There are major differences in how different states handle their respective mortgage foreclosure processes. The typical steps that are followed vary depending on the specific laws/statutes enacted in that particular state. The type of legal instrument – mortgage or deed of trust – used is detrimental to the foreclosure procedure followed. This article provides an in depth review of the mortgage foreclosure laws and the foreclosure process followed in the state of Pennsylvania.

Pennsylvania (PA) follows the judicial foreclosure process as it uses the mortgage as the legal instrument. So, the entire process is handled through the courts. This form of foreclosure process is not favorable towards the mortgage lenders/banks because it is more time consuming and involves following strict legal procedural steps. There are no trustees or third parties involved, so the lien holder is the only entity that can initiate the foreclosure process.

Judicial Foreclosure Process is more favorable to the property owner in default as it usually allows them more time to either settle their debt, sell the property, or look for other favorable alternatives than facing a foreclosure auction. In contrast to the non-judicial(trustee) process, judicial process typically allows the home owner to occupy the property for a longer period due to extended pre-foreclosure period.

When a borrower fails to make repayments according their mortgage agreement, the acceleration clause, which is a standard part of any mortgage allows the lender to call on the entire debt owed to them, not just the mortgage outstanding payments. Lenders typically initiate the foreclosure process after the borrower is a least 60 days behind on their mortgage payments. “Power of Sale” clause is not part of mortgage agreement and thus the lender has to sue the borrower to recover the debt.

The lender is required to send a notice by registered or certified mail stating their intention to foreclose due to the borrower’s non-payment of mortgage.The notice should give borrower a minimum of 30 days time to make their outstanding payments while also detailing the effects of the acceleration clause. Along with this notice, other information related to the options available to the borrower are also included.

When a borrower doesn’t take any action, the lender approaches the court and files a foreclosure lawsuit to recover the entire amount owed to them. A title search has to be ordered and it should accompany the lawsuit. Once the court determines that the borrower is in default on his/her mortgage payments, then an order of sale along with an auction date is issued.

The Sheriff has to serve the order of sale to the borrower within 30 days; otherwise, the court order has to be reinstated. This notice is usually served within 20 days. From the time of receipt of this notice, the borrower is given 20 days to file their response.

If the borrower doesn’t file any response or cure the debt with in those 20 days, the plaintiff has to send another notice. This notice clearly states the consequences of not resolving the debt. From the time the borrower receives this notice, they have 10 days to respond.

Once the 10 days have passed without any response, default judgment along with a Writ of Execution is entered and an auction date for the Sheriff Sale is set. The notice of Sheriff Sale auction has to served to the borrower/defendants at least 30 days before the auction date. All the other lien holders on the property as determined by the title search must also be sent notices of the impending foreclosure auction. The auction can be postponed and be rescheduled with in 100 days. Any subsequent postponements require a court order.

Depending on the individual sheriff departments and schedules, a sheriff sale auction is scheduled with in a 2 – 4 month time window. It is possible for the borrower to avoid the auction by paying off the debt up until an hour before the scheduled time for auction.

If the property sells at the foreclosure auction at a price that is satisfactory to the lender, the property is sold off. Pennsylvania doesn’t allow the borrower any remedies for redemption after the sale. This basically means that a borrower can’t pay back the debt they owed and get back the property after it is sold.

If the lender accepts a bid that is not sufficient to cover the entire debt they were owed, they can request the court for a deficiency judgment within a period of 6 months from the sale.

Pennsylvania Foreclosure Laws, process,and notices are primarily based on:

• Pa.R.C.P. Rules 1141-1164 (Actions to Foreclose a Mortgage)
• 3180-3183 (Judgments in Mortgage Foreclosure)
• 8103 et seq. (Deficiency Judgments).
• The Loan Interest & Protection Law, 41 P.S. § 101 et seq. (Act 6)
• The Homeowners’ Emergency Assistance Act, 35 P.S. sec. 1680.401 et seq. (Act 91).

Pennsylvania State Code contains information about these laws/statutes and for detailed information, visit the site and search.

PA Foreclosure Law Links:

• NOTES ON MORTGAGE FORECLOSURE LAWS IN PENNSYLVANIAA list of cases that summarize the position of the U.S. Supreme Court and Pennsylvania courts on certain procedural and substantive due process considerations to be followed in a mortgage foreclosure in PA. There is also a summary of Pennsylvania notice requirements imposed in certain cases by statute or the Rules of Civil Procedure.
• § 7.1. Scope – PA Law which regulates lawful interest rates as to foreclosures.
• § 7.4. Notice of intention to foreclose mortgage – PA Law which regulates the manner in which a lender has to notify a borrower of foreclosure.
• Rule 410. Real Property Actions – PA Law which regulates the necessary process actions to foreclose on an owner.
• Rule 430. Service Pursuant to Special Order of Court Publication – PA Law that allows the publication of a scheduled sheriff auction.
• Rule 1037. Judgment Upon Default or Admission. Assessment of Damages – PA Law which regulates the right of the borrower or court clerk to file a complaint against the foreclosing lender.
• Rule 3104. Writ of Execution. Entry. Lien – PA Law which regulates how a writ of execution becomes a lien against real property.
• Rule 3180. Judgment; execution – PA Law which regulates how a foreclosure judgment is enforced.
• Rule 3256. Precipe for writ; mortgage foreclosure – PA Law which regulates the necessary information that needs to be on a writ of execution in order for it to be valid.
• Rule 3276 – Deficiency Judgments – PA Laws regarding deficiency judgments
• Rule 3277. Definitions – (Liens) – PA Law which regulates the legal description of various liens and judgments.
• Pending or Newly Effected Legislation for Your State?
  Please select the Legislative Agenda link here: http://narhri.org/