HARRISBURG — As part of recent Pennsylvania Housing Finance Agency's (PHFA) amended regulations, lenders will have to send a newly revised notice of homeowners’ rights and options when facing foreclosure to all customers by Sept. 1.
Judy Berkman, managing attorney with Regional Housing Legal Services | Regional Housing Legal Services
The goal of the newly revised Act 91 is to make the standard notice of intention to foreclose more understandable to homeowners, according to Judy Berkman, managing attorney with Regional Housing Legal Services (RHLS), a nonprofit law firm that works to create housing and economic opportunities.
RHLS worked with the PHFA and others to revise the notice while still keeping it in compliance with the statute.
“We connected with a lot of other stakeholders—lenders, housing advocates, legal services folks, housing counselors—to get everyone's buy in that it was important to look at the notice,” Berkman recently told the Pennsylvania Record.
“The old one was a few pages, and it was incomprehensible, legalistic and confusing. Our goal was to make it more clear, simpler and more accessible.”
The groups spent more than a year working on revising the notice, including adding a heading near the top letting recipients know that they may be able to stop foreclosure. The final result was published by the PHFA on April 30.
Much of the language in the notice is required by the statute, Berkman said, and might still be confusing to some, but the PHFA is also planning to issue an Act 91 Fact Sheet that will be available from housing counselors. That will not be bound by the statute, so the PHFA will be able to put the information in layman’s terms.
Berkman said she’s pleased with both how responsive the PHFA was to suggestions and with the revisions to the notice, which is now down to one page. The structure of the notice was re-arranged to make important information stand out, including the fact that the recipient might be eligible for the state’s Homeowner’s Emergency Mortgage Assistance Program (HEMAP).
“The goal is to get people to go to housing counselors and to save their homes,” she said. “If they act and go to a housing counselor, while they go through the process and perhaps apply for HEMAP, the lender can't start the foreclosure proceeding, which would add a lot of costs.”
Homeowners have 33 days from when the notice is issued to arrange an in-person meeting with an approved consumer credit counseling agency.
“It's not just HEMAP,” she said. “There are a lot of other mortgage modification options out there. They might not understand that there are options to modify the mortgage based on their income or circumstances.“
The new notice comes with strict formatting requirements, including font size and which parts should be set in bold. A letter sent to mortgage lenders and others by the PHFA instructs that the format of the notice must be followed exactly for the sender to be in compliance with Act 91.
The statute doesn’t have a specific penalty for non-compliance. If a lender were to substantially alter the notice, a homeowner might be able to challenge the foreclosure in court, forcing the process to start over, according to a PHFA spokesperson.