Pennsylvania Senate Bill 653
The Pennsylvania legislature recently enacted the Vacant and Abandoned Real Estate Foreclosure Act (“Act”) to accelerate foreclosure proceedings on vacant and abandoned properties, effective December 17, 2018.
“Former owner” means an owner or obligor, or a successor in interest of an owner or obligor, whose interest in a mortgaged property was foreclosed in an action of mortgage foreclosure, conveyed by a deed in lieu of foreclosure or divested by court order under a mortgage or other obligation, including a successor in interest or other person claiming rights under or through the owner or obligor.
“Obligor” means a person that:
- Owes payment or performance of an obligation;
- Has signed a mortgage agreement with respect to mortgaged property; or
- Is otherwise accountable in whole or in part for payment or performance of an obligation.
“Purchaser” means any of the following:
- A person that acquires equitable title to a mortgaged property at a sheriff’s sale conducted pursuant to a foreclosure or similar action and has paid settlement funds and delivered required documentation to the sheriff to obtain a sheriff’s deed or the owner of a property under a recorded sheriff’s deed to the property or the person’s designee;
- The owner of a mortgaged property under a recorded sheriff’s deed to the mortgaged property; or
- A person that takes title to a mortgaged property pursuant to a deed in lieu of foreclosure.
“Servicer” means a person that is responsible for servicing an obligation, including a person that holds or owns an obligation or originates a mortgage loan if the person also services the obligation.
“Vacant and abandoned property” is property that meets the requirements to certify mortgaged property as vacant and abandoned.
“Vacant property” means mortgaged property with respect to which the owner and all persons claiming through the owner, including tenants, have relinquished possession. The term does not include unoccupied mortgaged property that is:
- Undergoing construction, renovation or rehabilitation and that is proceeding with reasonable diligence to completion;
- Physically secured and used or held for use by the homeowner as a vacation or seasonal home; or
- Physically secured and the subject of a probate action or other litigation in which ownership is contested.
After a creditor gives notice to an obligor of a delinquency or other default with respect to an obligation secured by a mortgage or initiates a foreclosure action or action for possession or to quiet title, a mortgaged property for which the notice is given or proceedings are initiated may be certified as vacant and abandoned if:
- A creditor or purchaser has been designated as a conservator of the mortgaged property under the Abandoned and Blighted Property Conservatorship Act;
- The mortgaged property is certified as vacant and abandoned by the municipality in which the mortgaged property is located in the manner provided below; or
- The mortgaged property is certified as vacant and abandoned in a judicial proceeding in the manner provided below.
The Act sets forth the procedure and requirements for certifying property as vacant and abandoned by a municipality and in a judicial proceeding.
In a foreclosure action, a mortgaged property certified as vacant and abandoned will not be subject to mediation, conciliation, diversion or other program established by a local court to encourage resolution of owner-occupied residential mortgage foreclosures.
Following a certification that a mortgaged property is vacant and abandoned, any subsequent documents required to be served on and any notices required to be delivered to the owner and, any obligor other than the owner or a former owner may be exclusively served and delivered by first class mail to an address specified by the owner, obligor or former owner for the receipt of communications relating to the property or, if no address is specified, by delivery to the address of the mortgaged property and by posting of notice in a conspicuous location on the mortgaged property.
If a mortgaged property is certified as vacant and abandoned, upon the request of a creditor or purchaser, the sheriff on receipt of an accelerated sale fee of $500 must schedule a sale of the mortgaged property to be conducted no later than 60 days following the filing of the writ of execution and the sheriff’s deed must be recorded no later than 30 days following the sale. The accelerated sale fee must be payable at the time of the filing of the writ of execution and must be immediately refunded if:
- The time frames are not complied with; or
- The expedited sale date is postponed or continued by a party other than the creditor.
If a mortgaged property is certified as vacant and abandoned, upon the requests of a creditor or purchaser, the sheriff on the receipt of an additional fee of $250 must execute and serve a writ of possession no later than 20 days following delivery of the writ to the sheriff. In order to impose the additional fee, the sheriff must schedule the removal of a former owner’s personal property from the mortgaged property and the securing of the personal property to be conducted no later than 30 days following the filing of the writ of execution. The additional fee must be immediately refunded if:
- The time frames are not complied with; or
- The expedited execution is postponed or continued by a party other than the purchaser.
If a mortgaged property is certified as vacant and abandoned or with the consent of the owner or an obligor other than the owner, the creditor may enter the mortgaged property peacefully for the purpose of inspecting, maintaining and repairing the mortgaged property and is not liable to the owner for trespass or for damage to the property resulting from a cause other than the creditor’s gross negligence or willful misconduct.
The maintenance obligations of a creditor that exercises the right to possession pending foreclosure are limited to compliance with property maintenance requirements of the Federal Housing Administration for loans insured by the administration or of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation for mortgages held by either respective entity. For other creditors, the mortgaged property maintenance obligations of a creditor that exercises its right to possession pending foreclosure will be limited to:
- Care for the yard and exterior of a building on vacant and abandoned mortgaged property, including removing excessive foliage growth that diminishes the value of surrounding properties.
- Measures reasonably necessary to prevent trespassers from remaining on the mortgaged property.
- Preventing mosquito larvae from growing in standing water on the mortgaged property and infestations by other vermin and insects.
- Taking other actions needed to prevent conditions on the mortgaged property that create a serious and imminent hazard to public health or safety.
After the commencement of foreclosure or other legal action with respect to a residential mortgage that is subject to the limits on attorney fees provided under the Loan Interest and Protection Law, attorney fees that are reasonable and actually incurred by the residential mortgage lender may be charged to the residential mortgage debtor. Attorney fees are presumed to be reasonable if they:
- Conform with the attorney fees promulgated and as may be amended from time to time by the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, the Department of Housing and Urban Development, the Department of Veterans Affairs or their respective successor organizations; and
- Are actually incurred for the enforcement of a mortgage obligation in Pennsylvania.
A party to the action may request, upon application to the court, a review of the reasonableness of the attorney fees claimed.
Except as provided above, prior to the commencement of foreclosure or other legal action with respect to a residential mortgage, that is subject to the limits on attorney fees provided under section 406 of the Loan Interest and Protection Law and the above provisions, attorney fees that are reasonable and actually incurred not in excess of 0.1% of the amount of the then existing base figure as defined in section 101 of the Loan Interest and Protection Law may be charged to the residential mortgage borrower. No attorney fees may be charged for legal expenses incurred for a residential mortgage prior to or during the 30-day notice period provided under section 406 of the Loan Interest and Protection Law.
The above provisions related to attorney fees are not limited to mortgaged properties certified as vacant and abandoned.