GoldbeckLaw Demand Letters

Pennsylvania's Act 91 of 1983, 35.P.S. 1680.401 et seq., the Homeowners Emergency Mortgage Assistance Act ("Act 91") permits a state agency, the Pennsylvania Housing Finance Agency (PHFA) to make loans secured by liens to Homeowners facing foreclosure. The Homeowners must prove that a hardship exists which caused the mortgage default and the Homeowners have a reasonable prospect of curing the default within 2 years.

Effective June 5, 1999, there have been significant revisions to Act 91 as incorporated in Act 160 of 1998 and regulations regarding the Act. The most significant changes are as follows:

1. A new Act 91/6 combined Notice must be used in place of the old Act 91 Notice starting July 1, 1999;

2. If the reinstatement amount is more than $60,000.00, the lender is not required to send Act 91/6 Notice;

3. If the homeowner is more than twenty four (24) months delinquent no combined Act 91/6 Notice is required;

4. The combined Act 91/6 Notice must be sent by first class mail with proof of mailing and certified or registered mail to the property and mailing address;

6. The Notice does not have to be re-sent if partial payments have been received and applied, but must be re-sent if the default was cured.

1. The property secured by the mortgage is not the principal residence of the Homeowners or

3. The mortgage is insured under FHA's Title II (12 U.S.C. Section 1707-17152-18) program.

Even if the property is vacant, it is strongly advised that the lender send the combined Act 91/6 notice to the property and last known mailing address. The alternative of not sending the notice is to have the Complaint dismissed for improper notice under Act 91/6.

Cautionary Note: We strongly recommend that the combined At 91/6 Notice be sent to the property and mailing address. The combined Act 91/6 Notice does not need to be sent on FHA insured loans, as the HUD Assignment program and forbearance guidelines offer the same relief available under Act 91.

Regulations pursuant to the Act (which were revised effective June 5, 1999) require a specific format of combined Act 91/6 Notice letters. The new combined Act 91/6 Notice letter, together with a list of the county agencies which must be inserted in the Notice letter are enclosed.

The homeowner must be at least sixty (60) days contractually due on the mortgage obligation or there exists another default under the mortgage before the combined Act 91/6 is sent. The notice letter must be sent to the property and mailing address of the individual homeowner by regular mail with proof of mailing and registered or certified (green card) mail.

Lenders may not accelerate the loan balance, or, more importantly, commence foreclosure, for a period of at least thirty three (33) days after sending the notice letters.

The homeowner may halt foreclosure for an additional period of at least thirty (30) days if they meet with the lender's designated representatives, or with a designated consumer credit counseling agency within the initial thirty three day period to try to work out a payment schedule, a forbearance plan or similar arrangements. The agency must notify the lender of the meeting and resulting thirty (30) day delay.

If the homeowner cannot make arrangements with the lender during the initial thirty three (33) to sixty (60) day period, the homeowner can obtain one last delay of at least sixty (60) days by making application through the Counseling Agency or PHFA for assistance. The lender is notified of this delay in writing from PHFA or the agency.

One area of major concern with Act 91/6 assistance is the lack of timely notice to the lender that a homeowner has timely filed for assistance. Often, the notification letters from the agency or PHFA are directed to the same address as a mortgage payment "lock box" or are simply not sent to the lender prior to the time the matter is referred to foreclosure. If you need to check on the status of an application for PHFA Assistance, you can call PHFA at (800) 342-2397. You should have all borrowers' social security numbers available. Also, the combined Act 91/6 Notice has a place for the lender to insert contact information. Please be sure to use an address that will be promptly routed to the appropriate collection representative.

If a PHFA application is received in your office, please promptly fill it in and return it to PHFA. Lenders are not reimbursed for attorneys fees and costs incurred during the Act's mandatory stay.

Generally, most homeowners are denied assistance because they fail to prove the statute's requirement that the homeowner has suffered a "...financial hardship due to circumstances beyond the mortgagor's control...", accordingly in many cases, our office will proceed to prepare to file the first action, the Complaint in Mortgage Foreclosure, as soon as the mortgagors are denied assistance, even if an appeal is filed. It is essential that all documents related to PHFA are forwarded promptly to our office, and that notice is sent to our attention to resume foreclosure upon receipt of PHFA denial of assistance.

If the homeowner is approved for assistance, PHFA requires that the lender provide reinstatement information regarding the loan. The lender is prohibited from commencing foreclosure if assistance is granted. PHFA will prepare a loan agreement, which must be reviewed and approved by the lender. The lender is bound by the terms of the agreement, as it would be with any contract. The agreements are relatively straightforward. PHFA will then schedule a loan closing, usually within thirty (30) to sixty (60) days of approval of assistance. PHFA will pay the lender the amount needed to reinstate the loan including principal, interest, taxes, insurance, and other costs. PHFA then takes a junior mortgage lien position equal to the amount of assistance.

If PHFA is assisting the mortgagor and a new default occurs or the payment amount changes, the lender is strongly encouraged to notify PHFA.

A borrower may apply for PHFA assistance outside of the above noted time frames, and may be approved for assistance. In this case, there is no statutory requirement to place the foreclosure on hold, but it may be appropriate to do so on a case by case basis. Attorneys fees are recoverable in this instance, at the rate of $100.00, per hour and all cost are recoverable.

Both the Act 6 and the combined Act 91/6 Notices are, in our view, collection letters. A file should not be referred to our office until the time periods have expired. In both Act 6 and combined Act 91/6, the lender's ability to collect attorneys fees and costs from the homeowners are controlled by statute. Any fees and costs incurred by our office in excess of the statutory allowable amounts are the lender's responsibility. In order to limit your out of pocket expenses, we encourage strict compliance with Act 6 and Act 91.

PENNSYLVANIA ACT 6 AND COMBINED ACT 91/6 REQUIREMENTS

LOAN TYPE	NOTICE OF INTENTION TO FORECLOSE (PA. ACT 6)	HOMEOWNER'S EMERGENCY MORTGAGE ASSISTANCE NOTICE (PA. ACT 91/6) (A/K/A 160)
TYPE OF MAIL SEND TO ADDRESSED TO	CERTIFIED OR REGISTERED MAIL PROPERTY ADDRESS AND LAST KNOWN MAILING ADDRESS	REGULAR MAIL WITH CERTIFICATE OF MAILING PROPERTY ADDRESS AND LAST KNOWN MAILING ADDRESS EACH RECORD OWNER(S) AND EACH ORIGINAL MORTGAGOR
FHA UNDER $50,000.00	ACT 6 REQUIRED	COMBINED ACT 91/6 NOT REQUIRED
FHA OVER $50,000.00	ACT 6 NOT REQUIRED*	COMBINED ACT 91/6 NOT REQUIRED
ALL OTHER LOAN TYPES REGARDLESS OF PRINCIPAL BALANCE	ACT 6 NOT REQUIRED*	COMBINED ACT 91/6 REQUIRED

* A DEMAND LETTER IS GENERALLY REQUIRED PRIOR TO COMMENCING ANY FORECLOSURE ACTION. PLEASE CONSULT THE SPECIFIC MORTGAGE FOR DETAILS ON THE TYPE AND CONTENT OF THE PRE-FORECLOSURE NOTICE TO BE SENT.

This is an official notice that the mortgage on your home is in default, and the lender intends to foreclose. Specific information about the nature of the default is provided in the attached pages. The HOMEOWNER'S MORTGAGE ASSISTANCE PROGRAM (HEMAP) may be able to help to save your home. This Notice explains how the program works.

To see if HEMAP can help, you must MEET WITH A CONSUMER CREDIT COUNSELING AGENCY WITHIN 30 DAYS OF THE DATE OF THIS NOTICE. Take this Notice with you when you meet with the Counseling Agency.

The name, address an phone number of Consumer Credit Counseling Agencies serving your County are listed at the end of this Notice. If you have any questions, you may call the Pennsylvania Housing Finance Agency toll free at 1-800-342-2397. (Persons with impaired hearing can call (717) 780-1869.)

This Notice contains important legal information. If you have any questions, representatives at the Consumer Credit Counseling Agency may be able to help explain it. You may also want to contact any attorney in your area. The local bar association may be able to help you find a lawyer.

La notificacion en adjunto es de suma importancia, pues afecta su derecho a continuar viviendo en su casa. Si no comprende el contenido de esta notification obtenga una traduccion immediatamente llamanda esta agencia (Pennsylvania Housing Finance Agency) sin cargos al numero mencionada arriba. Puedes ser elegible para un prestamo por el programa llamado "Homeowner's Emergency Mortgage Assistance Program" el cual puede salvar su casa de la perdida del derecho a redimir su hipoteca.

IF YOU COMPLY WITH THE PROVISIONS OF THE HOMEOWNER'S EMERGENCY MORTGAGE ASSISTANCE ACT OF 1983 (THE "ACT"), YOU MAY BE ELIGIBLE FOR EMERGENCY MORTGAGE ASSISTANCE:

* IF YOU HAVE A REASONABLE PROSPECT OF BEING ABLE TO PAY YOUR MORTGAGE PAYMENTS, AND

* IF YOU MEET OTHER ELIGIBILITY REQUIREMENTS ESTABLISHED BY THE PENNSYLVANIA HOUSING FINANCE AGENCY.

TEMPORARY STAY OF FORECLOSURE - Under the Act, you are entitled to a temporary stay of foreclosure on your mortgage for thirty (30) days from the date of this Notice. During that time you must arrange and attend a "face-to-face" meeting with one of the designated consumer credit counseling agencies listed at the end of this Notice.

THIS MEETING MUST OCCUR WITHIN THE NEXT (30) DAYS. IF YOU DO NOT APPLY FOR EMERGENCY MORTGAGE ASSISTANCE, YOU MUST BRING YOUR MORTGAGE UP TO DATE. THE PART OF THIS NOTICE CALLED "HOW TO CURE YOUR MORTGAGE DEFAULT", EXPLAINS HOW TO BRING YOUR MORTGAGE UP TO DATE.

CONSUMER CREDIT COUNSELING AGENCIES - If you meet with one of the consumer credit counseling agencies listed at the end of this notice, the lender may NOT take action against you for thirty (30) days after the date of this meeting. The names, addresses and telephone numbers of designated consumer credit counseling agencies for the county in which the property is located are set forth at the end of this Notice. It is only necessary to schedule one face-to-face meeting. Advise your lender immediately of your intentions.

APPLICATION FOR MORTGAGE ASSISTANCE - Your mortgage is in default for the reasons set forth later in this Notice (see following pages for specific information about the nature of your default.) If you have tried and are unable to resolve this problem with the lender, you have the right to apply for financial assistance from the Homeowner's Emergency Mortgage Assistance Program. To do so, you must fill out, sign and file a completed Homeowner's Emergency Assistance Program Application with one of the designated consumer credit counseling agencies listed at the end of this Notice. Only consumer credit counseling agencies have applications for the program and they will assist you in submitting a complete application to the Pennsylvania Housing Finance Agency. Your application MUST be filed or postmarked within thirty (30) days of your fact-to-face meeting.

YOU MUST FILE YOUR APPLICATION PROMPTLY. IF YOU FAIL TO DO SO OR IF YOU DO NOT FOLLOW THE OTHER TIME PERIODS SET FORTH IN THIS LETTER, FORECLOSURE MAY PROCEED AGAINST YOUR HOME IMMEDIATELY AND YOUR APPLICATION FOR MORTGAGE ASSISTANCE WILL BE DENIED.

AGENCY ACTION - Available funds for emergency mortgage assistance are very limited. They will be disbursed by the Agency under the eligibility criteria established by the Act. The Pennsylvania Housing Finance Agency has sixty (60) days to make a decision after it receives your application. During that time, no foreclosure proceedings will be pursued against you if you have met the time requirements set forth above. You will be notified directly by the Pennsylvania Housing Finance Agency of its decision on your application.

NOTE: IF YOU ARE CURRENTLY PROTECTED BY THE FILING OF A PETITION IN BANKRUPTCY, THE FOLLOWING PART OF THIS NOTICE IS FOR INFORMATION PURPOSES ONLY AND SHOULD NOT BE CONSIDERED AS AN ATTEMPT TO COLLECT THE DEBT.

(If you have filed bankruptcy you can still apply for Emergency Mortgage Assistance.)

NATURE OF THE DEFAULT - The MORTGAGE debt held by the above lender on your property located at:

A. YOU HAVE NOT MADE MONTHLY MORTGAGE PAYMENTS for the following months and the following amounts are now past due:

B. YOU HAVE FAILED TO THE TAKE THE FOLLOWING ACTION
(Do not use if not applicable):

HOW TO CURE THE DEFAULT - You may cure the default within THIRTY (30) DAYS of the date of this notice BY PAYING THE TOTAL AMOUNT PAST DUE TO THE LENDER WHICH IS $ , PLUS ANY MORTGAGE PAYMENTS AND LATE CHARGES WHICH BECOME DUE DURING THE THIRTY (30) DAY PERIOD. Payments must be made either by cash, cashier's check, certified check or money order made payable and sent to:

You can cure any other default by taking the following action within THIRTY (30) DAYS of the date of this letter. (Do not use if not applicable.)

IF YOU DO NOT CURE THE DEFAULT - If you do not cure the default within THIRTY (30) DAYS of the date of this Notice, the lender intends to exercise its rights to accelerate the mortgage debt. This means that the entire outstanding balance of this debt will be considered due immediately and you may lose the chance to pay the mortgage in monthly installments. If full payment of the total amount past due is not made within THIRTY (30) DAYS, the lender also intends to instruct its attorneys to start legal action to foreclose upon your mortgaged property.

IF THE MORTGAGE IS FORECLOSED UPON - The mortgaged property will be sold by the Sheriff to pay off the mortgage debt. If the lender refers your case to its attorneys, but you cure the delinquency before the lender beings legal proceedings against you, you will still be required to pay the reasonable attorney's fees that were actually incurred, up to $50.00. However, if legal proceedings are started against you, you will have to pay all reasonable attorney's fees actually incurred by the lender even if they exceed $50.00. Any attorney's fees will be added to the amount you owe the lender, which may also include other reasonable costs. If you cure the default within the THIRTY (30) DAY period, you will not be required to pay attorney's fees.

OTHER LENDER REMEDIES - The lender may also sue you personally for the unpaid principal balance and all other sums due under the mortgage.

RIGHT TO CURE THE DEFAULT PRIOR TO SHERIFF'S SALE - If you have not cured the default within the THIRTY (30) DAY period and foreclosure proceedings have begun, you still have the right to cure the default and prevent the sale at any time up to one hour before the Sheriff's Sale. You may do so by paying the total amount then past due, plus any late or other charges then due, reasonable attorney's fees and costs connected with the foreclosure sale and any other costs connected with the Sheriff's Sale as specified in writing by the lender and by performing any other requirements under the mortgage. Curing your default in the manner set forth in this notice will restore your mortgage to the same position as if you had never defaulted.

EARLIEST POSSIBLE SHERIFF'S SALE DATE - It is estimated that the earliest date that such a Sheriff's Sale of the mortgaged property could be held would be approximately months from the date of this Notice. A notice of the actual date of the Sheriff's Sale will be sent to you before the sale. Of course, the amount needed to cure the default will increase the longer you wait. You may find out at any time exactly what the required payment or action will by contacting the lender.

EFFECT OF SHERIFF'S SALE - You should realize that a Sheriff's Sale will end your ownership of the mortgaged property and your right to occupy it. If you continue to live in the property after the Sheriff's Sale, a lawsuit to remove you and your furnishings and other belongings could be started by the lender at any time.

ASSUMPTION OF MORTGAGE - You may or may not (CHECK ONE)sell or transfer your home to a buyer or transferee who will assume the mortgage debt, provided that all the outstanding payments, charges and attorney's fees and costs are paid prior to or at the sale and that the other requirements of the mortgage are satisfied.

* TO SELL THE PROPERTY TO OBTAIN MONEY TO PAY OFF THE MORTGAGE DEBT OR TO BORROW MONEY FROM ANOTHER LENDING INSTITUTION TO PAY OFF THIS DEBT.

* TO HAVE THE MORTGAGE RESTORED TO THE SAME POSITION AS IF NO DEFAULT HAD OCCURRED, IF YOU CURE THE DEFAULT. (HOWEVER, YOU DO NOT HAVE THIS RIGHT TO CURE YOUR DEFAULT MORE THAN THREE TIMES IN ANY CALENDAR YEAR.)

* TO ASSERT THE NONEXISTENCE OF A DEFAULT IN ANY FORECLOSURE PROCEEDING OR ANY OTHER LAWSUIT INSTITUTED UNDER THE MORTGAGE DOCUMENTS.

* TO ASSERT ANY OTHER DEFENSE YOU BELIEVE YOU MAY HAVE TO SUCH ACTION BY THE LENDER.

[To the Lender - the information within these brackets is not part of the Form Notice. Attached is a list of all Counseling Agencies. The Lender is only required to list the Counseling Agencies FOR THE COUNTY in which the property is located].

For More Information Contact:

Goldbeck McCafferty & McKeever
Suite 5000
Mellon Independence Center
701 Market Street
Philadelphia, Pennsylvania 19106
Tel: (215) 627-1322
FAX: (215) 627-1389
Internet: info@GoldbeckLaw.com

DEMAND LETTERS IN PENNSYLVANIA

PENNSYLVANIA ACT 6 AND COMBINED ACT 91/6 REQUIREMENTS