Pennsylvania Foreclosure Laws and Procedures
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The first step is to find a great local realtor who specializes in foreclosure purchases. Our free service connects buyers like you with top-rated agents from trusted brands like Coldwell Banker and Century 21. 🚨 We strongly encourage you to proceed carefully if you want to buy foreclosures at an auction. You should consider attending a couple of auctions in person without bidding first to familiarize yourself with the process before submitting bids if this is something you're serious about pursuing. Since you probably won't have traditional financing, pre-approval letters won't be a concern. However, you will need to submit bids according to the auction rules and be prepared to pay within the required timeframe — usually 10 days after the auction.
Pennsylvania is a judicial state, meaning the foreclosure process takes longer and has more potential complications than a non-judicial state, which could result in your deal falling through. The laws governing foreclosures in Pennsylvania are mixed from a buyer's perspective. Since many foreclosures have issues or have been neglected in some way, there's often an opportunity to build in equity by renovating or repairing the home. If the appraisal comes in low, you'll need to come out of pocket for the difference. For example, if you offer $250,000 for a Pennsylvania home and it appraises at $240,000, then the lender will only finance $240,000.
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If you decide to stick with pre-foreclosures and REOs, one major benefit is the ability to see it in person — auctioned properties are usually bought site unseen and as-is. We recommend most buyers stick to pre-foreclosures and REOs in Pennsylvania. The processes for buying these properties are more similar to traditional home purchases. When a homeowner fails to pay their mortgage or debts which use the house as collateral, the lender can take possession of the borrower's home to compensate them — this is called a foreclosure. Although the programs under the Making Home Affordable initiative have expired, the MHA website still contains useful information for homeowners facing foreclosure.
We have done extensive research to locate and verify this information, and we have also consulted one of our top agents who has experience buying foreclosures in writing this piece. Due to the Protecting Tenants at Foreclosure Act of 2009, you're required by federal law to honor the lease for tenants in a property if you buy a foreclosure and intend to rent it out. If you plan to live there, you still need to give them 90 days to vacate. The major benefit of buying a foreclosed home is the possibility of getting it for below market value. Most sellers are in a tight place financially, so savvy buyers can leverage that situation to negotiate lower sale prices.
Where to Find Your State's Statutes and More Foreclosure Resources
In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months. Or, if you want to save your home, filing for Chapter 13 bankruptcy might be the answer. To find out about the options available to you, speak with a local bankruptcy attorney. Pennsylvania law allows reinstatement up to one hour before the bidding at the foreclosure sale, a maximum of three times in any calendar year. If you default on your mortgage payments for your home in Pennsylvania, the foreclosure will be judicial.
In general, participating in a foreclosure diversion program will delay the foreclosure process. To find out if your county has a foreclosure diversion program, check the official court and county websites. You can also ask a local foreclosure attorney if your county offers this type of help. If you're a struggling homeowner in danger of falling behind in your mortgage payments, or if you're already behind, you should be proactive when it comes to saving your home from foreclosure. Along with participating in a foreclosure diversion program, here are some steps you can take to prevent a foreclosure.
Pros and cons of buying a Pennsylvania foreclosure
In Pennsylvania, the pre-foreclosure process cannot begin until the borrower has missed at least 120 consecutive days of payments. During that time, the lender must call the homeowner to notify them of delinquency and offer them options to get caught up. After an additional 45 days of missed payments, the lender must also send a letter to the homeowner to the same effect. The foreclosure process begins only if the borrower fails to respond or meet the lender's proposed conditions. This means the property owner has three years to pay past-due amounts, interest, and other fees. If property taxes are delinquent in subsequent years, the lienholder can pay them and have the amount added to the lien certificate.
Under Pennsylvania state law, Pennsylvania National Guard members on active state service and 30 days after that are exempt from civil process. A few potential ways to stop a foreclosure include reinstating the loan, redeeming the property before the sale, or filing for bankruptcy. Of course, if you're able to work out a loss mitigation option, like a loan modification, that will also stop a foreclosure.
Even when there is a redemption period available, interest and other fees can rapidly increase the outstanding balance. So, it’s important to act quickly when you receive a notice of delinquent property taxes. If you’re behind on property taxes, contact your county as soon as possible to find out whether they offer assistance or if you can delay your property taxes or enter into a payment plan. For instance, if the homeowner sells the property, the mortgage lender gets paid first. The same is true if someone sues the homeowner and gets a lien on the property. That means the mortgage lender would get the first $50,000 if the home was sold.
In Georgia, the homeowner gets a 30-day notice of delinquent property taxes. If the taxes aren’t paid within that 30-day period, the sheriff’s department can be ordered to seize and sell the property to cover the outstanding balance. This order triggers another 20-day notice period, an obligation to advertise the sale for four consecutive weeks, and an additional written notice to the owner. If no bids are sufficient to cover the outstanding tax debt, including accrued interest and costs, the county may purchase the property itself.
You can also find this information on your monthly mortgage statement. Learn how a Pennsylvania foreclosure works, including preforeclosure steps, foreclosure procedures, and homeowners’ rights under both state and federal laws. Auctions can't be scheduled until the foreclosure process is complete, and they can be postponed up to another 100 days after the initial scheduled date.
The problem is that tax lien sales rarely yield significant sums. In fact, in some states, the property is always sold for the amount of the tax lien plus costs of sale. So, in the example above, the property would be sold for $5,000 plus costs. And the investor would walk away with a $150,000 home for $5,000 plus costs. In a tax deed sale, the municipality goes straight to auctioning the property.
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