Foreclosure Law in Pennsylvania

In Lock Haven, Pennsylvania is a process permitting a lender of a mortgage to take possession or ownership of the property that secured the mortgage in the first place, to cut their losses when a borrower defaults on his or her loan.

A foreclosure normally involves a forced sale of the house at auction, so the bank can recover at least some of the loss it has incurred as a result of the default. Banks normally want to rid themselves of the property as soon as possible, collect as much money as they can from the sale, and then move on.

In every U.S. state, including Pennsylvania, a borrower has a right to a judicial sale of their foreclosed property. A judicial sale is simply an auction overseen by a court. The purpose of this is to make sure that the lender takes reasonable steps to sell the home for the highest possible price, and to ensure that the homeowner has an opportunity to bid on the house, if he or she is able. It is in everybody's interest for the bank to get the highest price possible for the house, even the borrower's. If the house fetches a higher price than what's left on the mortgage, the buyer can keep what's leftover. On the other hand, if it fetches less, the buyer might have to pay the deficiency.

In a large number of states, but not all of them, mortgages are a type of loan recognized as a "non-recourse loan." While the regulations governing these loans are complex, it most basically means that, once the house is sold, and the sale price doesn't cover what the borrower owes, the lender can't go after the borrower for the remainder. They simply have to take the loss.

How to Possibly Avoid Foreclosure in Lock Haven, Pennsylvania

Communication between you and your lender is perhaps the most important way to avoid foreclosure. Ignoring the issue is guaranteed to be counterproductive. Honesty is the best policy when it comes to dealing with lenders.

You should be mindful of the fact that your bank wants you to make your monthly mortgage payments - they probably aren't scheming to trick you into giving up your home. This isn't out of altruism, it's due to the fact that foreclosure is almost never as lucrative for the bank in the long run than a mortgage that is paid in full over a period of years or decades, with interest accruing the whole time. For a bank, a foreclosure is simply a last resort to cut their losses.

If you face sudden expenses, such as medical bills or a lawsuit, which put a serious but relatively short-term strain on your finances, you should notify your lender immediately. You might find that they are willing to accept lower payments, if this will prevent you from defaulting.

In Pennsylvania, some buyers have no choice but to resort to a short sale. This is simply the sale of the house, and using the funds to pay off the remainder of the mortgage. One advantage of a short sale is that, if the house sells for less than the mortgage balance, the remaining debt is absolved, and the borrower is free and clear.

Can a Lock Haven, Pennsylvania real estate attorney help?

If you feel that your home is close to being foreclosed in Lock Haven, Pennsylvania, and want to try to prevent this, the advice and assistance of an accomplished real estate lawyer can mean the difference between keeping or losing your home.