On June 22, 2012, Governor Corbett signed into law Senate Bill No. 1433, known as the Homeowner Assistance Settlement Act. This new law establishes a special fund known as the Homeowner Assistance Settlement Fund to finance the Homeowner’s Emergency Mortgage Assistance Program, which previously ran out of funding on August 27, 2011. The Act also addresses the failure to comply with notice requirements of the Homeowner’s Emergency Mortgage Assistance Program, commonly referred to as the Act 91 notice.
The purpose of the new law is to limit the damaging effect of the recent Pennsylvania Superior Court decision in the case of Beneficial Consumer Discount Company v. Pamela Vukmam 2012 PA Super 18 (PA Superior Ct. 2012), in which the Court found that the failure of the mortgagee to comply with the Act 91 notice requirements deprived the Court of jurisdiction in the foreclosure.
Following the Vukmam decision, any foreclosure judgment predicated upon a deficient Act 91 notice (in effect between June 5, 1999 and September 8, 2008) was deemed to be void because the deficient Act 91 notice deprived the court of jurisdiction to render the judgment. This new law however, specifically provides that retroactive to June 5, 1999, the failure of a mortgagee to comply with the Act 91 notice requirements does not deprive the Court of jurisdiction over the foreclosure action, and does not impair the subsequent conveyance or other transfer of title of property through the foreclosure proceeding.
The new law grants a Court the right to dismiss a foreclosure action without prejudice, impose a stay on the action, or impose any other appropriate remedy to address the interests of a mortgagor who has been prejudiced by the failure of the mortgagee to comply with the Act 91 notice provisions, but limits the rights of the mortgagor seeking to overturn a foreclosure judgment rendered against them. Under the new law, the mortgagor must affirmatively raise in the action, the mortgagee’s failure to comply with the Act 91 notice requirements, before the delivery of a Sheriff’s Deed or Marshal’s Deed, or the delivery of a deed by the mortgagee.
The Pennsylvania Legislature and Governor Corbett enacted Senate Bill No. 1433, ensuring that title to properties acquired by lenders through foreclosures affected by the deficient Act 91 notice will remain marketable and insurable. WWR anticipates that the Act 91 notice requirements will be reinstated shortly by the Pennsylvania Housing Finance Agency, and we will continue to monitor and report on any new developments arising as a result of this new law. In the meantime, thanks to the passage of the Homeowner Assistance Settlement Act, the mortgage industry has dodged what could have been an imminent “Armageddon” of claims challenging the validity of title to foreclosed properties in Pennsylvania, which were affected by the Vukmam decision.
If you have any questions on this matter, please contact Mr. Benjamin Hoen, Esq. or Mr. Patrick Thomas Woodman, Esq. of Weltman, Weinberg & Reis Co., LPA. Ben is an associate in the Real Estate Default Group (REDG) focused on foreclosure & eviction services based in the Cleveland office. He can be reached at 216.685.1164 and email@example.com. Tom is an associate in REDG focused on foreclosure & eviction services based in the Pittsburgh office and can be reached at 412.338.7106 or firstname.lastname@example.org.