Can a Lender Charge Fees for the Foreclosure Process in Pennsylvania

The foreclosure process is very upsetting for homeowners, and it can also be expensive. Depending on how foreclosure happens, you might face additional fees and costs from the lender. This can be costly for those already facing financial hardship, but you may be able to challenge some of the fees.

Foreclosure is not cheap, and lenders are already faced with the prospect of losing money. They may incur various costs during the foreclosure process, and these costs are typically passed on to homeowners. Fees for late mortgage payments, property inspections and evaluation, and various legal and attorney fees may be added to the final bill. You may challenge these costs with the help of a lawyer. Depending on the situation, you might negotiate with lenders about the fees or file for bankruptcy to halt the foreclosure process.

Call Young, Marr, Mallis & Associates at (215) 701-6519 for a private, free case assessment from our Pennsylvania mortgage foreclosure defense lawyers.

Possible Fees During the Pennsylvania Foreclosure Process

People facing foreclosure are often in dire financial situations, yet the process may come with more costs. Our Philadelphia mortgage foreclosure defense lawyers may review these fees to determine if they are fair.

Late Fees

Foreclosure often happens because homeowners are late with payments. According to 12 C.F.R. § 1024.41(f), a lender may not foreclose for late mortgage payments until the homeowner is at least 120 days delinquent.

Late fees might arise from banking issues or sudden layoffs, and some lenders might forgive first-time late fees. However, homeowners facing foreclosure are typically several months behind on payments, and they might have to pay hefty late fees during the foreclosure process.

Inspection Costs

Once you enter default, the lender may have the property inspected. They may check for maintenance issues, signs of disrepair, and anything else that might affect the property’s value. The lender may tack these costs onto your final bill after your home is sold at a sheriff’s sale.

Property Maintenance Costs

If the property needs maintenance, the lender may hire someone to repair property damage and prepare the home for sale. Lenders do not want to sell a house that is unfit for habitation and may order extensive work to be performed. If they do, these costs are usually passed on to homeowners.

Various Legal Fees

Pennsylvania is a judicial foreclosure state, meaning the foreclosure process goes through the courts. As such, lenders may incur filing and legal fees when they initiate foreclosure. They may also incur sheriff’s fees when the property is sold at auction.

How to Minimize Extra Fees During the Foreclosure Process

Extra fees imposed by the lender only serve to place a greater financial burden on homeowners who might already be struggling. If you are facing foreclosure, talk to your attorney about these fees and whether they can be mitigated or avoided.

Negotiate with the Lender

One possibility is that we can negotiate with the lender to minimize or avoid certain fees. After all, homeowners are in foreclosure because they cannot afford the mortgage, so how can the lender expect them to afford additional fees? The lender might be willing to forego some fees if doing so streamlines the foreclosure process.

Challenge the Fees

We should challenge any fees that seem unreasonable or unfair. For example, the lender might attempt to charge you fees related to repairs they made to the property. However, many of these repairs might not have been necessary to sell the house and were performed so the lender could get a better sale price. The lender should not be able to take advantage of homeowners this way, and we can push back on unnecessary repair or maintenance costs.

File for Bankruptcy

We may attempt to prevent foreclosure by filing for bankruptcy. While this is not an ideal option, it might alleviate your financial problems. Many people file for bankruptcy under Chapters 7 or 13.

Chapter 7 bankruptcy involves the liquidation of your assets, including your home. Proceeds from liquidation may be distributed to creditors according to 11 U.S.C. § 726(a). Some remaining debts may be discharged, and you would no longer be responsible for payment.

Chapter 13 bankruptcy does not involve liquidation and may help you hold on to your home. According to § 1322(a), you must devise a feasible but aggressive payment plan to regain control of your debts, including your mortgage. The court must approve the plan, which is subject to objections from lenders and creditors.

When you file for bankruptcy, the court will impose an automatic stay under § 362(a). This prevents lenders from pursuing legal action, including foreclosure, against you for unpaid debts. If foreclosure is currently pending, the proceedings must immediately stop, giving you more time to remedy your financial situation.

What to Do if You Are Facing Foreclosure in Pennsylvania

If you have received a notice from your bank regarding foreclosure or are currently involved in the process, you should contact an attorney immediately. Your lawyer may review your legal options, including bankruptcy, to determine how to protect your home or minimize the financial impact of foreclosure.

Begin gathering evidence to build your case. We need a copy of the mortgage so we can review the terms and conditions. You should also save any communication between you and the lender about the mortgage and foreclosure. This includes emails, letters, and records of phone calls. If the lender did not adequately communicate the foreclosure to you, we may be able to challenge the proceedings.

Speak to Our Pennsylvania Mortgage Foreclosure Defense Attorneys About Your Case

Call Young, Marr, Mallis & Associates at (215) 701-6519 for a private, free case assessment from our Radnor, PA  mortgage foreclosure defense lawyers.