Pennsylvania law protects homeowners by providing a statutory right to cure a defaulted mortgage through Act 6 and Act 91. Pennsylvania law allows homeowners to reinstate a mortgage that has defaulted up until one hour before a sheriff’s sale.
Act 6 only applies to “owners of relatively modest homes” as the current jurisdictional limit for Act 6 is $221,540.
- Act 6 requires mortgage lenders in Pennsylvania to give written notice of its intention to foreclose at least thirty (30) days before it can bring a foreclosure.
- The notice of intention to foreclose must be sent by registered or certified mail to the homeowners last known address.
- The failure to give the homeowner proper Act 6 notice has been held to be a justifiable basis to set aside a sheriff sale. In re: Sharp, 14 B.R. 817 (Bkrtcy. E.D. Pa. 1982). In Sharp, the lender’s failure to give a proper Act 6 notice led to bankruptcy court to set aside the sheriff sale and to order a reconveyance of property to the debtor/homeowner.
- Act 6 also imposes limitations on the amount that can be demanded from a homeowner attempting to tender a cure, particularly through limitations which they establish on the type and amount of fees and charges that can be demanded in addition to the delinquent monthly payments.
- Act 6 prohibits the lender from adding attorney’s fees during the 30-day cure period specified in the notice.
Act 91 created the Homeowner’s Emergency Mortgage Assistance Program (“HEMAP”) which offers financial assistance to homeowners whose loans are in default because of circumstances beyond their control, and who have a reasonable prospect of resuming full mortgage payments in the ensuing 24 to 36 months. For homeowners who qualify, the Pennsylvania Housing Finance Agency (PHFA) pays the arrearage on the mortgage and can provide ongoing, future assistance with the mortgage payments for up two years, and, in times of high unemployment, three years. The assistance is in the form of a loan to the homeowner, secured by a lien on the home.
- No residential foreclosure proceeding can be begin in Pennsylvania unless the homeowner is provided notice of the right to apply for HEMAP assistance, and, if a timely application is submitted, unless PFHA denies the application.
- Act 91 does not have a jurisdictional amount and applies to all real property located within the Commonwealth of Pennsylvania.
- Act 91 requires that the lender provide the homeowner with an itemized breakdown of the reinstatement amount.
- HEMAP applications are submitted to PHFA by PHFA-approved housing counseling agencies whose addresses and telephone numbers are listed on the Act 91 notice. The homeowner has 33 days from the date of postmark of the Act 91 notice, to arrange and attend a “face-to-face meeting” with a housing counselor.
- The foreclosure action is “stayed” or “frozen” while PHFA is processing a homeowner’s HEMAP application.