Sheriff Sale - How to Delay It

A Pennsylvania Sheriff’s Sale can be delayed, also known as stayed, either at the request of the lender or upon a stay granted by a judge.  The Sheriff’s Sale can be delayed up to one hour before the bidding at a foreclosure sale.

Common Technique

The common technique to delay a Sheriff’s Sale is to convince the foreclosing mortgage lender to request it.  In many cases, though not all, a lender will delay a Sheriff’s Sale to allow a short sale to reach settlement.

Sometimes a lender will only initiate their request to stay the Sheriff’s Sale a mere two to three days before the sale date.  The bank does this just in case the short sale transaction is not working out to their satisfaction, so they can quickly go ahead with the foreclosure sale if necessary.  The risk to sellers and agents is that if the left hand does not know what the right hand is doing, the Sheriff’s auctioneer might not receive the message to delay the sale.  Unfortunately, we have seen this happen on several occasions.

Once the Sheriff’s Sale occurs, it is final.  There is no right of redemption in Pennsylvania like there is in some other states.

Another Method

Another method of delaying a Sheriff’s Sale is for the borrower to declare bankruptcy.  A bankruptcy will postpone the foreclosure sale until the trustee or presiding judge releases the real estate from the bankruptcy proceeding.  We have seen borrowers declare bankruptcy a mere hour before a Sheriff’s Sale.  In those cases, they have been able to delay the foreclosure action for months while the bankruptcy runs its course.

One Other Method

One other technique to delay a Sheriff’s Sale is for the borrower or their representative to convince a judge to grant a stay.  Sometimes a judge will delay a Sheriff’s Sale to allow for a possible conciliation.  We have seen various judges grant stays from 30 days to six months.  The borrower may file a petition seeking relief from the judgment or a delay of the Sheriff’s Sale.  Rule 2965 of the Pennsylvania Code states that the petition must be filed within 30 days after the date the Default Judgment is served to the borrower or they may lose their rights to file.  We have seen some cases where a petition filed more than 30 days later was considered valid enough to convince a judge to postpone the Sheriff’s Sale.

In rare cases, the Sheriff’s department will postpone a foreclosure sale due to a high volume of cases.

Foreclosure can be avoided. Short Selling your home has far less consequences than a foreclosure sale. We do Short Sales... We provide you with an attorney at no cost to you. Our processors and negotiators deal with your lenders in reaching a satisfactory deal to close the sale. Don't wait!! If you or someone you know is having problems paying their mortgage, call me today to find out how our team of professionals can help you sell your home and move on with your life.

From the Blog "Stop My Foreclosure Instantly"  Reprinted with permission. 

Hardship - What Qualifies to be Eligible for a Short Sale?

I want to do a short sale and the bank says I need to display a hardship.  What counts as a hardship?

A hardship is a situation that renders a borrower unable to continue making monthly mortgage payments and/or unable to sell their property and cover the entire mortgage balance.

What are Legitimate Hardships?

Legitimate hardships include:

- The death of a breadwinner.

- Serious illness of a breadwinner.

- Serious illness of a family member, whereby the income earner(s) in a family take time off work to        care for the person.

- Serious damage to or a material defect with the property that will not be covered by insurance.

- Loss of a job.

- Reduced hours at work, which lowers a person’s take-home pay.

- Loss of a job by one of the two people in a dual-income household.

- A forced job relocation, typically more than 100 miles away.

- A divorce, typically one that involves a sharp decline in income and/or significant reduction in liquid assets.

What Situations Do Not Qualify as Hardships?

Situations that are not hardships include:

- Desire not to pay, even though the borrower has substantial income or assets.

- Decline in property values (in some areas of the country, like California, Arizona, Florida, and Nevada, the decline is so sharp that it may qualify as a hardship).

- A break-up between a boyfriend and girlfriend who were both on the mortgage.

- A person who has substantial liquid assets and who therefore could easily pay the difference that is owed.

- Depression experienced by the borrower.

- A person who is angry at the bank and wants to stop paying to make a point.

If there is no hardship, then it is extremely unlikely that a short sale will be approved.

If you believe you are a candidate for a Short Sale, contact me to discuss how we can help you get through this difficult time and avoid foreclosure.

Reprinted from the website “Significa Short Sale Solutions” with permission.

Short Sale - What's My Tax Liability?

I am selling my house via a short sale.  Will I have to pay tax on the forgiven debt?

 Under the Mortgage Forgiveness Debt Relief Act of 2007, enacted December 20, 2007, taxpayers may exclude debt forgiven on their principal residence.  This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately).  Details are on Internal Revenue Service (IRS) Form 982 and its instructions, available on www.irs.gov.  Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief.  In most cases, eligible homeowners only need to fill out a few lines on IRS Form 982 (specifically, lines 1e, 2 and 10b).

What are some of the rules?

The debt must have been used to buy, build, or substantially improve the taxpayer’s principal residence and must have been secured by that residence.  Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.  Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for this tax-relief provision.  In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available.

Will the government extend forgiveness?

It is possible that the federal government may extend the principal residence short sale tax forgiveness beyond December 31, 2012.  It is also possible that the government may not extend this provision.  The government needs tax revenues and 2012 is an election year, which may affect political decisions.  Given what we know now, people who are considering a short sale of their principal residence are better off if they sell their house in 2012.

Can the mortgage lender come after me?

Please be advised that your mortgage lender might not agree to forgive the mortgage deficiency. If they do not forgive the deficiency, they may legally pursue you personally to collect this debt.

Is a Short Sale right for you? Contact me to learn how our team of professionals can help you get through this difficult time and avoid foreclosure! 

From the Blog: Stop Foreclosure Right Now. Re-Printed with permission.

Who Knew? Banks CAN change the locks on your home BEFORE they foreclose!

Who changed my locks?

When a borrower becomes seriously delinquent on their mortgage, the bank will eventually send someone to the house to verify occupancy and perhaps assess the current market value.  If the bank’s representative, who may be a real estate agent, contractor, or other third party, deems that the property is abandoned, then the bank may change the locks and secure the premises even if the bank does not yet own it.  The bank might even winterize the property to defend against the possibility of water damage from frozen pipes in the winter.

Can I get the keys?

The fine print in most mortgage loan documents allows banks to secure a mortgaged property if their field representative sees that the property is vacant.  Even if the doors are locked, the bank may change the locks on an abandoned property.  Typically the bank will not tell the owner or listing agent that they’ve changed the locks.  However, the owner and listing agent have the right to request the new keys from the bank.  We have seen banks mail the keys or provide a lockbox combination upon request, although sometimes it will take several phone calls to obtain the keys.

What happens to my stuff?

If a mortgage lender changes the locks on a vacant house prior to foreclosing on the property, they will not remove any personal items.  In other words, the bank will not clean out the house before they foreclose.

What if I am still in the property?

If the bank’s representative sees that the house is occupied, then they will not change the locks until after a foreclosure sale.  A lot of homeowners facing foreclosure have an unfounded fear that the bank will lock them out of their home prior to a foreclosure auction.  If the home is occupied, then the mortgage lender will not change the locks, nor will they seize any personal property.

Should I let the bank know that I am still in the property?

If a person who is behind on their mortgage payments still lives in the property, it is wise for them to inform their bank that the house is occupied.  If the bank is notified that someone is living in the premises, then they may not send a field representative to the house.

You can avoid foreclosure via a Short Sale. The impact of a Short Sale is far less damaging to your credit and job opportunities. If you're experiencing a hardship and unable to make your mortgage payments, contact me to learn how we can help!

From the blog: Stop Foreclosure Right Now.  Reprinted with permission. 

Foreclosure Timeline in Pennsylvania

Foreclosure is a legal procedure in which property pledged as security is sold to satisfy the debt.  A mortgage lender’s rights can be enforced through foreclosure if the borrower defaults on mortgage payments or fails to fulfill any of the other obligations in the mortgage.  The foreclosure process in Pennsylvania begins when a borrower fails to make payments on a mortgage loan, or an owner fails to pay property taxes or water/sewer bills, or any other lien holder pursues its right to collect the debt secured by the property.

Sample Timeline for Foreclosure in Pennsylvania

August 1, 2011	August mortgage payment due but not paid
September 1, 2011	September mortgage payment also due.  Two months’ payments are now due.
October 1, 2011	October mortgage payment due.  Three months’ payments are now due.
October 6, 2011	Lis Pendens Notice.  Lender sends a Notice of Intent to Foreclosure (Act 6 Notice) to the borrower.  The lender may also send an Act 91. The homeowner has 20-30 days to respond.
November 9, 2011	The maximum 30 days in the Act 6 and Act 91 Notices are up.  The lender hires a foreclosure attorney.
December 9, 2011	The foreclosure attorney for the lender files a complaint at the county courthouse (Court of Common Pleas).
January 24, 2012	The borrower fails to respond to the complaint, and a default judgment is entered in favor of the lender.
February 26, 2012	The county Sheriff’s office schedules a date for the Sheriff’s Sale.
March 26, 2012	A notice of the Sheriff’s Sale is sent to the borrower and to other lien holders.
April 26, 2012	The Sheriff’s Sale is held.
April 28, 2012	The Sheriff’s office prepares and records a deed conveying title to the purchaser.  If a third party did not purchase the property at the Sheriff’s Sale, then the deed conveys title to the mortgage lender.
April 29, 2012	Eviction or Ejectment process begins if the borrower is still residing at the property.

 Typically the foreclosure process in Pennsylvania will take longer than the above diagram.  The lender may delay filing of a foreclosure lawsuit because they’re inundated or because they are attempting a workout with the borrower.  The borrower could delay the process with legal motions.  The judge in the county court may delay the foreclosure process to see if the borrower and lender’s attorney can reach a better solution.  The Sheriff’s Department may delay the sale because they’re overwhelmed.

From the Blog: Stop Foreclosure Right Now. Re-printed with permission.

1 out of Every 3 Homeowners are Underwater on their Mortgages!

Economy Watch at MSNBC recently reported that 1 out of every 3 mortgages are underwater. While, it goes on to say 90 percent of the owners are current in their payments, 10 percent are behind. Add this to the fact that foreclosures rose 9% in May from a month earlier and you have a picture that there is more trouble on the horizon for many families struggling day-to-day just to get by.

Many people that find themselves facing a hardship and owe more than their home is worth don't have to end up in foreclosure. A successful Short Sale of their home is a far better alternative on almost every level. Yet many homeowners will wait too long to ask for help or list their home with someone who isn't familiar with the Short Sale process only to have the sale rejected by the lender.

Significa does Short Sales... and they have been doing them since 2005 - over 300 Short Sales successfully closed. With our team of professionals, you have access to an Attorney, a Processor and a Negotiator. Our team knows how to represent you and get your home sold, avoiding foreclosure, so you can move on with your life.

Contact me today to learn how we can help you.

Articles referenced: 

One in Three Mortgage Holders Are Underwater


Foreclosure Activity Jumps in Troubling Sign for Housing Recovery