Pennsylvania Mortgage Foreclosure Defense Lawyer
Buying a home is the biggest purchase that most Pennsylvanians will ever make. But your home is more than just an investment – it’s the center of your family’s life together. Being threatened with foreclosure is a stressful experience, not only because of your emotional attachment to the property, but also because of the financial impacts. The good news is that through bankruptcy, mortgage modification, or other financial strategies, it may be possible to delay or even prevent foreclosure. Serving homeowners throughout Philadelphia and Bucks County, the mortgage foreclosure defense attorneys of Young, Marr, Mallis & Associates are here to help.
At Young, Marr, Mallis & Associates, we understand how much your home means to you – not only in terms of dollars and cents, but also your happy memories and the sense of pride you take in your property. We know how much is at stake in a foreclosure lawsuit, which is why we fight so aggressively to help our clients keep their properties and stay in their homes. Armed with over 30 years of experience representing thousands of individuals, our Bucks County and Philadelphia foreclosure lawyers are committed to helping Pennsylvania homeowners find affordable solutions with their lenders. For a free legal consultation about how to stop foreclosure in Philadelphia or Bucks County, contact us online, or call Young, Marr, Mallis & Associates at (215) 701-6519 today.
Pennsylvania’s Mortgage Foreclosure Process
After a borrower falls behind on their mortgage payments, the foreclosure process begins. When a mortgage borrower has fallen behind on their payments for more than 60 days, they will receive pre-foreclosure notices.
The pre-foreclosure notices that must be sent to mortgage borrowers are known as “Act 6” and “Act 91.” Act 6 is the notice that alerts the mortgage borrower about the foreclosing lender’s intention to foreclose on the property. This notice will be sent less than 60 days after the borrower’s nonpayment of their mortgage. Act 91 is the notice that provides Philadelphia residents with information about HEMAP, the Homeowners’ Emergency Mortgage Assistance Program.
Following the reception of the Act 6 and Act 91 notices, the mortgage borrower will have 30 days to respond. They can respond by setting up a payment plan or curing the mortgage default and the associated fees. The lender will then file a lawsuit against the mortgage borrower, which is known as a judicial foreclosure proceeding; the lender becomes the plaintiff and the mortgage borrower becomes the defendant. During a judicial foreclosure proceeding, the resolution will be determined by a court’s final judgment.
The mortgage borrower will have 20 days to file an answer after they receive notice of the foreclosure complaint. If the mortgage borrower never files an answer or does file an answer but does not include a defense, then their property will be listed as part of a sheriff’s sale. At least 30 days prior to the sale of their property, the mortgage borrower will receive notice of the sale.
There are certain statutes that protect mortgage borrowers from lending practices that are abusive, fraudulent, or usurious. Included in Sections 3180 and Section 3183 of the Pennsylvania Rules of Civil Procedure, these are known as the Loan Interest & Protection Law and the Homeowner’s Emergency Assistance Act. The Loan Interest & Protection Act sets a cap of 6% on the interest that lenders can place on loans taken out by mortgage borrowers. The Homeowner’s Emergency Assistance Act requires lenders to inform mortgage borrowers about programs that provide financial aid for foreclosure.
How to Prevent Foreclosure on Your Home
If you are unwilling to file for bankruptcy, or if bankruptcy does not make financial sense for your present situation, there may be other alternatives that would serve you better. Bankruptcy alternatives for foreclosure prevention include mortgage modifications, forbearance agreements, and short sales.
1. Filing for Bankruptcy to Stop a Foreclosure
There are several methods for postponing or preventing foreclosure on your home. Depending on the circumstances, one possible method is filing for bankruptcy.
There are two main types of personal bankruptcy in Pennsylvania: Chapter 7 bankruptcy (also called “liquidation” or “ordinary” bankruptcy) and Chapter 13 bankruptcy (also called “reorganization” bankruptcy or a “wage earner’s plan”). Chapter 7 affects the Pennsylvania foreclosure process differently than Chapter 13, so it’s important to have a clear understanding of each. Our bankruptcy lawyers handle both chapters, and, if we determine that bankruptcy is the right approach to your foreclosure case, will help you make the right decision about which chapter to file.
Home Foreclosure in Chapter 13
Chapter 13 is generally the stronger of the two bankruptcy chapters when it comes to stopping foreclosure. This is because unlike Chapter 7, Chapter 13 allows “debtors” – the people who file for bankruptcy – to catch up on missed mortgage payments, which are also called “mortgage arrears.”
When you file Chapter 13, our Pennsylvania bankruptcy attorney will propose a plan to repay, to varying extents, your creditors. This plan is what allows you to cure past-due or delinquent mortgage payments. After your plan is filed, your mortgage company will file a proof of claim with the bankruptcy court. The proof of claim will include a detailed payment history, copies of your mortgage documents, and a breakdown of what you owe.
This breakdown should include the mortgage payments you have missed, any escrow advances, and applicable attorney fees if permitted. Our office will carefully review the proof of claim. If any charges should be disputed, we will file an objection with the court. Sometimes the amount listed does not reflect what you actually owe. It is important to note that the burden of proof is on the debtor, so we will have to produce evidence that their claim is inaccurate.
Chapter 13 bankruptcies can be challenging for a debtor. As stated above, there is a catch: you must have enough disposable income to fund the plan, which lasts for three to five years. If you do not have enough disposable income for Chapter 13, you may need to explore Chapter 7 or alternatives to bankruptcy.
Home Foreclosure in Chapter 7
Chapter 7 bankruptcy is a faster, simpler, and easier process than Chapter 13. Typically, a person in Philadelphia or Bucks County will file for Chapter 7 if they have a significant amount of unsecured debt and few assets. In Chapter 7, a debtor might be required to turn over their property to be sold by a court-appointed trustee. Fortunately, there are federal and state exemptions that can be used to protect your property.
The problem with Chapter 7 is that it is not as effective in preventing foreclosure. This is because Chapter 7 does not allow debtors to catch up on missed payments like Chapter 13. Chapter 7 was designed to be a fast and efficient way to eliminate debt – not pay creditors.
What Chapter 7 can do is buy time, due to a feature called an “automatic stay.” An automatic stay is an injunction that goes into effect the minute your bankruptcy petition is filed. The stay creates a legal barrier between you and all your creditors. This legal wall stops all collections actions, such as phone calls and letters. More importantly, it halts all legal actions against you, including foreclosure procedures and sheriff sales.
Unfortunately, there is no mechanism in Chapter 7 to pay back mortgage arrears. Because of this, the foreclosure or sheriff sale will only be stopped temporarily. It is difficult to estimate how long your lender will be prohibited from moving forward with a foreclosure. If the mortgage company does not take any action, then the stay will be in place for the length of your bankruptcy – usually five to six months. However, because you will not be addressing your mortgage default, a lender is entitled to file a motion with the court requesting that your property is removed from the protection of the automatic stay. In nearly every case, there is no defense against this motion. Once it is filed, an order for relief from the stay will be granted by the Bankruptcy Court in approximately thirty days.
However, the additional time you are granted could enable you to reach an agreement with your lender. Additionally, by wiping out various debts, Chapter 7 could potentially free up adequate space in your budget to get current on your mortgage and make steady payments going forward.
2. Mortgage Modification
It may be possible to negotiate a mortgage modification with your lender. Depending on the terms of the loan, the modification might extend the payment period, lower your interest rates, or wipe out a portion of the principal. Without aggressive legal representation, it can be difficult for homeowners to obtain mortgage modification agreements, but our attorneys are highly experienced in these types of negotiations and understand what tactics work.
Filing for bankruptcy does not preclude negotiating a mortgage modification. In many cases, our office can work on a loan modification while you are working to cure the mortgage arrears through bankruptcy. There are some advantages to approaching a loan modification in this way. First, depending on your situation, you might be able to eliminate some unsecured debt that will free up additional funds to make your mortgage payment easier. Second, once you file for bankruptcy, your lender will have legal representation in the bankruptcy case. Working through another attorney is often more effective than working directly with a lender. There are many more people seeking modifications outside of bankruptcy. Because of the high-volume, documents and files are sometimes misplaced or lost. By applying for a modification while in bankruptcy, you decrease the risk of these types of problems.
3. Forbearance Agreement
Unlike a mortgage modification, a forbearance agreement does not change any of the provisions of your loan. Instead, a forbearance agreement temporarily delays payments, generally for a period of up to six months, giving you breathing room to create a long-term plan.
4. Short Sale
A short sale may be able to prevent foreclosure if other methods, such as loan modifications or forbearance agreements, are not available to you. In a successful short sale, the lender accepts a lower amount than the actual worth of the property.
In most cases, a foreclosure is the direct result of a homeowner falling behind on their payments. When this occurs, there usually is no legal defense to stop a foreclosure. However, there are cases where a homeowner is the victim of institutional mistakes or unscrupulous conduct on the part of their lender. A homeowner may have diligently made their payments and their lender misapplied them. Additionally, your mortgage could be an unconscionable contract that you signed under fraudulent circumstances.
In other situations, the mortgage company that foreclosed on your property might not have the proper documentation to prove that they own your mortgage note or have the right to foreclosure. While these circumstances are relatively rare, there are times you need an aggressive Pennsylvania mortgage defense attorney representing your interests. The attorneys and staff at Young, Marr, Mallis & Associates are prepared to assist you in a bankruptcy, negotiating a resolution, or fighting your mortgage lender in court if required.
Residential Mortgage Foreclosure Diversion Programs
In 2008 Philadelphia instituted the Residential Mortgage Foreclosure Diversion Program to slow down residential foreclosures due to the housing market crash. This program is limited to owner-occupied primary residences and designed to prevent homes from proceeding directly to a sheriff’s sale. It offers homeowners an opportunity to find an alternative to foreclosure. While introduced in Philadelphia, many of the surrounding counties have instituted similar programs. Our Pennsylvania bankruptcy will help guide you through your county’s program.
While each county has its own specific rules, the general process is similar. Under most of the programs, when a mortgage company files a foreclosure complaint, the court will schedule a conciliation conference. The purpose of this conference is to allow the homeowner and their lender to find an alternative to foreclosure. The court will also issue an order stating that the foreclosure proceeding will be delayed while the parties try to find a solution.
At the conciliation conference, the homeowner and our experienced mortgage defense attorney will meet with a mortgage company representative, usually another attorney, to review the potential options. In some cases, the parties can agree to request intervention from the court to help achieve a workable resolution.
Typically, conciliation conferences will come to one of three conclusions. First, the parties could agree on a resolution, and the foreclosure process will be halted. If the parties require additional time or updated paperwork is necessary, the parties will agree to continue the conciliation conference for a month or two. Finally, if parties cannot reach a resolution or agree on a continuance, the court will issue an order permitting the mortgage company to proceed with the foreclosure and schedule a sheriff sale.
Mortgage Foreclosure Program and Conciliation Conference in Pennsylvania
The mortgage assistance program offered by the State of Pennsylvania allows residents facing foreclosure to get loans for the purpose of paying their mortgage debt. The mortgage assistance program offers loans of $60,0000, lasting up to 36 months following mortgage delinquency. Participants in the mortgage foreclosure program will have to put as much as 35-40% of their income toward mortgage payments.
Pennsylvania residents facing the possibility of foreclosure also have the possibility of participating in a conciliation conference. During this conference, the mortgage borrower and lender will meet to discuss alternatives to foreclosure in a setting mediated by a housing counselor. Mortgage borrowers may agree upon a forbearance, a loan modification, or a payment plan as part of a conciliation conference.
Our Pennsylvania Mortgage Foreclosure Defense Attorneys Can Help
A foreclosure can be devastating for homeowners that have invested time and money in their property, yet it happens frequently when mortgage borrowers fail to pay their mortgages after financial hardship or unforeseen circumstances such as illnesses or job losses. And while finding out that your hard-earned home may be foreclosed upon can be overwhelming and stressful, it is important that you take action to fight it as quickly as possible.
With the help of a skilled and experienced attorney, homeowners facing the imminent threat of foreclosure mitigate the losses associated with foreclosure or even stop it altogether. Pennsylvania homeowners who are dealing with the possibility of foreclosure are encouraged to contact the Pennsylvania foreclosure attorneys at Young Marr & Associates as soon as possible to learn about their options going forward. An initial consultation is free and can be scheduled by contacting Young Marr & Associates at (215) 701-6519 for more information.