How To Defeat Some Foreclosures In PA

And How Many Homeowners Can Get Back What’s Been Stolen

First Things First – Outline of This Paper

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Describing who the law can help Reviewing the law Explaining available remedies The Department of Banking can act The Attorney General can act The Legislature Shouldn’t Help Banks Hire a lawyer

Who Can This Help? People who….

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Already lost their home in foreclosure Who are facing a sheriff’s sale Who have been sued in foreclosure, and the case is pending Who have received a ―pre-foreclosure notice‖

Who can be helped
Lost your home in foreclosure

Paid to ―reinstate‖ your loan

Currently being Sued in Foreclosure

Just got a letter telling you you’re going be sued

What you don’t know…

The ―Loan Interest and Protection Law‖ protects homeowners from Banks seeking to foreclose The law is known as ―Act 6‖, so I’ll call it that. (This is pretty easy stuff so far, eh?)

Notice of Intention to Foreclose

Act 6 requires the Banks to send you a letter before they sue you in foreclosure
The letter must be sent more than 30 days before you are sued

Notice of Intention to Foreclose

The letter must be sent by certified or registered mail
(Don’t try to ignore it. Get your mail. All they have to prove is that they sent it, not that you actually received it)

Here’s what the law says..

Section 403. Notice of Intention to Foreclose.--(a) Before any residential mortgage lender may accelerate the maturity of any residential mortgage obligation, commence any legal action including mortgage foreclosure to recover under such obligation, or take possession of any security of the residential mortgage debtor for such residential mortgage obligation, such person shall give the residential mortgage debtor notice of such intention at least thirty days in advance as provided in this section.

Definitions

You = ―residential mortgage debtor‖
Bank = ―residential mortgage lender‖

Section 403(b) of Act 6 …

(b) Notice of intention to take action as specified in subsection (a) of this section shall be in writing, sent to the residential mortgage debtor by registered or certified mail at his last known address and, if different, at the residence which is the subject of the residential mortgage.

What did you just read?

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The bank must send you a letter. (Section 403(a)) They must send it certified or registered mail (Section 403(b)) To your last known address, and to the address covered by the mortgage if different from your last known address. (Section 403(b))

Section 403(c) is important….

This section explains what the preforeclosure letter must say
Pay close attention to 403(c)(3)

I’ve highlighted it for you so you can’t miss it……and so….here it is….

Section 403(c) is the important section….
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(c) The written notice shall clearly and conspicuously state:
(1) (2) (3) The particular obligation or real estate security interest; The nature of the default claimed; The right of the debtor to cure the default as provided in section 404 of this act and exactly what performance including what sum of money, if any, must be tendered to cure the default; The time within which the debtor must cure the default; The method or methods by which the debtor's ownership or possession of the real estate may be terminated; and The right of the debtor, if any, to transfer the real estate to another person subject to the security interest or to refinance the obligation and of the transferee's right, if any, to cure the default.

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(4) (5) (6)

Let’s Isolate out Section 403(c)(3) to emphasize it

(c) The written notice shall clearly and conspicuously state: (3) The right of the debtor to cure the default as provided in section 404 of this act and exactly what performance including what sum of money, if any, must be tendered to cure the default;

I Know, I know…

You’re dying to find out what section 404 says, aren’t you? You should be, because Section 403(c)(3) expressly states that the letter the banks must send you shall advise you of your right to cure the default as provided in Section 404. So, let’s look at what Section 404 says

Section 404(a) says….

Section 404. Right to Cure a Default.--(a) Notwithstanding the provisions of any other law, after a notice of intention to foreclose has been given pursuant to section 403 of this act, at any time at least one hour prior to the commencement of bidding at a sheriff sale or other judicial sale on a residential mortgage obligation, the residential mortgage debtor or anyone in his behalf, not more than three times in any calendar year, may cure his default and prevent sale or other disposition of the real estate and avoid acceleration, if any, by tendering the amount or performance specified in subsection (b) of this section.

So, what does that mean..

Just what it says. You’ve got until up to 1 hour before the hammer falls at sheriff’s sale to pay to cure your default on your loan But you can’t do it more than 3 times per year. The next slide is the critical slide. Read it slowly….

Section 404(b) says…
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(b) To cure a default under this section, a residential mortgage debtor shall:
(1) Pay or tender in the form of CASH, cashier's check or certified check, all sums which would have been due at the time of payment or tender in the absence of default and the exercise of an acceleration clause, if any; (2) Perform any other obligation which he would have been bound to perform in the absence of default or the exercise of an acceleration clause, if any; (3) Pay or tender any reasonable fees allowed under section 406 and the reasonable costs of proceeding to foreclosure as specified in writing by the residential mortgage lender actually incurred to the date of payment.

(4) Pay any reasonable late penalty, if provided for in the security document.

Did you notice something?

I put the word ―cash‖ in red in the last slide. That means it’s important.

CASH IS KING

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You see in the prior slide, our legislature specifically instructed the banks to inform us that we can cure the default on the loan by paying cash You don’t have to look back… We’ll read Section 404(b)(1) again…

Section 404(b)(1)….once again

(b) To cure a default under this section, a residential mortgage debtor shall: (1) Pay or tender in the form of CASH, cashier's check or certified check, all sums which would have been due at the time of payment or tender in the absence of default and the exercise of an acceleration clause, if any;

So what have you learned…..

Section 403(a) requires banks to send you a letter, at least 30 days before suing you in foreclosure Section 403(c)(3) states that the letter must ―clearly and conspicuously‖ advise you of your right to cure the default as provided in Section 404

AND…..

Section 404(b)(1) states that you can cure your default by paying ―cash‖ Thus, the bank must write you a letter telling you that you can cure the default by paying ―cash‖. They can also explain the other payment options too (i.e. certified check, cashier’s check, or money order) But they can’t ignore cash.

The King Is Dead…

The Banks don’t want you to send cash. When the Banks ―nationalized‖ themselves into the monsters that destroyed our economy, gone were the days of going down to the local branch and paying your mortgage

What did they do….?


With hundreds of thousands of checks coming in each week, they automated the mailing system; The machines can’t open mail with cash inside And the banksters likely don’t want to pay the overhead to employ humans to open mail

So, the Banks simply violate the law…

Despite the fact that our legislature expressly stated in Act 6 that loan defaults can be cured in ―cash‖
The banks simply removed that word from their ―pre-foreclosure‖ letter

The typical preforeclosure letter

The typical pre-foreclosure letter in Pennsylvania states,
―Payment must be made by certified check, cashier’s check or money order‖

Don’t believe me….?

You might be thinking….No way!
Banks would never violate the clearly worded statute, would they?

Well, doubting Thomas, here’s your proof….

Bank of America…. Rejects Cash!!

What did you just read?

What you just read is a ―form‖ or ―cookie cutter‖ pre-foreclosure notice sent out on behalf of Bank of America
I’ll show it to you again. This time, focus on whether the Bank complies with the law and advises the homeowners they can pay with ―cash‖

Where’s the “Cash”?

Let’s Pause….

The ―cookie cutter‖ pre-foreclosure notice advised the homeowners that they ―must‖ pay by ―cashier’s check, certified check or money order‖
The cookie-cutter notice did not advise the homeowners they can pay using cash.

Let’s Pause….(Part II)

Earlier in the slideshow, you read the law. You know that the law expressly requires the bank to tell the homeowner that he/she can pay using cash. Thus, it is undeniable that notice sent out on behalf of Bank of America violated the law.

Why do this?

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Who sells certified checks? Banks do. Who sells money orders? Banks do. Who sells cashier’s checks? Banks do. The banks are making money violating the law, requiring homeowners to spend money in order to pay money.

Why Do This….(Part II)?

Banks also cut their overhead by not having to have people to open mail.
This is a cost that they couldn’t pass on to the customer, so they just avoid it by violating the law.

Their Excuse

The Banks will tell us that it’s for our protection that we can’t send cash. However, our lawmakers carefully deliberated whether we should be able to pay in cash, and they concluded that we should. Indeed, they made it the law!!

HOW TO IMPLEMENT WHAT YOU JUST LEARNED

I told you I’d explain how you can implement what you just learned, and so I’ll do that.
Let’s go back to Section 403 of Act 6 and read it again….

Section 403(a) of Act 6…

Section 403. Notice of Intention to Foreclose.--(a) Before any residential mortgage lender may accelerate the maturity of any residential mortgage obligation, commence any legal action including mortgage foreclosure to recover under such obligation, or take possession of any security of the residential mortgage debtor for such residential mortgage obligation, such person shall give the residential mortgage debtor notice of such intention at least thirty days in advance as provided in this section.

Failure to comply with the law….

The law says that before a bank can sue in foreclosure, it must send out a notice that complies with Act 6 I’ve shown you that the cookie-cutter notice does not comply with Act 6 Thus, the lawsuit that follows a defective pre-foreclosure notice must fail.

I’m not making this up…

―[T]he notice requirements pertaining to foreclosure proceedings are jurisdictional, and, where applicable, a failure to comply therewith will deprive a court of jurisdiction to act.‖ Philadelphia Housing Authority v. Barbour, 592 A.2d 47, 48 (Pa. Super. 1991) (citation omitted), affirmed without opinion, 615 A.2d 339 (Pa. 1992); see also, Marra v. Stocker, 615 A.2d 326 (Pa.1992)

How about some more…

―There is no exception to the notice requirements of Act 6 and to read one into the statute would be to amend it and, thereby, improperly engage in legislating.‖ Marra v. Stocker, 532 Pa. 187, 194; 615 A.2d 326, 329; 1992 Pa. LEXIS 467 (Pa. 1992).

That’s the PA Supreme Court talking

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And so it should be clear…. If the Bank doesn’t comply with Act 6 Then it cannot sue in foreclosure And if it does… The Court has no jurisdiction over the lawsuit

What the Heck does that mean to you?

Let’s say you were sued in foreclosure after being served with a preforeclosure notice that violated Act 6 because it did not advise you that you could cure your default by paying cash

What it means…(Part II)

The court had no jurisdiction over the lawsuit filed against you. This means that the Court could not act.
But (as you well know as you sit in your new apartment) the Court did act by entering a judgment of foreclosure against you and….

What does it mean….

You lost your house at sheriff’s sale
You also ended up paying costs and attorney’s fees to the bank out of the proceeds of the sale

You can….

Move to strike the judgment (if the defective pre-foreclosure notice is filed in the record)
Or you can move to open and strike the judgment if the defective letter is not filed ―of record‖

You can also sue the bank

The bank not only took your house, but it also used the money from the sale of the house to pay its lawyers and to reimburse itself costs
Since the entire foreclosure action was improper, you can sue the bank for these monies, and likely more (moving expenses, etc)

You can sue for either or both

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Let’s say you’ve moved and you’re happy where you are You don’t have to undo the judgment You can sue the bank for the fees and costs it took Let me explain why it is you can do this….

Let’s return to the law…

Act 6 specifically provides that a person who proves a violation of the Act can sue for damages
The person can also sue for attorney’s fees and expenses associated with proving the violation of Act 6 (i.e. your lawyer’s fees, assuming you hire one)

Section 504…The right to sue

Section 504. Individual Actions Permitted.-Any person affected by a violation of the act shall have the substantive right to bring an action on behalf of himself individually for damages by reason of such conduct or violation, together with costs including reasonable attorney's fees and such other relief to which such person may be entitled under law.

Triple Damages/4 years to sue

Section 502. Usury and Excess Charges Recoverable.--A person who has paid…charges prohibited or in excess of those allowed by this act or otherwise by law may recover triple the amount of such excess charges in a suit at law against the person who has collected such excess … charges: Provided, That no action to recover such excess shall be sustained in any court of this Commonwealth unless the same shall have been commenced within four years from and after the time of such payment. Recovery of triple the amount of such excess interest or charges, but not the actual amount of such excess interest or charges, shall be limited to a four-year period of the contract.

Let’s Pause

You’ve now read that you can sue for charges that were prohibited. Well, all of the attorney’s fees and costs you paid were prohibited due to the fact that the entire foreclosure action was prohibited

Let’s Pause…..

You’ve also read that a lawsuit claiming a violation of Act 6 must be filed within 4 years of the violation To be conservative, use the date you received your letter that failed to advise you of the right to pay cash Remember, it was sent certified mail to you, so the bank knows when you got it

Let’s kill all the lawyers

I’ve always wanted to comment on this often misused quote. While the quote is correct, the context of the quote is ignored. The quote comes from Henry VI (Act IV, Scene II).

Correct Context

Dick the Butcher in ''Henry VI,'' Part II, act IV, Scene II, Line 73 made the statement. Dick was a follower of the rebel Jack Cade, who thought that if he disturbed law and order, he could become king. Shakespeare meant it as a compliment to attorneys and judges who instill justice in society.

Act 6 helps you out

Act 6 provides that attorney fees are recoverable (so, instead of killing all the lawyers, hopefully you’ll retain one, who will take your case, win, and get paid by the bank and not you)

Section 503 - - Attorney Fees

Section 503. Reasonable Attorney's Fees Recoverable.--(a) If a borrower or debtor, including but not limited to a residential mortgage debtor, prevails in an action arising under this act, he shall recover the aggregate amount of costs and expenses determined by the court to have been reasonably incurred on his behalf in connection with the prosecution of such action, together with a reasonable amount forattorney's fee.

People with Pending Foreclosures or Sheriff Sales

File a motion with the Court seeking to dismiss the foreclosure suit filed against you. The basis of the lawsuit is that the Plaintiff (bank) violated the pre-foreclosure notice provisions of Act 6. As a result, the lawsuit must be dismissed as the Court has no jurisdiction to act.

People Who Reinstated

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For those of you who were served with a defective pre-foreclosure notice And then paid to reinstate your loan You paid attorney fees, and costs And you may, or may not, have done so after also being sued in foreclosure

Reinstatement folks

Section 406 of Act 6 explains how and when and how much the Banks can charge you attorney’s fees and costs NO attorney’s fees and costs can be imposed prior to the correct notice being sent to you, and 30 days passing

AND, SINCE YOU….

Never received a correct preforeclosure notice, you cannot be charged attorney’s fees or costs. You should sue to recover the attorney’s fees and costs that you paid when you reinstated your loan.

Loan Modifications

The same may hold true for you folks out there who entered into a modification agreement after receiving a defective preforeclosure notice and/or being sued in foreclosure after such a defective notice was issued. I say may because there are issues beyond the scope of this paper associated with your agreement to modify. Seek legal advice.

The Department of Banking

The Department of Banking can end this widespread violation of the law. Before showing you how, let’s review the facts. First, I’ve shown you the law that requires banks to issue notices that comply with the law

The Department of Banking

Second, I’ve shown you an exemplar of a ―cookie cutter‖ pre-foreclosure notice that clearly violates the law. Third, I have reviewed hundreds of foreclosure cases in Pennsylvania, and most pre-foreclosure notices violate the law in the same way - - they fail to advise of the right to cure by paying cash There are likely thousands of these legally defective notice serve in the past 4 years.

Can anything be done?

The Department of Banking has the statutory right to impose sanctions on banks that violate the law. There have been thousands of these deficient pre-foreclosure notices issued. Banks have reaped a windfall at the expense of homeowners already in financial dire straits

Here’s the law

Section 505. Penalties.—
(a) Any person who knowingly and intentionally violates the provisions of this act shall be guilty of a misdemeanor of the third degree. (b) Any person who violates a provision of this act shall be subject to a fine levied by the department of ten thousand dollars ($ 10,000) per offense.

“Knowingly and Intentionally”

No jury would believe that the banks and their teams of lawyers negligently overlooked our law that mandates that the homeowner be advised he/she can cure the default by paying cash? Why has the Department of Banking done anything about this?

Flagrant Violation of Law

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The violation of the law is flagrant The violation is widespread The violation harms the consumer, who must buy a bank product (cashier’s check, money order, certified check) just to pay his loan. The law is clear and unambiguous.

Attorney General

Here is the law…. Section 506. Enforcement.—(a) When the Attorney General has reason to believe that any person has violated the provisions of this act, or the regulations promulgated hereunder, he shall have standing to bring a civil action for injunctive relief and such other relief as may be appropriate to secure compliance with this act or the regulations promulgated hereunder.

Reason to believe…

The violation being committed here is on a widespread basis that results in wrongful foreclosures, and the wrongful assessment of fees and costs upon homeowners already in economic distress? The Attorney General’s office knows this industry is corrupt….how does it know…..?

Can’t hide from the truth…

Pennsylvania just participated in the $25 billion settlement with the major banks arising out of the biggest fraud committed in history. The government cannot deny knowing that the industry is corrupt.

Our own backyard

If you need to find out what, if anything, the AG’s office doing about the violation of the law, here is the address: Pennsylvania Office of Attorney General 16th Floor, Strawberry Square Harrisburg, PA 17120 717-787-3391

The Legislature

I bet the legislature – led by lawmakers loyal to banks, and not citizens – acts to pass a law, that is retroactive, that makes this conduct legal, instead of Illegal. And if they do that….vote them out.

Retain A Trial Lawyer

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This paper is not legal advice. Each situation is different. No attorney/client relationship exists or has been created. You should seek advice from a lawyer. A lawyer worth his/her salt won’t charge you upfront to take on your case, in my opinion.

Good Luck

I hope you find this informative.
Remember – Trial lawyers are the last buffer between people’s rights and extinction.

Members of the Bar

Step up to the plate. Put your skills to use, and help these folks out.

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