible. I did the mortgage modification prior to my filing bankruptcy. I just can’t keep up with the payments. The house is beautiful and in a nice neighborhood. I was considering listing the house which I understand will stall a foreclosure. Is that true?
If you list the property for sale, it will not stop the mortgage company from pursuing a foreclosure. Now if you have a signed sales agreement with a prospective buyer, then yes, your mortgage company will likely delay a sheriff’s sale or mortgage foreclosure for a short period of time. But merely having a listing agreement won’t be enough to stall them.
The other problem you have is that about 9 per cent of all homes in Allegheny County are vacant right now. There’s a huge backlog of real estate inventory out there, and mortgage companies are letting a lot of properties remain vacant. This is enormously frustrating, because if you have filed bankruptcy and "surrendered" your home, you cannot presume that the mortgage company has pursued a foreclosure. In that scenario, you are still the legal owner of the property and your local township will demand that you maintain the property! So, I like the fact that you have remained in the property for now. Let me know if you have more questions.
Thanks for responding. I don’t live in Allegheny county but I would imagine it is the same almost everywhere. Wouldn’t I get a notice that they have foreclosed or why would I be out of the house? I mean no sarcasm – just concerned. I have a friend (seriously) who is looking to buy via short sale and the home owners have been in the house for almost 18 months and still counting without making a payment. I understand their situation is unique in that they own two homes – perhaps through the same bank and are only selling one. That is a guess at this point. I was considering higher a negotiator to handle the transactions between the bank and myself. This particular couple is also handling the sale of their home this way. What are your thoughts? It just seems that it has been taking banks longer to foreclose. I am just really worried and would prefer a short sale as I understand that affects your credit for two years vs. seven. Now considering that I have filed bankruptcy my credit is already ruined for 7 years. My situation involves that I went from a two-income home to my income alone. It’s just too much for me to do.
I filed a chapter 13 already ,then I filed for a loan modification. Bc im still in the home but cant afford the mortgage. Due to the decrease in myincome. I havent heard anything from the mortgage company(Phfa).its been 6months.They wont return my calls and I dont know if im in foreclosure or not. They havent sent any noticed.Can they just put me out?
My house is in Lebanon County, PA. It’s been on the market since July with absolutely no interest. The house is no longer occupied because I couldn’t even afford to heat it. Currently 3 months behind on mortgage. There is now damage to the house due to the artic temperatures we’ve gotten causing busting pipes. My question is, if it ends up getting foreclosed, can the mortgage company come back on me for any of these damages? Are there costs to a me related to a foreclosure?
I have someone who is trying to rent his home. He told me that the house is getting ready to go into foreclosure and it could ale anywhere from 2-4 years for Tye foreclosure process. The price of rent seems alil too good to be true. How would I knw if this is a scam or not. Should I temp take the house or should I run the other way? Please help me.
In response to Gina, you should probably hire an attorney to investigate the prospects of the foreclosure. I am not sure how someone can know that the foreclosure process is going to take 2 to 4 years. Why? For example, if this property is in Allegheny County, I might be able to tell what the status of the foreclosure is, but I wouldn’t be able to predict that it could take 2 to 4 years. That seems like an outrageous statement. I would be very cautious if I were you,
Dear Shawn we are in a foreclosure beginning and want to try to sell our home . Is that possible?
Dalia, yes it is permitted but once you find a buyer and you have a signed sales agreement, then you should immediately call the mortgage company to let them know about the imminent closing. It’s always risky because there’s going to be urgency in terms of the sales process. Good luck on things!