How Does Foreclosure Work In Pennsylvania?
If you find yourself facing foreclosure (or even threatened by the prospect of it), it's absolutely critical to understand how the foreclosure process works in Pennsylvania.
Understanding the Foreclosure Process in Pennsylvania
What is foreclosure anyway?
Legally, foreclosure is the official process by which a mortgage lender attempts to take back real estate property (a home) securing a loan (a mortgage) - usually after a borrower (or a homeowner) stops making payments.
By no means is foreclosure fun, but it's not the end of the world.
By knowing how foreclosure works in Pennsylvania, you'll be much better equipped to navigate it well and come out on the other end in the best position possible.
Stages of the Foreclosure Process
Foreclosure works differently in different states around the country, but there are a few stages that are important to any foreclosure process.
There are generally two ways different states use to foreclose upon a property: judicial sale or power of sale.
Connect with us through our contact page or by calling us at 484-484-0971 to have us walk you through the specific foreclosure process here in Allentown, Bethlehem, Easton, and the Lehigh Valley.
In either scenario, a foreclosure action typically doesn't make its way to court until 3-6 months of missed payments. Usually (but not always), a lender will send out several notices letting you know that you're overdue or behind in your payment.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You'll get a letter from the court demanding payment.
- You'll have 30 days to bring payment to court to avoid foreclosure (sometimes that can be extended).
- If you don't pay after this period, a judgement will be entered and the lender can request the sale of your property - generally through an auction.
- Once the property is sold, the local sheriff serves an eviction notices and you must vacate the property.
Under Power of Sale (Non-Judicial) Foreclosure:
Under Power of Sale (Non-Judicial) Foreclosure is a stage of the foreclosure process where the lender has the power to sell the property without the involvement of the court system. This type of foreclosure is available in many states and can be a faster and more cost-effective way for lenders to recover their investment in the property.
In this stage of the foreclosure process, the lender typically provides a notice of default to the borrower, which specifies the amount owed and gives the borrower a certain period of time to pay off the debt or face foreclosure. If the borrower fails to pay, the lender can proceed with the sale of the property.
One of the advantages of this type of foreclosure is that it typically takes less time than a judicial foreclosure, which involves court hearings and a formal lawsuit. However, the downside is that the borrower may have fewer opportunities to contest the foreclosure and defend their property rights. Additionally, the lender may not be required to obtain a court order to sell the property, which can be a disadvantage for the borrower.
Overall, the stage of Under Power of Sale (Non-Judicial) Foreclosure can be a beneficial option for lenders looking to recover their investment quickly and efficiently. However, borrowers should be aware of their rights and options during this stage of the foreclosure process and seek legal advice if necessary.
So, What Happens After a Foreclosure Auction?
After a foreclosure is complete, the amount of the loan is paid off with the proceeds from the sale of the property.
Sometimes, if the sale of the property isn't enough to pay off the loan, a deficiency judgment can be issued against the borrower. A deficiency judgement is where the bank gets a judgement against you, the borrower, for the remaining funds owned to the bank.
Some states limit the amount owed in a deficiency judgement to the fair value of the property at the time of the sale, while other states will allow the full loan amount to be asssesed.
Here's a great resource that lists the state by state laws when it comes to deficiency judgements.
Generally, it's best to try to avoid a foreclosure auction. Instead, call up the bank to negotiate, or work with a local, reputable real estate firm like us at Pezon Properties to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced invested can help you by negotiating directly with the banks - or even eliminate the prospect of a foreclosure, even if your home is worth less than you owe.
If you're currently facing foreclosure and need to sell a property near Allentown, Bethlehem, Easton or anywhere in the Lehigh Valley, please let us know. We can help!
We buy houses in Allentown, Bethlehem, Easton or anywhere in the Lehigh Valley, Pennsylvania like yours from people who need to sell fast!
Give us a call anytime at 484-484-0971 or fill out this quick form to get started today!
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About the author
Mathew Pezon
Mathew Pezon is the founder and CEO of Pezon Properties, a cash home buying company located in Lehigh Valley, Pennsylvania. With several years of experience in the real estate industry, Mathew has become a specialist in helping homeowners sell their properties quickly and efficiently. He takes pride in providing a hassle-free, transparent, and fair home buying experience to his clients. Mathew is also an active member of his local community and is passionate about giving back. Through his company, he has contributed to various charities and causes.
