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September 12, 2012 | E-Alert | Philadelphia

On August 27, 2011, the Pennsylvania Housing Finance Agency ("PHFA") suspended the notice requirements under Act 91 due to the lack of funding of the Homeowners' Emergency Mortgage Assistance Program ("HEMAP").  Consequently, after August 27, 2011, a lender could initiate foreclosure proceedings against a residential mortgagor who otherwise qualified for notice under Act 91 without sending an Act 91 notice.

On August 18, 2012, however, the PHFA issued a Notice published at 42 Pa.B. 5447 (August 18, 2012), which stated that Act 70 (P.L. 648, No. 70, June 27, 2012) refunded the HEMAP, and consequently, the HEMAP has been restarted.  Mortgagees and mortgage servicers are, as a result, once again required to send an Act 91 notice prior to foreclosing on mortgages that qualify for Act 91 notice effective October 2, 2012.  Act 70 provides serious penalties for mortgagees or mortgage servicers who do not send an Act 91 notice where applicable.  The form Act 91 notice has not changed from the form published at 38 Pa.B. 4859 (August 30, 2008).

If a mortgagee or mortgage servicer commenced legal action against a mortgagor who would have otherwise qualified for Act 91 notice during the suspension of the notice requirements, the PHFA "strongly urges mortgagees and mortgage servicers to advise homeowners...of the restart of the HEMAP and to provide them with an up-to-date list of counseling agencies available to help them make application to the Agency."  42 Pa.B. 5447.  Homeowners currently in foreclosure and potentially eligible for HEMAP may apply for mortgage assistance even if they do not receive an Act 91 notice, in which case the mortgagee or mortgage servicer "is strongly urged to stay all foreclosure action for a period of 60 days to allow the Agency to make a decision on the application."  42 Pa.B. 5447.

Accordingly, lenders and mortgage servicers alike should be aware that the HEMAP program has been restarted, and thus, the notice requirements of Act 91 are once again applicable effective October 2, 2012 at latest.  Further, it may be prudent for lenders and mortgage servicers to inform qualified mortgagors, who are currently in foreclosure and who did not receive Act 91 notice, of the restart of the HEMAP to avoid a future challenge premised on inadequate notice.  More information, including the current model Act 91 notice, may be found at: http://www.pabulletin.com/secure/data/vol42/42-33/1613.html.

For more information, please contact Nolan G. Shenai at 215.640.8542 or nshenai@thorpreed.com.

This Thorp Reed & Armstrong, LLP Communiqué is prepared in summary form and is not to be construed as legal advice or opinion on any specific fact or circumstance. We do not assume any responsibility to revise the Communiqué if there are subsequent changes in the law.

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