By Philip J. Scolieri and Tracy L. Jones
Anyone who has had any dealings with mortgage foreclosures has heard of the Act 91 Notice. Mortgage holders must send this notice when that mortgage is in default and the mortgage holder wishes to begin foreclosure proceedings. The Act 91 notice is required to be sent to homeowners because of the Homeowner’s Emergency Mortgage Assistance Program (HEMAP). HEMAP is a program administered by the Pennsylvania Housing Financing Agency that provides emergency assistance to qualifying Pennsylvania residents who cannot make their mortgage payments. HEMAP was discontinued in July of 2011 due to insufficient funding. Thus, because that program was not accepting applications, Act 91 Notices were no longer required to be sent to the homeowner.
However, following a settlement with top mortgage companies, the program was reinstated when, on June 22, 2012, Governor Tom Corbett signed the “Homeowner Assistance Settlement Act” (Senate Bill 1433). This Act provides for funding for the HEMAP program. In fact, ninety percent of the settlement funds will go toward this program. Once again, mortgage holders will be required to send the Act 91 Notice before beginning foreclosure proceedings. This Notice informs the homeowner of the HEMAP program, explains how the program works, and provides other detailed information about the homeowner’s options.
There are specific time requirements when the mortgage holder must send the Act 91 notice. The notice cannot be sent until after the homeowner is sixty (60) days contractually delinquent or in violation of any other mortgage provision. The mortgage holder must send the notice thirty (30) days before he/she wishes to either request full payment or initiate legal proceedings. When the mortgage holder sends the notice to the homeowner, he/she must also simultaneously send the notice to the Pennsylvania Housing Finance Agency. Then, the homeowner has thirty (30) days plus three (3) extra days for mailing to have a face to face meeting with a consumer credit counseling agency. The Act 91 notice must list these agencies for the homeowner. If the homeowner decides to apply for assistance, the agency will make a decision within 60 days of the application. If the homeowner does not meet with the credit agency, the mortgage holder may move forward with the foreclosure process. However, the homeowner may still be able to apply and stay any foreclosure proceedings.
On August 18, 2012, the PA Bulletin published a notice announcing that mortgage holders will once again be required to send these Act 91 notices beginning October 2, 2012. The announcement also made it clear that these notices must meet the specific requirements of the Act. Serious consequences could result if one does not send a notice or sends a notice that does not conform to the requirements of the Act including dismissal of the foreclosure, staying the proceeding, or other remedies. A copy of the current Act 91 notice can be found on our blog athttp://pabusinesslawattorney.com, under forms.
The Act 91 notice is not the only notice that mortgage holders must send out before initiating foreclosure proceedings. An Act 6 notice may also be required. Similar to the Act 91 notice, a mortgage holder must send an Act 6 notice out thirty (30) days before the mortgage holder wishes to foreclose. The notice must provide specific information alerting the homeowner about their default status. This notice is required for “residential real estate” that falls under a specific dollar amount. The specific amount changes annually and is currently $230,110. Therefore, mortgage holders might be required to send these notices when a mortgage is in default and the mortgage holder wishes to begin foreclosure proceedings.