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Update On Beneficial Consumer Discount Company v. Vukmam Decision Regarding Residential Mortgage Foreclosures

In a recent Client Alert, we advised you of the decision of the Pennsylvania Superior Court in Beneficial Consumer Discount Company v. Vukmam. There, the court invalidated the execution sale of real property due to a defect in the "Act 91" notice sent to a residential mortgagor prior to the commencement of a mortgage foreclosure action. The Superior Court held that the defect robbed the lower court of jurisdiction, thus voiding not only the sale, but the judgment upon which the sale was based, and the mortgage foreclosure action itself. The decision has serious ramifications for all mortgage foreclosure actions, both pending and concluded, which included a PHFA Act 91 notice dated between May, 1999 and September 8, 2008.

Beneficial's petition to reargue the case was denied on April 12, 2012. Therefore, the decision will stand as the law of the Commonwealth unless and until it is modified or reversed on appeal. We will continue to monitor the progress of the case.

In the meantime, the District Court for the Middle District of Pennsylvania (a federal court interpreting and following the decisions of Pennsylvania courts) decided Deutsche Bank National Trust Company v. Pittari, 2012 WL 1078328, on March 30, 2012. There, the mortgagor also argued that the mortgagee did not have jurisdiction to foreclose on his home due to the use of the same Act 91 notice that was at issue in Beneficial. However, Mr. Pittari's argument was unsuccessful because the Act 91 notice he received was based on the revised version of Act 91, which does not require the creditor to advise the mortgagor of the option to meet with the mortgagor to discuss a mortgage default.

If you have any questions regarding these decisions, please contact Susan Reiter at (814) 870-7760 or sreiter@mijb.com.