Do I Have the Right to Reinstate My Mortgage in Pennsylvania?

Mortgage foreclosure can feel like the beginning of the end of your homeownership dreams. However, you may be able to reinstate your mortgage under the right conditions. In Pennsylvania, homeowners have a right to cure the default right up until just before the sheriff’s sale.

Curing the default involves paying all past due mortgage payments and various other costs. This can be expensive, but you have the right to cure the default if you have the means. Some people get financial help from their family or use financial windfalls like inheritance to cure their defaults. An attorney can help you negotiate with lenders to delay foreclosure or find another solution. Alternatively, you may explore other options for debt relief, including bankruptcy.

Obtain a confidential, free case analysis from our Pennsylvania mortgage foreclosure defense lawyers at Young, Marr, Mallis & Associates by calling (215) 701-6519.

Your Right to Reinstate Your Mortgage in Pennsylvania

In Pennsylvania, homeowners in foreclosure have a legal right to reinstate their mortgage by curing the default, according to 41 Pa.C.S. § 404(a). This is rarely simple or easy, but it is possible if you can find the necessary financial resources.

Under subsection (b) of the statute, to cure the default, you must first pay all past-due mortgage payments so that your balance is current. Next, you must perform any obligations you would have had to perform if not for the default. Third, pay any fees the lender incurred during foreclosure. Finally, pay the late penalties you might have incurred. You may cure the default up until 1 hour before the foreclosure sale.

Curing the default restores the homeowner to the same position as before, as if the default had not occurred.

How to Cure a Default on Your Mortgage

Depending on how far behind you are on your mortgage, and other costs associated with foreclosure, you might require a significant sum to cure the default and reinstate your mortgage. Below are some common methods worth exploring with an attorney.

Some receive financial help from family or friends. Parents, siblings, or other loved ones with greater financial resources might loan you the money to cure the default. Many would prefer to take a loan from family rather than a bank.

Others use inheritance to cure the default. If a relative recently passed away and you are awaiting a significant inheritance, our Pennsylvania mortgage foreclosure defense attorneys might convince the lender to pause foreclosure proceedings to give you enough time to get the money.

Alternatively, if relatives have established a trust fund in your name, you may be able to access the funds early.

If you are able to cure the default, just not fast enough, we may be able to postpone foreclosure. If your payments are on track to catch you up – e.g., after getting a new job – the lender might agree to delay foreclosure, giving you the time needed.

How a Lawyer Can Help You Reinstate Your Mortgage

Your attorney can communicate with lenders about your mortgage and impending foreclosure. Your lenders may be more willing to listen and compromise if a lawyer contacts them on your behalf. Additionally, your attorney might have a better understanding of navigating confusing legal and financial matters.

Your lawyer can review the pre-foreclosure requirements. For example, you should have received notice from the lender before they initiated foreclosure. An Act 6 notice is required by law and must inform you about the foreclosure at least 30 days in advance. It must also explain why foreclosure is happening, your right to cure the default, and other details about the foreclosure. If you did not receive this notice or it was inadequate, your lawyer can help you fight the foreclosure.

Your attorney should make sure the lender follows all proper procedures. Federal law under 12 C.F.R. § 1024.41(f) states that a lender may not foreclose for late mortgage payments unless the homeowner is at least 120 days delinquent. If the lender attempts to foreclose prematurely, your lawyer can intervene.

What to Do if You Cannot Reinstate Your Mortgage in Pennsylvania

If you cannot cure the default to reinstate your mortgage, filing for bankruptcy might help you avoid foreclosure. Depending on how you file, you might be able to keep your home.

Automatic Stay

When you file a bankruptcy petition, the federal bankruptcy court will impose an automatic stay under 11 U.S.C § 362(a). When this happens, lenders and creditors may not take legal action against you for unpaid debts. If legal action is pending, like a foreclosure, it must stop immediately. While the automatic stay is in effect, lenders are prohibited from contacting you about payment.

Chapter 7

Chapter 7 bankruptcy involves liquidating your property and assets, including your home. The proceeds from the liquidation are then used to pay outstanding debts according to § 726(a). If debts remain, they may be eligible for discharge, and you would not be legally responsible for payment.

While Chapter 7 bankruptcy might not allow you to keep your home, it can help you avoid foreclosure. This might be a viable option if you have debts other than your mortgage that are causing you to struggle financially.

Chapter 13

Chapter 13 bankruptcy does not involve liquidating your assets, but rather reorganizes your debts and finances. Under § 1322(a), you must design an aggressive yet feasible payment plan to regain control of your mortgage and other debts. Once the court, creditors, and lenders approve the plan, you must maintain it for about 3 to 5 years. Many people are able to catch up with their mortgage this way and keep their homes.

Our Pennsylvania Mortgage Foreclosure Defense Attorneys Are Here to Help You

Obtain a confidential, free case analysis from the Philadelphia mortgage foreclosure defense lawyers at Young, Marr, Mallis & Associates by calling (215) 701-6519.