How does the foreclosure process work?

The following is an overview of the foreclosure process in Pennsylvania. It should not be construed as legal advice, but instead as a guide to better understand foreclosure. If your home is in foreclosure, or headed towards foreclosure, you should immediately contact a foreclosure attorney. Time is of the essence, as will become clear below.

I will be happy to sit down with you in my office and discuss if keeping your home is a viable option, and if it is, the best plan of action. I will also help you plan your future living arrangements if keeping your home out of foreclosure is not possible.

A typical foreclosure has numerous steps and required procedures, but most normally begin after a homeowner falls three months behind on payments. Once you have fallen three months behind on your mortgage, the following process may begin at any time the lender decides to proceed. The following is the typical steps involved in a foreclosure.

Please refer to our glossary section for further explanation of any unfamiliar terms.


1. Notice of intention to foreclose (act 6 notice)

After three months of missed payments, the lender may send (by certified mail) the Act 6 Notice of Intention to Foreclose. This gives the homeowner 30 days to negotiate a repayment plan with the lender or cure the total amount in default.

The Act 6 Notice provided a brief time for the borrower before the legal foreclosure process can begin. The lender cannot collect attorney fees during this period. Once again, this time frame is only 30 days, so if you have received an Act 6 Notice, you should contact an experienced foreclosure or bankruptcy attorney immediately.


2. Act 91 notice (HEMAP)

The homeowner will also receive the Act 91 Notice which may provide a temporary (33 days from the date of the notice) stay on foreclosure.

Act 91 established HEMAP, or the Homeowners' Emergency Mortgage Assistance Program, which was intended to help homeowners who are more than 60 days in default on their mortgage to keep their homes. Act 91 gives the homeowner 33 days to arrange and attend a "face-to-face" meeting with an approved credit counseling agency. If the homeowner meets with an approved credit counseling agency, the lender cannot take any legal action (including foreclosure) for 30 days after the meeting.

To apply for mortgage assistance, the borrower must fill out, sign, and file a completed Homeowners' Emergency Mortgage Assistance Program Application with an approved credit counseling agency. These agencies will help assist you in completing the application and filing it with the Pennsylvania Housing Finance Agency.

What is the standard for receiving Act 91 assistance? You must prove your default was for reasons beyond your control, and that you have the reasonable ability to repay the default.

This standard may be difficult to meet. Also, funding for the program is limited and has even been suspended in recent years. The Federal protections of Chapter 13 bankruptcy may be your best option to organize a repayment. 


3. what happens after the notices expire? the foreclosure complaint.

If you do not attempt to arrange a repayment or apply for assistance under Act 6 or Act 91, and both notices expire, the lender will likely begin the legal process by filing a Foreclosure Complaint in the Court of Common Pleas. The complaint is filed in the Prothonotary's office and must be served by a sheriff. The sheriff will attempt to personally serve the homeowner, and if they are unable to do so, the sheriff will serve the homeowner in some other fashion permitted by the Court (registered mail, posting, publication, etc.).

The homeowner has 20 days to respond to this complaint. If no formal responses is filed, an additional 10 days is granted automatically by the Court. Once this 10 days expires (30 days total from the service of the complaint) the lender will be granted a default judgment.


4. sheriff sale

After a judgment is entered in the lender's favor (a default judgement will occur if no answer to the complaint is filed) the lender will next schedule a sheriff sale.

The homeowner will receive 30 days notice before the sheriff's sale, and there are various and notice of the sale will be published in a local newspaper and legal publication.

At this point, it is NOT too late to save your home through a Chapter 13 bankruptcy. However, it will require a larger payment because the Chapter 13 filer will be required to pay fees and costs of the lender seeking the sheriff sale. It's best to contact an experienced bankruptcy attorney long before this stage.


5. Execution of the Sheriff sale

The sheriff sale will occur some time after the 30 days notice given by the lender to the homeowner. It is possible to save the home through a Chapter 13 bankruptcy filing some time before the sale date. However, it may not be possible if you do not contact a foreclosure attorney in enough time to organize and file an emergency petition.

After the sale has occurred, the Sheriff will prepare and record a deed conveying title to the purchaser. If there is no purchaser, the title will convey back to the lender. Within 30 days, the eviction process may begin. The former homeowner must be prepared to move all personal items before access to the home is shut off.


Deficiency judgments after foreclosure

In addition to being able to evict a homeowner through foreclosure, a lender may seek a deficiency judgment.

A deficiency judgment may be sought when the lender, normally a bank, receives less from the Sheriff Sale than the amount owed by the lender. This deficiency judgment could lead to the former homeowner having a lien placed on a car, a bank account, or even a future home.

It may be necessary to file a Chapter 7 bankruptcy in order to remove a deficiency judgement against a former homeowner.