Act 91 Foreclosure Law

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Pennsylvania wanted to establish a cost-effective program to help prevent homelessness while still holding the homeowner accountable. The intent was to provide temporary mortgage assistance to give the delinquent borrower time to find a job, get additional education or training and bring the mortgage payments current. The funds were designed to be a loan, not a hand-out. The Homeowners Emergency Mortgage Assistance Program (HEMAP) was created in 1983 by the passage of Act 91.


To qualify for HEMAP, the homeowner must be in financial distress through no fault of his own, and the household income, savings and expenses must be documented. The property must be located in Pennsylvania, owner-occupied and either a one-family or two-family home. The borrower must have had a good payment history prior to the delinquency and must be at least 60 days late with the payment. Investment, vacation, or commercial properties do not qualify. Some Federal Housing Administration (FHA) loans may not qualify.


Act 91 requires lenders, prior to initiating foreclosure, to send delinquent borrowers a notice informing them of the HEMAP program. The notice states that the borrower has 33 days from receipt of the notice to meet face-to-face with a consumer credit counselor, and at this meeting, the borrower will be given the HEMAP application form. The lender will delay the foreclosure for 30 days after the meeting. The Pennsylvania Housing Agency is sent copies of all notices.


The borrower can file the HEMAP application any time after the credit counseling session, and the foreclosure process will be stopped when the application is approved. The applicant must show that the missed payments resulted from circumstances beyond his control and that he has a reasonable expectation of making the mortgage payments at some future time. Borrowers submit their financial records for review, and lenders are required to provide the mortgage documents.


There are two types of assistance available. One is a lump sum payment to bring the mortgage current, with the borrower responsible for all future mortgage payments. The other is continuous assistance, in which case the mortgage is brought current and monthly payments continue for two years or a until the total loan amount reaches $60,000, whichever comes first. The borrower will pay a portion of the mortgage each month.


HEMAP participants pay the program up to 40 percent of their household net monthly income, for each month they receive assistance. The minimum monthly payment is $25. Interest rates for HEMAP loans are 9 percent for loans closed on or before Jan. 1, 2009. Rates are determined annually for loans that close after that date.


About the Author

Pat O'Connor is the broker/owner of The Veritas Real Estate Group in Coral Springs, Fla. She holds a M.A. in psychology from the University of South Carolina. O'Connor has been writing real estate and loan origination textbooks, as well as developing online courses, since 2005. Her latest publication is the kindle ebook, "The SAFE Mortgage Loan Originator National Exam Study Guide."