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MORTGAGE FORECLOSURE: Superior Court Holds that the Act 91 Notice Prescribed by Regulation is Defective; Residential Sheriff Sale is Set Aside for Lack of Jurisdiction.

Posted By Cliff Tuttle | February 9, 2012

No. 809

On January 30, 2012, the Superior Court held that the Act 91 Notice promulgated  by the Pennsylvania Housing Finance Agency does not contain an important statutory provision and that, as a result, the courts lack jurisdiction over residential mortgage foreclosures filed by lenders giving the defective notice.

This holding was announced on January 30, 2012 in Beneficial Consumer Discount Company v. Vukmam, 2012 Pa. Super 18 (2012). The case is docketed at 347 WDA 2011.

[The Allegheny County Common Pleas proceedings indicate that the Appellee’s correct name is actually Vukman. However, we will use the Superior Court’s spelling, at least for now.]

The Vukmam holding  was followed in the unpublished decision on the same date at JP Morgan Chase Bank, NA v. Thrower, No. 347 WDA 2011.

In Vukmam, a mortgage foreclosure was filed in October 2006.  The parties reach a settlement agreement that was approved in May 2009 by the court in the Allegheny County Common Pleas. Under the settlement, the parties agreed to a judgment amount.  Vukmam was to pay a specified amount monthly and Beneficial would not execute on the judgment so long as the payments were made.

In April 2010, after filing an affidavit of default, Beneficial issued a writ of execution and conducted a sheriff sale in August 2010, at which Beneficial purchased the property.

On August 31, 2010, Appellee filed a “Motion to Set Aside Judgment and Sheriff’s Sale.”  She contended that the trial court lacked subject matter jurisdiction because Appellant had failed to comply  with the notice requirements of the Homeowner’s Emergency Mortgage Act, 35 P.S. Sections 1680.401c et seq., popularly known as Act 91.  The Superior Court summarized Appellee’s argument thusly:

“More specifically, Appellee maintained that the Act 91 notice received from Appellant failed to inform her that she had 30 days to have a face-to-face meeting with Appellant.  After holding a hearing, the trial court agreed with Appellee that the Act 91 notice was deficient.  The court issued an order setting aside the Sheriff Sale and the judgment; the order also dismissed Appellant’s complaint without prejudice.”

And set forth the principals of law:

The test for whether a court has subject matter jurisdiction inquires into the competency of the court to determine controversies of the general class to which the case presented belongs.”  In re Administrative Order No. 1-MD-2003, 936 A.2d 1, 5 (Pa. 2007)

“It is the law in this Commonwealth that a judgment may be attacked for lack of jurisdiction at any time, as any such judgment or decree rendered by a court that lacks subject matter jurisdiction is null and void.” Bell v. Kater, 943 A.2d 293, 298 (Pa. Super. 2008)

Appellant argued that Appellee had waived her rights due to an untimely presentation of her case, filing it after the ten-day statutory period for asserting errors in the sheriff’s sale.  The Superior Court noted that a procedurally-based jurisdictional challenge may be waived, but subject matter jurisdiction is never waived.

However, this issue had been decided in Philadelphia Housing Authority v. Barbour, 592 A.2d 47, 48 (Pa. Super. 1991) In that case, the Superior Court held that  failure to comply with notice requirements in mortgage foreclosure cases “will deprive a court of jurisdiction to act.”

The Court also cited Marra v. Stocker, 615 A.2d 326 (Pa. 1991), where the refusal to set aside a sheriff sale due to failure to give the required notice was reversed.

“We are bound by these decisions,” the Superior Court stated, noting that, under case law, it is powerless to overrule a prior decision of the Superior Court.

The crux of the problem is that Section 403 of Act 91 states that the borrower is entitled to have a face-to-face meeting with either the mortgagee who sent the notice or with a consumer credit counseling agency.  The suggested notice, promulgated by PHFA, omits mention of the option of meeting with the mortgagee.

In particular, Section 403(b) (1) states, in pertinent part:

“This notice shall also advise the mortgagor . . . that such mortgagor has 30 days to have a face-to-face meeting with the mortgagee who sent the notice or a consumer credit counseling agency to attempt to resolve the delinquency or default by restructuring the loan payment schedule or otherwise.”




CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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