Philadelphia Mortgage Foreclosure Defense Lawyer

Foreclosure can be a daunting process. However, an experienced foreclosure defense attorney can help you understand it and achieve the best possible result. Foreclosures in Pennsylvania are typically final since there is no right to redeem or recover the property after the sale. You must be proactive if your goal is to keep your home and/or to mitigate losses. Taking critical steps at the right time is crucial, especially when mortgage lenders try to add fees and costs associated with the foreclosure process to the existing debt.

Moreover, even if you’re prepared to lose the property, you can be responsible for the balance or deficiency remaining after the foreclosure sale. Hiring legal help can be a pivotal decision in making educated choices and fighting for your rights in a difficult foreclosure process. As more time passes and the deeper you get into the foreclosure process, the harder it will be to stop it.

Attorneys at Young Marr & Associates are skilled and experienced foreclosure lawyers with an unwavering commitment to helping you obtain the best results possible. Your initial consultation is free of charge and confidential. We handle foreclosure cases throughout Pennsylvania. Call us at (215) 701-6519 or contact us online to schedule a free consultation.

The Philadelphia, PA Residential Mortgage Foreclosure Program and Conciliation Program

In 2008, Philadelphia instituted the Residential Mortgage Foreclosure Diversion Program to slow down residential foreclosures caused by the housing market crash. Limited to owner-occupied primary residences, the program was designed to prevent homes from proceeding directly to sheriff’s sale while allowing homeowners to find an alternative to foreclosure.

When a mortgage company files a foreclosure and indicates that the property is residential and owner-occupied, the court schedules a conciliation conference along with an order preventing a judgment in favor of the mortgage company until the conciliation conference and all continued conferences have been concluded. Homeowners facing foreclosure whose property was not designated as owner-occupied can file a certificate requesting a conciliation conference. The purpose of this order is to slow down the foreclosure process, offering the homeowner an opportunity to find alternative solutions to cure the mortgage default.

The foreclosure complaint will include paperwork directing the homeowner to call the “Save Your Home Philly Hotline” before their scheduled conference. To assist Philadelphians, the Department of Housing and Community Development will provide the owner with a free housing counselor to review the available home retention options and help them prepare the necessary paperwork.

At the conciliation conference, the homeowner and their housing counselor will meet with a mortgage company representative to discuss potential options. Additionally, lawyers from Volunteers for Indigent Program, Community Legal Services, Philadelphia Legal Assistance, and Senior LAW Center will be available to provide legal advice and counsel to homeowners. If the parties are struggling to agree on a workable option, a judge could be requested. Our experienced Philadelphia mortgage foreclosure defense attorneys are also available to represent you at the conciliation conference.

Generally, conciliation conferences will have one of three outcomes. First, the parties could agree on a retention plan, and the property will be removed from foreclosure. The second typical outcome is that the parties will continue the conference at a later date while they continue to work on options or gather additional paperwork. Finally, if parties are unable to put together a workable retention plan or agree on a continuance, the court will issue an order allowing the mortgage company to proceed with the foreclosure and schedule a sheriff sale.

The purpose of this conciliatory meeting is typically to reach a solution with an agreement that can include:

Forbearance is when there is a time extension allowing the borrower to recover from financial hardship.

A loan modification is where the terms of the loan, such as time, interest, and monthly payments, are readjusted.

A plan or schedule of additional monthly sums, usually over a six-month period that can bring the loan payments current.

The Mortgage Foreclosure Process in Philadelphia, PA

Foreclosure is the process where a mortgage lender files a lawsuit against a borrower who has fallen behind in mortgage payments. Properties in Pennsylvania are sold in a sheriff’s sale to the highest third-party bidder or revert back to the foreclosing lender. Foreclosure actions must be preceded by pre-foreclosure notices. There are two pre-foreclosure notice requirements in Pennsylvania:

“Act 6” or “PA Act 6 Notice” dictate the rules for the initial letter where the foreclosing lender lets the mortgage borrower know about the intention to foreclose the property. This notification must be sent within 60 days of the nonpayment. The borrower has 30 days to set up a payment plan or cure the default and pay late fees, attorney’s fees, and costs.

An “Act 91” Notice provides Pennsylvania residents with information on Homeowners’ Emergency Mortgage Assistance Programs.

The Pennsylvania legislature has also enacted statutes to protect debtors from abusive lending and foreclosure practices, including the following:

The Loan Interest & Protection Law proscribes usurious practices and caps the interest rates banks can charge at 6%.

The Homeowners’ Emergency Assistance Act is a statute designed to help borrowers facing foreclosure by providing them with means to seek financial, housing, and legal assistance. Borrowers in Pennsylvania must receive information about opportunities for federal or state programs to give financial aid to distressed debtors facing foreclosure.

What is a Judicial Foreclosure in Philadelphia, PA?

Foreclosures in Philadelphia are judicial, meaning banks and mortgage companies must go through the civil court system to foreclose on a property. Some jurisdictions allow nonjudicial foreclosures where the courts are not involved.

A judicial foreclosure proceeding must be compliant with Pennsylvania Rules of Civil Procedure Sections 1141 through 1164, which guard fairness for both parties and ensure communications are made through official legal hearings and documents.

How Can I Avoid Mortgage Foreclosure in Philadelphia, PA?

Asserting your borrower’s legal rights can lead to a successful foreclosure challenge. The answer to the complaint is a crucial step. In this answer, you state defenses and raise the actions showing the lender imposed abusive fees and either caused or contributed to creating the mounting costs and arrears leading to the foreclosure.

Homeowners facing foreclosure in Philadelphia can increase their chances of avoiding foreclosure by promptly answering the foreclosure complaint and all other notices that they receive. An experienced attorney can work with homeowners facing foreclosure to file answers that will mitigate losses.

For some homeowners facing foreclosure, declaring bankruptcy may be the best option. Chapter 13 bankruptcy allows borrowers to make a plan with lenders to pay past-due or delinquent payments. Chapter 7 bankruptcy buys time for the borrower by issuing an “automatic stay,” which temporarily postpones the foreclosure proceedings, giving borrowers time to make missing payments.

How Much Time Do I Have to Fight Foreclosure in Philadelphia, PA?

It typically takes 120 days to complete an uncontested foreclosure. A contested or challenged foreclosure usually takes longer, especially if delays and extensions are requested. A defendant has a term of 20 days to answer the foreclosure complaint. A default judicial ruling is entered if the complaint is left unanswered. If no answer is furnished within 20 days, the borrower will receive a 10-day notice stating that failure to answer will result in a default judgment.

Answering the complaint can help protect important rights. The lender can file what is known as a “motion for summary judgment” if you fail to respond to the complaint. The motion for summary judgment is a request for the judge to sign off on the foreclosure sale. The substance of the statement must include specific reasons why there are no issues or questions warranting a prolonged dispute of the foreclosure. The trial is typically scheduled if the lender’s summary judgment request is denied. This part of the process is governed by the Pennsylvania Rules of Civil Procedure Sections 3180 through 3183.

Defenses to Foreclosure Complaints in Philadelphia, PA

The Residential Mortgage Foreclosure Diversion Program assumes a homeowner is legitimately behind on their mortgage payments and is seeking a home retention plan. However, there are circumstances where challenging the mortgage complaint is possible. While successful defenses against mortgage foreclosures are rare, there are a few common defenses that can be raised. The following are common defenses used to fight mortgage foreclosures in Philadelphia:

Continue Payments

Often, the fastest way to stop a mortgage foreclosure is to make the overdue payments you owe. Of course, this might be difficult since financial issues are likely why you could not pay your mortgage in the first place. Still, our team usually starts by reviewing whether there is any way to raise the funds you need before moving on to more complex solutions.

In some cases, it might be worth using a part of your savings or retirement fund to get the money you need. In other cases, family or friends might be able to step in and lend a hand. Our team can help you evaluate the difficult choices involved. We will also communicate your efforts to your lender, which might give you more time. It is always wise to stay in contact with your lender. Many are willing to work with you if they know you are trying to solve the problem.

If you manage to gather the funds to pay the outstanding mortgage debt and attendant costs before the foreclosure sale, you might be able to exercise your “right to redeem.” Our lawyers can negotiate with your lender to determine the value of your final payment.

Failure to Prove Ownership of the Loan

Only the holder of the loan note can file a foreclosure action. If the bank or mortgage company is unable to prove ownership of the loan, especially if the note had been bundled and transferred multiple times, the proper evidentiary documents may not be available. Even though this is a viable defense, the majority of banks are careful about maintaining a chain of possession of the necessary documents.

Loan Servicer Error

Errors by the loan servicer regarding a mortgage account may give rise to a defense. For example, crediting payments to another account may mean the account should be current if the payments were applied correctly. By comparing copies of all mortgage payments made and a detailed account history, our attorneys at Young Marr & Associates might be able to find a discrepancy in your favor.

Mortgage Restructuring

Another method to stop a foreclosure in Philadelphia is to restructure your mortgage with your lender. Essentially, you will renegotiate the terms of your mortgage loan so that your payment periods are more manageable. We can also help renegotiate your interest rate so that more of your money goes to the principal balance.

In order to get your loan modified, you typically need to show your lender that you are under serious financial strain. You must also demonstrate that you will have the means to make your payments if your mortgage is restructured. Our team can help you gather bank statements, tax records, and other documents to help you get new terms for your loan.

Mortgage Forbearances

A forbearance provides a slight pause on your mortgage payments, giving you some breathing room and allowing our attorneys to develop a long-term strategy. If your lender agrees, you might be relieved from making payments for a few months or even half a year. If your financial troubles are the result of short-term issues, like losing a job or suffering an injury, a temporary forbearance might be right for your situation.

To be clear, a forbearance will not cancel your payments. Your missed payments will need to be paid back later. Our lawyers can help negotiate your forbearance and whether your repayment should be made in one lump sum or monthly installments.

How a Lawsuit Can Help Fight a Mortgage Foreclosure in Philadelphia, PA

In some instances, negotiating with the lender will not help because they are violating the law. If your lender has engaged in predatory lending practices or did not follow the proper procedures, a lawsuit can be filed to defend against the foreclosure. Our team can review your case to determine if your lender has acted unfairly or illegally and how we can use it in your defense. The following are defenses we often use to halt mortgage foreclosures in Philadelphia:

Claims of Predatory Lending

Predatory lending by unscrupulous banks and creditors has become a serious issue over the years. This illegal practice occurs when lenders exploit borrowers. This exploitation can occur in numerous ways. For example, a lender might balloon the interest rate on a mortgage to far higher than it should be. In many cases, they lend money for a mortgage to those who actually should not qualify, knowing that they will be able to take the property back once the borrower can no longer make payments.

You can raise this defense in a lawsuit if you can prove that the lender behaved unfairly or deceived you in a material way. Perhaps you have evidence showing that the loan terms were misrepresented or briefly explained to you before agreeing. In other cases, we can use financial records to show that the lender would have known to deny the loan at the time of the mortgage agreement but approved it anyway.

Lack of Due Process

“Due process” is a term many people are familiar with but might not fully understand. It refers to following legal procedures in a particular case. These procedural rules are intended to ensure fairness, giving parties to a legal claim time to respond and prepare. A bank or mortgage company could have failed to follow state judicial procedures.

While a judge may overlook small errors, serious mistakes that put the homeowner in an unfavorable position might result in a more severe response by the court. If due process is violated in a mortgage foreclosure, borrowers might not have time to negotiate with the lender or prepare a defense. However, a successful challenge of this nature will usually only result in a court order to start the process over. Even an accidental violation of procedure is a foreclosure, which can be used as a defense.

The most common type of due process violation in a foreclosure is failing to serve notice to the borrower. The lender might have failed to send mandatory reminders before initiating the proceedings or did not serve the foreclosure to the borrower when it was filed. They can also be charged with violating the rules if their complaint does not contain sufficient information to meet the elements of the case.

This defense can give you some time to plan for the future, but it will not be a total defense against foreclosure. The case will be dismissed for violation of due process, but the lender will be able to refile the case. If notice is properly served the second time, the case will proceed.

Sheriff Sales in Philadelphia, PA

Foreclosure notices of the scheduled sale or public auction must be posted on the foreclosed property at least 30 days before the scheduled sheriff’s sale takes place. This notice has to be published in a newspaper once a week for three weeks or at least 21 days before the date of the official public auction.

Pennsylvania gives mortgage borrowers ample time to reinstate a mortgage. A sheriff’s sale on a property can be canceled if the debt is satisfied up to an hour before the scheduled time. Sheriff sales of mortgage foreclosures in Philadelphia usually take place on the first Tuesday of each month.

If the Sheriff’s Sale amount does not satisfy the mortgage debt, you may be responsible for a deficiency judgment. A deficiency judgment process is a legal action the foreclosing lender files if there is a shortfall after the foreclosure sale. This action has to be compliant with the Pennsylvania Rules of Civil Procedure Section 8103. The deficiency cannot exceed the fair market value of the property. These actions must be presented within six months of the foreclosure sale.

Deficiency Judgments, Short Sales, Deed in Lieu of Foreclosure, and Tax Consequences in Philadelphia, PA Foreclosures

If your property sells at sheriff’s sale and the amount is less than your total mortgage debt, you may face a deficiency judgment. For example, if your total mortgage debt is $350,000 and your house sells at auction for $300,000, your mortgage company can file a legal complaint requesting a judgment of $50,000. This amount is limited by the fair market value of the property. In the above example, if the fair market value of the home was $325,000, then the mortgage company is entitled to a $25,000 deficiency judgment.

A short sale could eliminate a deficiency through an agreement. To sell your property through a short sale, the mortgage holder must agree to allow the property to sell at less than the total mortgage debt remaining. To qualify for a short sale, specific circumstances, such as a depressed housing market, must exist. Pennsylvania does not have any legal restriction against filing a deficiency complaint, so it is crucial to have the bank expressly waive the right to file a deficiency judgment in the short sale agreement.

Your bank may accept your deed instead of filing a foreclosure complaint. In this instance, the deficiency would be the difference between the remaining mortgage balance and the fair market value of the property. While a deed in lieu of foreclosure is deemed to satisfy the full mortgage debt, as with a short sale, there is no restriction in Pennsylvania limiting the bank’s ability to file a complaint for a deficiency judgment. At Young, Marr, Mallis & Associates, we would work to ensure that any short sale or deed in lieu of a foreclosure agreement would protect your interests.

When debt is forgiven, such as a mortgage deficiency, there can be substantial tax consequences. The amount forgiven is considered income, and unless you are entitled to an exemption or exclusion, you are required to pay taxes on it, just like any other income. Tax and foreclosure laws are complicated, so it is important to talk with our experienced Philadelphia Bankruptcy attorneys.

Bankruptcy in Philadelphia, PA to Stop Mortgage Foreclosures

If all the above fail or do not achieve your desired result, filing a Chapter 13 bankruptcy could provide a method to keep your home. Bankruptcy is a federal court proceeding that stays or stops all lower court lawsuits against you. This means that the current foreclosure proceeding, or scheduled sheriff sale, is stopped by filing a bankruptcy petition.

This is not a “get out of jail free” card. Bankruptcies are hard work and require the assistance of our seasoned bankruptcy attorneys. Depending on your specific financial circumstances, the amount you are behind in your mortgage, and other factors, including your income and expenses, a Chapter 13 bankruptcy could allow you to keep your home.

At the same time, you pay back your delinquency over three to five years. To qualify for Chapter 13 bankruptcy, you will need a financial plan that shows your ability to pay and when payments will be made over the three to five-year period. Ultimately, though, the court will have the final say on whether a repayment plan is approved. Call Young, Marr, Mallis & Associates immediately to thoroughly review the facts of your situation and determine if filing for bankruptcy is the most beneficial, economical, and likely option to keep the home you have worked so hard for over the years.

Our Philadelphia, PA Foreclosure Defense Attorneys Can Help

If your home is at risk of being foreclosed upon, you should take immediate action to mitigate losses and avoid responsibility for balances or deficiencies following the sale of your home. It is crucial to employ the use of legal aid if you are facing foreclosure. An attorney will be able to help you make educated choices about what you can do to avoid having your home foreclosed upon and can help you understand the time restrictions that apply to certain critical steps in the process.

Don’t delay taking action on your foreclosure; foreclosures can move quickly, leaving you with little time to make decisions. Use the help of an attorney to do what is best for your home and family. The lawyers of Young Marr & Associates have the skill and experience to help Philadelphia residents avoid foreclosure. Contact them as soon as possible to schedule a free and confidential legal consultation. Call (215) 701-6519 before it’s too late.

Foreclosure actions can be incredibly overwhelming. Lenders can be sloppy, and there are blunders and unjust actions an experienced attorney can professionally identify while there is time available to fight against foreclosure. The Pennsylvania Foreclosure attorneys of Young, Marr, Mallis & Associates can help. Call today at (215) 701-6519 for a free consultation.