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Questions

How are mortgage liens treated in Pennsylvania?
How are Pennsylvania mortgages foreclosed?
What are the legal instruments that establish a Pennsylvania mortgage?
How long does it take to foreclose a property in Pennsylvania?
Is there a right of redemption in Pennsylvania?
Are deficiency judgments permitted in Pennsylvania?
What statutes govern Pennsylvania foreclosures?

Answers

How are mortgage liens treated in Pennsylvania?

Pennsylvania is known as a lien theory state where the property acts as security for the underlying loan. The document that places the lien on the property is called a mortgage.

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How are Pennsylvania mortgages foreclosed?

In Pennsylvania, the lenders go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. The property is then sold as part of a publicly noticed sale. The court with jurisdiction over a foreclosure is known as the Court of Common Pleas in the County in which the property is located. A complaint is filed with the prothonotary in this court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

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What are the legal instruments that establish a Pennsylvania mortgage?

The documents are known as the mortgage, note, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. A mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

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How long does it take to foreclose a property in Pennsylvania?

Depending on the court schedule, it usually takes approximately 120 days or more to effectuate an uncontested foreclosure. This process may be delayed if the borrower contests the action, seeks delays and adjournments of hearings, or files for bankruptcy. A defendant has 20 days in which to file an answer to a foreclosure complaint otherwise default will be entered. The defaulting borrower must be given at least 10 days notice before default is entered and there must be a 30 day notice before a foreclosure sale can take place by the Sheriff. There are two pre-foreclosure notice requirements which are specific to Pennsylvania. An Act 6 notice (Required to be sent by certified Mail) requires a notice of intention to foreclose to be sent within 60 days of a default occurring. The borrower will usually then have 30 days in which to set up a payment plan or cure any default during this time frame. An Act 91 notice (Required to be sent by regular mail with certificate of mailing) relates to a mortgage default where the borrower is advised there may be assistance available in the form of a HEMAP (Homeowners Emergency Mortgage Assistance Program) loan to cure the existing default. Act 6 and Act 91 notices have different applications to various government guaranteed loans. FHA loans under $50K in default usually require Act 6 notice and VA/Conventional loans under $50K require Act 91 notices.

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Is there a right of redemption in Pennsylvania?

Pennsylvania does not have a post-sale statutory right of redemption, which allows a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs.

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Are deficiency judgments permitted in Pennsylvania?

Yes. A deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures.  This means that the borrower still owes the lender for the difference between what the property sold for at auction and the amount of the original loan. Deficiency actions must be brought within six (6) months of the foreclosure sale.

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What statutes govern Pennsylvania foreclosures?

The laws that govern Pennsylvania foreclosures are found in Pa. R.C.P. 1141-1164 (Actions to Foreclose a Mortgage), 3180-3183 (Judgments in Mortgage Foreclosure), and 8103 et. seq. (Deficiency Judgments) (These are civil procedure rules). The Loan Interest & Protection Law, 41 P.S. §101 et. seq. (Act 6) and the Homeowners Emergency Assistance Act, 35 P.S. § 1680.401 et. seq. (Act 91) are the statutory references.


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