Pennsylvania’s Supreme Court’s decision, coupled with the Homeowner Assistance Settlement Act, is welcome news to the title industry and mortgage lenders throughout Pennsylvania.
On September 25, 2013, the Pennsylvania Supreme Court issued its opinion reversing the Superior Court in the matter of Beneficial Consumer Discount Company d/b/a Beneficial Mortgage Company of Pennsylvania v. Pamela Vukman. The Pennsylvania Supreme Court concluded that a defective Act 91 Notice does not affect the jurisdiction of trial courts to hear the underlying foreclosure matter.
Ms. Vukman argued that the Act 91 Notice sent by Beneficial was deficient as it did not advise the Defendant that she had the right to a face-to-face meeting with the Bank OR the right to have a face-to-face meeting with a consumer counseling agency. The notice only said that the Defendant had the right to a face-to-face meeting with a counseling agency. Ms. Vukman argued that, despite the fact she did actually meet with Benefical to discuss her delinquency during the pendency of the foreclosure action, the sheriff’s sale of her real estate should be set aside as the trial court did not have subject matter jurisdiction to decide the foreclosure case. As a result of the failure to inform the Defendant in the Notice of Intent to Foreclose of her right to a face-to-face meeting with the Bank, the trial court held and the Superior Court affirmed that the sheriff’s sale should be set aside and the foreclosure dismissed without prejudice to re-filing. This despite the Notice of Intent to Foreclose being the same notice that was proscribed by the Pennsylvania Housing Finance Agency as the “model” Notice of Intent to be used in Pennsylvania.
The Supreme Court’s ruling, in addition to 35 P.S. 1681.5 (Homeowner Assistance Settlement Act), enacted by the Pennsylvania Legislature in June 2012, makes clear that a defective Act 91 Notice gives a Court the ability to:
- Dismiss a foreclosure without prejudice
- Order the service of a corrected notice during the action
- Impose a stay
- Use another appropriate remedy to address the interests of the mortgage who has been prejudiced.
The PA Legislature went further to say in the Homeowner Assistance Settlement Act that the failure to properly comply with the Notice of Intention to Foreclose requirements must be raised prior to the delivery of a Sheriff’s deed, Marshall’s deed or Deed in Lieu of Foreclosure, effectively putting some finality to the defenses that can be raised to a defective notice of intention to foreclose in an underlying foreclosure action.
With the certainty that now comes from the delivery of a sheriff’s deed following a Pennsylvania foreclosure sale, title companies and mortgage lenders will no longer be faced with the uncertainty of lawsuits from aggrieved mortgagors who have lost their homes to foreclosure or to the uncertainty of title claims for years to come.