Each year, lenders send thousands of “Act 91 Notices” to Pennsylvania homeowners to inform them that they are in default on their mortgages, they face foreclosure, and they can take steps to save their homes.
The Act 91 Notice is required by Pennsylvania law and is established by a policy issued by the Pennsylvania Housing Finance Agency (PHFA). The existing notice was universally criticized as being incomprehensible, legalistic and confusing, thereby creating an unnecessary barrier for homeowners to understand what actions they should take and what rights they have to save their homes.
Regional Housing Legal Services Executive Director, Mark Schwartz, proposed that revisions to the notice were necessary after multiple years of only a small percentage of Act 91 notice recipients applying to the Homeowner’s Emergency Mortgage Assistance Program (HEMAP). Consulting a Housing counselor defers the filing of foreclosures in Court, connects the homeowner with a certified housing counselor, and ultimately, may help homeowners modify their mortgages or get HEMAP loans in order to avoid foreclosure.
Mark Schwartz and Managing Attorney, Judy Berkman, worked with stakeholders across the Commonwealth to propose changes that would have the buy-in of banking companies, community-based organizations, legal service providers, and housing advocates. With the assistance of knowledgeable Community Legal Services attorneys and other housing advocates, RHLS was able to propose significant changes to the Act 91 Notice.
Key changes to the Notice include the following:
• A simpler plain language one page notice on the homeowners’ rights, including meeting with a free housing counselor and applying for HEMAP. (There is a translation in Spanish on the reverse, and translations are available on the PHFA website in Chinese, Vietnamese, Russian, and Cambodian/Khmer.)
• A clear one page notice on what the homeowner can do to cure the default and bring it current.
• Changes to the format of the notice, such as font and spacing, to draw attention to key portions including the importance of contacting a housing counseling agency.
RHLS and the housing advocates also proposed several changes to the PHFA Policy Statement regarding HEMAP to make sure that no new obstacles were inadvertently imposed on homeowners applying for HEMAP loans.
RHLS believes the changes to the Act 91 Notice will ultimately result in more homeowners seeking guidance from housing counselors, successfully applying for HEMAP, and saving their homes from foreclosure.
Lenders in Pennsylvania will be required to use the new Act 91 Notice on or before September 1, 2016. For further information, including the PHFA letter to Members of HEMAP Constituent Groups.
RHLS would like to express its sincere thanks to the dedicated attorneys at Community Legal Services and other Pennsylvania housing advocates and other stakeholders, as well as the staff of PHFA and the PA Department of Banking, for their hard work and collaboration on a very difficult task.