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Court Defers Holding Lenders to the Letter of the Law in Foreclosure Cases

AARP argued that lenders may not seek foreclosure in court until they send homeowner a notice required by state law informing them of their rights when trying to save their home.  The Supreme Court of Pennsylvania declined to address the suitability of the notice and sent the case back down to trial court.


Pamela Vukman struggled to keep her home before its 2009 foreclosure and subsequent foreclosure sale. After her home was sold, but before she was forced out, she found a lawyer who realized that the lender had failed to comply with a legal requirement to inform her of the opportunity for a face-to-face meeting before a lender could start legal proceedings to foreclose.

The lender had sent Vukman a form notice prepared by a state agency, which had since 1999 erroneously eliminated the face-to-face meeting provision required by state law.  Vukman argued in court that because the notice was defective, the lender did not have the right to seek a foreclosure and the court did not have jurisdiction to enter an order. The court agreed that it did not have jurisdiction to order the foreclosure absent a proper notice, which was affirmed by an appeals court.

The lender appealed to the Pennsylvania Supreme Court, claiming the court can enter an order foreclosing on a home even with defective notice. Meanwhile, the lenders convinced the Pennsylvania’s General Assembly to pass a law seeking to confer jurisdiction on the court retroactively.

AARP Foundation Litigation attorneys filed AARP’s friend-of-the-court brief. The primary goal of the state’s foreclosure statute (known as “Act 91”) was to protect homeowners and avoid preventable foreclosures. “Through Act 91, the General Assembly mandated that no legal action, including foreclosures could be instituted until after mortgagees advised homeowners of their rights, including an opportunity for a face-to-face meeting. Legislators knew that legal action would trigger additional fees and costs, making it more expensive and less likely that a homeowner would be able to save his or her home, and more expensive for the Commonwealth to assist homeowners,” argued the brief.

AARP urged the Pennsylvania Supreme Court not to be swayed by the lender’s claim that requiring proper notice would have an adverse financial impact on them, because the lender brought this problem on itself. Either the lenders knew the notice was defective and used it anyway or they failed to learn of and comply with the legal requirements to foreclose upon a home in Pennsylvania.

The brief detailed the value Americans place on homeownership; the devastating impact foreclosure has on families, neighborhoods, and the economy;  the legislative history of the provision for face-to-face meetings; and precedents from other courts that have prohibited lenders from evading legal requirements. AARP argued that the attempt to confer jurisdiction retroactively was invalid and would reward lenders for failing to comply with the law in the first place.

The state’s highest court disagreed with the lower courts and AARP that a defect in the notice deprived the court of jurisdiction over the foreclosure, but the court declined to rule on whether the notice was actually defective under state law.  The court remanded the case to the trial court for a hearing on the merits of the notice and the impact of the notice on the foreclosure.

What’s at Stake

Approximately one-third of all people who have suffered a foreclosure are over age 50, and over 3 million older homeowners remain at risk of foreclosure. Homes represent the largest source of wealth for most American families. It is vital that laws protecting homeowners be strictly enforced to prevent the devastating impact of foreclosure on families, communities, and the economy.

Case Status

Beneficial Consumer Discount Company v. Vukman was decided by the Pennsylvania Supreme Court.