issues in residential mortgage foreclosures -...
TRANSCRIPT
Issues in Residential Mortgage
Foreclosures
Presented by:Harper J. Dimmerman, Esq.
The Law Offices of Harper J. Dimmerman P.C.Stephen FeltApex Lending
Max L. LiebermanMax L. Lieberman & Associates, P.C.
Matthew B. Weisberg, Esq.Prochniak Weisberg, P.C.
Philadelphia, PA • July 19, 2007
EDUCATION SERVICES
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A DIVISION OF LORMAN BUSINESS CENTER, INC.Keeping You Current. Helping You Succeed. TM
Lorman Education ServicesP.O. Box 509Eau Claire, WI 54702-0509Phone: 866/352-9539 • Fax: 715/833-3953E-mail address: [email protected] site: www.lorman.com
Issues in Residential Mortgage
Foreclosures
Prepared by:Harper J. Dimmerman, Esq.
The Law Offices of Harper J. Dimmerman P.C.Stephen FeltApex Lending
Max L. LiebermanMax L. Lieberman & Associates, P.C.
Matthew B. Weisberg, Esq.Prochniak Weisberg, P.C.
© 2007 Lorman Education Services. All Rights Reserved.
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Philadelphia, PA • July 19, 2007
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EDUCATION SERVICES
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Keeping You Current. Helping You Succeed. TM
RESIDENTIAL REAL ESTATE OVERVIEW
I. AGREEmEnTS .............................................................................................................................................. 3
II. DISCLOSuRES .............................................................................................................................................. 3
III. TITLE InSuRAnCE ..................................................................................................................................... 3
IV. LITIGATIOn ................................................................................................................................................... 3
ATTACHmEnTS .......................................................................................................................................................... 5
ISSuES IN RESIDENTIAL MORTgAgE FORECLOSuRES
I. FORECLOSuRE PROCEDuRE ..............................................................................................................77Prior to Foreclosure ...................................................................................................................77Drafting the Complaint ...........................................................................................................80Filing and Service ......................................................................................................................82Responses to the Complaint .................................................................................................84Default Judgment .....................................................................................................................85motion for Judgment ...............................................................................................................86Execution ......................................................................................................................................87Sheriff’s Sale ................................................................................................................................91Settlement With the Sheriff ...................................................................................................93
APPEnDICES .............................................................................................................................................................95
REAL ESTATE/FORECLOSuRE LITIgATION
I. YOuR GuIDE TO FORECLOSuRE .................................................................................................... 159Recent Case Law and Statutory updates ....................................................................... 159Judicial Foreclosures ............................................................................................................. 165nonjudicial Foreclosures; Tax Sales .................................................................................. 173Foreclosure of Land Sale Contracts .................................................................................. 176
II. COLLATERAL FORECLOSuRE COnSIDERATIOnS ................................................................... 177Appeals and Injunctions ...................................................................................................... 177Deficiency Actions, Pa.R.C.P. no. 3276, et. seq. ............................................................. 179Receivership ............................................................................................................................. 182Possessions/Evictions ........................................................................................................... 182
A.B.C.D.E.F.G.H.I.
A.B.C.D.
A.B.C.D.
TABLE OF CONTENTS iEDUCATION SERVICES
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A DIVISION OF LORMAN BUSINESS CENTER, INC.Keeping You Current. Helping You Succeed. TM
EDUCATION SERVICES
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A DIVISION OF LORMAN BUSINESS CENTER, INC.Keeping You Current. Helping You Succeed. TM
ii
ISSuES IN RESIDENTIAL MORTgAgE FORECLOSuRES
I. ISSuES In RESIDEnTIAL mORTGAGE FORECLOSuRES ........................................................ 187
ATTACHmEnTS ..................................................................................................................................................... 197
TABLE OF CONTENTS
Residential Real Estate Overview
Prepared and Presented by:
Harper J. Dimmerman, Esq.The Law Offices of Harper J. Dimmerman P.C.
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Residential Real Estate Overview
I. Agreements A. Standard PAR Form B. Deadlines C. Key Provisions D. Contingencies E. Lawyer’s Role
II. Disclosures A. Pennsylvania Disclosure Law B. Form Disclosures C. Other Disclosures
III. Title Insurance A. Recent Changes B. Rates and Charges C. Search D. Commitment E. Final Policies/Recording
IV. Litigation A. Before Settlement B. After Settlement C. Lis Pendens/Specific Performance D. Decisions
Appendices A. Standard Agreement of Sale B. Seller’s Property Disclosure Statement C. Cases D. Articles
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Source: All Sources > Cases > PA State Cases, Combined Terms: real w/1 estate and 2006 and error and realtor (Edit Search)
2006 PA Super 61, *; 895 A.2d 614; 2006 Pa. Super. LEXIS 252, **
CHERYL A. SCHWARZWAELDER, Individually, and as Trustee of the CHERYL SCHWARZWAELDER IRREVOCABLE TRUST, STEVEN B. SCHWARZWAELDER, Individually and as Trustee of the STEVEN B. SCHWARZWAELDER IRREOVOCABLE TRUST, Appellants v. JULIAFOX, FOX REAL ESTATE SERVICES, RICHARD DOBROSIELSKI, JR., AND JILL FOX a/k/a JILL
FOX DOBROSIELSKI, Appellees
No. 421 WDA 2005
SUPERIOR COURT OF PENNSYLVANIA
2006 PA Super 61; 895 A.2d 614; 2006 Pa. Super. LEXIS 252
December 6, 2005, Argued
March 23, 2006, Filed
PRIOR HISTORY: [**1] Appeal from the Order of the Court of Common Pleas of Allegheny County, Civil Division, No. 04-12401. Before FRIEDMAN, J.
DISPOSITION: AFFIRMED.
COUNSEL: Chris Passodelis, Jr., Pittsburgh, for appellants. John D. Eddy, Pittsburgh, for appellees.
JUDGES: Before: KLEIN, PANELLA, and JOHNSON, JJ. Opinion by JOHNSON, J.
OPINIONBY: JOHNSON
OPINION: OPINION BY JOHNSON, J.: [*P1] Cheryl A. Schwarzwaelder and Steven B. Schwarzwaelder, individually and as trustees of irrevocable trusts bearing their names (the Schwarzwaelders), appeal the trial court's order granting preliminary objections in the nature of a demurrer and denying them leave to amend their complaint. The Schwarzwaelders contend that the trial court both misapprehended the elements of the common law and statutory causes of action they assert and erred in concluding that they have no standing to seek the remedies they claim against the defendants named. We do not find reversible error in the court's disposition. Accordingly, we affirm its order granting preliminary objections in the nature of a demurrer. [*P2] This matter arises out of a real estate sale that was successfully concluded almost two years before the commencement of this action. At all relevant times, the Schwarzwaelders held record title to 173 Backbone Road, which consisted[**2] of a large home and acreage in Sewickley, Allegheny County. Seeking to sell the property, the Schwarzwaelders contracted with Howard Hanna Real Estate Services which, in turn, listed it in West Penn Multi-List, a service that gives real estate brokers access to the listings of other brokerages and thereby allows maximum exposure of their clients' properties. In exchange for participation in this service, the listing real estate brokerage agrees to pay anylicensed realtor or agency who produces a buyer for the subject property from the proceeds of the sales commission paid by the seller. Howard Hanna listed the Schwarzwaelders'
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property at $ 1,600,000; hence, the anticipated sales commission equaled $ 80,000, Hanna to pay half that amount to the seller's realtor. [*P3] On July 26, 2002, Richard Dobrosielski, Jr., represented by Fox Real Estate Services, offered $ 1,450,000 for the property. To document his ability to consummate the transaction,defendant Julia Fox, who allegedly acted as Dobrosielski's realtor, represented to the Schwarzwaelders' realtor that Dobrosielski had pre-approved financing. Accordingly, the Schwarzwaelders accepted the offer and the parties scheduled[**3] an initial closing date of October 1, 2002. As the closing date approached, however, Dobrosielski acknowledged that he had not been pre-approved, and requested an extension of the closing date to October 15, 2002, to allow him to obtain financing. On October 9, 2002, Dobrosielski further documented his intention to proceed by producing a letter from his mortgage broker purporting to guarantee financing at a stated rate and term and committing to pay the Schwarzwaelders $ 75,000 if such financing could not be obtained. In addition, the mortgage broker paid the Schwarzwaelders $ 2205.91 as compensation for the delay between the original and rescheduled closing dates. The broker did obtain financing and, two days later, on October 11, 2002, the parties closed the transaction, vesting Dobrosielski with legal title to 173 Backbone Road. The sale yielded a commission of $ 72,500, of which Howard Hanna paid $ 36,250 to Fox Real Estate Services, as determined by contract with West Penn Multi-List. [*P4] Subsequently, during the summer of 2004, the Schwarzwaelders learned that Dobrosielski's alleged agent, Julia Fox, did not in fact hold a realtor's license and that Dobrosielski's wife, [**4] Jill Fox, was the principal of Fox Real Estate Services. Consequently, they commenced this action, alleging that Dobrosielski, his wife, Jill Fox, his mother-in-law, Julia Fox, and Fox Real Estate Services had breached the agreement of sale by failing to close on the originally scheduled date and holding out Julia Fox as his agent when she was not, in fact, a licensed realtor. The Schwarzwaelders alleged further that Dobrosielski's failure to disclose the status of Julia Fox and Fox Real Estate Services constituted fraud, intentional misrepresentation, and negligent misrepresentation. Finally, theSchwarzwaelders asserted that the acts and omissions of the defendants, including Jill Fox, constituted Civil Conspiracy and Conversion and violated Pennsylvania's Unfair Trade Practices and Consumer Protection Law. [*P5] Responding to the Schwarzwaelders' Complaint, Dobrosielski and the Foxes filed preliminary objections in the nature of a demurrer asserting that the claims stated failed to raise cognizable bases for relief, as each had either merged with the deed upon closing or thefacts pled were not adequate to invoke the statutory and common law remedies asserted. During oral[**5] argument, the Schwarzwaelders sought leave to amend their complaint both to include additional facts and to add Howard Hanna as an involuntary plaintiff if necessary. The trial court, the Honorable Judith L.A. Friedman, concluded that no amendment could create an actionable claim given the circumstances already alleged and, consequently, denied the Schwarzwaelders' request to amend and sustained the defendants' demurrer. The Schwarzwaelders then filed this appeal, raising the following questions for our review:
1. Whether the Complaint is legally sufficient, and if not, whether the Trial Court erred in denying leave to amend? 2. Whether all indispensable parties have been joined, and if not, whether Defendants waived the right to do so? 3. Whether Plaintiffs lack standing despite their allegations that they suffered financial losses from Defendants['] fraudulent actions? 4. Whether merger and waiver prevent cognizable claims despite Defendants' fraud? 5. Whether Plaintiffs suffered cognizable harm? 6. Whether Defendants' misrepresentation and breach of contract were material? 7. Whether Plaintiffs relied on Defendants' misrepresentations? 8. [**6] Whether there is a legal distinction between fraud and intentional misrepresentation? 9. Whether Defendants' conduct was so
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outrageous so [sic] as to support punitive damages?
Brief for Appellant at 4. [*P6] Before proceeding to the merits of the Schwarzwaelders' claims, we pause to note the endemic shortcomings of their brief. Regrettably, the brief as a whole, at 52 pages long, is needlessly prolix. In addition, the arguments posed offer only limited reference to apposite authority and are sometimes contentious, focusing not on demonstrating the adequacy of Plaintiffs' complaint but on contradicting the trial judge. This shortcoming translates directly into the excessive number of questions posed by the Statement of Questions Involved, which despite its length, fails to identify salient issues for resolution by this Court and dwells instead on isolated legal questions ancillary to the content of the Complaint. Most significantly, the Statement and supporting argument fail to correspond, making review of this very lengthy document much more difficult than it should have been. Although we do notfind the brief's shortcomings sufficient to invoke the penalty[**7] of dismissal, see Pa.R.A.P. 2101, we shall limit our review to only those matters raised that are directly material to the adequacy of the Complaint and the trial court's exercise of discretion in denying the Plaintiffs' request to amend. [*P7] The Schwarzwaelders' appeal arises from entry of an order granting preliminary objections in the nature of a demurrer.
"Preliminary objections in the nature of [a] demurrer test the legal sufficiency of the plaintiff's complaint." Sexton v. PNC Bank, 2002 PA Super 33, 792 A.2d 602, 604 (Pa. Super. 2002). "The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible." Mistick Inc. v. Northwestern Nat'l Cas. Co., 2002 PA Super 267, 806 A.2d 39, 42 (Pa. Super. 2002) (citation omitted). Thus, our scope of review is plenary and our standard of review mirrors that of the trial court. See id. Accepting all material averments as true, we must determine "whether the complaint adequately states a claim for relief under any theory of law." Id. (citation omitted).
[**8] Homziak v. General Electric Capital Warranty Corp., 2003 PA Super 442, 839 A.2d 1076, 1079 (Pa. Super. 2003). [*P8] The Schwarzwaelders' first question appears to encapsulate the thrust of this appeal; i.e., whether the Complaint is legally sufficient and whether the trial court erred in denying leave to amend. Their third, fifth and seventh questions, concerning standing, cognizable harm, and reliance upon misrepresentations focus the issues most central to our determination. Accordingly, we shall consider the first, third, fifth, and seventh questions together as they relate to the sufficiency of the Complaint. [*P9] The Schwarzwaelders argue that the claims and remedies they pled in their Complaint are sustained by "a complementary body of federal and state civil and criminal statutes and regulations, including but not limited to, [UTPCPL] [the Pennsylvania Unfair Trade Practices and Consumer Protection Law], Pennsylvania Real Estate Brokers License Act[,] 63 P.S. § 455.101, et seq. ("RELRA")[,] the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601[,] et seq[**9] . ("RESPA")[,] and Pennsylvania common law." Brief for Appellant at 19. Although the Schwarzwaelders offer supporting arguments to explain the significance of
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these respective statutes to their claims against the defendants, these arguments fail to resolve the reservations of the trial court concerning both cognizable harm and standing, reservations that we share. [*P10] Addressing the issue of cognizable harm, the trial court recognized and rejected, as follows, the same argument the Schwarzwaelders advance here:
Plaintiffs are clearly furious that Defendant Buyer's wife or mother-in-law got part of the commission Plaintiffs gave to Hanna, but their fury is legally puzzling: Plaintiffs themselves have suffered no cognizable harm. Plaintiffs seem to think that they could have negotiated a lower commission with Hanna had they but known at the time that Jill was Defendant Richard Dobrosielski's wife. While this is speculative, at best, even taking it as true, we come back to the important jurisdictional problem: Hanna is indispensable either as a plaintiff or as a defendant.
Trial Court Opinion, 4/6/05, at 9 (emphasis in original). We need not address whether[**10]Hanna is an indispensable party to this litigation to concur in the trial court's assessment thatthe Schwarzwaelders have failed entirely to demonstrate any real pecuniary loss as a result of the Defendants' failure to disclose their respective family and business relationships. Initially, the Schwarzwaelders' argument that renegotiation of the sales commission rate "is the industry standard when there is only one (1) licensed broker involved in a residential multi-list sale," Brief for Appellant at 34, is not supported by any reference to authority. Moreover, even if such a claim were factually true, the Schwarzwaelders' supposition that they necessarily would have benefited from a renegotiated commission in this transaction is wholly speculative. Accordingly, their claim that they suffered damages in the amount of the commission paid to Fox Real Estate is incapable of proof. See Rizzo v. Haines, 520 Pa. 484, 555 A.2d 58, 68 (Pa. 1989) (characterizing damages as "speculative" if the fact of loss is uncertain). Without some plausible allegation of damages, the Schwarzwaelders' claims of breach of contract, common law fraud, and violation of the UTPCPL simply[**11] cannot be sustained. See Sullivan v. Chartwell Inv. Partners, LP, 2005 PA Super 124, 873 A.2d 710, 716 (Pa. Super. 2005) ("A breach of contract action involves (1) the existence of a contract, (2) a breach of a duty imposed by the contract, and (3) damages."); Huddleston v. Infertility Center of America, 700 A.2d 453, 461 (Pa. Super. 1997) (reaffirming element of injury to plaintiff resulting from defendant's false representation to sustain claim of fraud); 73 P.S. § 201-9.2 (requiring showing of "ascertainable loss" to sustain private cause of action under UTPCPL). [*P11] Even if the Schwarzwaelders could plead and prove the requisite damages, their statutory claims would fail nonetheless, either because the Schwarzwaelders are not eligible claimants or because the statutes themselves create no private cause of action. We consider first, Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1, et seq. (UTPCPL). The applicable provision of the UTPCPL establishes a private cause of action under the following enumerated circumstances:
[**12] § 201-9.2. Private actions (a) Any person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by any person of a method, act or practice declared unlawful by section 3 of this act, may bring a private action to recover actual damages or one hundred dollars ($ 100), whichever is greater.
73 P.S. § 201-9.2(a) (emphasis added). Applying this provision, the trial court concluded that
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the facts the Schwarzwaelders pled, if true, "make it clear that Plaintiffs 'purchased or leased'nothing from any of the Defendants." Trial Court Opinion, 4/6/05, at 15. In response, the Schwarzwaelders argue that, in fact, they purchased the services of Dobrosielski's agents, Julia and Jill Fox and Fox Real Estate Services, because they paid a real estate commission of 5% to Howard Hanna Real Estate, which in turn paid Fox pursuant to its agreement with West Penn Multi-List. Brief for Appellant at 34. [*P12] A similar argument was considered by this Court and rejected in DeFazio v. Gregory. See 2003 PA Super 418, 836 A.2d 935, 939 (Pa. Super. 2003)[**13] ("Though the UTPCPL does not define the term 'buyer, 'we can be certain that it does not mean seller. Furthermore, we conclude that 'purchases' in Section 201-9.2 cannot be defined as 'sells. '"). Although the Schwarzwaelders attempt a cursory distinction of DeFazio, their rationale, which appears in a footnote, is not persuasive. Brief for Appellant at 27 n. 10 ("The Court in DeFazio was addressing an ancillary timber service contract and never addressed the issue of whether a seller of residential real estate using the West Penn multi-list system, in which the seller simultaneously is compelled to be a purchaser of the buyers' real estate agent's service[,] has a private right of action under [UTPCPL]."). Unfortunately, this distinction merely reasserts the dubious premise that the Schwarzwaelders were the purchasers of real estate services from Fox Real Estate, Dobrosielski's realtor. The Schwarzwaelders offer no authority from any jurisdiction to support this novel proposition. Moreover, their assertion ignores the circumstances inherent in virtually any such transaction; the Schwarzwaelders contracted with Howard Hanna and negotiated a fee for service upon[**14] Hanna's production of a buyer ready, willing, and able to consummate the sale. They never retained Julia Fox, Jill Fox, or Fox Real Estate and had no contractual relationship with any of them. Consequently, Fox Real Estate owed them no contractual duty; rather Fox, as the buyers' agent, contracted with the buyer to serve his interest. The fact that Fox was paid its commission by Howard Hanna, which split the total fee remitted by the Schwarzwaelders does not render the Schwarzwaelders Fox's clients. Contrary to the Schwarzwaelders' assertion, the fee accepted by Howard Hanna became Hanna's property subject to the contractual mandate imposed by West Penn Multi-List that it split the sum with the buyer's realtor. The Schwarzwaelders purchased nothing from Fox and cannot claim an attendant cause of action under the UTPCPL. [*P13] For this same reason, the Schwarzwaelders' claim for relief under RESPA (the Real Estate Settlement Procedures Act) is also devoid of merit. Although, like the UTPCPL, RESPA allows plaintiffs to assert a private suit for money damages, see 12 U.S.C. § 2607(d)(2), (5),the cause of action appears to arise only in favor of[**15] parties to the real estate settlement transaction actually charged for the service at issue. See 12 U.S.C. § 2607(d)(2) ("Any person or persons who violate the prohibitions or limitations of this section shall be jointly and severally liable to the person or persons charged for the settlement service ...."). Because the Schwarzwaelders purchased no service from any of the defendants, we conclude that RESPA does not vest them with the right to the award of damages they now claim. [*P14] The Schwarzwaelders' additional claim that a remedy is available to them under RELRA (the Pennsylvania Real Estate Brokers License Act) fails to raise a cognizable cause of action. Unlike either RESPA or the UTPCPL, RELRA does not contemplate private actions formoney damages as an enforcement mechanism and, consequently, does not create a private cause of action. In point of fact, the statute prohibits civil suits by anyone seeking payment of a real estate commission who is not a licensed real estate broker, see 63 P.S. § 455.302, and specifically empowers the Pennsylvania Real Estate Commission to police related transactions, [**16] see 63 P.S. § 455.406(1) ("The commission shall have the power and its duty shall be to administer and enforce the laws of the Commonwealth relating to ... those activities involving real estate for which licensing is required under this act ....").The Schwarzwaelders offer no basis upon which we might purport to expand the reach of this statute, and given its inclusion of the foregoing enforcement mechanism, we are aware of none. Accordingly, we conclude that RELRA, like RESPA, UTPCPL, common law fraud, and
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breach of contract, fails to offer any basis upon which the Schwarzwaelders can recover as a matter of law. [*P15] Having determined that the causes of action the Schwarzwaelders assert offer no basis for recovery on the facts alleged, we need now only consider whether the trial court abused its discretion in refusing to allow amendment of the complaint. "Our standard of review of a trial court's order denying a plaintiff leave to amend its complaint ... permits us to overturn the order only if the trial court erred as a matter of law or abused its discretion." Brickman Group Ltd. V. CGU Ins. Co., 2004 PA Super 487, 865 A.2d 918, 926-27 (Pa. Super. 2004).[**17] "The trial court enjoys 'broad discretion' to grant or deny a petition to amend." Id. at 927. Although the court generally should exercise its discretion to permit amendment, "where a party will be unable to state a claim on which relief could be granted, leave to amend should be denied." Id.; see also Feldman v. Lafayette Green Condo. Ass'n, 806 A.2d 497, 500 (Pa. Cmwlth. 2002) ("Leave to amend will be withheld where the initial complaint reveals the prima facie elements cannot be established and where the defects are so substantial amendment is unlikely to cure them."). [*P16] In this case, the Schwarzwaelders contend that the trial court should have allowed amendment to permit them to attach the parties' listing contract with West Penn Multi-List to substantiate a contractual relationship between themselves and the Fox Real Estate and the other Fox defendants. Brief for Appellant at 45-46. Yet the Schwarzwaelders' recitation of the language upon which they rely fails to support their position. The provision of the agreement at issue is reproduced in the Schwarzwaelders' brief as follows:
Owner understand [sic] that this property may[**18] be shown to prospective buyers (a) by subagents of the listing Broker; (b) by Brokers who solely represent the Buyer (Buyer-Agents) or (c) by Brokers who do not represent either Owner or Buyer (Transaction Licensees). Owner authorizes the Listing Broker to share information and to fully cooperate with subagents of the Listing Broker, with Buyer-Agents and with Transactional Licensees. Owner further authorizes Listing Broker to offer compensation to subagents, Buyer-Agents and Transactional Licensees including the sharing a part of the Listing Broker's commission.
Brief for Appellant at 46 (emphasis in original). The Schwarzwaelders attempt, through the addition of emphasis to the final sentence of this excerpt to suggest a relationship between themselves and Fox Real Estate Services as the "Buyer-Agent." We find nothing in this language, however, to substantiate that suggestion. The "Owner's" authorization of the listing broker to offer compensation to subagents appears merely permissive. The Schwarzwaelders offer no authority to sustain their assertion that it establishes the desired contractual relationship between themselves as sellers and the buyer's agent, [**19] nor are we aware of any. Indeed, the provision's definition of "Buyer-Agents" as "brokers who solely represent the Buyer," appears to undermine the connection the Schwarzwaelders seek.Because addition of such language by way of attachment to the Complaint does not appear to offer a remedy for that document's current deficiencies, we find no basis upon which the trial court should have allowed amendment to include it. See Brickman Group Ltd., 865 A.2d at 929; see also Feldman, 806 A.2d at 502. Accordingly, the trial court did not abuse its discretion by refusing to allow it. [*P17] For the foregoing reasons, we affirm the trial court's order sustaining the defendants'preliminary objections in the nature of a demurrer and refusing the Schwarzwaelders' requestto amend their Complaint. [*P18] Order AFFIRMED.
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Source: All Sources > Cases > PA State Cases, Combined Terms: real w/1 estate and 2006 and error and realtor (Edit Search)
View: FullDate/Time: Sunday, June 4, 2006 - 6:18:18 PM EDT
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Source: All Sources > Find Cases > PA State Cases, CombinedTerms: real w/1 estate and may w/2 2007 (Edit Search)
2007 Pa. LEXIS 1195, *
WILL SALLEY, JR., Appellant v. OPTION ONE MORTGAGE CORP.; CIT GROUP; JOHN DOE TRUSTEE; JOHN DOE TRUST; AND JOHN DOES # 'S 1-100, Appellees
No. 50 EAP 2005
SUPREME COURT OF PENNSYLVANIA
2007 Pa. LEXIS 1195
September 12, 2006, Argued May 31, 2007, Decided
PRIOR HISTORY: Salley v. Option One Mortg. Corp., 2005 U.S. App. LEXIS 29399 (3d Cir. Pa., Oct. 20, 2005)
JUDGES: [*1] CAPPY, C.J., CASTILLE, NEWMAN, SAYLOR, EAKIN, BAER, BALDWIN, JJ. Former Justice Newman did not participate in the decision of this case. Mr. Chief Justice Cappy and Messrs. Justice Castille, Eakin and Baer join the opinion. Madame Justice Baldwin files a dissenting opinion.
OPINION BY: SAYLOR
OPINION: Order granting Petition for Certification of Question of Law MR. JUSTICE SAYLOR This Court accepted certification from a panel of the United States Court of Appeals for the Third Circuit to consider whether an arbitration agreement, consummated in connection with a residential mortgage loan, which reserves judicial remedies related to foreclosure is presumptively unconscionable. The matter arises in the context of a federal lawsuit asserting violations of various mortgage-regulation and consumer-protection laws by a sub-prime lender, i.e., a financial institution affording higher-interest loans to consumers with impaired credit histories. Prevailing Pennsylvania law on this subject was established by a decision of a Superior Court panel in Lytle v. CitiFinancial Services, Inc., 2002 PA Super 327, 810 A.2d 643 (Pa. Super. 2002), which held that "under Pennsylvania[*2] law, the reservation by [a financial institution] of access to the courts for itself to the exclusion of the consumer creates a presumption of unconscionability, which in the absence of 'business realities' that compel inclusion of such a provision, renders the arbitration provision unconscionable and unenforceable under Pennsylvania law." Id. at 665 (emphasis in original). Lytle, however, conflicts with a prior decision of the Third Circuit in Harris v. Green Tree Financial Corporation, 183 F.3d 173 (3d Cir. 1999), which, in interpreting Pennsylvania law, reasoned that "the mere fact that [the lender] retains the option to litigate some issues in court, while [the consumer] must arbitrate all claims does not make the arbitration agreement unenforceable." Id. at 183. In requesting this Court's consideration of the certified question, the Third Circuit observed that the Lytle/Harris conflict has created confusion and generated inconsistent results among district courts in the federal system. See Salley v. Option One Mortgage Corp., No. 04-4241, 2005 U.S. App. LEXIS 29399, slip op., 2005 WL 3724871, at *3 n.7 (3d Cir. Oct. 20, 2005) [*3] (citing cases).
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I. The background underlying the certification petition is as follows. The appellant, Will Salley, Jr., a low-income homeowner in Philadelphia, applied for and received a residential mortgage loan from the appellee, Option One Mortgage Corp., a sub-prime lender. As part of the application process, Mr. Salley was required to enter into a written "Agreement for the Arbitration of Disputes." That agreement mandated arbitration of most disputes upon any party's request, indicating that the claims were to be administered by the American Arbitration Association and governed by the Federal Arbitration Act, Title 9, U.S.C., with the arbitrator being authorized to award any remedy or relief that a court of appropriate jurisdiction could order or grant. The agreement, however, excepted some remedies from arbitration, largely, at least, creditor remedies including foreclosure, as follows:Exceptions: The following are not disputes subject to this Agreement: (1) any judicial or non-judicial foreclosure proceeding against any real or personal property that serves as collateral for the loan, whether by the exercise of any power of sale under any deed of trust, mortgage,[*4] other security agreement or instrument under applicable law, (2) the exercise of any self-help remedies (including repossession and setoff rights) and (3) provisional or ancillary remedies with respect to the loan or any collateral for the loan such as injunctive relief, sequestration, attachment, replevin or garnishment, the enforcement of any assignment of rents provision in any loan documents, the obtaining of possession of any real property collateral for the loan by an action for unlawful retainer or the appointment of a receiver by a court having jurisdiction. This means that nothing in this Agreement shall limit your right or our right to take any of these actions. The institution and/or maintenance of any action or remedy described in this paragraph shall not constitute a waiver of your right or our right to arbitrate any dispute subject to this Agreement. Mr. Salley commenced the federal action against Option One and others in the Eastern District of Pennsylvania in May 2004. He alleged, inter alia, that, through material misinformation and nondisclosures, Option One baited him with promises of debt relief through consolidation and low fixed monthly payments, then[*5] switched him into a high-cost, variable-rate refinancing, in violation of various federal and state laws, including the Truth in Lending Act, 15 U.S.C. §§ 1601, et seq., Pennsylvania Usury Law, 41 P.S. §§ 502, et seq., and Pennsylvania Unfair Trade and Consumer Protection Law, 73 P.S. §§ 201-1, et seq., and asserted common law theories including breach of contract and fraud. Further, Mr. Salley asserted that Option One failed to deliver funds to him at closing as represented on the settlement documents, and to completely pay bills and satisfy mortgages for purposes of debt consolidation as it had promised, and as a result, foreclosure proceedings were initiated by the assignee of another lender. According to the complaint, Option One's purported conduct is an instance of predatory lending, in which unscrupulous lenders use deceptive and high-pressure marketing techniques targeting poor, elderly, and minority populations to advance secured loans carrying inflated costs and obligations, and which are made without regard to the ability to repay, in anticipation of eventual foreclosures that will[*6] strip borrowers of their equity. Mr. Salley sought rescission of the loan transaction, termination of any security interest created in his property, return of monies that he paid in connection with the transaction, forfeiture and return of the loan proceeds, actual and statutory damages, and an award of attorneys' fees and costs. In response, Option One filed a motion to dismiss or, alternatively, to stay the action pendingarbitration. Mr. Salley responded with the argument that, consistent with Lytle, the arbitration agreement was unconscionable and unenforceable in light of the exception for foreclosure and other creditor remedies. The district court granted the motion to dismiss, relying upon the Third Circuit's prediction in Harris that this Court would not find a similar arbitration clause unconscionable. Mr. Salley lodged an appeal in the Third Circuit, which, in turn and as noted, petitioned this Court for certification of the following question:Whether the arbitration agreement under consideration
40
in this case, which exempts from binding arbitration certain creditor remedies, while requiring the submission of other claims to arbitration, is unconscionable[*7] under Pennsylvania law, as suggested by Lytle v. CitiFinancial Services, Inc., 2002 PA Super 327, 810 A.2d 643 ([Pa. Super.] 2002) (one-sided agreement presumptively unconscionable) (contra Harris v. Green Tree Fin. Corp., 183 F.3d 173 (3d Cir. 1999)) and is therefore unenforceable?Salley, No. 04-4241, 2005 U.S. App. LEXIS 29399, slip op., 2005 WL 3724871, at *3. We accepted the question as certified, and thus, in essence, we are asked to determine whether Lytle reflects the law of Pennsylvania. This legal issue, over which our review is plenary, has been fully briefed and argued before this Court. In addition to the briefs filed by the parties to the federal action, an amicus curiae brief has been submitted, in support of Mr. Salley's position, by the National Consumer Law Center, National Association of Consumer Advocates, Community Legal Services, and AARP. Supporting Option One, an amicus brief has been filed by the American Bankers Association, American Financial Services Association, Chamber of Commerce of the United States of America, Consumer Bankers Association, Pennsylvania Bankers Association, Pennsylvania Chamber of Business[*8] and Industry, Pennsylvania Association of Community Bankers and Pennsylvania Financial Services Association. II. Both parties appear to accept the relevance of the Federal Arbitration Act, which applies to written arbitration agreements that are part of a "contract evidencing a transaction involving interstate commerce." 9 U.S.C. § 2. n1 This enactment expresses a liberal federal policy favoring arbitration agreements. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 941, 74 L. Ed. 2d 765 (1983). Congress's purpose was to overcome state legislative and judicial efforts to undermine the enforceability of arbitration agreements, inter alia, by establishing a substantive rule of federal law placing such agreements upon the same footing as other contracts. See Southland Corp. v. Keating, 465 U.S. 1, 16, 104 S. Ct. 852, 861, 79 L. Ed. 2d 1 (1984). The federal statute thus requires that a "written provision . . . to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon any grounds at law or in[*9] equity for the revocation of any contract. 9 U.S.C. § 2. n2 Under the latter proviso, however, generally applicable state-law contract defenses, such as fraud, duress, or unconscionability, still may be applied to invalidate arbitration agreements. See Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 116 S. Ct. 1652, 1656, 134 L. Ed. 2d 902 (1996). - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n1 It appears to be undisputed that: Option One is a California corporation with its principal place of business outside of Pennsylvania; Mr. Salley is a Pennsylvania resident; and the real property that is the collateral for the Option-One/Salley loan is located in Pennsylvania. n2 Pennsylvania law reflects an identical policy embodied in the Uniform Arbitration Act. See 42 Pa.C.S. § 7303 ("A written agreement to subject any existing controversy to arbitration or a provision in a written agreement to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable, and irrevocable, save upon such grounds as exist at law or in equity relating to the validity, enforceability or revocation of any contract."). - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -[*10] The doctrine of unconscionability has been applied in Pennsylvania as both a statutory and a common-law defense to the enforcement of an allegedly unfair contract or contractual provision. See 13 Pa.C.S. § 2302 (establishing the doctrine's applicability pertaining to
41
contracts involving goods and services within the purview of the Pennsylvania Commercial Code); Denlinger, Inc. v. Dendler, 415 Pa. Super. 164, 175-77, 608 A.2d 1061, 1067-68 (1992) (discussing the common-law conception of unconscionability). This Court, however, has not frequently discussed the common-law application. Nevertheless, we agree with the general formulation which has been applied fairly consistently in the intermediate appellate courts, and which borrows from the statutory version and is largely consonant with the Second Restatement of Contracts. See Restatement (Second) of Contracts § 208 (1981). Under that formulation, a contract or term is unconscionable, and therefore avoidable, where there was a lack of meaningful choice in the acceptance of the challenged provision and the provision unreasonably favors the[*11] party asserting it. See Denlinger, Inc., 415 Pa. Super. at 177, 608 A.2d at 1068 (citing Witmer v. Exxon Corp., 495 Pa. 540, 551, 434 A.2d 1222, 1228 (1981)). The aspects entailing lack of meaningful choice and unreasonableness have been termed procedural and substantive unconscionability, respectively. See generally 17A Am. Jur. 2d Contracts § 278 (2006). n3 The burden of proof generally concerning both elements has been allocated to the party challenging the agreement, and the ultimate determination of unconscionability is for the courts. See Bishop v. Washington, 331 Pa. Super. 387, 400, 480 A.2d 1088, 1094 (1984); accord 13 Pa.C.S. § 2302. Nevertheless, where material facts are disputed, for example, concerning the general commercial background underlying a challenged transaction and/or the commercial needs of a particular trade, fact finding may be necessary. Accord Restatement (Second) of Contracts § 208, comment f ("[T]he determination is made 'as a matter of law,' but the parties are to be afforded an opportunity[*12] to present evidence as to commercial setting, purpose and effect to aid the court in its determination."); 13 Pa.C.S. § 2302 ("When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination."). - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n3 Option One argues at length that parties to a contract should be free to make whatever agreements they wish; contracts should not be voided merely because a court believes that the bargains that they reflect are unwise; and Pennsylvania courts should adhere to their historical reluctance to void contracts on public policy grounds. See, e.g., Hall v. Amica Mutual Ins. Co., 538 Pa. 337, 348, 648 A.2d 755, 760 (1994) ("It is only when a given policy is so obviously for or against the public health, safety, morals or welfare that there is a virtual unanimity of opinion in regard to it, that a court may constitute itself the voice of the community in so declaring."); see also Snow v. Corsica Construction Co., 459 Pa. 528, 329 A.2d 887 (1974) (explaining that "[i]nadequacy of price, improvidence, surprise, and mere hardship, none of these, nor all combined, furnish an adequate reason for a judicial rescissionof a contract. For such action something more is demanded -- such as fraud, mistake, or illegality." (quoting Frey's Estate, 223 Pa. 61, 65, 72 A. 317, 318 (1909))). While Option One's position in this regard is well taken, we believe that the elements of procedural and substantive unconscionability, when property applied, meaningfully distinguish the range of ordinary and acceptable bargaining situations from those in which strong public policy does favor contract avoidance. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -[*13] Although an arbitration agreement may be challenged on grounds of unconscionability, as Mr. Salley does here, the United States Supreme Court has expressed the concern that allowing a party to invoke judicial review to challenge the parties' overall agreement (and therefore also an arbitration component) would contravene Congress' purpose to facilitate a just and speedy resolution of controversies that is not subject to delay and/or obstruction in the courts. See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404, 87 S. Ct.
42
1801, 1806, 18 L. Ed. 2d 1270 (1967); accord Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444, 126 S. Ct. 1204, 1208, 163 L. Ed. 2d 1038 (2006). Accordingly, the Supreme Court has determined that a challenge to the validity of a contract as a whole, and not specifically to an arbitration clause, must be presented to the arbitrator and not the courts. Id. at 447, 126 S. Ct. at 1210. The courts may consider, in the first instance, only those challenges that are directed solely to the arbitration component itself. See id. at 446, 126 S. Ct. at 1209. III. [*14] Mr. Salley's arguments proceed under the state-law defense proviso of the Federal Arbitration Act, and, not surprisingly (in light of Prima Paint and Buckeye), he styles his challenge as one going solely to the arbitration agreement, consistent with Lytle. According to Mr. Salley, the arbitration agreement is procedurally unconscionable because it is a contract of adhesion dictated by a party with vastly superior bargaining power. On the matterof substantive unconscionability, Mr. Salley contends that Lytle reflects the appropriate conclusion that the exceptions to mandatory arbitration for foreclosure and other creditor remedies unreasonably favor Option One. In this regard, he suggests that there is nothing at law that prevents an arbitrator from adjudicating in rem or equitable claims concerning secured property or administering an effective foreclosure proceeding. As to the Third Circuit's Harris decision, Mr. Salley's position is that the federal court placed undue reliance on the fact that Pennsylvania law does not require mutuality of remedy to support a contract.See Harris, 183 F.3d at 183. Mr. Salley stresses that the heart of substantive[*15] unconscionability is not mutuality but reasonableness, and for this reason, he claims that the Third Circuit's focus was misplaced. Although the cases are sometimes fact-sensitive, several jurisdictions have found consumer arbitration agreements containing expansive exceptions allowing creditor access to the courts to be unconscionable. n4 Finally, Mr. Salley indicates that, if unconscionability is not manifest on the face of the existing record, a hearing should be afforded to address the issue, with the burden of proof being allocated to Option One in accordance with Lytle. - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n4 See, e.g., Wisconsin Auto Title Loans, Inc. v. Jones, 2006 WI 53, 290 Wis. 2d 514, 714 N.W.2d 155, 171-74 (Wisc. 2006) (finding unconscionable an arbitration agreement in the consumer lending setting containing a broad carve-out for creditor remedies); Taylor v. Butler, 142 S.W.3d 277, 284-87 (Tenn. 2004) (same); Iwen v. U.S. West Direct, 1999 MT 63, 293 Mont. 512, 977 P.2d 989, 995-96 (Mont. 1999); Arnold v. United Companies LendingCorp., 204 W. Va. 229, 511 S.E.2d 854, 862-63 (W. Va. 1998); Flores v. Transamerica HomeFirst, Inc., 93 Cal. App. 4th 846, 113 Cal.Rptr.2d 376, 382-83 (Cal. Ct. App. 2001). - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -[*16] Mr. Salley's amici, on the other hand, do not refer directly to Lytle. Rather, their expressed objective is to place the certified issue in a larger context, which they describe as a prevailingpublic policy crisis of predatory lending threatening vulnerable homeowners and their communities. n5 Although amici do not criticize arbitrations generally, their position is that mandatory arbitration has played a central role in insulating unscrupulous home mortgage lenders from scrutiny and liability for pervasive wrongdoing. Mr. Salley's amici regard two aspects of the Option-One/Salley arbitration agreement as particularly objectionable. First, amici contend that the agreement requires that the parties pay exorbitant costs and fees to the arbitral forum, making it impossible for an indigent person facing foreclosure to afford arbitration. Second, amici take the position that the agreement has the effect of requiring consumers facing a home foreclosure to litigate nearly identical statutory claims twice, once in state court against the foreclosing entity (to whom the loan has been sold/assigned in a
43
secondary market), and a second time in an arbitral forum against[*17] Option One as the lender. According to amici, this "split forum" effect places an insurmountable and disproportionate burden on poor, elderly, and minority borrowers in Pennsylvania and elsewhere, making the pursuit of arbitration so impractical that it is tantamount to no remedy at all. - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n5 Amici note that not all subprime lenders are predatory lenders; however, they explain that predatory lenders operate within and exploit advantages of the subprime lending market, which is generally less regulated and less competitive than the conventional lending market. See Brief of Amici Curiae at 12 (citing Kathleen C. Engel and Patricia A. McCoy, A Tale of Three Markets: The Law and Economics of Predatory Lending, 80 Tex. L. Rev. 1255, 1270-97 (2002)). - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - Option One opens its presentation by stressing the narrowness of the legal question certified by the Third Circuit. According to Option One, the matters raised by Mr. Salley's amici are largely outside of the appropriate range of[*18] this Court's present review, since the enforceability of the arbitration agreement and the question framed by the Third Circuit do not involve the merits of the parties' underlying dispute. Further, Option One notes that the Third Circuit expressly placed certain matters discussed by Mr. Salley's amici beyond the scope of the question certified to this Court, for example, questions concerning whether the costs of arbitration would be prohibitively expensive. n6 - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n6 The Third Circuit indicated that Mr. Salley waived such matters by failing to pursue them in the argument section of his federal appellate brief. See Salley, No. 04-4241, 2005 U.S. App. LEXIS 29399, slip op., 2005 WL 3724871, at *2 n.5. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - On the question of whether the exceptions to mandatory arbitration contained in the parties' agreement are substantively unconscionable, Option One submits that this Court should reject Lytle and declare that such provision does not prevent enforcement of the parties' agreement to arbitrate. In the first instance,[*19] Option One characterizes Lytle as openly antagonistic toward financial institutions and the use of arbitration agreements in consumer transactions, n7 in contravention of the strong federal and state policies favoring the arbitration of disputes across the broad range of commerce, including consumer lending. According to Option One, the Lytle panel applied an arbitration-specific standard for unconscionability, without recognizing that such directed rules are preempted by the Federal Arbitration Act. See Doctor's Associates, 517 U.S. at 687, 116 S. Ct. at 1656 (applying preemption theory to invalidate a state procedural rule affecting the enforceability of an arbitration agreement); Perry v. Thomas, 482 U.S. 483, 492 n.9, 107 S. Ct. 2520, 2527 n.9, 96 L. Ed. 2d 426 (1987) ("A court may not, . . . in assessing the rights of litigants to enforce an arbitration agreement, construe that agreement in a manner different from that in which it otherwise construes nonarbitration agreements under state law."). Option One regards Lytle's approach as one requiring mutuality of remedy, which plainly is not necessary to support a valid agreement under[*20] Pennsylvania's ordinary principles of contract law. See Erkess v. Eisenthal, 354 Pa. 161, 164, 47 A.2d 154, 156 (1946); Driebe v. Fort Penn Realty Co., 331 Pa. 314, 319-20, 200 A. 62, 64-65 (1938).
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- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n7 In this regard, Option One refers to passages of Lytle that cast consumer lending practices in terms of "timeless and constant effort by the haves to squeeze from the have nots even the last drop," Lytle, 810 A.2d at 658 n.8 (emphasis in original); attribute to the entire lending industry an intent to use arbitration provisions to thwart every state consumer statute enacted to balance economic disparities between financial institutions and consumers,see id. at 660; and offer aspects of proposed consumer protection legislation that were not passed into law as exemplifying overarching social policy norms, see id. at 660-62 & nn. 10-11. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - Option One posits that, according due respect to the strong federal and state policies favoring arbitration,[*21] terms like those in the Option-One/Salley arbitration agreement are neither one-sided nor unfair to borrowers, much less substantively unconscionable. It is the company's position that the exception for judicial remedies provides benefits to both the borrower and the lender, first, by preserving judicial access for both parties, so that the provisions are not truly non-mutual in the first instance. See Arbitration Agreement at 1 (indicating that "nothing in this Agreement shall limit your right or our right") (emphasis added)). n8 Further, Option One notes that Pennsylvania's detailed framework of laws and procedures governing judicial foreclosure actions strikes a balance between protecting the lender's interests in expeditiously establishing the right to reclaim the mortgaged property onthe one hand, and safeguarding the borrower's interests in keeping his home on the other. See generally Bankers Trust Co. v. Foust, 424 Pa. Super. 89, 92, 621 A.2d 1054, 1056 (1993) (explaining that various provisions of Pennsylvania law regulating foreclosures are "intended to afford homeowners who are in dire economic straits a measure of protection from overly zealous[*22] 'residential mortgage' lenders"). n9 Option One suggests that it is precisely for these reasons that, in providing for compulsory judicial arbitration of certain disputes, the General Assembly excepted all proceedings involving title to real estate. - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n8 As examples of judicial remedies available to borrowers, Option One indicates that preliminary injunctive relief would be available in the courts to protect property, as would permanent relief in a proceeding to quite title. Further, borrowers may assert various counterclaims in foreclosure proceedings. n9 Accord Torrance v. Aames Funding Corp., 242 F. Supp. 2d 862, 872 (D. Or. 2002) (explaining that foreclosure claims that a lender was permitted to litigate in the courts under an arbitration agreement "are heavily regulated by statute, allowing for streamlined procedures and effective protections for both sides"; it is not "unreasonable, much less oppressive, to forego arbitration of such claims"); Walther v. Sovereign Bank, 386 Md. 412, 872 A.2d 735, 749 (Md. 2005) (stating that "foreclosure proceedings . . . do not act solely to protect the interests of the mortgage lender against a defaulting debtor but instead provide protections for both sides"); Conseco Fin. Serv. Corp. v. Wilder, 47 S.W.3d 335, 343 (Ky. App. 2001) (observing that foreclosure claims are "heavily regulated" by statutes that provide "effective protections for both sides"); Lackey v. Green Tree Fin. Corp., 330 S.C. 388, 498 S.E.2d 898, 905 (S.C. App. 1998) ("Judicial remedies for the recovery of property, such as the replevin action, and the foreclosure action, provide specific procedures for protection of collateral and the parties during the pendency of the proceedings. These protections relate to both parties, and are facilitated by the enforcement procedures specifiedin the law."). Specific provisions of Pennsylvania law highlighted by Option One in this regard include: the
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requirement of advance, clear, conspicuous, and detailed written notice in connection with certain residential foreclosures, 41 P.S. § 403; substantial delinquency requirements, 35 P.S. § 1680.403c(a); strict jurisdictional prerequisites, Bankers Trust, 424 Pa. Super. at 91 n.1, 621 A.2d at 1056 n.1; requirements concerning disclosure of the availability of emergency financial assistance, 35 P.S. § 1680.402c; a period of repose if a borrower meets with a consumer credit counseling agency and/or applies for mortgage assistance payments, 35 P.S.§ 1680.403c(b)(4), (6); and a panoply of judicial rules that assure fair and just resolution of foreclosure controversies. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -[*23] Option One's amici point out that many of their constituent members, who are financial institutions and do not engage in subprime lending, have adopted as standard features of their business contracts provisions that mandate the arbitration of various disputes arising from or relating to those contracts. According to amici, these members have structured millions of contractual relationships around arbitration agreements because it is a prompt, fair, inexpensive and effective method of resolving disputes with consumers and other contracting parties; because arbitration minimizes the disruption and loss of goodwill that often results from litigation; and because the United States Supreme Court has consistently endorsed arbitration and enforced the stability of the process over the past several decades. Particularly in light of the breadth of Lytle's approach, amici note that this Court's decision here will impact most mortgage arbitration clauses, which frequently exclude foreclosure proceedings from the scope of arbitration. Like Option One, amici view Lytle as evincing a hostility toward arbitration and as injecting an arbitration-specific requirement of mutuality[*24] into the assessment of arbitration agreements. Because state laws that single out arbitration for special adverse treatment are preempted by the Federal Arbitration Act pursuant to the Supremacy Clause of the United States Constitution, they urge this Court to find that Lytle simply cannot be correct. IV. It is evident from the above that the application of arbitration agreements in the consumer lending industry presents a range of policy issues. For example, as Mr. Salley's amici argue, to the extent that such agreements may be used by unscrupulous financial institutions or others as a tool to facilitate pernicious practices such as predatory lending, judicial redress should be available. On the other hand, as Option One's amici explain, if principled lenders are forced in every case into the courts to litigate arbitrability on an extensive factual record, the benefit of arbitration in terms of securing a just, speedy, and economic resolution of controversies will be lost. Indeed, the United States Supreme Court has characterized the tension between permitting broad-scale, initial judicial review concerning arbitrability and effectuating the policies underlying the Federal[*25] Arbitration Act as presenting a "conundrum." Buckeye, 546 U.S. at 449, 126 S. Ct. at 1210. Notably, in confronting this controversy as it arises in many different variations as individual cases are presented, the Supreme Court has channeled the majority of disputes concerning arbitrability into the arbitration process. n10 For example, in Buckeye, the Court established a bright-line rule that, where a challenge can be viewed as going to the validity of a contract as a whole, and not specifically to the arbitration clause, it must be addressed by an arbitrator. See id. at 449, 126 S. Ct. at 1210. - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n10 Pennsylvania's Uniform Arbitration Act appears to manifest a similar policy designed to streamline and/or curtail initial judicial review. On an application to compel arbitration, wherethe opposing party denies the existence of an agreement to arbitrate, the enactment requiresthat the court is to "proceed summarily to determine the issue so raised." 42 Pa.C.S. § 7304
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(a) (emphasis added). - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -[*26] In this case, the Third Circuit panel premised the certified question concerning whether the Option-One/Salley arbitration agreement is unconscionable on the understanding that this is a question of law and that there are no disputed questions of material fact involved in this case. See Salley, No. 04-4241, 2005 U.S. App. LEXIS 29399, slip op., 2005 WL 3724871, at * 1 n.2 ("No material facts are in dispute here."). While we agree that the determination of whether an agreement is unconscionable is ultimately a question of law, as we have developed above, the necessary inquiry is often fact sensitive. For example, to the extent that Mr. Salley's claim is that his arbitration agreement was intended to function and/or functioned as a tool of predatory lending, we believe that there are substantial factual disputes involved. In light of such potential factual disputes and/or ambiguities that may prevail relative to discrete arbitration agreements, the threshold question presented in this line of cases is not generally whether an arbitration agreement is unconscionable, but rather, who (as between the court and an arbitrator) should resolve the factual controversies and/or ambiguities in the[*27] first instance. Indeed, on a certification from the Third Circuit substantially similar to the one presently before us, also arising out of a challenge to an arbitration agreement used in a residential mortgage loan transaction, the New Jersey Supreme Court did not directly answer the certified question concerning whether an arbitration agreement was unconscionable. See Delta Funding Corp. v. Harris, 189 N.J. 28, 912 A.2d 104 (N.J. Aug. 9, 2006). Rather, the court determined, in light of material ambiguities, that such question should be presented to an arbitrator in the first instance. See id. at 110. Like the present case, the Delta Funding v. Harris matter also involved allegations of predatory lending arising out of the sub-prime lending business. See id. at 108. Upon the borrower's default, the lender's assignee initiated foreclosure proceedings, and the borrower responded with an answer, counterclaims, and a third-party complaint against the lender asserting multiple violations of consumer protection laws. The lender filed a petition in federal district court seeking to compel arbitration, which was dismissed, and the borrower[*28] lodged an appeal in the Third Circuit, giving rise to the certification to the New Jersey Supreme Court of the issue: "Is the arbitration agreement at issue, or any provision thereof, unconscionable under New Jersey law, and if so, should such provision or provisions be severed." Id. at 109. A number of the arguments presented to the New Jersey Supreme Court were very similar to those presented here, including contentions relating to exceptions to mandatory arbitration for foreclosure proceedings and asserted prohibitive costs and split-forum effect. n11 - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n11 The arbitration agreement in the Delta Funding v. Harris case also contained a specific prohibition against the use of class actions, as well as various provisions addressing the allocation of attorneys' fees. See id. at 108-09. The New Jersey court's discussion of those aspects is not directly relevant on the arguments presented in the case presently before us. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - The New Jersey court opened its analysis with its indication[*29] that several material provisions of the arbitration agreement were ambiguous. Therefore, under a line of United States Supreme Court decisions, the court indicated that it was the role of the arbitrator, and not the courts, to interpret them. See Delta Funding v. Harris, 912 A.2d at 110 (citing Green
47
Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 451-53, 123 S. Ct. 2402, 2407, 156 L. Ed. 2d 414 (2003) (plurality), and PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401, 406-07, 123 S. Ct. 1531, 1535-36, 155 L. Ed. 2d 578 (2003)). The court then proceeded to address how the ambiguous provisions, if interpreted and applied in a manner detrimental to the borrower, could be unconscionable under New Jersey law. In doing so, the New Jersey Supreme Court discussed the doctrine of unconscionability in terms of the same procedural and substantive aspects as we have identified above, observingthat both elements are required to support a determination that an agreement is unconscionable. n12 Further, the court referenced four factors that it had previously identified as material in assessing whether a contract of adhesion is unconscionable:[I]n[*30] determining whether to enforce the terms of a contract of adhesion, [we] look[] not only to the take-it-or-leave-it nature of the standardized form of the document but also to [(1)] the subject matter of the contract, [(2)] the parties' relative bargaining positions, [(3)] the degree of economic compulsion motivating the "adhering" party, and [(4)] the public interests affected by the contract.Id. at 111 (quoting Rudbart v. New Jersey Dist. Water Supply Comm'n, 127 N.J. 344, 605 A.2d 681, 687 (N.J. 1992)). - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n12 The New Jersey court also explained that procedural and substantive unconscionability are generally assessed according to a sliding-scale approach (for example, where the procedural unconscionability is very high, a lesser degree of substantive unconscionability may be required). See id. at 111. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - In discussing procedural unconscionability, the New Jersey Supreme Court noted that the borrower had alleged facts suggesting a high level. The court refused to[*31] resolve disputed factual questions on this point, however. Rather, it found it sufficient to note that the lender possessed superior sophistication and bargaining power. See id. at 111. On the matter of substantive unconscionability, the New Jersey Supreme Court began with the arbitration agreement's costs provision, which permitted the arbitrator to make a discretionary allocation of costs. The court noted that it was beyond dispute that the borrower would be entitled to an award of costs if she prevailed in her federal Truth-In-Lending or state-consumer-protection-law claims. See, e.g., 15 U.S.C. § 1640(a)(3) (reflecting a mandatory award of attorneys' fees and costs for a Truth-In-Lending violation). If the borrower did not prevail on those claims, however, the arbitration agreement permitted the arbitrator to allocate costs, and they might be assessed against the borrower. The New Jersey Supreme Court therefore expressed the concern that such a fee-shifting provision, which reached beyond frivolous or bad-faith claims, could deter consumers from vindicating statutory rights through mandatory arbitration. In this regard, the court explainedthat[*32] some other courts have considered the possible chilling effect in invalidating cost-splitting and/or cost-shifting provisions in arbitration agreements. See Delta Funding v. Harris, 912 A.2d at 112 (citing Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 657-67 (6th Cir. 2003), and Scovill v. WSYX/ABC, Sinclair Borad. Group, Inc., 425 F.3d 1012, 1019-21 (6th Cir. 2005)). Based on this concern, the court concluded that "[a] contract of adhesion that contains such a term, which effectively would deter the vindication of a consumer's statutory rights, would be unconscionable and unenforceable if interpreted and applied in the manner described above." Id. at 113. Despite this conclusion, the court emphasized that the cost provision had not yet been interpreted by an arbitrator. It explained that:[o]nce that occurs, if the agreement is held to permit the shifting of arbitration costs to Harris, then the unconscionable cost-shifting
48
provision must be severed from the agreement. In that eventuality, Delta, which previously offered to pay all of Harris's arbitration costs, would be responsible for the entire cost of arbitration.[*33] Cf. Jones v. Household Realty Corp., No. C-3-03-280, 2003 U.S. Dist. LEXIS 25882, *17-18 (S.D. Ohio Dec. 17, 2003) (finding cost-splitting provision to be unconscionable and severing offending provision). In Jones, the court similarly ordered the defendant to pay "the entire cost of arbitration" based, in part, on the defendant's stipulated offer to pay such costs. . . That said, if an arbitrator were to interpret all of the disputed provisions in a manner that would render them unconscionable, we have no doubt that those provisions could be severed and that the remainder of the arbitration agreement would be capable of enforcement. The arbitration agreement's broad severability clause supports that result.Delta Funding v. Harris,912 A.2d at 114-15. The New Jersey Supreme Court, however, was less troubled by the borrower's split-forum argument. It found the fact that foreclosure must proceed in a judicial forum under the arbitration agreement to be "hardly surprising in that the foreclosure of mortgages is a uniquely judicial process." Id. at 115. The court recognized that the borrower's third-party counterclaims against[*34] the lender would have to proceed in arbitration, and that those claims tracked her defenses in the foreclosure proceeding, resulting in the split-forum effect. It concluded, however, that such result "is burdensome; however, it is not unconscionable." The court also referenced the decisions of other courts, cited by Option One in the certification proceeding presently before us, which have rejected the argument that similar provisions were unconscionable in light of the unique nature of the foreclosure remedy. See Delta Funding v. Harris, 912 A.2d at 116 (citing Walther, 872 A.2d at 749; Conseco v. Wilder, 47 S.W.3d at 343; Lackey, 498 S.E.2d at 905); see also supra note 9. n13 Further, the court observed that the fee-shifting provisions of the state consumer protection laws had the effect of alleviating the borrower's burden of litigating her claims in two forums, should she be successful in proving violations. See id. n14 - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n13 The New Jersey Supreme Court also acknowledged that there was a line of authority to the contrary. See Delta Funding v. Harris, 912 A.2d at 116 (citing Taylor v. Butler, 142 S.W.3d at 284-87; Wisconsin Auto Title, 714 N.W.2d at 171-74); see also supra note 4. [*35] n14 Upon receipt of the New Jersey court's opinion, the Third Circuit remanded the matter to the district court with directions that it should enforce the arbitration agreement. See Delta Funding Corp. v. Harris, 466 F.3d 273, 275 (3rd Cir. 2006). - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - In several respects, the certification petition before us is more straightforward than that which was before the New Jersey Supreme Court in Delta Funding v. Harris. For example, as Option One emphasizes, the Third Circuit explained that Mr. Salley's arguments based on prohibitive costs are waived. See Salley, No. 04-4241, 2005 U.S. App. LEXIS 29399, slip op., 2005 WL 3724871, at *3 n.7. n15 Further, although this Court is cognizant of the phenomenon of predatory lending and its deleterious social effects, because those asserted aspects of this case go to not only the arbitration agreement but also to the underlying merits of the parties' larger dispute, we believe that any relevant contentions in this regard are for an arbitrator in the first instance, under the rationale set forth in the Prima Paint/Buckeye line of decisions. [*36] See Buckeye, 546 U.S. at 449, 126 S. Ct. at 1210; Prima Paint, 388 U.S. at 404, 87 S. Ct. at 1806.
49
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n15 Madame Justice Baldwin indicates that the Third Circuit's waiver determination should be of no moment to us here; further, she would advise the federal appellate court that the district court should be required to hold an evidentiary hearing to determine whether the Option-One/Salley arbitration agreement is unconscionable based on prohibitive costs. See Dissenting Opinion, slip op. at 3-4 & n.1. Putting aside the awkwardness of advising the federal courts to conduct a merits hearing regarding a question which already has been foundto be waived in the federal forum, we note that Mr. Salley also has not briefed the question of prohibitive costs before this Court (presumably as he is giving heed to the Third Circuit's waiver determination). Therefore, it would be imprudent for us to consider the costs matter in the present setting in any event. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - What we are left[*37] to consider is whether exceptions from mandatory arbitration for foreclosure remedies are, in and of themselves, unconscionable, and, relatedly, the viability of Lytle's conclusion that they are. Initially, we acknowledge that there appears to be a substantial level of procedural unconscionability present in the sub-prime lending industry, asit employs adhesion contracts and, by design, targets those with few financial choices. Procedural unconscionability would be particularly high in the present case if various of the facts asserted by Mr. Salley, such as lender non-disclosure and dishonesty in the application and settlement process, are true. Further, Option One does not deny that its agreement with Mr. Salley was one of adhesion. Nevertheless, merely because a contract is one of adhesion does not render it unconscionable and unenforceable as a matter of law. Accord Todd Heller, Inc. v. United Parcel Service, Inc., 2000 PA Super 171, 754 A.2d 689 (Pa. Super. 2000) (citing Rudolph v. Pennsylvania Blue Shield, 553 Pa. 9, 17, 717 A.2d 508, 511 (1998) (Nigro, J., concurring)). See generally Carnival Cruise Lines v. Shute, 499 U.S. 585, 111 S. Ct. 1522, 113 L. Ed. 2d 622 (1991)[*38] (enforcing a forum-selection clause contained in an adhesion contract). Additionally, we do not believe that fact finding is necessary concerning procedural unconscionability when viewing the reservation of foreclosure remedies in isolation, because, as a matter of law, we conclude that such exception does not, in and of itself, render the arbitration agreement substantively unconscionable. n16 Our reasoning on this point is in full alignment with that of the New Jersey Supreme Court and the jurisdictions that it referenced. See Delta Funding v. Harris, 912 A.2d at 116; see also supra note 9 (collecting cases). - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n16 In light of the Prima Paint/Buckeye line of cases, it is also questionable whether the facts asserted by Mr. Salley concerning the application and settlement process could be considered in a court's initial assessment concerning the arbitration agreement, since they are substantially intertwined with the merits of the underlying dispute. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - As Option One argues, there is a[*39] facially apparent business justification for such an exception, as the safeguards thereby preserved assure regularity and consistency for the benefit of both lender and borrower, and accordingly, there are sound pragmatic and policy reasons why foreclosure proceedings should be pursued in a court of law. While there is no question that the reservation facilitates the split-forum effect highlighted by Mr. Salley's amici, again, the federal and state consumer protection laws invoked by Mr. Salley mitigate
50
this burden for meritorious claims properly brought under their provisions. See, e.g., 15 U.S.C. § 1640(a)(3); 73 P.S. § 201-9.2. n17 Moreover, the United States Supreme Court has made clear that parties who agree to arbitrate some claims may exclude others from the scope of the arbitration agreement. See Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 221, 105 S. Ct. 1238, 1242-43, 84 L. Ed. 2d 158 (1985) ("The preeminent concern of Congress in passing the [Federal Arbitration] Act was to enforce private agreements into which parties had entered, and that concern requires that we enforce agreements[*40] to arbitrate, even if the result is 'piecemeal' litigation[.]"); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S. Ct. 3346, 3355, 87 L. Ed. 2d 444 (1985) ("Nothing, in the meantime, prevents a party from excluding statutory claims from the scope of an agreement to arbitrate."). As such, the split-forum effect can be viewed as an acceptable corollary to the general policy favoring arbitration of claims. Further, we believe that, if there is evidence that may be used to establish an intention on the part of some lenders to use the exception as a tool of predatory lending, such evidence goes beyond a mere challenge to the foreclosure reservation or the arbitration agreement itself, but also subsumes aspects of the underlying, asserted consumer lending violations. - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n17 The Option-One/Salley arbitration agreement also purports to reserve certain creditor remedies in addition to foreclosure, including self-help remedies. Although we recognize that, in some contexts, an exception for self-help may raise additional policy concerns, Mr. Salley makes no argument that this term of the arbitration agreement has any direct relevance in the present setting involving a residential mortgage loan. Madame Justice Badwin appears to draw substantial significance from the preservation of self-help remedies. See Dissenting Opinion, slip op. at 4. However, like Mr. Salley, she fails to identify any form of creditor self-help remedy that would be available in a residential mortgage setting. We do not dispute Justice Baldwin's assertion that all of the lender's claims that can, as a practical matter, yield full recourse, are excluded from arbitration under the Option-One/Salley agreement. This is not, however, because there is some greater range of non-arbitration remedies that the lender has available and is exclusively preserving, as the dissent appears to suggest. Rather, we do not take issue with the dissent's assertion in this regard because, in the face of substantial arrearages, foreclosure may very well represent the sole practical avenue for a sub-prime lender to secure full recourse. The apparent business justification for reserving the judicial forum for such remedy is developed in the text above. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -[*41] Madame Justice Baldwin's description of our determination (i.e., "the majority would have an arbitrator, rather than our Court, decide the question of unconscionability, due to its reasoning that Mr. Salley is challenging the contract as a whole, and not specifically the arbitration clause," Dissenting Opinion, slip op. at 1), is imprecise. We believe that we have answered the certified question as fully as is presently appropriate on the terms on which the Third Circuit posed it and on which that question has been briefed before us, namely, whether the Option-One/Salley arbitration agreement is presumptively unconscionable based on Lytle's reasoning concerning the impact of the exception permitting creditor access to the courts. We have merely also taken care, however, not to exclude the possibility that the arbitration agreement might otherwise be deemed to be unconscionable under Pennsylvania law if Mr. Salley's predatory lending claims are proven, since we have little doubt concerning the unreasonableness of such an adhesion agreement when used as a tool of established predatory lending.
51
While we believe that Lytle was well intentioned in its effort to guard[*42] against perniciouslending practices, our conclusion here is that it swept too broadly. Under Pennsylvania law, the burden of establishing unconscionability lies with the party seeking to invalidate a contract, including an arbitration agreement, and there is no presumption of unconscionability associated with an arbitration agreement merely on the basis that the agreement reserves judicial remedies associated with foreclosure. V. We conclude that the exception from mandatory arbitration for foreclosure contained within the Option-One/Salley arbitration agreement, in and of itself, does not render the agreement presumptively unconscionable under Pennsylvania law. Having thus answered the certified question, this matter is returned to the Third Circuit and jurisdiction is relinquished. Former Justice Newman did not participate in the decision of this case. Mr. Chief Justice Cappy and Messrs. Justice Castille, Eakin and Baer join the opinion. Madame Justice Baldwin files a dissenting opinion.
DISSENT BY: BALDWIN
DISSENT: DISSENTING OPINION MADAME JUSTICE BALDWIN I would answer the certified question in the affirmative for two reasons. First, the majority would have[*43] an arbitrator, rather than our Court, decide the question of unconscionability, due to its reasoning that Mr. Salley is challenging the contract as a whole, and not specifically the arbitration clause. I believe the majority is mistaken. I see Mr. Salley's challenge as going solely to the arbitration provision within his contract with Option One. His lawsuit is based not on the illegality of his contract with Option One, but rather on Option One's predatory "bait and switch" lending tactics as violations of the Truth in Lending, Usury and Unfair Trade and Consumer Protection Laws. The argument is not that the contractis invalid, but that the enforcement mechanism, i.e. the arbitration clause, is unconscionable and thus unenforceable. Thus, I do not believe that the United States Supreme Court decisions in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S. Ct. 1801, 18 L. Ed. 2d 1270 (1967); Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 126 S. Ct. 1204, 163 L. Ed. 2d 1038 (2006) control the result in this matter. Those decisions do not permit a challenge to the parties' overall agreement in contravention of an arbitration provision.[*44] In Prima Paint, the plaintiff claimed that a consulting agreement was fraudulently induced, when one of the contracting parties falsely represented itself to be solvent and capable of meeting its contractual obligations. The United States Supreme Court found that the plaintiff was challenging the entire contract, and not just the arbitration clause. Thus, the Court concluded, the issue must be presented in the first instance to the arbitrator, based upon the parties' agreement to arbitrate any disputes arising under the contract. In Buckeye, consumers alleged that the contracts they entered into with Buckeye check casing were illegally usurious, and the Court similarly held that the challenge was to the contract itself, not solely to the arbitration clause it contained. In contrast, if the challenge is only to the unconscionability of the arbitration provision, as here, our Court may, and should, consider that challenge. See Prima Paint, 388 U.S. 395 at
52
402, 87 S. Ct. 1801, 18 L. Ed. 2d 1270 ("if the claim is fraud in the inducement of the arbitration clause itself-an issue which goes to the making of the agreement to arbitrate-the federal court may proceed to adjudicate[*45] it.") Here, Mr. Salley does not claim that his contract with Option One is illegal on its face, but rather challenges the one-sided nature of the arbitration provision, and the manner in which he was induced to enter into the arbitration provision. Accord Wisconsin Auto Title Loans, Inc. v. Jones, 2006 WI 53, 290 Wis. 2d 514, 714 N.W.2d 155, 159 (Wis. 2006) (Because this appeal addressed only the unconscionability of the arbitration clause, not the validity of the contract as a whole, the issue is properly before a court and not an arbitrator). I am also not persuaded by Option One's contention that Mr. Salley's position is "anti-arbitration." We have a strong public policy in this state in favor of resolving disputes by arbitration, and we zealously interpret arbitration agreements as equivalent to all other contracts. This policy, though, should never extend to approving an arbitration agreement that is in any manner unconscionable, just as we would view any other unconscionable contract with disfavor. Secondly, I find the arbitration provision in question both procedurally (unfairness in formation of the contract) and substantively (terms disproportionately favorable to the more[*46] powerful party) unconscionable. The majority seems to recognize the undisputable fact of procedural unconscionability in that Option One possessed a vastly superior sophistication, and virtually all of the bargaining power in this "take it or leave it" contract. As Mr. Salley's Amici point out, a low-income borrower in need of a loan is extremely unlikely even to notice the existence of a lopsided arbitration agreement in the closing process, and even less likely to question such a provision, for fear that the loan would not be granted. As for substantive unconscionability, the fact that, pursuant to the arbitration provision, Mr. Salley is required to pay arbitration fees to initiate his claims against Option One is enough torender the provision unreasonable. n1 Arbitration fees are privately set, and significantly exceed fees for filing a civil action in state or federal court. Even if the arbitrator would ultimately allocate costs between the parties, a consumer required to initiate a claim in arbitration is still responsible to pay fees up front, which a low-income consumer in Mr. Salley's position would find difficult. As the United States Supreme Court has noted, "the existence[*47] of large arbitration costs could preclude a litigant . . . from effectively vindicating [his] federal statutory rights in the arbitral forum." Green Tree Financial v. Randolph, 531 U.S. 79, 90, 121 S. Ct. 513, 522, 148 L. Ed. 2d 373, 383 (2000). Here, there is no specific evidence about the costs of arbitration. Thus, at a minimum, I would propose that the district court should be required to hold an evidentiary hearing to determine whetherthe costs are prohibitive and thus unconscionable such as to invalidate the arbitration provision. - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n1 The majority notes that Option One agreed to pay Mr. Salley's arbitration fees, but this does not alter the fact that as written, the arbitration provision would require Mr. Salley to pay for arbitration. The Third Circuit held Mr. Salley's arguments based on prohibitive costs waived, but I am troubled by the fact that Option One's agreement to pay costs removed any incentive for Mr. Salley to pursue that claim. Thus, I would address the issue of prohibitive costs in this Court's unconscionability discussion. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -[*48] In addition, I would find the part of the arbitration provision that excludes creditor remedies to be substantively unconscionable. The majority quotes with approval the New Jersey Supreme Court's finding that a similar provision may be oppressive to the borrower but is not
53
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unconscionable. Setting aside for the moment the issue of judicial foreclosure actions, creditor self-help remedies are also excluded from arbitration. This means that, for all practical purposes, all of borrower's claims must be arbitrated, and all of lender's claims are excluded from arbitration. This does not support lender's notions that they support arbitration; to the contrary, Option One is availing itself of a judicial forum while blocking their borrowers from the same. Without expressing an opinion as to whether arbitration or a judicial forum is preferable, an agreement such as this is one-sided. Parties are free to contract for asymmetrical remedies, but when the stronger party imposes the forum restriction on the weaker party without accepting that forum for itself, that provision is problematic. See e.g. Ting v. AT&T, 319 F.3d 1126 (9th Cir. 2003). In sum, I believe that[*49] our Court should follow the lead of courts such as the Wisconsin Supreme Court, n2 Tennessee Supreme Court, n3 West Virginia Supreme Court of Appeals n4 and California Court of Appeal n5 in finding that similar one-sided arbitration agreements are unconscionable and void. - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - n2 Wisconsin Auto Title Loans, Inc. v. Jones, supra. n3 Taylor v. Butler, 142 S.W.3d 277 (Tenn. 2004). n4 Arnold v. United Companies Lending Corp., 204 W. Va. 229, 511 S.E.2d 854 (W.Va. 1998). n5 Flores v. Transamerica HomeFirst, Inc., 93 Cal. App. 4th 846, 113 Cal.Rptr.2d 376 (Cal. Ct. App. 2001). - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
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This article was originally printed in the June 12, 2006 issue of The Legal Intelligencer. Copyright 2006 ALM Properties Inc. Further duplication without permission is prohibited. All rights reserved.
71
This article was originally printed in the June 12, 2006 issue of The Legal Intelligencer. Copyright 2006 ALM Properties Inc. Further duplication without permission is prohibited. All rights reserved.
72
This article was originally printed in the November 13, 2006 issue of The Legal Intelligencer. Copyright 2006 ALM Properties Inc. Further duplication without permission is prohibited. All rights reserved.
73
This article was originally printed in the November 13, 2006 issue of The Legal Intelligencer. Copyright 2006 ALM Properties Inc. Further duplication without permission is prohibited. All rights reserved.
74
Foreclosure Procedure
Prepared and Presented by:
Max L. LiebermanMax L. Lieberman & Associates, P.C.
75
76
1 If a judgment already exists, you need to obtain an assignment of thejudgment assigning it to your client, and then proceed pursuant to PA. R. CIV. P.2351, et seq. and 3026(b).
Issues in Residential Mortgage Foreclosures in
Pennsylvania
II. Foreclosure Procedure
A. Prior to Foreclosure
The first thing you want to do when your client sends you a foreclosure
matter is to order a record owner and lien search from your title company. The cost,
currently, is about $250.00. You should specifically tell the title company that you
want the names and addresses of all of the lien and judgment holders. You will need
this information later.
The title report will show what position your client’s mortgage is in, all of the
assignments from the original mortgagee to your client, what judgments exist against
the mortgagors, and what taxes are due. You need to share this with your client, to
determine if your client still wants to do a foreclosure. Sometimes, the title report
will show that a prior mortgagee has already obtained a judgment. In that case, you
don’t need to start from scratch1.
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2 PA. R. CIV. P. 1148. Newton Village Partnership v. Kimmel, 424 Pa.Super. 53, 621 A.2d 1036 (1993)(counterclaim seeking in personam damagesdisallowed); Meritor Savings Bank v. Barone, 399 Pa. Super. 213, 582 A.2d 521(1990); Mellon Bank v. Joseph, 267 Pa. Super. 307, 406 A. 1055 (1979).
3 42 P.S. §8103; PA. R. CIV. P. 3276, et seq.
4 73 P.S. §§ 500-101, et seq. Green Tree Consumer Discount Co, v.Newton, 2006 Pa. Super. 284, 909 A.2d 811 (2006).
At this point, if you are going forward, you need to decide whether you will
sue on the note or foreclose. The advantage of suing on the note is that you receive
a personal judgment that attaches to all real property of the defendant in the county.
The disadvantage is that your client becomes subject to counterclaims and a broader
scope of new matter. On the other hand, if you bring an action in mortgage
foreclosure, most counterclaims are barred2 ; the disadvantage is that if your client’s
claim is not satisfied, you may need to petition for a deficiency judgment3 to obtain
further recovery.
If what you have is a home improvement installment sale contract and
mortgage, you need to warn your client that the action will be subject to all defenses
and claims that the homeowner may have against the contractor4. How do you rebut
that claim, asserted years later, that the windows were faulty?
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5 41 P.S. §§401, et seq.
6 35 P.S. §§1680.401c, et seq.
7 You don’t need to do this more than 3 times a year, and the noticedoes not expire. However, if a long time has elapsed, you may wish to send a newone, to be safe.
8 Bennett v. Seave, 520 Pa. 431, 442-3, 554 A.2d 886, 892-3 (1989).
9 35 P.S. §1680.404c(a)(13).
Next you need to ascertain if the notices pursuant to Act 65 and Act 916 have
been sent. If not, you may need to send them. You cannot foreclose a “residential
mortgage” as defined in Act 6 until you or your client has given this notice and given
the debtor thirty days to cure the default7. A “residential mortgage” is any mortgage
securing a debt of $50,000.00 or less encumbering a 1 to 4 family residence. A
sample of an Act 6 notice is attached as Appendix A.
An Act 91 notice cannot be given until the default is at least 60 days old. The
purpose of the Act 91 notice is to inform the homeowner of the availability of
assistance from the Pennsylvania Housing Assistance Agency8, so I take the position
that you do not need to give it if it is clear that assistance will not be available under
the Act. For example, you do not need to give this notice if the mortgage is a third
or more junior mortgage9, if the aggregate amount of the arrearage exceeds
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10 35 P.S. §1680.403c(f)(2).
11 35 P.S. §1680.403c(f)(1).
12 www.phfa.org/applications/counseling_agencies.aspx
13 12 PA. CODE §31.203(B)(2).
$60,00010, or if the loan is more than 24 months in default, cumulatively11. A sample
Act 91 notice is attached as Appendix B.
Act 91 requires that you give the debtor a list of approved credit counseling
agencies available in the county. You can download this list from the agency’s web
site.12 If the debtor actually visits the credit counseling agency, there is an automatic
stay of at least thirty days.13
Both the Act 6 and the Act 91 Notices must be sent by certified mail, return
receipt requested. Some people combine them into one document, or address them
to husband and wife, or send them in the same envelopes. My practice is to send a
separate Act 6 notice and a separate Act 91 notice to all the mortgagees in separate
envelopes. I also send them to both the mortgaged premises and the address of the
debtors, if different.
B. Drafting the Complaint
The first thing to do, if you’ve never filed a foreclosure in this county before
is to call the Prothonotary’s office. In most counties, they will be very helpful. You
will want to know the following: Does the county have a cover sheet, and if so, will
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14 Only the real owner needs to be a defendant, if you are willing torelease the mortgagors from liability, PA. R. CIV. P. 1144. This can be an advantage,if you don’t know where the mortgagors are.
15 See RULE 1147, Note.
they send you a copy? What do you insert in the Notice to Plead? What is the filing
fee? Should the papers be stapled? Will the Prothonotary carry the papers to the
Sheriff for service? What else do I, who have never practiced in this county before,
need to know? There are other sources for this information, such as the local rules
or the prothonotary’s web site, but it is sometimes quicker to ask.
The required averments of the complaint are set forth in Rule 1147. You
need to aver the parties to14 and date of the mortgage; all of the assignments and their
recording data; a “legal” description of the land; the names, addresses and interests
of all defendants, and the real owner; a specific averment of default; an itemized
statement of the amount due; and a demand for judgment. I also include averments
that the Act 6 and Act 91 Notices were sent, or if not, why they are not required15.
If this is your first contact with the debtors, you need to add the Fair Debt Collection
Act Notice. The complaint may aver one or more grounds for foreclosure, but may
not join more that the one cause of action.
You complaint will have exhibits attached. If you referred to the Note, it
must be attached. The mortgage and assignments can be incorporated by reference,
if you comply with Rule 1019(g), but otherwise must be attached. You need to
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16 PA. R. CIV. P. 400, et seq.
attach the legal description, and finally, copies of the Act 6 and/or Act 91 Notices,
with the receipts for certified mail and return cards.
Finally, the complaint needs to be verified. An officer or other person
authorized by the plaintiff must sign under penalty of perjury that the facts are true
and correct to the best of his or her knowledge. You, as the lawyer, may not do this
A sample complaint is attached as Appendix C.
C. Filing and Service
After you have drafted the complaint, sent it to the client for verification, and
received it from the client, you are ready to file. If you have not yet called the
Prothonotary, now would be a good time to do so. You also need to touch base with
the Sheriff’s office. You need to know what the Sheriff’s fee or deposit will be, and
whether a special form will be required. You will need a separate form for each
defendant.
If you are not familiar with the service rules16, you need to look at them now.
They will tell you if you can use your own process server, whether you must
deputize the Sheriff of another county, or whether you can try service by certified
mail.
On every Sheriff’s form is a space for additional instructions. If you can
anticipate a problem, this is where you can help the Sheriff solve it by stating, for
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example, “Serve the defendant at his office [insert address] between 9:00 AM and
4:30 PM”, or whatever else you can think of that will be helpful.
In most cases, you will be filing by mail. Be sure you send enough copies so
that you have at least one stamped copy for your file. In addition to the original and
the return copy, you will need one for each defendant. Also, enclose a stamped self-
addressed envelope. If the Prothonotary will be delivering to the Sheriff, have his
package assembled, with his checks and return envelope, so the Prothonotary can
carry it across the hall with the stamped copies of the complaint.
The Sheriff has thirty days from filing to serve the complaint. If the form
does not ask for this date, put it in your cover letter. You do not want the Sheriff to
serve a stale complaint.
If the complaint comes back “not found”, you can reinstate the complaint and
ask the Sheriff to try again, or you can file a motion for special service pursuant to
Rule 430. This is not a typical motion, so you will need to call the prothonotary and
court administrator to discover how these are handled under local practice. Also,
you or your client will need to provide an affidavit of investigation detailing what
you did to try to locate the defendant. At a minimum, the court will want to know
that you sent a Freedom of Information Act request for a forwarding address to the
post office, and what else you tried. I always do an internet search, also. If I think
my process server can find the defendant, I ask for permission to use a private
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process server; otherwise you might have to ask for advertizing, posting and/or
regular and/or certified mail.
There are two other special circumstances. Rule 410(b)(1) provides that the
Sheriff must serve anyone found on the property so it is a good idea to give the
Sheriff a couple extra copies of the complaint, just in case. Second, sometimes the
mortgagor has died, and no estate has been opened. In this situation, you have two
choices: either serve the unknown heirs by advertizing pursuant to Rule 430, or open
an estate for the sole purpose of litigation. Check with your title company as to
which it prefers.
D. Responses to the Complaint
The defendants have twenty days from service to plead to the complaint. If
they fail to do so, you must give them notice by mail or hand delivery pursuant to
Rules 237.1 and 237.5, that they have ten additional days to answer. The ten days
run from delivery, if delivered, or from mailing, if mailed. I always use certified
mail so that there can be no argument about date of mailing. A form of the notice is
set forth in Rule 237.5.
If the defendants respond, they may file preliminary objections, or an answer
with or without new matter or counterclaims. If they file preliminary objections, you
will either have to amend to obviate the objection, or respond and convince the court
that the objections have no merit.
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17 RULE 1029(b), PA. R. CIV. P.
18 First Wisconsin Trust Co. v. Strausser, 439 Pa. Super. 192, 199, 653A.2d 688, 692, New York Guardian Mortgage Corp. v. Dietzel, 362 Pa. Super. 429,429, 524 A.2d 951, 952 (1987).
19 RULE 1148, PA. R. CIV. P.
20 See n.2, supra; Green Tree Consumer Discount Co. v. Newton, 2006Pa. Super. 284, 909 A.2d 811 (2006)(mortgage securing home improvement contractsubject to counterclaim); Cunningham v. McWilliams, 714 A.2d 1054 (Pa. Super.1998), appeal den., 557 Pa. 653, 734 A.2d 861 (1999)(fraud in the inducement of themortgage, as opposed to the sale of which the mortgage was a part).
The typical answer might consist of a series of general denials and/or denials
for lack of knowledge, particularly as to the amount due. General denials are
admissions17, as are denials for lack of knowledge as to the amount due18. If this is
what you are faced with, you might want to wait a little while (so that the defendants
can’t claim they are being denied the right of discovery), and then move for
judgment on the pleadings or in the alternative for summary judgment. A sample
motion and brief is attached as Appendix D.
By Rule19, counterclaims are not allowed unless they arise out of the same
transaction from which the plaintiff’s cause of action arose. In the typical residential
foreclosure, this is a rare instance20. If a counterclaim is asserted, you should
consider preliminary objections in the nature of a motion to strike. A sample brief
in support of preliminary objections is attached as Appendix E.
E. Default Judgment
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After the expiration of the ten day period, if no response has been filed, you
may file a praecipe to enter judgment by default and to assess damages. A sample
praecipe is attached hereto as Appendix F.
Before you file the praecipe, you must call the prothonotary. You need to
know what the fee is, and if there is any special form or format. The praecipe
documents the date of service of the complaint, the date of mailing of the Rule 237.1
and 5 notices, copies of which with the certified mail proofs of mailing should be
attached, and the lack of response. It also contains an assessment of damages, which
must be able to be calculated from the complaint. Finally, it prays for entry of
judgment in the stated amount. In addition to praecipe, you will need to attach an
affidavit of non-military service and of current addresses. Last, you will need a Rule
236 Notice and an addressed stamped envelope for each defendant. In some
counties, it is the practice for the prothonotary to include a copy of the praecipe and
contents with the Rule 236 Notice, and in others, just the Notice. You need to know
to determine how much postage to put on the envelopes Of course, you will want to
send the prothonotary at least one extra copy to be stamped and mailed back to you.
F. Motion for Judgment
Assume an answer was filed, the pleadings are closed, and either no
discovery was taken or discovery is completed. If the answer consists of general
denials and lack of knowledge, it may be appropriate to file a motion for judgment
on the pleadings pursuant to Rule 1034.
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As mentioned earlier, it is time to call the prothonotary again. You need to
know if there is a fee, if a cover sheet is needed, and what goes in the motion
package.
I always combine this motion with a motion for summary judgment pursuant
to Rule 1035.1. There are two reasons for this: First, if gives the judge an alternate
ground for ruling in your favor, and it gives you an opportunity, in your client’s
affidavit, to patch over any holes in your case and to reassess damages.
G. Execution
Once you have your judgment, it is time to think about actually exposing the
property for sale. If you got your judgment by default, you need to wait for at least
ten days. This is because, under Rule 237.3(b), if a motion to open is filed within
that period, the court must open the judgment if the petition states a meritorious
defense. You certainly do not wish to stimulate a motion to open that will
automatically be considered timely.
If any significant time has passed, you may wish to up date your title search,
which can take a few weeks. You will need accurate information, including last
known addresses, as to all persons with an interest in the property. This includes
owners, tenants, mortgagees, judgment holders, and other lien holders.
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21 See, RULES 3180, et seq., and 3101 et seq., PA. R. CIV. P.
The process of execution, although covered in the Rules of Civil
Procedure21varies widely from county to county in actual practice. For example,
Philadelphia has pre-printed forms for the praecipe to issue the writ of execution and
for the writ. In other counties, you may have to prepare the writ, or the prothonotary
may do it for you, based on the praecipe.
So, you need to call the prothonotary once again. You need to know whether
there is a fee for issuing the writ, whether there are preprinted forms, who prepares
the writ, of what the writ package is comprised, whether you need stamped,
addressed envelopes (and what goes in them so you know how much postage), and
whether the prothonotary will deliver the writ and sheriff’s package to the sheriff.
Often, the prothonotary office will have a checklist, and may even have sample
forms.
Generally speaking, the writ package will consist of the praecipe to issue the
writ, the writ itself, copies for service, a notice of issuance of the writ, a notice of
the right to claim certain exemptions from sale, and a form for claiming the
exemptions. A sample writ package is attached as Appendix G.
The sheriff’s package is more complicated. Again, you need to check with
the local sheriff for the details, as it will vary from county to county. At this point,
you will be required to post a deposit with the sheriff. The deposit will range from
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$1,700.00 to $2,500.00 depending on county. This deposit is used to defray the
sheriff’s costs of service, handbills, advertisements, etc., and if you get the property,
will also be applied to taxes, municipal liens, transfer tax (in Philadelphia), and the
sheriff’s commission or poundage. Often, it is far short of the amount you will need
to settle up, if you are the successful bidder.
The sheriff will require a package of documents as well. His package will
consist of the original and a copy of the writ, copies of the prothonotary’s package
(less the praecipe), one or more full legal descriptions, one or more short form
descriptions, a notice of sheriff’s sale with the time, date and place of the sale, and
the date of distribution, and various other affidavits and certifications as may be
required by local rules and practice. You may also need an order for service for each
defendant. You will also need an affidavit pursuant to Rule 3129.1, which lists every
one with an interest in the property. If the junior lienholders are not included on this
affidavit, and given the required notice of the sale, they will not be foreclosed, and
you will take the property subject to those interests. A sample sheriff’s package is
attached as Appendix H.
Rule 3129.2 governs what notice must be given to the persons with interest
in the property, and how the various parties listed on the Rule 3129.1 affidavit must
be served. The sheriff will serve the in-state defendants (See, Rule 3129.2(c) but
you will have to serve all the others. The easiest method is to address a “Dear
Lienholder” letter to each lienholder, and attach to it a copy of the notice of sheriff’s
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sale and legal description. A sample is attached as Appendix I. Service may be by
ordinary mail, but you must get a postmarked USPS Form 3817 Certificate of
Mailing postmarked for each letter.
You have until thirty days before the sale to serve the people identified on the
Rule 3129.1 affidavit, and to file a return of service . Rule 3129.2(c)(2) requires the
return of service to be filed in accordance with Rule 405, which requires an affidavit
stating the time, date, and method of service be filed with the prothonotary. A copy
should be sent to the sheriff as well. A sample Rule 3129.2 return of service is
attached as Appendix J.
The time from filing the sheriff’s package to date of sale varies widely by
county. The more urban counties have a schedule, so that if you file by a certain
date, you know that the sale will be two or three months later. Some counties run the
sales every other month, and some very rural counties have so few of these sales that
they will set one up just for you. In Monroe county, the wait can be well over a
year.
As the sale date approaches, you might want to touch base with the sheriff’s
office, again. You will need to know the bidding procedure, whether you may
announce your upset price, how long you will have to settle up if you are successful,
and most importantly, whether the sheriff will take your check.
During this interim, you will want to talk to your title company about
converting your record owner and lien search into a commitment, and what its
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requirements will be if you are the successful bidder. Some lenders feel that they
don’t need title insurance because of the sheriff’s sale, but it is better to be protected.
Finally, shortly before the sale, you will need to get bidding instructions in
writing from your client. Obviously, interest and attorneys’ fees have continued to
accrue since the writ has issued. Your client will want you to bid high enough so
that after settling with the sheriff, paying taxes, municipal liens, and sheriff’s
commissions or poundage, and adding that to the accrued interest and attorneys’ fees,
and taking into account prior liens, you don’t exceed what the client thinks the
property can be sold for. In some cases, the client will tell you to stop well short of
the paper amount of the debt; in others you will be given a higher number. Keeping
in mind that excess proceeds will go to junior lienholders or perhaps the debtors,
there is no point in bidding more that what you can walk away from the settlement
table with.
If your client is in last minute settlement discussions with the debtor, or is
negotiating to sell the loan, you may even be instructed to postpone the sale. Rule
3129.3 allows you to postpone for up to ninety days without having to re-advertize
or send new notices, if the announcement is made at the scheduled sale date.
H. Sheriff’s Sale
Now is the key day. Get there early, and take a seat far enough up front that
you can hear what is going on, and so you won’t miss anything. If you haven’t been
there before, introduce yourself to the auctioneer as being there on behalf of your
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client. You do not want the auctioneer to stay your sale pursuant to Rule 3129.3(c)
because he or she doesn’t know you are there. This is also a good time to find out
if there has been a last minute bankruptcy filing or other court order staying your
sale.
The auctioneer will start with cases left over from other sales, then move to
the current list. Even though you know where you are on the list, you want to keep
alert, because cases can drop off in droves. When your case is reached, stand up.
The auctioneer will announce the opening bid, which will consist of the sheriff’s
fees, taxes and municipal liens.
At this point, you can announce a postponement or stay. If you are allowed,
announce whether there are any prior mortgages and the approximate amount due,
and your upset bid (the dollar amount where you will sit down). This is important,
because you want to discourage idle competitive bidding, since the sheriff’s
commission or poundage and transfer tax, if any, will be based on the amount bid.
If no one bids, announce “attorney on the writ”. This means that you are the
successful bidder for the minimum price. Although you are free to leave at this point
if you don’t have to settle immediately, you might want to stay to see if the property
is rebid for any reason.
If there is competitive bidding, the bids will increase in minimum increments
of $100.00. If you have announced or told someone your upset bid, and that amount
is reached, you can sit down and then go home. If there is no other bidding, and/or
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you are the second highest bid, register yourself as the second bidder, so that if the
first bidder defaults, you will get the property. Otherwise, you may have to start all
over and get a new writ issued, etc.
If the bidding is spirited, and your client has incurred costs in excess of those
on the writ, or excess interest accruals, and if you have cleared it with your client
ahead of time, it might make sense to stop the bidding by staying or postponing the
sale to allow you time to reassess damages. This is done by petition, and may
ultimately lead to a more full recovery for your client.
If you are the successful bidder, either on the writ or otherwise, before you
leave, check with the sheriff or deputy to see if there is any additional deposit
required.
I. Settlement with the Sheriff.
In Philadelphia, you have up to thirty days to settle with the sheriff. This can
be extended for an additional thirty days, if you ask in advance in writing. In other
counties, you may have to settle sooner. I have had sales in counties where you have
to settle by the end of the sale, and others by the end of the day.
Settlement is not much different than an ordinary settlement. The sheriff will
present you with a breakdown of his or her fees and costs, taxes and liens paid,
recording fees (if the sheriff records), etc. You will be asked to make up any
shortfall, or will receive a check if your deposit was greater than necessary. You
may also be asked for a receipt for the amount of the debt owed to your client,
93
pursuant to Rule 3133, instead of having to pay money that would be distributed
back to your client.
In return, you will receive the sheriff’s deed poll twenty days after the
schedule of distribution is filed (or after the sale, if there is no schedule), which may
come later if the sheriff sends it out for recording, as required by Rule 3135, and a
copy of the sheriff’s distribution policy.
If you do not settle, you will be in default and will forfeit the deposit. The
sheriff will treat the writ as abandoned pursuant to Rule 3138(b). You may, at any
time thereafter while your judgment is alive, start over and have the writ reissued.
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Appendices
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Act 6 Notice
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Act 91 Notice
Appendix C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Complaint
Appendix D . . . . . . . . . . . . . . . . . Motion and Brief (Judgment on the Pleadings)
Appendix E . . . . . . . Brief in Support of Preliminary Objections to Counterclaim
Appendix F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Praecipe for Default Judgment
Appendix G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Writ Package
Appendix H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sheriff’s Package
Appendix I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notice to Lienholder
Appendix J . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rule 3129.2 Return
Disclaimer
The materials contained in the following Appendices have been assembled andmodified for instructional and illustrative purposes only. Practitioners should reviewstatutory, regulatory and case law regularly, and update their forms accordingly. Theauthor of these materials expresses no opinion whether a court would find any of thefollowing persuasive under similar or different circumstances. Although thematerials were taken from actual cases, the names of the parties and facts of the caseshave been changed, and are not intended to reflect on any existing person or entity.
95
96
Appendix A
97
98
LAW OFFICESMAX L. LIEBERMAN & ASSOCIATES
A PROFESSIONAL CORPORATION
MAX L. LIEBERMANMARLA D. SONES
512 BETHLEHEM PIKE, SECOND FLOORFORT WASHINGTON, PENNSYLVANIA 19034-2107
TELEPHONE: (215) 542-9150FACSIMILE: (215) 542-9397E-Mail: [email protected] Site: www.lslaw.com
January 1, 2006
VIA CERTIFIED MAILRETURN RECEIPT REQUESTED
Mr. David Debtor 123 S. Overhead StreetWhitehaven, PA 18661
This firm is a debt collector attempting to collect a debt. Thisnotice is being sent to you in an attempt to collect theindebtedness referred to herein. Any information obtained from youwill be used for that purpose. Pursuant to the Fair Debt CollectionAct, 15 U.S.C. §§1692 et seq. (1977), you may dispute the validityof the debt or any portion thereof. If you do so in writing withinthirty (30) days of receipt of this letter, the creditor will obtainand provide you with written verification thereof; otherwise, thedebt will be assumed to be valid. Likewise, if requested withinthirty (30) days of receipt of this pleading, creditor will send youthe name and address of the original creditor if different fromabove.
IF YOU HAVE BEEN DISCHARGED IN BANKRUPTCY, THIS IS NOT ANATTEMPT TO IMPOSE PERSONAL LIABILITY. STRANGLEHOLDMORTGAGE CORP. SEEKS ONLY POSSESSION OF THE COLLATERALWHICH IS SECURITY FOR THE DEBT. THIS NOTICE IS REQUIREDFOR FORECLOSURE AND IS NOT TO BE CONSTRUED AS A DEMAND ONYOU PERSONALLY FOR THE OBLIGATION FOR WHICH YOU HAVERECEIVED A DISCHARGE IN BANKRUPTCY.
Re: Stranglehold Mortgage Corp. v. Debtor Client Loan No. 2525251111 Our Account No. 987654321
99
NOTICE OF INTENTION TO FORECLOSE
Dear Mr. Debtor:
We represent Stranglehold Mortgage Corp. ("Lender"), theholder of a promissory note and/or mortgage or deed of trust onyour property located at: 123 S. Overhead Street, Whitehaven, PA18661, which mortgage is in SERIOUS DEFAULT because you have notmade the monthly payment of principal and interest in the amount of$220.98, for 37 months through December 31, 2005. StrangleholdMortgage Corp.’s records indicate that your account is past due asfollows:
37 Monthly installments of $220.98 totaling $ 8,176.26
Accrued Late Charges $ 409.81
Overdue Escrow Payments $ 0.00
Unpaid Advances $ 300.00
Other Fees $ 0.00
TOTAL DUE $ 8,886.07
The total amount now required to cure this default, or inother words, get caught up in your payments, as of the date of thisletter is $8,886.07.
You may cure this default within THIRTY (30) DAYS of thedate of this letter, by paying to Lender the above amount of$8,886.07, plus any additional monthly payments, late charges andfees which may fall due during this period. Such payment must bemade in the form of certified check, cashier’s check or moneyorder, payable to Stranglehold Mortgage Corp., 400 Usury Court,Faketown, DE 19999.
Please contact the following office to find out the exactamount needed to cure this default:
STRANGLEHOLD MORTGAGE CORP.400 Usury CourtFaketown, DE 19999
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(Phone) 555-333-8765 Ext. 610; (Fax) 555-333-5678(Toll Free) 800-333-4000
If you do not cure this default within THIRTY (30) DAYS,you will be come liable for a reasonable attorneys fee not toexceed $50.00. Our client intends to exercise its right toaccelerate the mortgage payments at that time. This means whateveris owing on the original amount borrowed will be considered dueimmediately and you may lose the chance to pay off the originalmortgage in monthly installments. If full payment of the amount ofdefault is not made within THIRTY (30) DAYS, Lender also intends tostart a lawsuit to foreclose on your mortgaged property.
If the mortgage is foreclosed, your mortgaged propertywill be sold by the Sheriff to pay off the mortgage debt. If youcure the default before legal proceedings are begun against you,you will still have to pay the reasonable attorney’s fees actuallyincurred. However, if legal proceedings are started against you,you will have to pay the additional reasonable attorney’s fees.Any attorney’s fees will be added to whatever you owe Lender, whichmay also include Lender's reasonable costs. If you cure thisdefault within the thirty day period, you will not be required topay the attorney's fees. YOU HAVE THE RIGHT TO REINSTATE AFTERACCELERATION AND THE RIGHT TO ASSERT IN THE FORECLOSURE PROCEEDINGTHE NON-EXISTENCE OF A DEFAULT OR ANY OTHER DEFENSE YOU MAY HAVE TOACCELERATION AND FORECLOSURE.
Lender may also sue you personally for the unpaidprincipal balance and all other sums due under the mortgage. Ifyou have not cured the default within the thirty day period andforeclosure proceedings have begun, you still have the right tocure the default and prevent the sale at any time up to one hourbefore the Sheriff's foreclosure sale. You may do so by paying thetotal due, as well as the reasonable attorney’s fees and costsincurred in connection with the foreclosure sale (and perform anyother requirements under the mortgage). It is estimated that theearliest date that such a Sheriff’s Sale could be held would beapproximately six months from the date of this letter. A notice ofthe date of Sheriff’s Sale will be sent to you before the sale. Ofcourse, the amount needed to cure the default will increase thelonger you wait. You may find out at any time exactly what therequired payment will be by calling Lender at the following number:555-333-8765, extension 610 and ask for Ms. Money. This payment
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must be in the form of cashier's check, certified check or moneyorder and made payable to us at the address stated above.
You should realize that a Sheriff’s Sale will end yourownership of the mortgaged property and your right to remain in it.If you continue to live in the property after the Sheriff's Sale,a lawsuit could be started to evict you.
You have additional rights to help protect your interestin the property. YOU HAVE THE RIGHT TO SELL THE PROPERTY TO OBTAINMONEY TO PAY OFF THE MORTGAGE DEBT, OR TO BORROW MONEY FROM ANOTHERLENDING INSTITUTION TO PAY OFF THIS DEBT (YOU MAY HAVE THE RIGHT TOSELL OR TRANSFER THE PROPERTY SUBJECT TO THE MORTGAGE TO A BUYER ORTRANSFEREE WHO WILL ASSUME THE MORTGAGE DEBT, PROVIDING THAT ALLTHE OUTSTANDING PAYMENTS, CHARGES, AND ATTORNEY'S FEES AND COSTSARE PAID PRIOR TO OR AT THE SALE AND THAT THE OTHER REQUIREMENTSUNDER THE MORTGAGE ARE SATISFIED.) CONTACT US TO DETERMINE UNDERWHAT CIRCUMSTANCES THIS MIGHT EXIST. YOU HAVE THE RIGHT TO HAVETHIS DEFAULT CURED BY ANY THIRD PARTY ACTING ON YOUR BEHALF.
Federal law requires that Stranglehold Mortgage Corp.inform you of the total amount of the debt owed to it, as of thedate of this letter, which is $20,927.93 as of December 31, 2005,plus daily interest of $8.43. This letter, however, does notnecessarily request payment of that amount. Rather, itspecifically requests the amounts needed to cure the default asoutlined on page 2 of this letter.
If you cure this default, the mortgage will be restoredto the same position as if no default had occurred. However, youare not entitled to this right to cure your default more than three(3) times in any calendar year.
If you have any questions regarding your legal rights,you should contact an attorney. If it is your intention to curethe breach and, if applicable, retain this property, we urge you tocontact Stranglehold Mortgage Corp. immediately at 555-333-8765Ext. 610 to discuss the reason(s) for your default.
MAX L. LIEBERMAN & ASSOCIATES,a professional corporation
By: Max L. Lieberman
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Appendix B
103
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ACT 91 NOTICETAKE ACTION TO SAVE
YOUR HOME FROMFORECLOSURE
THE COMMONWEALTH OF PENNSYLVANIA'SHOMEOWNER'S EMERGENCY MORTGAGE
ASSISTANCE PROGRAMMAY BE ABLE TO HELP YOU.
READ THE FOLLOWING NOTICE TO FIND OUTHOW THE PROGRAM WORKS.
If you need more information call the PennsylvaniaHousing Finance Agency at 1(800) 342-2397
LA NOTIFICACION EN ADJUNTO ES DE SUMA IMPORTANCIA, PUES AFECTA SUDERECHO A CONTINUAR VIVIENDO EN SU CASA. SI NO COMPRENDE EL CONTENIDODE ESTA NOTIFICACION OBTENGA UNA TRADUCCION IMMEDITAMENTE LLAMANDOESTA AGENCIA (PENNSYLVANIA HOUSING FINANCE AGENCY) SIN CARGOS ALNUMERO MENCIONADO ARRIBA. . PUEDES SER ELEGIBLE PARA UN PRESTAMO POREL PROGRAMA LLAMADO "HOMEOWNER'S EMERGENCY MORTGAGE ASSISTANCEPROGRAM" EL CUAL PUEDE SALVAR SU CASA DE LA PERDIDA DEL DERECHO AREDIMIR SU HIPOTECA.
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ACT 91 NOTICE IMPORTANT: NOTICE OF HOMEOWNERS'
EMERGENCY MORTGAGE ASSISTANCE PROGRAMPLEASE READ THIS NOTICE.
YOU MAY BE ELIGIBLE FOR FINANCIAL ASSISTANCEWHICH CAN SAVE YOUR HOME FROM FORECLOSURE AND
HELP YOU MAKE FUTURE MORTGAGE PAYMENTS
This firm is a debt collector attempting to collect adebt. This notice is being sent to you in an attempt tocollect the indebtedness referred to herein. Anyinformation obtained from you will be used for thatpurpose. Pursuant to the Fair Debt Collection Act, 15U.S.C. §§1692 et seq. (1977), you may dispute thevalidity of the debt or any portion thereof. If you doso in writing within thirty (30) days of receipt of thisletter, the creditor will obtain and provide you withwritten verification thereof; otherwise, the debt will beassumed to be valid. Likewise, if requested withinthirty (30) days of receipt of this pleading, creditorwill send you the name and address of the originalcreditor if different from above.
Date: January 1, 2006RE: Account No.: Stranglehold Mortgage Corp.
Account No. 2525251111 Our File No. 987654321
Mr. David Debtor 123 S. Overhead StreetWhitehaven, PA 18661
FROM: Max L. Lieberman Attorney for Stranglehold Mortgage Corp.
Your mortgage is in default because you have failed to pay promptly installments ofprincipal and interest. as required, for a period of at least sixty (60) days. The total amount of thedelinquency is $8,886.07, as of December 31, 2005. That sum includes the following:
37 monthly payments of principal and interest of $220.98, each for a total: $ 8,176.26Late fees, advances, etc $ 709.81Attorney fees $ 0.00
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Your mortgage is also in default for the following reasons: N/A
You may be eligible for financial assistance that will prevent foreclosure on your mortgageif you comply with the Provisions of the Homeowners' Emergency Mortgage Assistance Act of 1983(the "Act"). You may be eligible for emergency temporary assistance if your default has been causedby circumstances beyond your control, you have a reasonable prospect of resuming your mortgagepayments, and if you meet other eligibility requirements established by the Pennsylvania HousingFinance Agency. Please read all of this Notice. It contains an explanation of your rights.
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 a representative of this lender, or with a designated consumer credit counselingagency. The purpose of this meeting is to attempt to work out a repayment plan, or to otherwisesettle your delinquency. This meeting must occur in the next (30) days.
If you attend a face-to-face meeting with this lender, or with a consumer credit counselingagency identified in this notice, no further proceeding in mortgage foreclosure may take place forthirty (30) days after the date of this meeting. The name, address and telephone number of ourrepresentative is:
Ms. Emily Money Asset ManagerStranglehold Mortgage Corp. 400 Usury Court Faketown, DE 19999
Telephone Number: 1 (555) 333-8765; Ext. 610
The names and addresses of designated consumer credit counseling agencies are shown onthe attached sheets. It is only necessary to schedule one face- to-face meeting. You should advisethis lender immediately of your intentions.
If you have tried and are unable to resolve this problem at or after your face-to-face meeting.you have the right to apply for financial assistance from the Homeowners' Emergency MortgageAssistance Fund. In order to do this, you must fill out. sign and tile a completed Homeowners’Emergency Assistance Application with one of the designated consumer credit counseling agencieslisted on the attachment. An application for assistance may only be obtained from a consumer creditcounseling agency. The consumer credit counseling agency will assist you in filling out yourapplication and will submit your completed application to the Pennsylvania Housing FinanceAgency. Your application must be filed or postmarked. within thirty (30) days of your face-to-facemeeting.
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It is extremely important that you file your application promptly. If you do not do so, or ifyou do not follow the other time periods ser forth in this letter, foreclosure may proceed againstyour home immediately.
Available funds for emergency mortgage assistance are very limited. They will be disbursedby the Agency under the eligibility criteria established by the Act.
It is extremely important that your application is accurate and complete in every respect. ThePennsylvania Housing Finance Agency has sixty (60) days to make a decision after it receives yourapplication. During that additional time; no foreclosure proceedings will be pursued against you ifyou have met the time requirements set forth above. You will be notified directly by that Agencyof its decision on your application.
The Pennsylvania Housing Finance Agency is located at 2101 North Front Street. Post OfficeBox 8029, Harrisburg. Pennsylvania 17105. Telephone No. (717) 780-3800 or 1-800-342-2397 (tollfree number). Persons with impaired hearing can call (717)780-1869.
In addition you may receive another notice from this lender under Act 6 of 1974. That noticeis called a "Notice of Intention to Foreclosure". You must read both notices. since they both explainrights that you flow have under Pennsylvania law. However, if you choose to exercise your rightsdescribed in this notice. you cannot be foreclosed upon while you are receiving that assistance.
Very truly yours,
Max L. Lieberman
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Appendix C
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MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiff
IN THE COURT OF COMMON PLEAS OF LUZERNE COUNTY, PENNSYLVANIA
STRANGLEHOLD MORTGAGE CORP., aDelaware corporation400 Usury CourtFaketown, DE 19999
Plaintiff
v.
DAVID and DEBBIE DEBTOR, h/w 123 S. Overhead StreetWhitehaven, PA 18661
Defendant
: CIVIL DIVISION:: CIVIL ACTION - LAW:: NO._________:: MORTGAGE FORECLOSURE:::::
NOTICE TO DEFEND
You have been sued in court. If you wish to defend against the claims set forth in thefollowing pages, you must take action within twenty (20) days after this Complaint and notice areserved, by entering a written appearance personally or by an attorney and filing in writing with theCourt your defenses or objections to the claims set forth against you. You are warned that if youfail to do so, the case may proceed without you and a judgment may be entered against you by theCourt without further notice for any money claimed for any other claim or relief requested by theplaintiff. You may lose money or property or other rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOTHAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SETFORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP.
LEGAL SERVICES OF NORTHEASTERN PENNSYLVANIA410 BICENTENNIAL BUILDING
15 PUBLIC SQUAREWILKES-BARRE, PA 18701
(570) 825-8567
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MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiff
IN THE COURT OF COMMON PLEAS OF LUZERNE COUNTY, PENNSYLVANIA
STRANGLEHOLD MORTGAGE CORP., aDelaware corporation400 Usury CourtFaketown, DE 19999
Plaintiff
v.
DAVID and DEBBIE DEBTOR, h/w 123 S. Overhead StreetWhitehaven, PA 18661
Defendant
: CIVIL DIVISION:: CIVIL ACTION - LAW:: NO._________:: MORTGAGE FORECLOSURE:::::
COMPLAINT
Plaintiff comes, by its attorney, and complains against
defendant upon a cause of action of which the following is a
statement:
1. Plaintiff is STRANGLEHOLD MORTGAGE CORP., a Delaware
corporation with a principal place of business at 400 Usury
Court, Faketown, DE 19999.
2. Defendants are DAVID AND DEBBIE DEBTOR, husband and wife, with
a principal address as set forth in the caption to this
complaint.
3. On or about October 15, 1997, defendants borrowed $18,650.00
from Predatory Funding Company, a division of Inferior Bank,
pursuant to a promissory note (the “Note”), a true and correct
copy of which is attached hereto as Exhibit “A” and is
incorporated herein by reference.
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4. The Note is secured by a first mortgage (the “Mortgage”) dated
October 15, 1997 given by defendants to Predatory Funding
Company, a division of Inferior Bank encumbering property of
defendants located at 123 South Overhead Street, Whitehaven,
Luzerne County, Pennsylvania, and recorded in the Recorder of
Deeds Office for Northumberland County in Record Book 5678,
page 987 &c., and incorporated herein by reference pursuant to
Rule 1019(g), Pa. R. Civ. P.
5. The property encumbered by the Mortgage is described on
Exhibit “B” attached hereto and made a part hereof.
6. Plaintiff is the present holder of the Note and Mortgage by
virtue of the following assignments of mortgage:
a. Assignment of mortgage dated May 21, 2002, from the
Federal Deposit Insurance Corporation, as conservator of
Inferior Bank, to Super Bank, NA, recorded in Record Book
5679, Page 333, &c., and incorporated herein by reference
pursuant to Rule 1019(g), Pa. R. Civ. P.
b. Assignment of mortgage from Super Bank, NA to Bad Credit
Financial Services, Inc., dated January 20, 2006 recorded
in Record Book 8888, Page 125 &c., and incorporated
herein by reference pursuant to Rule 1019(g), Pa. R.
Civ. P.
C. Assignment of mortgage from Bad Credit Financial
Services, Inc. to Stranglehold Mortgage Corp., dated
November 3, 2006, recorded in Record Book 9999, Page 543
&c., and incorporated herein by reference pursuant to
Rule 1019(g), Pa. R. Civ. P.
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7. The Note and Mortgage are currently in default because
defendants have failed to pay principal or interest since
November 2, 2003.
8. The amount currently due on the Note and Mortgage, as of
February 10, 2006, is as follows:
Current principal balance due $ 15,062.77
Accrued interest @ 14.25% per annum($8.43 per day from 11/2/03 until2/10/06)
$ 4,892.16
Accrued late charges $ 390.00
Advances $ 920.00
Less Escrow $ 0.00
Total due $ 21,264.939. The Act 6 Notices were sent by Certified Mail and first class
mail more than thirty days prior to the filing of this
Complaint, copies of which is attached hereto as Exhibit “C”.
Act 91 Notices are not required because the mortgage is more
than 24 months in default, cumulatively.
10. The Mortgage allows recovery of attorney fees and costs of
suit.
11. Plaintiff has demanded payment but defendants have failed and
refused to pay any part of the amount due.
WHEREFORE, plaintiff demands judgment in rem against
defendants in the amount of $25,571.65, plus interest at the rate
of $6.90 per day since April 30, 2007, until date of judgment, and
thereafter until paid in full, plus attorney fees and costs.
Max L. LiebermanAttorney for plaintiffStranglehold Mortgage Corp.
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VERIFICATION
Emily Money hereby states that she is the Asset Manager ofplaintiff herein, verifies that the statements made in theforegoing pleading are true and correct to the best of herknowledge, information and belief, and that false statements hereinare subject to the penalties of 18 Pa. C. S. Ann. §4904 relating tounsworn falsification to authorities.
Date: _____________________ ________________________
Emily Money
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116
Appendix D
117
118
MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiffs
IN THE COURT OF COMMON PLEAS OF LUZERNE COUNTY
CIVIL ACTION - LAW
STRANGLEHOLD MORTGAGE CORP. Plaintiff
v.
DAVID and DEBBIE DEBTOR, h/w Defendants
::::: NO. 99-9999-Civil Term:: Mortgage Foreclosure
PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGSPURSUANT TO Pa. R. Civ. P. 1034, OR, ALTERNATIVELY,
JUDGMENT UPON ADMISSION PURSUANT TO Pa. R. Civ. P. 1037
Plaintiff, STRANGLEHOLD MORTGAGE CORP, by its attorney, moves for judgment on
the pleadings, or, alternatively, for judgment upon admission, against defendants, DAVID AND
DEBBIE DEBTOR, and in support thereof, present the following:
1. On February 20, 2006, this action was instituted by filing a complaint seeking judgment in
rem for mortgage foreclosure in the amount of $21,264.93, plus interest from February 10,
2006 at the per diem rate of $8.43. A true and correct copy of the Complaint is attached
hereto as Exhibit “A” and made a part hereof.
2. On July 12, 2006, defendants filed an Answer to Plaintiff’s Complaint, a true and correct
copy of which is attached hereto as Exhibit “B”.
3. Defendants’ Answer admitted that they were the real owners of the property subject to the
instant mortgage in paragraph 2, admitted they executed the mortgage in the original amount
of $21,240.00 to Predatory Funding Company (assignor of the mortgage to plaintiff) in
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paragraph 3. Otherwise, the remainder of the responses to the original Complaint constitute
general denials, and are therefore deemed admissions pursuant to Pa. R. Civ. P. Rule
1029(b), which provides that “averments in a pleading to which a responsive pleading is
required are admitted when not denied specifically, or by necessary implication . . .”. In
defendants’ answer, defendants merely indicated they wished to defend against the claims
as set forth in the Complaint.
4. Defendants have admitted they signed the subject mortgage and have acknowledged that
there are monies due and owing, and to the extent that none of the averments in paragraphs
3 through 10 of the Amended Complaint are denied with any specificity pursuant to the
above rules, all of the averments are deemed admitted.
5. Therefore, as each and every averment of the Plaintiff’s Complaint is deemed admitted
pursuant to Pa. R. Civ. P. 1029, Plaintiff, Stranglehold Mortgage Corp. is entitled to
judgment pursuant to Pa. R. Civ. P. 1034 and 1037.
12. Plaintiff is entitled to judgment in rem for mortgage foreclosure in the amount of $21,264.93
plus post judgment interest in the pe diem amount of $8.43, until paid..
WHEREFORE, plaintiff, Stranglehold Mortgage Corp. respectfully requests that the court
enter judgment in its favor and against defendants in the amount of $21,264.93 plus post judgment
interest in the per diem amount of $8.43, until paid.
__________________________________Max L. Lieberman, Attorney for PlaintiffStranglehold Mortgage Corp.
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MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiffs
IN THE COURT OF COMMON PLEAS OF LUZERNE COUNTY
CIVIL ACTION - LAW
STRANGLEHOLD MORTGAGE CORP.Plaintiff
v.
DAVID and DEBBIE DEBTOR, h/w Defendants
::::: CASE NO. 9999-2006 :: Mortgage Foreclosure
MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS
PURSUANT TO PA. R. CIV. P. 1034, OR, ALTERNATIVELY,JUDGMENT UPON ADMISSION PURSUANT TO PA. R. CIV. P. 1037
I. HISTORY OF THE CASE
On February 20, 2006, plaintiff filed the within action seeking to foreclose on the propertyof the defendants for their failure and/or refusal to cure the default on their Mortgage and MortgageNote. Payments were due and payable from November 2, 2003 to the present.(See Plaintiff’sComplaint attached to Motion as Exhibit “A”) The defendants filed their Answer to Plaintiff’sComplaint on July 12, 2006.
Defendants’ answer to the complaint admitted that they were the real owners of the propertysubject to this mortgage (paragraph 2) and admitted that they had executed the mortgage in theoriginal amount of $21,240.00 to Predatory Funding Company (assignor of the mortgage toStranglehold Mortgage Corp.) (paragraph 3) (See Exhibit “B”, p.1) Moreover, in paragraph 5,defendants responded that they had not received notice or evidence of the assignment of the subjectmortgage to plaintiff without which defendants “would have no way of knowing that (they) wouldbe satisfying the aforementioned mortgage to the proper party”, thereby again admitting the validityof the mortgage and the outstanding debt. (Exhibit “B”, p. 1-2)
Additionally, in Defendants’ Answer to plaintiff’s Complaint, defendants requested that theybe provided with proof of default so that this would “verify the amount the Plaintiff indicates is still
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due on the aforementioned note.” (See Exhibit “C”, p. 1-2). Otherwise, defendants Answer merelystated that they wished to defend against the claims as set forth in the Complaint or consisted ofgeneral denials.
II. ARGUMENT
The pleadings between plaintiff and defendants have closed. At this juncture, any party maymove for judgment on the pleadings pursuant to Pa. R. Civ. P. 1034(a). In the alternative, Pa R.Civ. P. 1037(c) provides:
In all cases, the court, on motion of a party may enter an appropriate judgment against a party upon default of admission
In this case, to the extent that defendants have admitted the existence of the mortgage, the signingof the mortgage, and have acknowledged their failure to pay and/or the existence of the outstandingdebt, it is appropriate for this Court to enter judgment against defendants upon admission.Moreover, this action is a mortgage foreclosure action, the sole purpose of which is to take theDefendants’ property to sheriff sale as a result of defendants failure and/or refusal to cure alongstanding default on their mortgage. In mortgage foreclosure actions, where the mortgagoradmits the delinquency of the mortgage payments and fails to sustain any cognizable defense, theentry of judgment is appropriate and warranted. First Wisconsin Trust Company v. Strausser, 439Pa. Super. 192, 653 A.2d 688 (1995); New York Guardian Mortgage Corp. v. Dietzel, 362 Pa.Super. 426, 429, 524 A. 2d 951, 952 (1987); See also Swift v. Milner, 371 Pa. Super. 302, 308, 538A. 2d 28, 30 (1988); Scales v. Sheffield Fabricating and Machine Company, 258 Pa. Super. 568, 393A. 2d 680 (1978).
In First Wisconsin Trust Company v. Strausser, supra, the Superior Court held that acombination of general denials and the denial of the amount due as a conclusion of law warrantedthe entry of summary judgment. Likewise, in New York Guardian Mortgage Corp. v. Dietzel, supra,the Superior Court held that summary judgment for the plaintiff was proper where the defendantadmitted falling behind in payments, but denied the amount averred to be due because of lack ofknowledge. As the plaintiff's right to succeed is certain, there are no material facts in dispute, andthis case is so free from doubt that the trial of this matter would be a fruitless exercise, judgment infavor of plaintiff based on the pleadings is appropriate and warranted. See Weik v. Estate of Brown,794 A. 2d 907 (Pa. Super. 2002); Bata v. Central Penn National Bank, 423 Pa. 373. 224 A. 2d 174(1966).
More specifically, defendants have admitted they signed the subject mortgage and haveacknowledged that there are monies due and owing. The Rules of Civil Procedure provide thataverments in a pleading to which a responsive pleading is required “are admitted when not deniedspecifically or by necessary implication. A general denial . . . shall have the effect of an admission.”Rule 1029(b), PA. R. Civ P. Thus, to the extent that none of the averments in paragraphs 3 through10 of the Amended Complaint are denied with any specificity pursuant to the Pennsylvania Rulesof Civil Procedure, the averments are deemed admitted. Additionally, to the extent that the bulk
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of defendants’ responses constitute general denials, they are deemed admissions pursuant to Pa. R.C. P. 1029. As each and every averment of the Plaintiff’s Complaint is deemed admitted pursuantto Pa. R. Civ. P. 1029, Plaintiff, Stranglehold Mortgage Corp. is entitled to judgment pursuant toPa. R. Civ. P. 1037 See 1 Goodrich-Amram, Standard Pennsylvania Practice, §1037(c)(1) page 261.Additionally, accepting all well-pleaded allegations of the complaint as true, on the facts averred,the law says with certainty that plaintiff is entitled to judgment as there are no facts which warranta trial. See Pennsylvania Financial Responsibility Assigned Claims Plan v. English, 541 Pa. 424,664 A. 2d 84 (1995); MacElree v. Philadelphia Newspapers, Inc., 544 Pa. 117, 674 A. 2d 1050 (Pa.1996).
III. CONCLUSION
For all the reasons stated above, Plaintiff respectfully requests that this Honorable Courtenter an Order in the form entering judgment in rem for mortgage foreclosure in the amount of$21,264.93 plus post judgment interest in the per diem amount of $8.43 in favor of plaintiff andagainst defendants.
__________________________________
Max L. Lieberman, Attorney for PlaintiffStranglehold Mortgage Corp.
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124
Appendix E
125
126
MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorney for Plaintiff
IN THE COURT OF COMMON PLEAS OF LUZERNE COUNTYCIVIL ACTION - LAW
STRANGLEHOLD MORTGAGE CORP.Plaintiff
v.
DAVID and DEBBIE DEBTOR, h/w
Defendants
::::: CASE NO. 9999-2006 :::: MORTGAGE FORECLOSURE
PLAINTIFF’S, STRANGLEHOLD MORTGAGE CORP, MEMORANDUM OF LAW IN SUPPORT OF PRELIMINARY OBJECTIONS OF PLAINTIFFS TO
DEFENDANTS’ AMENDED COUNTERCLAIM AND MOTION TO STRIKEDEFENDANTS’ COUNTERCLAIM
I. HISTORY OF THE CASE
On February 20, 2006, Plaintiff, Stranglehold Mortgage Corp filed this in rem mortgageforeclosure action in accordance with Pa. R. Civ. P. 1141. On July 12, 2006, defendants filed anAnswer to plaintiff’s Complaint with New Matter and Counterclaim. Defendants’ Counterclaimagainst plaintiff again seeks in personam and money damages, alleging that defendants had overpaidthe loan. Presently before this Court for determination are the preliminary objections to defendants’impermissible, and improper Counterclaim.
II. HOW THE QUESTIONS ARE RAISED
Presently before this Court are the Preliminary Objections of Plaintiff, StrangleholdMortgage Corp., to the Counterclaim of Defendants. It is well established that pursuant to Pa. R.Civ. P. 1028(a)(2), a party may file preliminary objections to any pleading for the failure of apleading to conform to law or rule of Court. Moreover, preliminary objections may also be filed toany pleading to challenge the legal sufficiency of a pleading pursuant to Pa. R. Civ. P. 1028(a)(4).The standards for ruling on preliminary objections are also well established. The Court must acceptthe material facts as set forth in the pleading to which objection is made as well as the inferences
127
therefrom as true. The Court must then determine whether the law says with certainty that norecovery is possible. See Philadelphia Factors, Inc. v. The Working Data Group, Inc., et al, ____Pa. Super. ____, 849 A. 2d 1261(2004) citing Aventis Pasteur, Inc. v. Alden Surgical Co., Inc., ____Pa. Super. ___ , 848 A. 2d. 996 (2004); see also Smith v. Weaver, 445 Pa. Super. 461, 665 A. 2d.1215 (1995).
III. QUESTIONS INVOLVED
A. Should the Court grant preliminary objections pursuant to Pa. R. Civ. P. 1028(a)(2) and(4) and strike defendants’ counterclaim with prejudice since the counterclaim sets forth an improperclaim for in personam money damages in this in rem mortgage foreclosure action contrary to Pa. R.Civ. P. 1141(a) and 1148?
[Purely procedural or pleading issues deleted]
IV. ARGUMENT
A. THE COUNTERCLAIM MUST BE STRICKEN WITH PREJUDICE BECAUSE IT IS NOT AUTHORIZED BY PENNSYLVANIA RULES OF CIVIL PROCEDURE 1141(a) and 1148
This action is a mortgage foreclosure action, the sole purpose of which is to take theDefendants’ property to sheriff sale. Pennsylvania law makes clear that an action in mortgageforeclosure is strictly in rem and does not include any personal liability including but not limited tothe claim for relief sought by the defendants herein, which is based on their alleged overpaymentof the subject loan. See Newtown Partnership v. Kimmel, 424 Pa. Super. 53, 621 A.2d 1046, (1993);Signal Consumer Discount Company v. Babuscio, 257 Pa. Super. 101, 390 A. 3d 255 (1978).
Pennsylvania Rule of Civil Procedure 1141(a) clearly states that a mortgage foreclosureaction “. . . shall not include an action to enforce a personal liability.” Moreover, Pa. R. Civ. P.1148 clearly permits a counterclaim only when a counterclaim “ . . . arises from the same transactionor occurrences or series of transactions or occurrences form which the plaintiff’s cause of actionarose,” or more specifically, only those counterclaims which are part of or incident to the originalcreation of the mortgage relationship itself. See Chrysler First Business Credit Corporation v.Gourniak, 411 Pa. Super. 259, 601 A. 2d 338 (1992).
There is no question that those matters raised in defendants’ Counterclaim were not part ofor incident to the original creation of the mortgage relationship itself, but instead were, as defendantsthemselves allege, related to a reinstatement of the original mortgage necessitated by their previousfailure to make payments under the this mortgage. In their answer to the plaintiff’s preliminaryobjections, defendants relied on the Superior Court decision in Meritor Savings Bank v. Barone, 399Pa. Super. 213, 582 A. 2d 21(1990). The Court in Meritor, which was dealing with a counterclaimrelating to disability insurance which was to be issued as part of the original mortgage transaction,reversed the lower court’s dismissal of the counterclaim precisely because it arose as part of theoriginal mortgage. As the court stated:
128
Counterclaims in mortgage foreclosure actions are governed by theterms of Pa. R. C. P. 1148, which provide: A defendant may plead acounterclaim which arises from the same transaction or occurrenceor series of transactions of occurrences from the plaintiff’s cause ofaction arose. In Mellon Bank, N.A. v. Joseph, 267 Pa. Super. 307,406 A. 1055 (1979), the court affirmed an order striking theappellants two counterclaims. The court ruled: “Here thecounterclaims appellant seeks to assert are remedial; they arose oncethe mortgage was in default, but were not part of, or incident to thecreation of the mortgage itself.” 406 A. 2d at 1060. Unlike thecounterclaims in Mellon, the Counterclaim in the instance case aroseas part of, or incident to, the creation of the mortgage...
582 A. 2d at 23.
Defendants’ reliance on Meritor is misplaced as the Court clearly would not permit a counterclaimsuch as one in this case which was not part of or incident to the creation of the original mortgageobligation of the defendants. Because there is no right to in personam or monetary damages in amortgage foreclosure proceeding under Pa. R. Civ. P. 1141(a) and because defendants’Counterclaim does not meet the criterion of Pa. R. Civ. P. 1148, the defendants’ Counterclaim mustbe stricken with prejudice pursuant to Pa. R. C. P. 1028 (a)(2) for failure to conform to the law orrule of Court.
The defendants’ counterclaim fails to state a claim for relief against plaintiff because it seeksrelief in the form of in personam and monetary damages for which a party is not entitled in an in remmortgage foreclosure action. See Newton Village Partnership v. Kimmel, 424 Pa. Super. 53, 621A. 2d 1036 (1993). In addition, as the cause of action alleged in the defendants’ amendedcounterclaim does not arise as part of or incident to the original creation of the mortgage relationshipitself, but as part of a reinstatement agreement of the mortgage, it is not a permissible amendedcounterclaim pursuant to Pa. R. Civ. P. 1148, and therefore fails to state a cause of action.
[Argument of purely procedural or pleading issues deleted]
V. CONCLUSION
For all the reasons stated above, Plaintiff respectfully requests that this Honorable Courtenter an Order in the form attached hereto striking defendants’ amended Counterclaim withprejudice.
Respectfully submitted,
________________________Max L. Lieberman, Attorney for Plaintiff,Stranglehold Mortgage Corp.
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130
Appendix F
131
132
Max L. Lieberman & Associates, P.C.Max L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiff
IN THE COURT OF COMMON PLEASFOR LUZERNE COUNTY PENNSYLVANIA
STRANGLEHOLD MORTGAGE CORP., aDelaware Corporation
Plaintiffv.
DAVID and DEBBIE DEBTOR, h/w
Defendants
:: CIVIL DIVISION-LAW:::::: CASE NO. 9999-2006 :: MORTGAGE FORECLOSURE
PRAECIPE TO ENTER DEFAULT JUDGMENT
TO THE PROTHONOTARY:
Please enter a default judgment in favor of plaintiff, STRANGLEHOLD MORTGAGE
CORP. and against defendants, DAVID and DEBBIE DEBTOR for failure to answer or otherwise
respond to the Complaint.
1. The Complaint in Mortgage Foreclosure was served on defendants David and Debbie
Debtor by the Sheriff of Luzerne County on March 1, 2006. True and correct copies of the
Affidavits of Service by the Luzerne County Sheriff of the Complaint in Mortgage Foreclosure on
defendants David and Debbie Debtor are attached hereto as Exhibit “A” and “B” and incorporated
herein by reference as if fully set forth at length.
133
2. Notices of intention to take default judgment pursuant to Pa. R. Civ. P. 237.1(a)(2) and
237.5 was forwarded to defendants by certified mail on March 22, 2006.
3. A copy of the Notices and certified mail receipts are attached hereto as Exhibits “C” and
“D” respectively. Pursuant to the Notices, defendants had ten (10) days in which to answer the
complaint. The ten days expired on April 1, 2006.
Accordingly, please assess damages in the amount demanded in the Complaint together with
the following:
Current principal balance due $ 15,062.77
Accrued interest @ 14.25% per annum $ 4,892.16 ($8.43 per day from 11/2/03 until 2/10/06)
Accrued late charges $ 390.00
Advances and other charges $ 920.00
TOTAL DUE $ 21, 264.93
together with interest at the per diem rate of $8.43 from February 10, 2006 until judgment
is entered.
________________________________Max L. Lieberman, Attorney for PlaintiffStranglehold Mortgage Corp.
134
Appendix G
135
136
MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiff
IN THE COURT OF COMMON PLEASFOR LUZERNE COUNTY PENNSYLVANIA
STRANGLEHOLD MORTGAGE CORP., aDelaware Corporation
Plaintiffv.
DAVID and DEBBIE DEBTOR, h/w
Defendants
:: CIVIL DIVISION-LAW::: CASE NO. 9999-2006 ::: MORTGAGE FORECLOSURE
PRAECIPE FOR WRIT OF EXECUTION
TO THE PROTHONOTARY:
Please issue Writ of Execution in the above matter:
AMOUNT DUE: $ 21,264.93
INTEREST FROM 02/11/06 to 8/4/06 at $ 8.432 per diem $ 1,466.82
(costs to be added)
__________________________________Attorney for PlaintiffMax L. Lieberman, EsquireMax L. Lieberman & Associates, P.C.512 Bethlehem Pike, 2nd FloorFort Washington, PA 19034(215) 542-9150I.D. No. 15344
See Property Description attachedas Exhibit “A”
137
MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiff
IN THE COURT OF COMMON PLEASFOR LUZERNE COUNTY PENNSYLVANIA
STRANGLEHOLD MORTGAGE CORP., aDelaware Corporation
Plaintiffv.
DAVID and DEBBIE DEBTOR, h/w
Defendants
:: CIVIL DIVISION-LAW:: CASE NO. 9999-2006 ::: MORTGAGE FORECLOSURE
WRIT OF EXECUTION
TO THE SHERIFF OF LUZERNE COUNTY:
To satisfy the judgment, interests and costs in the above matter you are directed to levy uponand sell the following described property:
123 Overhead Street, White Haven, Pennsylvania 18661 more particularly described onExhibit “A” attached hereto.
AMOUNT DUE: $ 21,264.93
INTEREST FROM 02/11/06 to 8/4/06 at $ 08.43 per diem $ 1,466.82
(costs to be added) $ ________________
__________________________________Prothonotary, Common Pleas Court of Luzerne County, Pennsylvania
By _________________________________
Date ________________________________
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MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiff
IN THE COURT OF COMMON PLEAS FOR LUZERNE COUNTY PENNSYLVANIA
STRANGLEHOLD MORTGAGE CORP., aDelaware Corporation
Plaintiffv.
DAVID and DEBBIE DEBTOR, h/w
Defendants
:: CIVIL DIVISION-LAW:: CASE NO. 9999-2006 :: MORTGAGE FORECLOSURE
WRIT OF EXECUTIONNOTICE
This paper is a Writ of Execution. It has been issued because there is a judgment against you. It may cause yourproperty to be held or taken to pay the judgment. You may have legal rights to prevent your property from being taken.A lawyer can advise you more specifically of these rights. If you wish to exercise your rights, you must act promptly.
Exempt Property. The law provides that certain property cannot be taken. Such property is said to be exempt.There is a debtor’s exemption of $300.00. There are other exemptions which may be applicable to you. Attached is asummary of some of the major exemptions. You may have other exemptions or other rights.
If you have an exemption, you should do the following promptly: (1) Fill out the attached exemption claimform and demand for a prompt hearing: (2) Deliver the form or mail it to the Sheriff’s Office at the address noted.
You should come to court ready to explain your exemption. If you do not come to court and prove yourexemption, you may lose some of your property.
YOU SHOULD TAKE THIS NOTICE TO A LAWYER AT ONCE. IF YOU DO NOT HAVE ALAWYER GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDEINFORMATION ABOUT HIRING A LAWYER.
IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TOPROVIDE INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLEPERSONS AT A REDUCED FEE OR NO FEE.
Legal Services of Northeastern PA410 Bicentennial Building
15 Public SquareWilkes Barre, PA 18701
Telephone (570) 825-8567
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MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiff
IN THE COURT OF COMMON PLEAS FOR LUZERNE COUNTY PENNSYLVANIA
STRANGLEHOLD MORTGAGE CORP., aDelaware Corporation
Plaintiffv.
DAVID and DEBBIE DEBTOR, h/w
Defendants
:: CIVIL DIVISION-LAW:: CASE NO. 9999-2006 :: MORTGAGE FORECLOSURE
NOTICE OF EXEMPTION RIGHT
In addition to your other rights, the law provides that you are entitled to a debtor’s exemptionof $300.00 per owner which will be paid to you in cash if the Sheriff’s Sale is completed.
If you believe that the value of your equity in the property is less than $300.00 per owner youmay be able to prevent the sale if you do the following promptly:
1) Fill out the attached claim form and demand for a prompt hearing.
2) Deliver the form or mail it to the Sheriff’s Office at the address noted on the ClaimFor Exemption.
You should come to court ready to explain your exemption. If you do not come to court andprove your exemption, and the sale is not stopped for some other reason, the sale will be held.
140
MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiff
IN THE COURT OF COMMON PLEAS FOR LUZERNE COUNTY PENNSYLVANIA
STRANGLEHOLD MORTGAGE CORP., aDelaware Corporation
Plaintiffv.
DAVID and DEBBIE DEBTOR, h/w
Defendants
:: CIVIL DIVISION-LAW:: CASE NO. 9999-2006 :: MORTGAGE FORECLOSURE
MAJOR EXEMPTIONS UNDER PENNSYLVANIA AND FEDERAL LAW
1. $300 statutory exemption2. Bibles, school books, sewing machines, uniforms and equipment3. Most wages and unemployment compensation4. Social Security Benefits5. Certain retirement funds and accounts6. Certain veteran and armed forces benefits7. Certain insurance proceeds8. Such other exemptions as may be provided by law
CLAIM FOR EXEMPTION
To The Sheriff:
I, the above-named defendant, claim exemption of property from levy or attachment:
(1) From my real property in my possession which has been levied upon;
(a) I desire that my $300.00 statutory exemption be:
(I) set aside in kind: (specify real property to be set aside in kind:)______________________________________________________________________________________________________________________________________________________________
(ii) paid in cash following the sale of the property levied upon; or
(b) I claim the following exemption (specify property and basis of):.
_______________________________________________________________________________
_______________________________________________________________________________
141
(2) From my real property which is in the possession of a third party, I claim the following exemptions:
(a) my $300 statutory exemption: [ ] in cash; [ ] in kind (specify)____________________
(b) other (specify amount and basis of exemption): ________________________________________
I request a prompt court hearing to determine the exemption. Notice of the hearing should be given to me at:(include address and telephone number)
_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
I verify that the statements made in this Claim for Exemption are true and correct. I understand that falsestatements herein are made subject to the penalties of 18 Pa.C.S. § 4904 relating to unsworn falsification to authorities.
Date: ______________________ ______________________________________________Defendant
THIS CLAIM TO BE FILED WITH
THE OFFICE OF THE SHERIFFLUZERNE COUNTY
200 NORTH RIVER STREETWILKES-BARRE, PENNSYLVANIA 18711
142
Appendix H
143
144
Include Order for Service, and other affidavits, certifications and full and short-formlegal descriptions as may be required by the Sheriff, plus the following:
145
MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiff
IN THE COURT OF COMMON PLEAS FOR LUZERNE COUNTY PENNSYLVANIA
STRANGLEHOLD MORTGAGE CORP., aDelaware Corporation
Plaintiffv.
DAVID and DEBBIE DEBTOR, h/w
Defendants
:: CIVIL DIVISION-LAW:: CASE NO. 9999-2006 :: MORTGAGE FORECLOSURE:
AFFIDAVIT PURSUANT TO RULE 3129
STRANGLEHOLD MORTGAGE CORP, plaintiff in the above action, sets forth as of thedate the praecipe for the writ of execution was filed the following information concerning the realproperty located at 123 S. Overhead Street, White Haven, Luzerne County, Pennsylvania 18661:
See Exhibit “A” for a description of the real property to be sold.
1. Name and address of Owner(s) or Reputed Owner(s):
Name and Address (if address cannot bereasonably ascertained, please so indicate)
Name and Address (if address cannot bereasonably ascertained, please so indicate)
David Debtor 123 S. Overhead Street White Haven. PA 18661
Debbie Debtor 123 S. Overhead Street White Haven. PA 18661
2. Name and address of Defendant(s) in the judgment:
Name and Address (if address cannot bereasonably ascertained, please so indicate)
Name and Address (if address cannot bereasonably ascertained, please so indicate)
146
David Debtor 123 S. Overhead Street White Haven. PA 18661
David Debtor 123 S. Overhead Street White Haven. PA 18661
3. Name and last known address of every judgment creditor whose judgment is a record lienon the real property to be sold:
Name and Address (if address cannot bereasonably ascertained, please so indicate)
Name and Address (if address cannot bereasonably ascertained, please so indicate)
STRANGLEHOLD MORTGAGE CORP.a Delaware corporation400 Usury Court Faketown, DE 19999
4. Name and address of the last recorded holder of every mortgage of record:
Name and Address (if address cannot bereasonably ascertained, please so indicate)
Name and Address (if address cannot bereasonably ascertained, please so indicate)
STRANGLEHOLD MORTGAGE CORP.a Delaware corporation400 Usury Court Faketown, DE 19999
Super Bank, N.A. 123 Moneylending Street, Suite 610Fort Washington, PA 19034
Predatory Funding Company Inferior Loan OperationsP.O. Box ABC Fort Washington, PA 19034
Mass Funding. LLC 84 Loanview DriveIrving, TX 75038
5. Name and address of every other person who has any record interest in or record lien on theproperty and whose interest may be affected by the sale:
Name and Address (if address cannot bereasonably ascertained, please so indicate)
Name and Address (if address cannot bereasonably ascertained, please so indicate)
147
PA Department of Public WelfareBureau of Child Support EnforcementHealth & Welfare Building, Room 432PO Box 2675Harrisburg, PA 17105-2675
Tax Claim Bureau200 North River StreetWilkes Barre, PA 18711
Luzerne County Domestic RelationsLuzerne County Court of Common Pleas113 W. North Street Wilkes Barre, PA 17128-0946
Commonwealth of PADepartment of RevenueBureau of Compliance, Dept. 280946Harrisburg, PA 17128-0946
6. Name and address of every other person of whom the plaintiff has knowledge who has anyinterest in the property which may be affected by the sale:
Name Address (if address cannot be reasonablyascertained, please so indicate)
None
(Attach separate sheet if more space is needed)
I verify that the statements made in this affidavit are true and correct to the best of mypersonal knowledge or information and belief. I understand that false statements herein are madesubject to the penalties of 18 Pa.C.S. § 4904 relating to unsworn falsification to authorities.
__________________________________Date Max L. Lieberman, Attorney for Plaintiff
Stranglehold Mortgage Corp.
148
Appendix I
149
150
MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiff
IN THE COURT OF COMMON PLEAS FOR LUZERNE COUNTY PENNSYLVANIA
STRANGLEHOLD MORTGAGE CORP., aDelaware Corporation
Plaintiffv.
DAVID and DEBBIE DEBTOR, h/w
Defendants
:: CIVIL DIVISION-LAW:: CASE NO. 9999-2006 :: MORTGAGE FORECLOSURE:
TO: Luzerne County Domestic Relations Luzerne County Court of Common Pleas 113 W. North Street Wilkes Barre, PA 17128-0946
RE: SHERIFF’S SALE AGAINST REAL ESTATE
Dear Lienholder:
Please be advised that this office represents the above mortgagee in an action of MortgageForeclosure. Attached hereto is a copy of the Notice of Sheriff Sale of the real property in questionwhich includes the date, time and place of the Sheriff Sale, and a legal description of the property.
Our research indicates that you are a lien creditor and that said Sheriff’s Sale may divest yourlien against the said property.
Very truly yours,
_______________________Max L. LiebermanAttorney for Plaintiff
151
152
Appendix J
153
154
MAX L. LIEBERMAN & ASSOCIATESMax L. Lieberman, EsquireAttorney I.D. No. 15344512 Bethlehem Pike, Second FloorFort Washington, PA 19034-2107(215) 542-9150 Attorneys for Plaintiff
IN THE COURT OF COMMON PLEAS FOR LUZERNE COUNTY PENNSYLVANIA
STRANGLEHOLD MORTGAGE CORP., aDelaware Corporation
Plaintiff v.
DAVID and DEBBIE DEBTOR Defendants
:: CIVIL DIVISION-LAW:: CASE NO.9999-2006 :: MORTGAGE FORECLOSURE:
RETURN OF SERVICE
I, Max L. Lieberman, hereby certify that I have caused a true and correct copy of thefollowing documents with respect to 123 S. Overhead Street, White Haven, Luzerne County,Pennsylvania 18661 to be served upon:
Name & Address Documents Served Date Served Method of Service
Predatory Funding Company
Inferior Loan OperationsP.O. Box ABC
Notice to Lienholder (Ex. A-1)Notice of Sheriff’s Sale ofReal Property (Ex. A-2)
May 19, 2006 First Class Mail; PS Form3817 attached as ExhibitA-3
Super Bank, N.A. 123Moneylending Street, Suite610Fort Washington, PA 19034
Notice to Lienholder (Ex. B-1)Notice of Sheriff’s Sale ofReal Property (Ex. A-2)
May 19, 2006 First Class Mail; PS Form3817 attached as ExhibitA-3
155
Name & Address Documents Served Date Served Method of Service
Mass Funding. LLC 84 Loanview DriveIrving, TX 75038
Notice to Lienholder (Ex. C-1)Notice of Sheriff’s Sale ofReal Property (Ex A-2)
May 19, 2006 First Class Mail; PS Form3817 attached as ExhibitA-3
Luzerne County DomesticRelationsLuzerne County Court ofCommon Pleas113 W. North Street
Wilkes Barre, PA 17128-0946
Notice to Lienholder (Ex. D-1)Notice of Sheriff’s Sale ofReal Property (Ex. A-2)
May 19, 2006
First Class Mail; PS Form3817 attached as ExhibitA-4
PA Department of PublicWelfareBureau of Child SupportEnforcementHealth & Welfare Building,Room 432PO Box 2675Harrisburg, PA 17105-2675
Tax Claim Bureau200 North River StreetWilkes Barre, PA 18711
Commonwealth of PADepartment of RevenueBureau of Compliance,Dept. 280946Harrisburg, PA 17128-0946
Notice to Lienholder (Ex. E-1)Notice of Sheriff’s Sale ofReal Property (Ex. A-2)
Notice to Lienholder (Ex. F-1)Notice of Sheriff’s Sale ofReal Property (Ex. A-2)
Notice to Lienholder (Ex. G-1)Notice of Sheriff’s Sale ofReal Property (Ex. A-2)
May 19, 2006
May 19, 2006
May 19, 2006
First Class Mail; PS Form3817 attached as ExhibitA-4
First Class Mail; PS Form3817 attached as ExhibitA-4
First Class Mail; PS Form3817 attached as ExhibitA-4
False statements herein are subject to the penalties of 18 Pa. CS. Ann. §4904 relating tounsworn falsification to authorities.
___________________________Max L. Lieberman, Attorney for
Plaintiff
156
Real Estate/Foreclosure Litigation in Pennsylvania By: Matthew B. Weisberg, Esquire
Prochniak Poet & Weisberg, P.C., Managing Principal 610-690-0801 x223
[email protected] www.ppwlaw.com
157
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I. YOUR GUIDE TO FORECLOSURE
A. Recent case law and statutory updates
(1) Nationsbanc Mortg. Corp. v. Grillo, 827 A.2d 489, 2003 Pa.Super 221 (Pa.Super.
June 10, 2003)
a. General Intro to Case:
Pennsylvania courts, and federal courts interpreting Pennsylvania law, firmly hold
that once a mortgagor tenders the full amount stated in the judgment, the writ of
execution, and the sheriff’s levy sheet, the mortgagee must accept the payment and
satisfy the judgment.
b. Facts:
The Grillos purchased their home on October 17, 1988, obtaining financing from
Nationsbanc. The Grillos defaulted on their mortgage and Nationsbanc bank initiated a
foreclosure action. In order to stay the foreclosure action, Mary Grillo filed six serial
bankruptcies. Ultimately, on April 17, 1997, judgment in foreclosure was entered against
the Grillos in the amount of $153,910.86. Despite the judgment, the Grillos continued to
make monthly mortgage payments of $1,280.00.
In 2001, Nationsbanc filed a Praecipe for Writ of Execution and judgment was
granted in the original judgment amount of $153,910.86. Nationsbanc did not act to
amend or increase the judgment until the day of the sheriff’s sale.
Pursuant to Pa.R.C.P. No. 3129, notice of a March 9, 2001 sheriff’s sale was sent
to the Grillos. Two days prior to the sheriff’s sale, the Grillos tendered payment of the
judgment to Nationsbanc and requested that Nationsbanc mark the judgment and
mortgage satisfied. But on the date of the sheriff’s sale, Nationsbanc rejected the Grillos’
tender and filed a Praecipe to Reassess Damages and Judgment in order to increase the
judgment by $30,000 due to accrued interest from the date of the original judgment.
159
The property, valued at $125,000, was sold at the sheriff’s sale to the attorney on
the Writ for $845.94. On March 19, 2001, the Grillos filed a petition to set aside the
sheriff’s sale and stay the pending eviction. On June 5, 2001, Nationsbanc filed a motion
for a protective order. The trial court held for Nationsbanc and the Grillos appealed.
c. Judgment:
On June 10, 2003, two years after the litigation began, the Superior Court of
Pennsylvania reversed the trial court's decision and granted the Grillos’ petition to set
aside the sheriff's sale. The court held that Nationsbanc had not petitioned the court to
amend the judgment prior to the March 7, 2001 tender of the original judgment. Thus,
the court determined that the March 7, 2001 tender satisfied the judgment as a matter of
law. The court ordered Nationsbanc to satisfy the judgment and the mortgage. BA
Mortgage, successor in interest to Nationsbanc, appealed to the Supreme Court of
Pennsylvania but it refused to hear the appeal. In April 2004, the Grillos sent a check to
the mortgagee in satisfaction of the mortgage and judgment
d. Subsequent Judgments:
Grillo v. BA Mortg., LLC, 2004 WL 2250974 (E.D.Pa. Oct 04, 2004) (NO.
CIV.A.2:04CV0289LDD)
On June 30, 2004, the Grillos filed a complaint in federal district court alleging
various common-law causes of action in addition to violations of 28 U.S.C. § 1983 and
several Pennsylvania statutes. BA Mortgage filed a motion to dismiss the civil rights
action under 28 U.S.C. § 1983 but it was denied. The court held that the Grillos had
sufficient basis to proceed to trial on their civil rights claim against Nationsbanc. In its
ruling the court held that Nations Banc’s Praecipe unilaterally and unlawfully caused the
prothonotary to raise the judgment amount without due process. Further, the court held
that Nationsbanc’s refusal to accept payment and satisfy the judgment gave rise to
additional causes of action.
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e. Conclusions:
In short, it now appears that the long-held practice of filing a Praecipe to Reassess
Damages immediately prior to the sheriff’s sale is invalid and must be made by a prior
petition. Further, a foreclosure defendant’s tender of the amount of the judgment on the
Writ of Execution requires the lender to satisfy the judgment and mortgage, cancelling
the upcoming sale. Therefore, the best practice is to file a Petition to Reassess Damages
and Judgment immediately following entry of the underlying foreclosure judgment.
f. Other PA cases on this Subject:
Morgan Guar. Trust Co. of New York v. Mowl, 705 A.2d 923 (Pa.Super. 1998).
Union National Bank of Pittsburgh v. Ciongoli, 407 Pa.Super. 171, 595 A.2d
179(Pa.Super.,1991). Together, these cases held that opened-ended judgments in
mortgage foreclosure actions are unconstitutional and illegal. A judgment may only be
amended by the court prior to satisfaction and cannot be made by the unilateral actions of
the mortgagor. Thus, judgment is satisfied by tender of the judgment amount listed in the
Writ of Execution.
(2) Relevant Statutes
a. Truth in Lending Act - TILA
The federal Truth in Lending Act was adopted by Congress to protect consumers
in credit transactions by requiring clear disclosure of key terms in the lending
arrangement and all costs. For example, the Act requires creditors to clearly disclose the
name and address of the creditor, the amount financed, the annual percentage rate, and
the payment schedule. The Act provides a federal remedy for erroneous or false
disclosures. Creditors may be held liable for actual damages, as well as legal fees,
including reasonable attorney’s fees, in a successful action. Moreover, the Act imposes
criminal penalties on creditor violators, ranging from fines to imprisonment.
b. Homeowners Equity Protection Act - HOEPA
161
HOEPA is a federal law designed to discourage predatory lending in mortgages
and home equity loans. The Act broadens the federal definition of a creditor and
restricted certain terms of home loans if interest rates or fees are above a specified level.
The Act also extends borrower rescission rights by closing gaps in TILA to protect
borrowers from lenders who seek to deprive them of their cancellation rights.
c. Real Estate Settlement Procedures Act - RESPA
Initially enacted in 1974, the Real Estate Settlement Procedures Act was passed to
help consumers become better shoppers for settlement services to and eliminate
kickbacks and referral fees that unnecessarily increase the costs of certain settlement
services. To effectuate these goals, RESPA requires the lender to make disclosures to the
borrower regarding the various costs associated with the settlement, the specific services
provided, escrow account practices, and business relationships between settlement
service providers. RESPA also prohibits certain practices that increase the cost of
settlement services. The Act provides a remedy allowing victims of violations to recover
treble damages and attorney fees.
d. Equal Credit Opportunity Act - ECOA
The ECOA is one of several federal anti-discrimination laws which prohibits
creditors from discriminating against credit applicants on the basis of race, color,
religion, national origin, sex, marital status, age, or because an applicant receives income
from a public assistance program. Under the Act, a creditor is required to notify
applicants within thirty (30) days after completion of their credit application to tell them
whether their application has been approved or denied. If credit is denied, the reasons for
the denial must be provided. Violations of ECOA may be redressed by filing a federal
lawsuit for actual damages suffered plus punitive damages of up to $10,000.
e. Unfair, Deceptive, Acts and Practices - UDAP and Unfair Trade Practices
and Consumer Protection Law - UTPCPL
162
UDAP is an acronym stemming from the language of the Federal Trade
Commission Act which prohibits “unfair or deceptive acts or practices.” All fifty states
have enacted such statutes to protect consumers within the general marketplace from
abuse, misconduct, deception and unfair competitive practices. The Unfair Trade
Practices and Consumer Protection Law, Pennsylvania’s version of UDAP, allows the
Attorney General to bring a suit to temporarily or permanently restrain the violating party
from engaging in the unlawful practice. UTPCPL further provides for money damages to
the injured party
f. Fair Credit Reporting Act - FCRA
The Fair Credit Reporting Act helps protect individuals dealings with credit
reporting agencies. The Act places restrictions on these agencies and requires them to
provide accurate and complete information to businesses when they evaluate applications
for credit, insurance, or a job. In 1996, FCRA was amended to provide individuals with a
private remedy for violations whether the violation was willful or negligent.
g. Fair Debt Collection Practices Act - FDCPA
Congress enacted the Fair Debt Collection Practices Act to regulate the activities
of debt collection agencies. The Act prohibits deceptive and unfair practices by these
agencies. Specifically, agencies may not use false, deceptive, and misleading
representations, or means, in connection with the collection of debts. For example,
agencies may not make false representations or imply that the debt collector is vouched
for, or affiliated with, the United States and may not threaten to take actions that cannot
legally be taken. FDCPA allows individuals to bring a private action to recover actual
damages as well as up to a $1,000 in additional damages.
(3) The 2005 Bankruptcy Reform Act
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, referred
to as the 2005 Bankruptcy Reform Act, scheduled to take effect in Mid-October of this
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year, is the first major revision of the bankruptcy laws since 1978. The Act marks a
significant departure from the prior state of the law, which reflected an attitude of
empathy towards individuals in debt. The reforms essentially reverse that pro-debtor
attitude and take a confrontational approach in dealing with debtors. Several aspects of
the law directly and indirectly affect the foreclosure procedure, and therefore are of
specific interest to attorneys in foreclosure.
For example, the Act places severe penalties on “serial filers,” who file new
bankruptcy petitions within one year after a petition has been dismissed, or who file a
new petition within the same year that two or more petitions are already pending. In such
cases, the Act provides for the early lifting of the automatic stay, and in some cases, bars
the automatic stay completely. The Act places the burden on the debtor to establish a
good faith filing in order to obtain an automatic stay. Moreover, if the court finds that a
debtor engaged in a scheme to file multiple petitions or to transfer real property without
consent to delay, impeded or defraud creditors, the court may order that relief from the
automatic stay shall continue through cases filed by the debtor over the next 2 years.
Congress, with the enactment of these strict pro-creditor provisions, has
demonstrated a shift away from the goal of debtor relief towards the goal of protecting
the system from abuse and greed. However, the precise effect that these dramatic
reforms will have on judges and the courts, the nature of creditor-debtor relationship, and
the foreclosure process are yet to be determined.
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B. Judicial Foreclosures
(1) Notice of Intent to Foreclose - Act 6
In residential mortgage foreclosures, where the original principle balance is
$50,000 or less and the secured property is a residential, occupied dwelling, the
foreclosing lender must send formal notice to the mortgagor of its intent to foreclose. 41
P.S. §101, et. seq. (“Act 6"). Notice must be sent by certified mail to the mortgagor at
the property and to the mortgagor’s mailing address if different. The foreclosing lender
must wait thirty (30) days from the date of notice to give the debtor the opportunity to
cure the arrearage. 41 P.S.§§ 403-04. If the arrearage is cured, the foreclosing lender
may only recover a “legal fee” of $50.00.
(2) Pennsylvania Homeowner’s Emergency Mortgage Assistance Program and the
Combined Act 91/6 Notice
In 1983, through 35 P.S. § 1680.401c, et. seq. (“Act 91"), Congress created the
Pennsylvania Homeowner’s Emergency Mortgage Assistance Program (“HEMAP”).
The purpose of this program is to prevent widespread mortgage foreclosures and
distressed sheriff’s sales resulting from defaults caused by circumstances beyond a
homeowner’s control. The Act requires foreclosing lenders to provide additional notice
to certain debtors who are permanent Pennsylvania residents that they can request
financial assistance through HEMAP to cure the arrearage. The Act applies to residents
suffering from financial hardship beyond their control which prevents them from curing
their arrearage within a reasonable time period. Such residents must possess statutorily
defined favorable credit history and must prove that they have a reasonable prospect of
resuming full monthly payments within 24 months from the date of the application. 35
P.S. § 1680.401c, et. seq.. HEMAP recipients receive loans to help bring delinquent
payments current and may be eligible for continuing monthly payment assistance. Total
assistance cannot exceed 24 monthly payments or $60,000.
Notice under the Combined 91/6 Act is required if the mortgaged premises is the
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primary residence of the foreclosure defendant, the delinquency is less than $60,000, the
loan is not insured by the Federal Housing Administration (“FHA”), and the delinquency
is less than 24 months. Notice must sent in the same manner as Act 6 notice.
Within thirty (30) days of receipt of the notice, if the debtor seeks a “face-to-face”
meeting with the foreclosing lender, or with an approved consumer credit counseling
agency to apply for assistance, the foreclosing lender may not file a complaint in
foreclosure for an additional thirty (30) days (totaling 60 days from the date of the initial
combined notice). If, following the face-to-face meeting, the debtor applies for
assistance, the lender is again prevented from filing its complaint for an additional sixty
(60) days, or until the Pennsylvania Housing Finance Agency (PHFA) has made its
determination regarding the application. 35 P.S. § 1680.403c.
To avoid violating these combined notice provisions, the best practice is to send
Combined 6/91 Act notice to all residential mortgagors entitled to notice under either
Act.
(3) Complaint in Mortgage Foreclosure Pa.R.C.P. No. 1141 et. seq.
Both the real owner and mortgagor must be named as defendants in the
complaint. If a federal lien exists in the initial title report, the United States of America
must be named as a defendant. 29 U.S.C. §2410(b).
The complaint itself shall include: (1) the parties to the mortgage, the date of the
mortgage, the dates of any assignments, and a statement of the place of record of the
mortgage and assignments, (2) a description of the land subject to the mortgage, (3) the
names, addresses and interests of the defendants in the action, and, if the real owner is
not named as a defendant, a statement that the real owner is unknown or unfound, (4) a
specific averment of default, (5) an itemized statement of the amount due, and (6) a
demand for judgment for the amount due. It is not necessary to attach a copy of the
mortgage or assignments to the complaint.
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Although not required, the best practice is to also include in the complaint an
averment of compliance with Act 6/91. Furthermore, attorneys ought to conduct a review
of the notice, as well as a review of all collateral documentation, such as a green card,
prior to filing a complaint. These practices help prevent defects which may render the
complaint null for lack of jurisdiction. A jurisdictional challenge can be raised at any
time, including, for the first time, sua sponte on appeal.
(4) Service of original process, Pa.R.C.P. No. 400, et seq.
The complaint must be filed in the county where the subject property is located.
In almost every county in the commonwealth of Pennsylvania, service of the complaint
must be made by the sheriff only. Philadelphia, however, allows service by an agent.
Service of the complaint must be served on every defendant within thirty (30)
days. Otherwise, the complaint must be reinstated and a service attempt must be repeated
every thirty (30) days. Failure to attempt service within the first thirty (30) days may
render the complaint “dead” by statute. Likewise, failure to reinstate the complaint prior
to additional attempted service may render service defective, and thus afford the
opposing party preliminary objections.
If service cannot be made on every defendant, a reasonable investigation must be
made to determine the absent defendant’s last known address. Thereafter, a motion for
alternative service should be filed. This motion must be accompanied by an affidavit
stating the nature and extent of the investigation made to locate the defendant and the
reasons why service could not be made. Pa. R.C.P. No. 430.
After service has been completed, the defendant has twenty (20) days to respond
by an answer or by preliminary objections. If the defendant fails to file a response, the
plaintiff must send a notice of intent to enter default judgment (“10 Day Notice”). After
10 days without a response, the court may enter a judgment pursuant to Pa.R.C.P. No.
237.1, 237.5 in the amount averred in the complaint. Pa.R.C.P. No. 1037(b)1.
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But if the defendant files a responsive pleading prior to the entry of the default
judgment, the foreclosure will likely be delayed for an additional five months. An
average foreclosure takes between five and eight months to go forward to a sheriff’s sale.
Thus, it is the best practice for an attorney to advise his clients to file the foreclosure
action as quickly as possible, such as after two or three missed payments.
(5) Litigation
a. Traditional Response
Unlike New Jersey, Pennsylvania is a fact pleading state and, as such, plaintiffs
must file complaints alleging specific facts giving rise to the action. Failure to do so runs
the risk of triggering preliminary objections by the opposing party. Likewise, defendants
must respond specifically to the plaintiff’s averments. Traditionally, defendants respond
by an “answer” or a “new matter.” An answer, theoretically, must be filed within twenty
days (20) of service, but practically, can be filed at any time prior to the entry of
judgment without leave of court (unlike in New Jersey and the federal courts).
If a new matter is averred in the defendant’s answer, the plaintiff must also
respond within twenty (20) days from filing. The response must specifically (not
generally) deny the new matters, especially if the new matter contains fact pleading. A
general denial consists of one sentence, stating that the party denies all of the allegations
contained in the prior pleading. A specific denial requires a individual response to each
allegation stated in the complaint, denying only contested allegations.
Typically, opposing counsel will attempt to argue that a non-responses and
general denials are admissions Nonetheless, the current state of the law essentially states
that when any subsequent pleading contradicts a prior pleading, such subsequent pleading
serves as a denial (not an admission). Thus, for example, if a plaintiff fails to file a
response to a defendant’s new matter, which directly contradicts the complaint, a
defendant’s likely allegation that this non-response acts as an admission by plaintiff will
be overruled as a matter of law. The best practice is to submit a response for all denials,
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including the reason for the denials.
b. Preliminary Objections
Like the defendant’s answer, preliminary objections to the legal sufficiency of the
complaint must theoretically be filed within twenty (20) days of service of the plaintiff’s
complaint. However, unlike the answer requirements, the plaintiff may successfully bar
late preliminary objections if the lateness has prejudiced the plaintiff. Although this type
of prejudice is uncommon in a mortgage foreclosure action, one example of such
prejudice is a claim that the lateness caused the plaintiff’s complaint to be in violation of
the statute of limitations.
In reality, preliminary objections are often an effort by defendant to stall the
foreclosure action. However, when faced with a meritorious preliminary objection, it is
best to respond promptly by filing an amended complaint addressing the allegations of
the preliminary objections. Moreover, if a plaintiff is faced with a meritorious
preliminary objection alleging a defect in Act 6/91 notice, the plaintiff should
immediately withdraw the complaint. Thereafter, plaintiff can re-initiate the foreclosure
process from the beginning. This action shows good faith on the part of the plaintiff and
avoids the risk of having to re-initiate the entire process further down line in the
foreclosure action.
c. Miscellaneous Responses to Pleadings
Most often, the red flag that a foreclosure action is going to be contentious reveals
itself in the defendant’s response in a counterclaim. The counterclaim may allege various
“predatory lending” violations or raise other irrelevant issues, such as the failure of a
credit life insurance policy to pay off the subject mortgage.
In this situation, the best practice, if possible, is to discuss with opposing counsel
the possibility for a resolution of all the issues, including the counterclaim and the
delinquency. Otherwise, a plaintiff should raise a preliminary objection to all boilerplate
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or irrelevant counterclaims. The goal here is to cause the immediate elimination of
extraneous claims to prevent delays in the foreclosure process further down the line. For
example, if the allegations are not eliminated at this point, the defendant may raise them
again in response to the plaintiff’s future motion for summary judgment.
Nevertheless, if the plaintiff chooses not to file preliminarily objections to the
defendant’s counterclaims, the plaintiff must respond to the counterclaim in the same
manner as the defendant is required to respond to the initial complaint. Thus, just as a
defendant’s answer and new matter are due within twenty (20) days after the receipt of
the complaint, the plaintiff’s response to the defendant’s counterclaim is also due within
twenty (20) days thereafter.
(6) Litigation via Discovery
a. Written Discovery
Unlike traditionally litigated matters, where the defendant seeks to prevent any
and all adverse judgments, in a foreclosure action the defendant’s purpose in litigating is
to decrease the amount of the foreclosure judgment or to delay the sheriff’s sale.
Therefore, traditional discovery mechanisms, requiring strict compliance by opposing
counsel, should be disregarded. For example, standard discovery mechanisms such as
interrogatories, requests for production of documents, and expert interrogatories should
be abandoned in favor of requests for admissions. Requests for admissions require that
opposing counsel provide specific responses within thirty (30) days.
Depositions should also be abandoned because they create issues of fact which
can prevent the recovery of a successful motion for summary judgment. Once a motion
for summary judgment has been denied, the parties should immediately begin traditional
(written or oral) discovery, with the intent of eliminating the grounds for the court’s
denial. After the grounds have been eliminated, the plaintiff should submit a request for
reconsideration of the denial of the plaintiff’s motion for summary judgment.
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(7) Motion for Summary Judgment
A motion for summary judgment is the most powerful tool for a foreclosing
lender involved in a litigated foreclosure. Failure to file this motion prior to the passing
of the county deadline will lead to a trial docketing of the particular matter. If this
occurs, the foreclosure may last an additional one to two years regardless of the
defendant’s other stalling tactics, such as bankruptcies, petitions to stay the sheriff’s sale,
and so on.
After the filing of the motion for summary judgment, if the defendant alleges that
the plaintiff’s judgment calculation is incorrect as the grounds to deny the motion for
summary judgment, a Reply Memorandum and Alternative Order should be filed. These
actions recognize the factual discrepancies and essentially agree with the defendant.
However, doing this does not negatively affect the plaintiff’s foreclosure. On the
contrary, the order will usually increase the probability that the judge will grant the
plaintiff’s motion for summary judgment. Furthermore, even if the plaintiff recovers a
slightly reduced judgment after the sheriff’s sale, the reduction will be offset by the funds
saved by obtaining a grant to the motion for summary judgment.
(8) Trial
If trial is imminent, the plaintiff must be prepared to present witnesses, such as a
branch manager who is knowledgeable about the client, the client’s foreclosure
procedures, and the underlying loan documentation. Similarly, the plaintiff must be
prepared to present exhibits at trial, including the deed, the docket, all pleadings,
including the underlying payment ledger, the mortgage, and other evidence supporting
the merit of the plaintiff’s case.
As previously mentioned, the plaintiff should concede to immaterial computation
disagreements in order to move the case along. Plaintiffs should not waste time, energy
and money quibbling and objecting to the debtor’s irrelevant or emotional testimony.
However, the plaintiff should attempt to present testimony, despite its irrelevance,
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regarding the length of debtor’s indebtedness, as well as the attempts made for
conciliation. Whenever possible, the plaintiff should attempt to enter into stipulations
with opposing counsel. The result of stipulations is two-fold: (1) it reduces trial times,
thereby conserving the client’s funds, and (2) it helps to prevent issues of fact which
might to lead to the court to sympathize with the defendant. The issue of whether a
defendant is entitled to a jury trial is unsettled, but the lenders should avoid jury trials for
obvious reasons. Notably, many people can relate to the defendant, and may feel
sympathy towards the defendant. This can bias the jury and prejudice the plaintiff’s case.
Trial in a foreclosure action is an uphill battle in which the plaintiff attempts to
divest title from a debtor who might appear to be worthy of sympathy. However, the
plaintiff and his attorney must remember that they have been wronged and they deserve
to win. The case should not be presented begrudging, but confidently and with
conviction.
(9) Sheriff’s Sale, Pa.R.C.P. No. 3129, et. seq. and Pa.R.C.P. No. 3180, et. seq.
Pa.R.C.P. No. 3129 governs the pre-sale requirements in foreclosure actions.
Strict compliance with this rule must be followed. Further, attorneys should gain detailed
knowledge of each county’s procedural requirements because prothonotarys tend to be
strict and unwavering.
After the judgment, in order to start the sheriff’s sale process, the plaintiff must to
file a Writ of Execution, which includes attachments of all documentation required by the
sheriff and the prothonotary of the particular county. In conjunction, the plaintiff’s
attorney should order and purchase a title bringdown to provide the foreclosing lender
with the full ability to divest any new or potential lienholders. If a lienholder is found in
the bringdown, the plaintiff must provide that lienholder with proper notice of the
sheriff’s sale under Rule 3129. The plaintiff’s service of the notice must be completed on
all defendants and lienholders at least thirty (30) days prior to sale.
Notice requirements vary. For an unrepresented defendant, Pa.R.C.P. No. 402(a)
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requires personal service, but Pa.R.C.P No. 403 provides that service by mail is
allowable. If the plaintiff cannot complete service under these rules, service may be
made pursuant to Pa.R.C.P. No. 430, which permits other methods of delivery under
special circumstances. For represented defendants, service can be made pursuant by
handing, mailing or leaving a copy at the address of the party's attorney of record.
Pa.R.C.P. No. 440. Service of remaining parties set forth in a 3129 affidavit can be made
by ordinary mail and must be evidenced in the certificate of mailing (US Postal form
3817).
The plaintiff can opt to postpone the sheriff sale one time only, without court
permission. The postponement can be for up to one-hundred (100) days from the
originally scheduled sale date and the plaintiff is not required to conduct any further
notice or advertising. Only an attorney on the writ may postpone or stay a sheriff’s sale.
New York Guardian Mortgage Corporation v. Jerome Brokenborough, 575 A.2d 121
(1990). Any additional postponements require a court order. Prior to attending the sale
and bidding, attorneys should be familiar with each county’s specific procedures.
C. Nonjudicial Foreclosures; Tax Sales
(1) Upset tax sales
Often, the first sale that takes place pertaining to the foreclosure property is an
upset tax sale. These sales deal with unpaid township, borough, county, and school
district real estate taxes. Under 72 P.S.§ 5860.609, the sale allows the successful bidder
to take title to the property under, and subject to, “the lien of every recorded obligation,
claim, lien, estate, mortgage, ground rent and commonwealth tax lien included in the
upset price...” 72 P.S.§ 5860.609.
The Tax Bureau must publish notice of sale thirty (30) days prior to the sale in at
least two (2) local newspapers. 72 P.S. §5860.602(a). Thirty (30) days prior to sale, the
tax claim bureau must send notice by certified mail to the property owner. If the tax
bureau does not receive a return receipt at least ten (10) days prior to the sale, the bureau
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must send notice to the owner by regular, first class mail at the owner’s last known
address with proof of mailing. 72 P.S. § 5860.602(e). Furthermore, notice of sale must
be posted on the property itself at least ten (10) days prior to the sale. 72 P.S.§
5860.602(e)(3). Unfortunately, mortgagees and other lienholders do not receive personal
notice of the upset tax sale, and thus must be diligent in checking up on these properties.
Within sixty (60) days of the sale, the bureau must make a “consolidated return”
to the jurisdictional court. This document includes information about the property sold,
the owners of the property, and the details of the sale. Thirty (30) days thereafter, if no
objections or exceptions have been filed, the court will determine that the sale was
properly conducted and the return will be “confirmed nisi.” 72 P.S. § 5860.607.
Objections and exceptions must be filed by the property owner within the thirty
(30) day period following the confirmation nisi. 72 P.S. § 5860.607(a.1)(1);
72PS§5860.607(b). If no objections are filed, the court will issue a decreed absolute
signifying the finalization of the sale. 72 P.S. § 5860.607(c). After this absolute
confirmation, the tax sale may not be set aside for any reason other than failure to
provide proper notice. 72 P.S. § 5860.607(c).
(2) Judicial Tax Sale
If there is no purchaser at an upset sale, the property will be re-listed for a judicial
tax sale. Pursuant to 72 P.S. § 5860.610, the property will be sold at a judicial sale “freed
and cleared of their respective tax and municipal claims, liens, mortgages, charges and
estates, except separately taxed ground rents.” With a judicial tax sale, the bureau must
serve notice upon all lienholders and interested parties. 72 P.S. §§ 5860.610,5860.611.
(3) Private Tax Sales
In lieu of a judicial tax sale, the Tax Claim Bureau may sell its tax interest to a
private tax holder, who, in turn, can sell the property at a private sale with the same
effect as the upset tax sale. 72 P.S. §§ 5860.613, 613-1, 614, 615; 72 P.S. § 5860.605.
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(4) Defenses to Tax Sales
As previously mentioned, unless the debtor satisfies delinquent tax payment, the
tax sale can only be set aside for lack of sufficent notice. For example, in Menanite
Board of Missions v. Adams, the Supreme Court of the United States held that notice is a
minimum constitutional precondition to proceeding with a tax sale and that a mortgagee's
knowledge of delinquency in payment of taxes is not equivalent to notice that a tax sale is
pending, and thus is not sufficient. 462 U.S. 791, 103 S.Ct. 2706 (1983). Similarly, the
Pennsylvania case, First Pennsylvania Bank v. Lancaster County Tax Claim Bureau,
held that a certain notice provisions within a real estate tax sale law, which did not
require personal service or notice by mail to the record mortgagee of impending tax sale,
violated the due process rights conferred of the mortgagee. 504 Pa. 179, 470 A.2d 938
(1983). In order to challenge the sufficiency of notice in a tax sale, the challenger
must file a petition “within three months of the acknowledgment of the deed to the
premises by the sheriff.” 53 P.S. § 7193.3. The best practice is to file notice and then
negotiate a settlement. Tax sales are routinely difficult to overturn and are often the
subject of legal malpractice claims.
As a side note, attorneys should be careful when dealing with properties
purchased at private tax sale. Recently, private tax sale purchasers have improperly
attempted to quiet title to the property. While this action to quiet title may be
inappropriate, the courts have nevertheless upheld them when the purchaser strictly
complied with the service requirements and the lender delayed or failed to file a
response.
(5) Right of Redemption
Within nine (9) months from the date of acknowledgment of the sheriff’s deed,
and upon payment of costs, the owner, first mortgage lienholder, or other interested party
may redeem the property by petition pursuant to 53 P.S. § 7293(a). However, there is no
right of redemption for a property deemed vacant. A vacant property is defined as a
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property not continuously occupied by the same individual or family unit as a residence
for at least ninety (90) days prior to the sale and up through the date of acknowledgment
of the sheriff’s deed. 53 P.S.§ 7293.
D. Foreclosure of Land Sale Contracts
Sometimes a foreclosure action will not involve a traditional mortgage. For
example, individual sellers and buyers sometimes execute a land sale contract, or
installment contract. These contracts are agreements in which the seller retains legal title
to the property, usually in escrow, until the purchaser has made the required payments.
The buyer maintains an equitable interest in the property throughout the duration of the
contract. After the completion of the buyer’s payments for the full amount stated in the
contract, the seller transfers equitable title to the buyer.
There are several reasons why parties might opt for this arrangement as opposed
to a more traditional mortgage arrangement. First, closing costs are usually low. Second,
other financing options may not be available for certain buyers, especially if the buyers
are young or have bad credit. Third, sellers can often gain interest income in these
agreements. Finally, interest terms under installment contracts may be more favorable
than conventional rates.
In Pennsylvania, 68 P.S. § 903 defines an installment contract as an “ executory
contract for the purchase and sale of a dwelling situate in any city of the first class or
county of the second class whereby the purchaser is obligated to make six or more
installment payments to the seller after the execution of the contract and before the time
appointed for the conveyance of title to the dwelling.” The statute provides several
remedies to the seller if the purchaser defaults on the contract, such as termination of the
contract, an action for recovery of installments made by the seller, an action for damages
for breach of the contract, and an action for the recovery of possession of the property. 68
P.S. § 906. However, these actions, especially those to regain possession, may often be
difficult because the buyer can argue that he has an equitable interest in the property.
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Thus, a foreclosure action often becomes necessary.
Pennsylvania courts have held that, although the seller retains legal title under an
installment contract, these agreements should be treated mortgages. Stillwater Lakes
Civic Ass'n, Inc. v. Krawitz, 772 A.2d 118. Accordingly, like a normal foreclosure
action, a foreclosure on an installment contract could take anywhere from one to two
years. Moreover, during a foreclosure, the buyer may continue to live on the property
without making payments to the seller. In the meantime, the seller may need to make
payments to a senior lender to prevent foreclosure on an underlying loan, a deficiency
judgment, and detrimental effects to the seller's credit rating. Additionally, while the
buyer occupies the premises, liens may attach to the property through the buyer.
Therefore, once the seller recovers the property, he may be subject to these intervening
liens. It is rare that sellers recover any of these sums from buyers.
Subsequently, the best practice is to advise clients not to engage in these contracts
by explaining to them the potential, and highly likely, risks and pitfalls. If a client does
decide to enter into an installment contract, the contract should provide for specific pro-
seller remedies for buyer defaults. For example, the contract should include a clause that
the deed, held in escrow, is to be automatically released by the escrow agent to the seller
upon proof that the buyer has defaulted on a certain number of payments.
II. COLLATERAL FORECLOSURE CONSIDERATIONS
A. Appeals and Injunctions
(1) Appeals
Once a final and dispositive order has been rendered by the Court of Common
Pleas, a party may take an appeal to the Superior Court, or Commonwealth Court, within
thirty (30) days of that order. Pa.R.A.P., Rule 902, 903. Two (2) copies of the notice of
appeal, the order for transcript (if any) and a proof of service must be filed with the clerk
of the trial court. Pa.R.A.P., Rule 904, 905. Thereafter, the clerk will transmit a copy of
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the notice of appeal to the prothonotary of the appellate court named in the notice.
Pa.R.A.P., Rule 905(b).
Pursuant to Rule 5000.5(a)(3) of the Pennsylvania Rules of Judicial
Administration, the appellant must serve notice of appeal upon (1) all parties to the
matter in the trial court, (2) the judge of the lower court, (3) the official court reporter of
the trial court, and (4) the district court administration. Pa.R.A.P., Rule. 906. The notice
of appeal must strictly comply with Pa.R.A.P., Rule 904 and must include: (1) a caption,
(2) a request for transcript or a statement signed by counsel that there is no verbatim
record, and (3) a statement that the order appealed from has been entered in the docket,
along with a copy of the docket entry showing the entry of the order. Pa.R.A.P., Rule
904.
The best practice is to comply with every appellate rule for that jurisdiction,
regardless of its relevance to the appeal. Additionally, it is always best to attach a
certified copy of the transcript. Non-compliance will, at the least, result in a Motion to
Quash Appeal, and, at the worse, result in the dismissal of the appeal, sua sponte, for
want of procedural propriety.
(2) Injunctions
Typically, debtors file last-minute petitions to stay or continue the sheriff’s sale.
These petitions can be filed at any time up to the day of sale. In fact, a variety of
counties hold their sales until mid-day specifically for the purpose of scheduling pre-sale
injunctive petitions on the morning thereof.
Attorneys filing a petition to stay or postpone a sheriff’s sale should be very
cognizant of county rules regarding filing requirements and attendance at hearings.
Failure to comply with county procedures may result in the court docketing the petition,
ignoring it altogether, or holding an evidentiary hearing in the attorneys absence without
notice. If this occurs, it is likely that the attorney will be subject to a malpractice action
for subjecting his client to a divestiture. Nonetheless, attorney pleas for help at the sale
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itself will be ignored.
(3) First-sale Equitable Relief
A petition to set aside a sheriff’s sale will only be granted on the bases of: (1) the
gross inadequacy of the price, (2) the lack of competitive bidding by agreement
(“showing”), (3) sale irregularities, and (4) fraud. After delivery of the deed, fraud is the
only ground for setting aside a sheriff’s sale. North Phila. Trust Co. v. Hammond, 341
Pa. 77, 17 A.2d 881(1941).
B. Deficiency Actions, Pa.R.C.P. No. 3276, et. seq.
(1) Generally
The Deficiency Judgment Act was enacted to protect debtors from double
collections by creditors who have purchased the debtor’s real property at sheriff’s sale.
Because the purchase price at the sheriff’s sale is often lower than the fair market value
of the property, the Act requires that credit be given for the value of the property
purchased at the sheriff’s sale. Thus, whenever real property is served to a judgment
creditor in execution proceedings, and the sale price is not sufficient to satisfy the
judgment, interest and costs, the judgment creditor shall petition the court to fix the fair
market value of the real property sold. 42 Pa.C.S.A. § 8103; Shrawer v. Quiggle, 256
Pa.Super. 303, 389 A.2d 1135 (1978); Delaware Valley Factors Inc. v. G.B.Echenhofer
Co., 226 Pa.Super. 165, 313 A.2d 318 (1973). The Act applies regardless of nature of the
execution proceedings, including proceedings on a mechanic’s lien, on a mortgage
foreclosure and on a personal money action. This Act does not impose personal liability
on a respondent to the petition.
The Act does not apply where a third-party, unrelated to judgment creditor,
purchases the property at the sheriff’s sale, the creditor files a motion to set aside the sale,
and the purchaser then pays a sum of money to the creditor in consideration for the
withdrawal of the petition to set aside the sale. Bank Leumi: LE-Isreal v. Zimmerman,
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396 Pa.Super. 409, 578 A.2d 967 (1990). However, if the judgment creditor is the
successful bidder, and then assigns its bid to a third-party to whom the sheriff issues a
deed, the statute is operative. Reliable Savings and Loan Ass’n of Bridgeville v. Joyce,
385 Pa.Super. 536, 561 A.2d 804 (1989).
The deficiency action must be filed as a supplementary proceeding in the matter
in which the judgment was entered. It must be filed within six (6) months following the
delivery of the sheriff’s deed in the county where the property is located. 42 Pa.C.S.A. §
5522; Pa.R.C.P. No. 3278. However, the court has held that the six-month period can be
tolled throughout the span of time during which a confessed judgment is improperly
opened by a court order while the parties litigate the validity of the judgment. Holzapfel
v. Mahoney, 367 Pa.Super. 93, 532 A.2d 469 (1987). If the judgment creditor fails to file
a timely petition, any protected person may file a petition to mark the judgment satisfied.
42 Pa.C.S.A. § 5522; 42 Pa.C.S.A. §8103(d); Pa.R.C.P. Nos. 3287-3290. If a mortgagee
has received full satisfaction of the debt, but fails to record the mortgage as satisfied, the
mortgagee shall be liable for damages to the aggrieved party.
The petition must name, as respondents, all parties directly or indirectly liable for
the debt. If the petition fails to state all these parties, the creditor risks rendering
unnamed parties immune from liability under that action. If no answer is filed to the
petition, or the answer does not deny the petition’s allegations, the court shall enter an
order determining the fair market value to be the amount set forth in the petition.
Pa.R.C.P. No. 3284; 42 Pa.C.S.A. § 8103(c)(2).
Under the Act, the court shall determine the fair market value of the real property
based on the “highest and best uses” of the property. First Pennsylvania Bank v. Peace
Valley Lakeside Community and Agricultural Trust, 329 Pa.Super. 218, 478 A.2d 42
(1984). The analysis to determine this amount involves assessments of: (1) recent sales
of real property of comparable location and description, (2) the uses to which the
property may be applied, (3) the demand for the property and similar properties, (4) the
income produced by the property, and (5) generally, all elements which affect the actual
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value. Union National Bank v. Crump, 349 Pa. 339, 37 A.2d 733 (1944). Expert
testimony is almost always necessary to make these assessments, but often times an
owner is deemed competent to testify regarding the property’s value. Mellon Bank
National Ass’n v. Pennsylvania Restaurant of ABE, 364 Pa.Super. 567, 528 A.2d 654
(1987); Wall Street Federal Savings and Loan v.Burnstein, 394 Pa. 353,147 A.2d 359
(1959).
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(2) Contents of the Petitioner
Pursuant to Pa.R.C.P.No. 3282, a petition shall contain averments setting forth:
(1) the name and address of the judgment creditor, (2) the name and last known address
of each respondent, (3) a statement that the petition is filed pursuant to §8103(a) of the
judicial code, (4) the court and number of the execution proceedings, the original
judgment and any judgment obtained by transfer, (5) the date that the property was struck
down to the successful bidder and the date that the sheriff’s deed was delivered, (6) an
attached legal description, (7) the fair market value, (8) a description of all prior lien
amounts, if credit therefore is desired, (9) a statement that the judgment creditor is a non-
consumer judgment credit, if special allocation is requested, (10) any special allocation
required by §8103(f) of the judicial code, and (11) a request that the court fix the fair
market value of the property at the value set forth in the petition.
C. Receivership
Often times mortgagees become concerned with the management of mortgaged
property during the period after default and before foreclosure. In this case, one
instrument available to the mortgagee is a receivership. Receiverships require the
judicial appointment of a third party (receiver) to take possession of the mortgaged
property and to operate, repair, collect rents and preserve the property. A receivership is
often favorable because it allows the mortgagee to avoid strict accounting requirements
and insulates the mortgagee from tort and related landowner liabilities. However, the
receiver, if appointed, is the agent of the court and not the mortgagee. Thus, the receiver
may take actions to which the mortgagee objects.
D. Possessions/Evictions
(1) Ejectment
Pursuant to Pa.R.C.P. No. 1051, et. seq., after a sheriff’s sale, a successful bidder
may evict the occupants of the premises through an action in ejectment. This action must
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be filed in a county in which the land, or a part of the land, is located. The plaintiff must
attach a legal description of the property and request a judgment in ejection for
possession of the property. Pa.R.C.P. No. 1054. A plaintiff may also aver and request
damages for expenses which arose from defendant’s possession of the land. Pa.R.C.P.
No. 1055. Many complaints in ejectment request judgment against un-named “John
and Jane Doe” defendants. These unspecified defendants may be tenants of the property
or other unknown residents. Prevailing case law tends to allow preliminary objections to
ejectment actions when defendants are not specifically identified. Nevertheless, custom
usually allows this practice.
(2) Replevin
Pursuant to Pa.R.C.P. No. 1071, et. seq., a judgment creditor may file an action
for replevin to obtain possession of movable property within the residence in satisfaction
of the defaulted payments. Therein, the plaintiff must aver: (1) a description of the
property, (2) its value, (3) its location, and (4) the material facts upon which the
plaintiff’s claim is based. Pa.R.C.P. No. 1073.1. Prior to the judgment, the property may
be seized by the sheriff pursuant to a Writ of Seizure, issued only upon a court order
entered after notice and hearing. Pa.R.C.P. No. 1075, et. seq. As usual, strict compliance
with the applicable rules must be maintained.
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Issues in Residential Mortgage Foreclosures
Prepared and Presented by:
Stephen FeltApex Lending
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Foreclosures 101 Foreclosure property investing may be one of the best or the most frustrating source of deals, depending on how you work them. There are many investors on the street looking for the best deals and also many that are selling get rich quick schemes to would be investors at local seminars. In order to work in this field you need to understand the ins and outs of the market and how to find the deals before the throngs of novice investors come knocking. Finding homeowners in foreclosure may prove to be a stumbling block for many novice investors. Most newcomers to the business don’t know where to find property owners at the pre-foreclosure stage. Most people don’t know the correct name of the local government agency where foreclosure lawsuits and notices of lis pendens or notices of default are recorded in the public record. Here is the most important advice I can offer. Go in person to your local county Government office and do not leave until you speak face-to-face with a public recorder that works in the office where mortgage or deed-of-trust loan foreclosure actions are filed and recorded in the public records of your county. This office may be known in your county as the recorder, notary, circuit court clerk, county court clerk , registrar or bureau of conveyances. Ask the person with whom you are speaking if your county’s public records may be accessed online. If so, you will be able to download notices of lis pendens or notices of default to your computer. If they’re not online, find out if there is a foreclosure-reporting service in your area that gathers information from your county’s public records about property owners in foreclosure. One such source is
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www.foreclosure.com. You can also look in your local newspaper for your county where foreclosure notices are published. The Sequence of Foreclosure The typical sequence of events in the foreclosure process is as follows:
1. Borrower is delinquent >90 days on mortgage payment 2. Delinquency Notice sent by Lender to borrower 3. Notice of Default Filed by Lender 4. Reinstatement/Foreclosure Period 5. Date of Publication 6. Date of Sale 7. Redemption Period 8. Deficiency Judgment
The foreclosure ball doesn’t get rolling until after a lender declares a loan to be in a default status. Technically, a borrower is in default if they are late by one payment. However, most lenders consider any loan with payments that are 90 days or more past due to be in default. But not all lenders are as aggressive as they should be when it comes to declaring that a mortgage or deed-of-trust loan is in default. This has been especially true with lenders servicing government-backed loans such as the FHA and/or VA loans. However, most lenders servicing conventional loans are much more aggressive about declaring delinquent loans to be in a default status. They usually send delinquent borrowers a notice of their intent to foreclose on a loan within 95 days from the date that the last loan payment was received. Some lenders will allow as much as 120 days to pass without a
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payment before they take legal action. Once a lender notifies a borrower that his or her loan is in a default status, the lender instructs his or her attorney or trustee to initiate a foreclosure action against the borrower. The attorney or trustee then files a foreclosure lawsuit and notice of lis pendens or a notice of default in the same county where the deed to the property being foreclosed on is recorded. After a notice of lis pendens or a notice of default is filed and recorded in the public records, it becomes public information. Legal Aspects of How Foreclosure Notices Work Foreclosure is the legal process of the mortgage lender taking the collateral, normally a house, condo, or townhouse for a promissory note in default. The process differs slightly from state to state with two main types of foreclosure. Judicial and Non-Judicial. In mortgage states a judicial foreclosure is most often used whereas in deed of trust states use a non-judicial or power of sale foreclosure. A complete state by state list can be seen in the following pages. The legal term lis pendens is Latin for “a pending lawsuit” and refers to the period of time between when a lawsuit is filed and when the case is actually heard in court. In judicial foreclosure actions, lenders file a lawsuit to foreclose on a mortgage or deed-of-trust loan that is in default and a notice of lis pendens. A notice of lis pendens is recorded in the public records to give the public constructive notice that a lawsuit affecting a property’s title has been filed in a state or federal court of competent jurisdiction. Like all lawsuits, a judicial
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foreclosure starts with a summons or legal notice upon the borrower and any other parties with inferior rights in the property. This includes but is not limited to all junior liens and tenancies which are wiped out by the foreclosure, which need to be notified of the proceedings. If the borrower does not file an answer to the lawsuit, the lender then gets a judgment by default. At this time a person is appointed by the court to tally the total amount due, including legal fees, interest and penalties. The lender must then advertise a notice of sale in the county newspaper for several weeks. If the total amount due is not paid by the borrower by the due date then there is a sale at the courthouse. The process can take varying time, depending on the state, jurisdiction and case load, with as little as three months and as long as twelve months. The sale is conducted like an auction, where the property goes to the highest bidder. As you can imagine, the good properties with low debt will get the most action at the sale by the seasoned investors. If there is not significant equity in the property many times the only bidder will be the lender on the first mortgage or trust deed. The lender can bid all the way up to the amount that is owed without having to come out of pocket to purchase the property and will normally try to sell the property through its REO department. In the event that the proceeds from the sale are insufficient to satisfy the lender, the lender may be entitled to a deficiency judgment against the borrower and anyone else that guarantees the loan. Some states restrict this type of judgment such as California, although many lenders look for this. In non-judicial foreclosure actions, where lenders don’t file foreclosure lawsuits and notices of lis pendens, instead they file a notice of default or power of sale.
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This is a legal notice that is recorded in the public record to give the public constructive notice that a mortgage or deed-of-trust loan is in default and scheduled to be foreclosed on, usually at a private trustee’s sale. The borrower usually has a right of redemption after the sale, see the attached list of states. To stay organized, keep a record of the information that is contained in foreclosure lawsuits and notices of lis pendens and notices of default. Strict Foreclosures, which doesn’t require a sale is utilized by only a few states. This type of foreclosure permits the borrower a certain amount of time to pay what is owed and once that date has passed the title reverts back to the lender without the need for a sale. Many states will allow borrowers to reinstate or cure their loan before the date of sale. The curing process simply requires the payment of arrears plus interest and legal fees. It is much more desirable for a defaulting borrower to reinstate their loan than to pay off their entire balance. Most deed of trust states, or non-judicial states, allow this to happen. Some states give a borrower the right to redeem the amount owed and get title to the property back after the sale date. The length of time allowed for redemption varies state to state, see the attached listing for more information. In some cases, the lender and borrower may settle a foreclosure in the process of the proceedings by the borrower giving the lender a Deed in Lieu of Foreclosure. This is where the borrower may opt for a deed in lieu instead of having their credit trashed by the foreclosure and possibly worse by a deficiency judgment. Yet there is another form of foreclosure, which is sometimes referred to as a
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friendly foreclosure and tested in a Colorado court case, Blitz vs. Marino, 786P.2d490 (1989). In that case, a deed in lieu of foreclosure was given after negotiations between the borrower and lender, but before a foreclosure action had commenced. The Friendly Foreclosure is when a property owner and an investor agree in advance to legally side step the due on sale proceedings and settle out of court on their own terms. Many times a second lien holder will pursue this type of action since they have only two options. One is to lose their position in the proceedings taken out by the first lien holder, and the other is to make up the payments on the first lien. Once the second lien holder makes up the back payments on the first lien, it can then seek to recoup its money from the borrower. If the borrower can’t repay the debt, or is in default on the second lien, the second lien holder can commence foreclosure proceedings. Don’t forget that the second lien holder can’t wipe out the senior or first lien, so that when the winning bidder gets the home and takes title it will be subject to first lien approval. Many court cases have been ruled that the first lien holder can’t enforce a due-on-sale when the title to the property has been transferred pursuant to a foreclosure of a junior lien. Matter of Ruepp,321 S.E.2d 517 (NC App.,198), Yelen v. Bankers Trust Co., 476So.2d 767 (FL App.3 Dist., 1985) A friendly foreclosure can be structured like this: Step 1: Agree on a cash settlement. Negotiate with the seller on the amount of cash they need to pay their debts, which will give the investor the deed on their property. Step 2: Create a Loan. “Loan” the seller the money secured by a second
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mortgage on the property and record the deed of trust or mortgage with the county. Step 3: Declare Default. Upon default of the first payment due, file a notice of default against the seller. Step 4: Settle out of Court. Once the seller is in default of the loan you both agree to settle the matter by them giving you a deed in lieu of foreclosure. They keep the cash and you have the title to the property, subject to the first mortgage already in place. Finding Foreclosure Notices The following national recorders directory website has a listing of all county registrar offices nationwide: www.zanatec.com State foreclosure statutes require lenders to publish legal foreclosure notices in a newspaper that is circulated within the same county where the foreclosure notice is recorded. In most counties, county and circuit courts require that foreclosure notices be published in newspapers the courts have approved as newspapers of record. A newspaper of record is a paper that has county-wide circulation and is read by the majority of residents within the county. You can call the office of your local county clerk of the court to obtain the names of the newspapers of record for your county. Recorded foreclosure notices also can be accessed online. Depending on your state’s public-records statute and whether your county’s public records are available online, you should be able to access information on recorded notices of
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lis pendens and notices of default directly from your county’s public records Library. You can usually tell whether a notice of lis pendens is for a foreclosure action by looking at the parties listed in the notice. For example, if one of the parties is a bank or mortgage lender and the other is a private individual or two people with the same last name, there is a good chance that it is a mortgage-foreclosure lawsuit. After printing out the listing of notices of lis pendens, log onto the county property appraiser website and do a property-records search using the owner’s name that is listed in the lis pendens notice. If interested in the property, notify the property owner in a letter. Finding Property Owners With Delinquent Loans Property owners with delinquent loans are hard to track down. That is the downside of there being no public record of their financial misfortune, until the notice of default is filed that is. There are three basic stages in the foreclosure process; the default period, the foreclosure period, and the redemption period. The first two periods are simply the best time to acquire a property since the redemption period requires an all cash paid requirement. Foreclosure auctions are not to be treated as a game as there are many savvy and shrewd investors that attend. As a novice investor it is best to avoid foreclosure auctions and concentrate on acquisition prior to the auction. You can also contact the lender directly after the auction to see what they have in their REO (Real Estate Owned) department. Don’t count on any creative financing from the lender except for VA loans. If at all possible, acquire the property directly from the owner in a pre-
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foreclosure agreement. Once you take control of the deed to the property you can then contact the lender and reinstate the loan by making the back payments. Be careful of any back taxes or other liens on the property as this is a common occurrence with foreclosures. Most lenders will require a power of attorney specific to the property from the seller along with the deed. The most efficient method to find property owners with delinquent loans is to place classified ads that target property owners who are one loan payment away from foreclosure. A simple message will do. For example: “Trouble Making House Payments? Call 215-555-5555 Today For Help” Run these ads in the local and the major newspapers and run them daily for the best return on your investment. Don’t worry if there are 5 other ads just like yours, the best place to be is the same place as all of your competitors. Just think about all those car dealerships lining the roads. Why do you think they put them next to each other instead of on their own? It is because people get to know where they are and look for them there. You can also contact local mortgage companies about their dead leads that people were in foreclosure and nobody could help. Mortgage brokers make money by lending money, and often come across people with little to no equity in their home and facing foreclosure. Remember the 3 sides of the foreclosure triangle:
1. Pre-Foreclosure 2. Courthouse Action 3. Real Estate Owned (REO)
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Types of Liens – Voluntary & Involuntary Voluntary Involuntary Mortgages Tax/Assessment Deeds of Trust Federal Liens Equity Lines of Credit Judgments
Mechanics Liens
Vendors Liens Mechanics of a Real Estate Transaction
1. Locate and Identify Potential Investment Property 2. Evaluate the property 3. Review and analyze the numbers 4. Negotiate an agreement 5. Prepare and sign a contract 6. Open Escrow 7. Satisfy all contingencies (if you can’t satisfy all then cancel the contract) 8. Assign contract or close the transaction 9. Fix up and rent or sell the property for positive cash flow
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HOME RETENTION PROGRAMS LETTER TO PRE-FORECLOSURES Attention Homeowner: SAVE YOUR HOME – CALL TODAY!
Our sole business is to save your home by negotiating with your lender(s) to stop the foreclosure proceedings and restructure your current loan. GET A LOAN MODIFICATION – WHAT IS IT? It is a fresh re-start. We negotiate with your lender to take the delinquency, foreclosure fees, attorney fees and penalties and add them to the end of the loan – then you simply restart your normal payments. Note: some lenders will lower your interest rate and payments. Approximately 90% of all lenders will do a loan modification. GET APPROVED – (BAD CREDIT DOESN’T MATTER) You must know the rules and present a professional plan and a hardship letter that the lender requires in order to approve your request. If you don’t know the rules or make an error, the lender will not approve your request. We know the rules! Note: the other 10% of lenders that do not offer a modification will do a work out program called a forbearance plan. We understand that federal foreclosure policies and lender policies often conflict with each other and few people outside the banking world have the knowledge to forcefully negotiate with your lender.
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Most attorneys do not understand banking and only have one solution:
BANKRUPTCY! Bankruptcy should be the last resort and you should know they often fail. Nobody feels good about filing a bankruptcy. We are a licensed mortgage broker/banker and will review lender’s programs that might be to you benefit.
The typical foreclosure procedure involves………… • Your bank will stop accepting mortgage payments • Your bank will stop accepting telephone calls • Your bank will continue to add interest, penalties and late fees monthly • You will receive legal papers regarding foreclosure, and a court date • You will have only a short time to try to save your home We understand that you receive many letters from different companies during these difficult times. Many of these companies want to buy your house (for pennies on the dollar) or want to sell your house (for pennies on the dollar). I don’t want to buy or sell your home, and only as a last resort will we work out a lease/option for you. WE WANT TO SAVE YOUR HOME. It’s not too late to save your home. We have the solution. You do have rights in foreclosure that most people aren’t aware of. Call to let us explain your rights. We will answer all your questions and help guide you through these tough times. REFERENCES We will be pleased to offer you a list of homeowners we have assisted in your area. WE ARE A GROUP OF EXPERIENCED BANKERS.
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Foreclosure by State
State Security Foreclosure Initial # of Redemption DeficiencyInstrument Type Step Months Judgment
Alabama Mortgage Nonjudicial Publication 1 12 months AllowedAlaska Trust Deed Nonjudicial N.of Default 3 None AllowedArizona Trust Deed Nonjudicial N.of Sale 3 None AllowedArkansas Mortgage Judicial Complaint 4 None AllowedCalifornia Trust Deed Nonjudicial N.of Default 4 None ProhibitedColorado Trust Deed Nonjudicial N.of Default 2 75 Days AllowedConnecticut Mortgage Strict Complaint 5 None AllowedDelaware Mortgage Judicial Complaint 3 None AllowedDist.of Columbia Trust Deed Nonjudicial N.of Default 2 None AllowedFlorida Mortgage Judicial Complaint 5 None AllowedGeorgia Security Deed Nonjudicial Publication 2 None AllowedHawaii Mortgage Nonjudicial Publication 3 None AllowedIdaho Trust Deed Nonjudicial N.of Default 5 None AllowedIllinois Mortgage Judicial Complaint 7 None AllowedIndiana Mortgage Judicial Complaint 5 3 Months AllowedIowa Mortgage Judicial Petition 5 6 Months AllowedKansas Mortgage Judicial Complaint 4 6-12 Months AllowedKentucky Mortgage Judicial Complaint 6 None AllowedLouisiana Mortgage Exec.Process Petition 2 None AllowedMaine Mortgage Judicial Complaint 6 None AllowedMaryland Trust Deed Nonjudicial Notice 2 None AllowedMassachusetts Mortgage Judicial Complaint 3 None AllowedMichigan Mortgage Nonjudicial Publication 2 6 Months AllowedMinnesota Mortgage Nonjudicial Publication 2 6 Months ProhibitedMississippi Trust Deed Nonjudicial Publication 2 None ProhibitedMissouri Trust Deed Nonjudicial Publication 2 None AllowedMontana Trust Deed Nonjudicial Notice 5 None ProhibitedNebraska Mortgage Judicial Petition 5 None AllowedNevada Trust Deed Nonjudicial N.of Default 4 None AllowedNew Hampshire Mortgage Nonjudicial N.of Sale 2 None AllowedNew Jersey Mortgage Judicial Complaint 3 10 Days AllowedNew Mexico Mortgage Judicial Complaint 4 None AllowedNew York Mortgage Judicial Complaint 4 None AllowedNorth Carolina Trust Deed Nonjudicial N. Hearing 2 None AllowedNorth Dakota Mortgage Judicial Complaint 3 60 Days ProhibitedOhio Mortgage Judicial Complaint 5 None AllowedOklahoma Mortgage Judicial Complaint 4 None AllowedOregon Trust Deed Nonjudicial N.of Default 5 None AllowedPennsylvania Mortgage Judicial Complaint 3 None AllowedRhode Island Mortgage Nonjudicial Publication 2 None AllowedSouth Carolina Mortgage Judicial Complaint 6 None AllowedSouth Dakota Mortgage Judicial Complaint 3 180 Days AllowedTennessee Trust Deed Nonjudicial Publication 2 None AllowedTexas Trust Deed Nonjudicial Publication 2 None AllowedUtah Trust Deed Nonjudicial N.of Default 4 None AllowedVermont Mortgage Judicial Complaint 7 None AllowedVirginia Trust Deed Nonjudicial Publication 2 None Allowed
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Washington Trust Deed Nonjudicial N.of Default 4 None AllowedWest Virginia Trust Deed Nonjudicial Publication 2 None ProhibitedWisconsin Mortgage Judicial Complaint 6 None AllowedWyoming Mortgage Nonjudicial Publication 2 3 Months Allowed
Exec. Process = Executive ProcessN. of Default = Notice of DefaultN. of Sale = Notice of Sale
NOTES :
Deficiency Judgment: allows the lender to sue the borrower if the property sells for less than theprincipal + delinquency + foreclosure feesNumber of months: once the lender has noticed the homeowner of their foreclosure action this is(generally) the number of months before the lender can sell the propertyJudicial foreclosure: means the lender must sue the borrower in a court and must use an attorney.Generally speaking this is a longer process and will add about 45 days to the time clock start onthe sale dateNonjudicial foreclosure: means the lender doesn't have to use the courts to foreclosure on theproperty. Some will use a third party attorney or a trustee appointed by the lenderRedemption: is the term used in some States that allow a homeowner to repurchase their homefrom the lender after the lender has gained title from a forced foreclosure sale. The lender requiresall cash for repurchase. It is too late for our company to help the client
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County Recorders in Pennsylvania Adams County Courthouse Recorder Of Deeds 111-117 Baltimore Street Rm 102 Gettysburg PA 17325 (717) 337-9826 (717) 334-1758 Allegheny County Recorder County Offiece Building 542 Forbes Avenue Room 101 Pittsburgh PA 15219 (412) 350-4226 Fax: (412) 350-6877
Armstrong County Register & Recorder Of Deeds Armstrong County Court House Market Street Kittanning PA 16201 (724) 543-2500
Beaver County Recorder Of Deeds 810 3rd Street P.O. Box 537 Beaver PA 15009 (412) 728-5700
Bedford County Recorder Of Deeds Bedford County Court House 200 South Juliana St Bedford PA 15522 (814) 623-4836
Berks County Recorder Of Deeds County Recorders Office Sixth And Court Street Reading PA 19601
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(215) 478-3380 Blair County Recorder Of Deeds Blair County Court House Hollidaysburg PA 16648 (814) 695-5541 Bradford County Register & Recorder Of Deeds Bradford County Court House Towanda PA 18848 Bucks County Recorder Of Deeds Administration Building Doylestown PA 18901 (215) 348-6209 Butler County Recorder Of Deeds County Government Center, Floor L PO Box 1208 124 West Diamond Street Butler PA 16003 (724) 284-5340 Cambria County Courthouse 200 South Center Street Ebensburg PA 15931 (814) 472-1473 Fax: (814) 472-1412 Cameron County Recorder Of Deeds Cameron County Court House Emporium PA 15834 (814) 486-3349 Carbon County Recorder Of Deed Courthouse Annex P.O.Box 87
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Corner Of Hazzard Sq.& Rt.209 Jim Thorpe PA 18229-0087 (570) 325-2651 Centre County Recorder Of Deeds Centre County Court House Bellefonte PA 16823 (814) 355-6700 Chester County Recorder Of Deeds Chester County Courthouse High And Market St. Westchester PA 19380 (215) 344-6330 Clarion County Recorder Of Deeds Clarion County Court House Clarion PA 16214 (814) 226-4000 Clearfield County Recorder Of Deeds Po Box 361 Clearfield PA 16830 (814) 765-2641 Clinton County Recorder Of Deeds Corner Of Water And Jay Street Lock Haven PA 17745 (717) 893-4000 Columbia County Columbia County Court House 35 W. Main Bloomsburg PA 17815 (717) 389-5632
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Crawford County Recorder Of Deeds Crawford County Court House Meadville PA 16335 (814) 336-1151 Cumberland County Recorder Of Deeds Cumberland County Court House Carlisle PA 17013 (717) 240-6370 Dauphin County Recorder Of Deeds P.O. Box 12000 Front & Market Room 102 Harrisburg PA 17108 (717) 255-2802 Delaware County Recorder Of Deeds Recorder Of Deeds Office Delaware County Courthouse#107 Media PA 19063 (610) 891-4144 Elk County Recorder Of Deeds Po Box 314 Ridgway PA 15853 (814) 776-5349 Recorder Of Deeds Erie County 140 West 6th Street, Room 121,1st Floor Erie PA 16501 (814) 451-6246 Fayette County Courthouse Recorder Of Deeds 61 E. Main Street Uniontown PA 15417 (724) 430-1238
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Forest County Recorder Of Deeds Po Box 423 Tionesta PA 16353 (814) 755-3537 Franklin County Recorder Of Deeds 157 Lincoln Way East Chambersburg PA 17201 (717) 261-3872 Fulton County Recorder Of Deeds Fulton County Court House Mc Connellsburg, PA 17233 (717) 485-4212 Greene County Recorder Of Deeds Greene County Court House Waynesburg PA 15370 (412) 852-1171 Huntingdon County Recorder Of Deeds Penn Street County Courthouse Huntingdon PA 16652 (814) 643-3091 Indiana County Recorder Of Deeds 825 Philadelphia Street Indiana PA 15701 (412) 465-3800 Recorder of Deeds Jefferson County Courthouse 200 Main Street Brookville PA 15825 (814) 849-1610
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Juanita County Recorder Of Deeds Po Box 68 Mifflintown PA 17059 (717) 436-8991 Lackawanna County Recorder Of Deeds Lackawana County Courthouse Scraton PA 18503 (717) 963-6775 Lancaster County Recorder Of Deeds 50 North Duke Street Lancaster PA 17603-1881 (717) 299-8238 Lawrence County Recorder Of Deeds Government Center 430 Court Street Newcastle PA 16101 (724) 656-2127 Lebanon County Recorder Of Deeds 400 South Eighth Street Room 107 Lebanon PA 17042 (717) 274-2801 Lehigh County Recorder 455 Hamilton Street P.O. Box 1548 Allentown PA 18105-1548 (610) 782-3162 Luzerne County Recorders Of Deeds Luzerne County Courthouse Wilkes-Barre PA 18711 (717) 825-1500
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Lycoming County Recorder Of Deeds 48 W. 3rd Street Williamsport PA 17701 (717) 327-2200 McKean County Recorder Of Deeds 500 W. Main St. Box 3426 Smethport PA 16749 (814) 887-5571 Mercer County Recorder Of Deeds N. Diamond Street Mercer PA 16137 (412) 662-3800 Mifflin County Recorder Of Deeds 20 N. Wayne Street Lewistown PA 17044 (717) 242-1449 Fax: (717) 248-2503 Monroe County Recorder Recorder's Office Courthouse Stroudsburg PA 18360 (570) 420-3400 Montgomery County Recorder County Recorders Office Montgomery County Courthouse PO Box 311 Norristown PA 19404 (610) 278-3289 Montour County Recorder Of Deeds
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29 Mill Street Danville PA 17821 (717) 271-3012 Northampton County Recorder Of Deeds Northampton Cty Government Ctr Seventh And Washington Street Easton PA 18042 (610) 559-3077 Northumberland County Recorder Of Deeds Courthouse 2nd & Market Street. Sunbury PA 17801 (717) 988-4100 Perry County Recorder Of Deeds Center Square P.O. Box 223 New Bloomfield PA 17068 (717) 582-2131 Philadelphia County Recorder Department Of Records City Hall, Room #154 Philadelphia PA 19106 (215) 686-2291 Pike County Recorder Of Deeds 412 Broad Street Milford PA 18337 (717) 296-7231 Potter County Recorder Of Deeds Potter County Court House Coudersport PA 16915 (814) 274-8290
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Schuylkill County Recorder Of Deeds 401 N 2nd Street Pottsville PA 17901 (570) 622-5570 Snyder County Recorder P.O. Box 217 Middleburg PA 17842 (717) 837-4224 Somerset County Recorder Of Deeds 300 N Center Ave, Suite 400 Somerset PA 15501 (814) 445-1547 Fax: (814) 445-1563 Sullivan County Recorder Of Deeds Sullivan County Courthouse Recorder Of Deeds, Main St. La Porte PA 18626 (717) 946-7351 Susquehanna County Recorder Of Deeds Susquehanna County Court House Montrose PA 18801 (717) 278-4600 Tioga County Recorder Of Deeds 116 Main Street Wellsboro PA 16901 (717) 724-1906 Union County Recorder Of Deeds 103 South 2nd Street Lewisburg PA 17837
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(570) 524-8761 Venango County Courthouse Recorder Of Deeds Liberty Street Franklin PA 16323 (814) 432-9534 Warren County Recorder Of Deeds Warren County Court House Warren PA 16365 (814) 723-7550 Washington County Recorder Of Deeds Washington County Courthouse Washington PA 15301 (412) 228-6806 Wayne County Recorder Of Deeds Wayne County Courthouse Court Street Honesdale PA 18431 (717) 253-5970 Westmoreland County Recorder Co.Courthouse Square 5th Flr P.O. Box 160 N. Main Street, Annex Greensburg PA 15601 (412) 830-3000 Wyoming County Recorder Of Deeds Wyoming Court House Tunkhannock PA 18657 (717) 836-3200
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YorkCountyRecorderOfDeeds 28EastMarketStreet York,PA17401 (717) 771-9295
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