Before Each New Foreclosure Filing, Updated Pennsylvania Act 6/91 Notices Needed

In October 2014, the Superior Court, an intermediate appellate court in Pennsylvania, decided that a residential mortgagee must deliver an Act 6 pre-foreclosure notice before filing a second foreclosure action based on the same default as a prior foreclosure action, even when the mortgagee had delivered the notice before the first foreclosure action. The Court held that the legislature intended for the word “any” in 403(a) of Act 6 of 1974 to mean “each” and “every,” thus requiring that a lender send a notice to a debtor before each and every foreclosure action.

The Court’s rationale was that mailing a new notice is necessary before filing the second action to bring sections 404(a) and 403(c)(4) of Act 6 into play. They require, among other things, a reinstatement amount breakdown. If the mortgagee does not send a second notice, the reinstatement breakdown would serve no purpose because the debtor would not be made aware of the amount of money needed to cure the default. The Superior Court also suggested that Act 91 of 1983 would likely require a new notice as well, given that Act 91 was amended in 2008 both to require an itemization of the amount past due and to create a combined Act 6/91 pre-foreclosure notice.

‍New Ruling

‍In early 2019, the state Supreme Court decided a separate case under a similar fact pattern. The Supreme Court mostly followed the prior Superior Court decision in holding that a lender may not recycle a stale pre-foreclosure notice issued in connection with a prior foreclosure complaint but must instead provide the borrower with a new, updated Act 6 notice before each foreclosure action.

The Court determined that a lender must inform the borrower of the payment required to cure the default in a clear and conspicuous manner. If the stale notice is used, the statutory period allowable to make payment becomes meaningless. Further, the Court held that a required new notice must include the lender’s current contact information and the address to send payment.

‍Act 91 Notices

‍Notwithstanding the comment in the intermediate appellate opinion discussed above about Act 91 notices, neither court directly addressed Act 91 notices as part of its decision, but rather, as direction. That Act contains specific language that if a notice is sent and the borrower does not apply for assistance or is denied, a new notice is not required.

However, it makes little sense to distinguish between the two notices as a future court is likely to hold that, despite the language of Act 91, it is still within the spirit of the Act to send a new notice before each foreclosure action.  Further, the only cases where Act 91 would apply and Act 6 would not apply are non-FHA loans secured by borrowers’ personal residences where the original principal amount exceeds the Act 6 base amount of $256,025 for 2019 or the applicable year in which the mortgage originated. There may be a small number of FHA loans that exceed the base amount and therefore may not require that any notice be sent under Pennsylvania law.

Regardless, given the tight window for finding exceptions, best practices would recommend that mortgagees send both a new Act 6 and Act 91 notice, separate or combined, before each new foreclosure action is filed.