Philadelphia Mortgage Foreclosure Lawyer
Foreclosure can be a daunting process. However, an experienced foreclosure defense attorney can help you understand it and achieve the best possible result. Foreclosures in Pennsylvania are typically final since there no right to redeem or recover the property after the sale. You must be proactive if your goal is to keep your home and/or to mitigate losses. Taking critical steps at the right time is crucial, especially when mortgage lenders try to add fees and costs associated with the foreclosure process to the existing debt. Moreover, even if you’re prepared to lose the property, you can be responsible for the balance or deficiency remaining after the foreclosure sale. Hiring legal help can be a pivotal decision to make educated choices and fight for your rights in a difficult foreclosure process. As more time passes and the deeper you get into the foreclosure process, the harder it will be to stop it.
Attorneys of Young Marr & Associates are skilled and experienced foreclosure lawyers with an unwavering commitment to helping you obtain the best results possible. Your initial consultation is free of charge and confidential. We handle foreclosure cases throughout Pennsylvania. Call us at (215) 701-6519 or contact us online to schedule a free consultation.
The Philadelphia Residential Mortgage Foreclosure Program and Conciliation Conference
In order to slow down residential foreclosures due to the housing market crash, in 2008, Philadelphia has instituted the Residential Mortgage Foreclosure Diversion Program. Limited to owner-occupied primary residences, the program was designed to prevent homes from proceeding directly to sheriff’s sale while allowing homeowners an opportunity to find an alternative to foreclosure.
When a mortgage company files a foreclosure and indicates that the property is residential and owner-occupied, the court schedules a conciliation conference along with an order preventing a judgment in favor of the mortgage company until the conciliation conference and all continued conferences have been concluded. Homeowners facing foreclosure whose property was not designated as owner-occupied can file a certificate requesting a conciliation conference. The purpose of this order is to slow down the foreclosure process, offering the homeowner an opportunity to find alternative solutions to cure the mortgage default.
The foreclosure complaint will include paperwork directing the homeowner to call the “Save Your Home Philly Hotline” before their scheduled conference. To assist Philadelphians, the Department of Housing and Community Development will provide the owner with a free housing counselor to review the available home retention options and help them prepare the necessary paperwork.
At the conciliation conference, the homeowner and their housing counselor will meet with a mortgage company representative to discuss potential options. Additionally, lawyers from Volunteers for Indigent Program, Community Legal Services, Philadelphia Legal Assistance, and Senior LAW Center will be available to provide legal advice and counsel to homeowners. If the parties are struggling to agree on a workable option, a judge could be requested. Our experienced Philadelphia mortgage foreclosure defense attorneys are also available to represent you at the conciliation conference.
Generally, conciliation conferences will have one of three outcomes. First, the parties could agree on a retention plan, and the property will be removed from foreclosure. The second typical outcome is that the parties will continue the conference on a later date while they continue to work on options or gather additional paperwork. Finally, if parties are unable to put together a workable retention plan or agree on a continuance, the court will issue an order allowing the mortgage company to proceed with the foreclosure and schedule a sheriff sale.
The purpose of this conciliatory meeting is typically to reach a solution with an agreement that can include:
- Forbearance where there is a time extension allowing the borrower to recover from financial hardship.
- A loan modification where the terms of the loan such as time, interests, and monthly payments are readjusted.
- A plan or schedule of additional monthly sums, usually over a six-month period, that can bring the loan payments current.
The Mortgage Foreclosure Process
Foreclosure is the process where a mortgage lender files a lawsuit against a borrower who has fallen behind in mortgage payments. Properties in Pennsylvania are sold in a sheriff’s sale to the highest third-party bidder or revert back to the foreclosing lender. Foreclosure actions must be preceded by pre-foreclosure notices. There are two pre-foreclosure notice requirements in Pennsylvania:
- “Act 6” or “PA Act 6 Notice” dictate the rules for the initial letter where the foreclosing lender lets the mortgage borrower know about the intention to foreclose the property. This notification must be sent within 60 days of the nonpayment. The borrower has 30 days to set up a payment plan or cure the default and pay late fees, attorney’s fees, and costs.
- An “Act 91” Notice provides Pennsylvania residents with information on Homeowners Emergency Mortgage Assistance Programs.
The Pennsylvania legislature has also enacted statutes to protect debtors from abusive lending and foreclosure practices, including the following:
- The Loan Interest & Protection Law proscribes usurious practices and sets a cap of 6% on interest rates bank can charge.
- The Homeowners’ Emergency Assistance Act is the statute designed to help borrowers facing foreclosure with means to seek financial, housing, and legal assistance. Borrowers in Pennsylvania must receive information about opportunities for federal or state programs giving financial aid to distressed debtors facing foreclosure.
What is a Judicial Foreclosure?
Foreclosures in Philadelphia are judicial, meaning banks and mortgage companies are required to go through the civil court system to foreclose on a property. Some jurisdictions allow nonjudicial foreclosures, where the courts are not involved.
A judicial foreclosure proceeding must be compliant with Pennsylvania Rules of Civil Procedure Sections 1141 through 1164, which guard fairness for both parties and ensures communications are made through official legal hearings and documents.
How Can I Avoid Mortgage Foreclosure?
Asserting your borrower legal rights can lead to a successful foreclosure challenge. The answer to the complaint is a crucial step. In this answer, you state defenses and raise the actions showing the lender imposed abusive fees, and either caused or contributed to creating the mounting costs and arrears leading to the foreclosure.
How Much Time Do I Have to Fight?
It typically takes 120 days to complete an uncontested foreclosure. A contested or challenged foreclosure usually takes longer, especially if delays and extensions are requested. A defendant has a term of 20 days to answer the foreclosure complaint. A default judicial ruling is entered if the complaint is left unanswered. If no answer is furnished with the 20-days, the borrower will receive a 10-day notice stating that failure to answer will result in a default judgment.
Answering the complaint can help protect important rights. The lender can file what is known as a “motion for summary judgment” if you fail to respond to the complaint. The motion for summary judgment is a request for the judge to sign off on the foreclosure sale. The substance of the statement must include specific reasons why there are no issues or questions warranting a prolonged dispute of the foreclosure. The trial is typically scheduled if the lender’s summary judgment request is denied. This part of the process is governed by the Pennsylvania Rules of Civil Procedure Sections 3180 through 3183.
Defenses to Foreclosure Complaints in Philadelphia
The Residential Mortgage Foreclosure Diversion Program assumes a homeowner is legitimately behind on their mortgage payments and is seeking a home retention plan. However, there are circumstances where challenging the mortgage complaint is possible. While successful defenses against mortgage foreclosures are rare, there a few common defenses that can be raised.
A bank or mortgage company could have failed to follow state judicial procedures. While a judge may overlook small errors, serious mistakes that put the homeowner into an unfavorable position might result in a more severe response by the court. However, a successful challenge of this nature will usually only result in a court order to start the process over.
Only the holder of the loan note can file a foreclosure action. If the bank or mortgage company is unable to prove ownership of the loan, especially if the note had been bundled and transferred multiple times, the proper evidentiary documents may not be available. Even though this is a viable defense, the majority of banks are careful about maintaining a chain of possession of the necessary documents.
Errors by the loan servicer regarding a mortgage account may give rise to a defense. For example, crediting payments to another account may mean the account should be current if the payments were applied correctly. By comparing copies of all mortgage payments made and a detailed account history, our attorneys at Young Marr & Associates might be able to find a discrepancy in your favor.
Sheriff Sales in Philadelphia
Foreclosure notices of the scheduled sale or public auction must be posted on the foreclosed property at least 30 days before the scheduled sheriff’s sale takes place. This notice has to be published in a newspaper once a week for three weeks or at least 21 days before the date of the official public auction.
Pennsylvania gives mortgage borrowers ample time to reinstate a mortgage. A sheriff’s sale on a property can be canceled if the debt is satisfied up to an hour before the scheduled time. Sheriff sales of mortgage foreclosures in Philadelphia usually take place on the first Tuesday of each month.
If the Sheriff’s Sale amount does not satisfy the mortgage debt, you may be responsible for a deficiency judgment. A deficiency judgment process is a legal action the foreclosing lender files if there is a shortfall after the foreclosure sale. This action has to be compliant with the Pennsylvania Rules of Civil Procedure Section 8103. The deficiency cannot exceed the fair market value of the property. These actions must be presented within six months of the foreclosure sale.
Deficiency Judgments, Short Sales, Deed in Lieu of Foreclosure and Tax Consequences in Philadelphia Foreclosures
If your property sells at sheriff’s sale and the amount is less than your total mortgage debt, you may face a deficiency judgment. For example, if your total mortgage debt is $350,000 and your house sells at auction for $300,000, your mortgage company can file a legal complaint requesting a judgment of $50,000. This amount is limited by the fair market value of the property. In the above example, if the fair market value of the home was $325,000, then the mortgage company is entitled to a $25,000 deficiency judgment.
A short sale could eliminate a deficiency through agreement. To sell your property through a short sale, the mortgage holder must agree to allow the property to sell at less than the total mortgage debt remaining. To qualify for a short sale, specific circumstances such as a depressed housing market must exist. Pennsylvania does not have any legal restriction against filing a deficiency complaint, so it is crucial to have the bank expressly waive the right to file a deficiency judgment in the short sale agreement.
Your bank may accept your deed instead of filing a foreclosure complaint. In this instance, the deficiency would be the difference between the remaining mortgage balance and the fair market value of the property. While a deed in lieu of foreclosure is deemed to satisfy the full mortgage debt, as with a short sale, there is no restriction in Pennsylvania limiting the bank’s ability to file a complaint for a deficiency judgment. At Young, Marr & Associates, we would work to ensure that any short sale or deed in lieu of foreclosure agreement would protect your interests.
When debt is forgiven, such as a mortgage deficiency, there can be substantial tax consequences. The amount forgiven is considered income, and unless you are entitled to an exemption or exclusion, you are required to pay taxes on it, just like any other income. Tax and foreclosure laws are complicated, so it is important to talk with our experienced Philadelphia Bankruptcy attorneys.
Bankruptcy in Philadelphia to Stop Mortgage Foreclosures
If all the above fail, or do not achieve your desired result, filing a Chapter 13 bankruptcy could provide a method to keep your home. Bankruptcy is a federal court proceeding that stays, or stops, all lower court lawsuits against you. This means that the current foreclosure proceeding, or scheduled sheriff sale, is stopped by filing a bankruptcy petition. This is not a “get out of jail free” card, bankruptcies are hard work and require the assistance of our seasoned bankruptcy attorneys. Depending on your specific financial circumstances, the amount you are behind in your mortgage, and other factors included your income and expenses, a Chapter 13 bankruptcy could allow you to keep your home. At the same time, you pay back your delinquency over three to five years. Call Young, Marr & Associates immediately to thoroughly review the facts of your situation and determine if filing for bankruptcy is the most beneficial, economical, and likely option to keep the home you have worked so hard for over the years.
Our Philadelphia Foreclosure Defense Attorneys Can Help
Foreclosure actions can be incredibly overwhelming. Lenders can be sloppy, and there are blunders and unjust actions an experienced can professional identify while there is time available to fight against the foreclosure. The Pennsylvania Foreclosure attorneys of Young, Marr & Associates can help. Call today at (215) 701-6519 for a free consultation.