Pennsylvania Supreme Court Relaxes Foreclosure Standards

Written by: Alan Nochumson

In a case of first impression, the Supreme Court of Pennsylvania has issued an opinion that will make it easier for banks to foreclose on delinquent properties.

In Beneficial Consumer Discount v. Vukman, No. 29 WAP 2012 (Pa. Sept. 25, 2013), the plaintiff mortgage holder, Beneficial Consumer Discount Co., filed a mortgage foreclosure complaint against the property owner, Pamela A. Vukman.  Prior to the filing of the complaint, Beneficial had provided Vukman with the so-called Act 91 notice.  The parties eventually agreed to a settlement whereby Beneficial received judgment for the accelerated amount due on the mortgage, but, in turn, agreed not to execute on the judgment as long as Vukman made regular payments.  Subsequently, Beneficial filed an affidavit alleging Vukman had defaulted on her obligations under the settlement agreement and filed a praecipe for writ of execution.  The property was ultimately sold at a sheriff’s sale, with Beneficial as the property’s successful bidder.

In turn, Vukman filed a motion to set aside the sheriff’s sale, alleging that Beneficial had failed to comply with the requirements of Act 91.  Specifically, Vukman alleged the Act 91 notice that Beneficial gave her failed to inform her of the option of a face-to-face meeting with Beneficial.

The trial court determined that the Act 91 notice was deficient based upon this omission and concluded that this stripped it of subject-matter jurisdiction, which cannot be waived.  Beneficial appealed the trial court’s ruling to the Superior Court of Pennsylvania, which affirmed the trial court’s ruling based upon its own previous rulings holding that foreclosure notices are jurisdictional in nature and a failure to comply therewith will deprive a court of jurisdiction to act.

In granting allocatur, the Supreme Court of Pennsylvania reversed and ultimately concluded that Act 91 notice does not implicate the jurisdiction of the court.

In 2006, when Beneficial filed its complaint, Act 91 required a mortgagee who desired to foreclose to send notice to the mortgagor “advis[ing] the mortgagor of his delinquency … and that such mortgagor has 30 days to have a face-to-face meeting with the mortgagee who sent the notice or a consumer credit counseling agency to attempt to resolve the delinquency … by restructuring the loan payment schedule or otherwise.”

The Supreme Court initially pointed out that as the notice sent by Beneficial lacked this clause, the notice was deficient under the statute. However, the analysis did not end there.  According to the Supreme Court, the issue presented was whether Act 91 imposes jurisdictional prerequisites, which “relate solely to the competency of the particular court … to determine controversies of the general class to which the case … belongs” or whether they are procedural requirements, which impact “the ability of a [court] to order or effect a certain result” in mortgage foreclosure cases.

The Supreme Court pointed out that, although it had never addressed this precise issue, the Supreme Court of New Jersey had rejected the argument that a defect in pre-foreclosure notice violated a jurisdictional precondition and renders any resulting judgment void.  Our Supreme Court found that its sister Supreme Court was persuasive, as New Jersey’s pre-foreclosure notice was substantially similar to Act 91.

In reaching its ultimate conclusion, the Pennsylvania Supreme Court pointed out that the trial courts have unlimited original jurisdiction over all proceedings in the state unless otherwise provided by law and that, in the absence of a clear legislative mandate, laws are not to be construed to decrease the jurisdiction of the courts.

Our Supreme Court soundly rejected Vukman’s argument as relying on the incorrect assumption that a cause of action in mortgage foreclosure included a mortgagee’s compliance with Act 91.

Rather, the Supreme Court emphasized that the cause of action was actually dependent on a mortgagor’s default on a mortgage and did not include the procedural requirements of acting on that cause.

Utilizing the definition of “procedure” and “procedural law” found in Black’s Law Dictionary, the Supreme Court found Act 91 notice requirements to be procedural in nature as they set forth the steps a mortgagee with a cause of action must take prior to the filing for foreclosure.  The court concluded that Act 91 notice requirements do not sound in jurisdiction as they do not affect the classification of the case as a mortgage foreclosure action, a conclusion further supported by the lack of explicit language in Act 91 prescribing that such requirements are jurisdictional.

The Supreme Court held that Vukman’s failure to pay the mortgage according to Beneficial’s terms gave Beneficial its cause of action and, to act on that cause of action, it was required to give notice under Act 91.  Although the Supreme Court held that the Act 91 notice given by the mortgage holder in the instant case was defective and the procedural requirements were not met, that defect did not affect the subject-matter jurisdiction of the court to hear the matter.

Reprinted with permission from the October 18, 2013 edition of The Legal Intelligencer © 2013 ALM Media Properties, LLC.  All rights reserved.  Further duplication without permission is prohibited.  For information, contact 877-257-3382, or visit

Alan Nochumson