What is the Act 6 Foreclosure Notice in Pennsylvania?
The mortgage foreclosure process happens in court. Before foreclosure officially begins, a lender will send a foreclosure notice in Pennsylvania.
If you currently have a Federal Housing Administration (FHA) or U.S. Department of Agriculture (USDA) loan and have entered into default on your mortgage, you might be sent an Act 6 foreclosure notice. This notice means foreclosure is imminent, and a claim will be filed with the court within a month. Individuals with FHA loans generally rent their properties out, meaning their tenants could face losing their homes if a property owner defaults on their mortgage. If you are sent an Act 6 foreclosure notice, you can respond by curing your mortgage, building a defense to stop foreclosure, or filing for bankruptcy in Pennsylvania.
Property owners can reach the Pennsylvania bankruptcy attorneys at Young, Marr, Mallis & Associates by calling (215) 701-6519 to schedule a free case assessment.
When Are Act 6 Foreclosure Notices Sent in Pennsylvania?
Lenders have to follow specific processes in order to foreclose on a property in Pennsylvania. These processes include sending a foreclosure notice to a property owner. The specific notice you receive will be based on the type of loan you have.
When individuals get loans from the U.S. Department of Agriculture or the Federal Housing Administration, they will get Act 6 notices of foreclosure when they have entered into mortgage default. These notices must be sent at least 30 days before a lender can file a foreclosure claim with the court in Pennsylvania. All Pennsylvania foreclosures happen through the court.
Borrowers that have conventional loans with banks and not FHA or USDA loans will get Act 91 foreclosure notice letters. This letter will contain basically the same information as an Act 6 letter, informing you that you are at risk of mortgage foreclosure. Regardless of the type of foreclosure warning you receive, you will have 30 days to respond to the notice. You can cure your mortgage and repay your lender entirely during that time. If you cannot do this, our Bucks County bankruptcy attorneys can negotiate with your lender to reduce your payments and restructure your mortgage agreement so that you no longer risk foreclosure. If your lender is not willing to negotiate, you might have to build a defense against mortgage foreclosure or stop the process using other methods to keep your property in Pennsylvania.
After getting a foreclosure notice, make sure that it is accurate. If you are not in mortgage default, the notice could be a mistake.
How Might an Act 6 Foreclosure Notice Affect a Property Owner in Pennsylvania?
Most often, Act 6 notices of foreclosure impact property owners with Federal Housing Administration loans. These borrowers are typically landlords that get FHA loans, live in their properties for a year, and then rent their properties out to tenants.
Borrowers that have FHA loans likely also rent out their properties. This means that receiving an Act 6 warning of foreclosure could seriously impact your tenants as well as yourself. If your property is foreclosed upon, your tenants may no longer have a place to live. If you are currently living in your property per your FHA loan, you might also risk losing your primary residence.
Federal Housing Administration loans are normally carefully administered. The initial down payment is small so that individuals can purchase properties for lesser amounts and repay lenders partially using the rent they receive from tenants. Suppose a borrower got an FHA loan by working with a bank, but the bank improperly administered the loan, used predatory lending methods in the process, or did not comply with FHA rules surrounding these loans. In such circumstances, homeowners could use such actions as reasons why they should be allowed to keep their properties in Pennsylvania, despite being in mortgage default.
What to Do if You Are Sent an Act 6 Foreclosure Notice in Pennsylvania
If you are sent an Act 6 foreclosure notice letter in the mail in Pennsylvania, you must act quickly. If a homeowner cannot cure their mortgage, they may have to file for bankruptcy to stop mortgage foreclosure.
Although filing for bankruptcy can be daunting for borrowers, it is generally preferable to mortgage foreclosure. Bankruptcy and foreclosure can stay on a borrower’s credit report for a comparable amount of time and similarly impact one’s credit. However, bankruptcy will also help you to settle your debts, while mortgage foreclosure will leave you without your property.
If you file for bankruptcy and have an FHA loan, your tenants can remain in your property without the risk of foreclosure. Furthermore, you can address your outstanding mortgage payments. Although Pennsylvania does provide a homestead exemption in bankruptcy, there are federal exemptions that property owners can use to protect their properties from liquidation during Chapter 7 bankruptcy.
Filing for bankruptcy immediately will be important if you are sent an Act 6 letter. If you wait longer than 30 days to file, the mortgage foreclosure process might begin in court. While debtors might still be permitted to file for bankruptcy if their homes are in foreclosure, doing so could be more difficult. Entering bankruptcy immediately after getting an Act 6 foreclosure notice will allow you to benefit from an automatic stay. This will stop any efforts to foreclose upon your property. If you’ve also received notice of an upcoming sheriff’s sale, that process will be halted when you file for bankruptcy in Pennsylvania.
Sending an Act 6 foreclosure notice is not an empty threat from your lender. This notice should be taken seriously and addressed immediately so that your property is no longer vulnerable to foreclosure.
Contact Our Pennsylvania Lawyers About Your Mortgage Foreclosure Case Today
To have our Philadelphia bankruptcy attorneys review your case for free, call Young, Marr, Mallis & Associates at (215) 701-6519.