The Pennsylvania Supreme Court reversed a lower state court’s order to set aside a foreclosure judgment and sheriff’s sale. After the borrower defaulted and prior to initiating foreclosure, the mortgage company sent the borrower notice under the Pennsylvania Homeowner’s Emergency Mortgage Act, which among other things, required the mortgage company to inform the borrower of an option for an in-person meeting with the mortgage company. However, the borrower and mortgage company reached a settlement in which the mortgage company received a judgement for the accelerated amount due on the mortgage, but agreed not to execute the judgment so long as the borrower made regular payments. However, the borrower defaulted on her obligations under the settlement agreement and the mortgage company filed a praecipe for writ of execution and subsequently sold the property at a sheriff’s sale. The borrower moved to set aside the judgment and the sheriff’s sale alleging that because the mortgage company failed to provide the required notice, the trial court lacked subject matter jurisdiction over the foreclosure. The lower court and subsequent state appellate court agreed holding that it lacked jurisdiction because the required notice was deficient. The mortgage company appealed.
In reaching its decision the Pennsylvania Supreme Court noted that the question was whether the required notice “imposes jurisdiction 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 there are procedural requirements, which impact the ‘ability of a [court] to order or effect a certain result.’” The Court agreed with mortgage company and that a defective notice did not implicate the court’s jurisdiction, but rather its power to act. The Court also referenced a recent New Jersey Supreme Court case, U.S. Bank N.A. v. Guillaume, 38 A.3d 570 (N.J. 2012), involving a similar pre-foreclosure notice and noted that the New Jersey notice was “substantially similar” to the required notice in Pennsylvania. The Court held that the borrower’s “failure to pay the mortgage according to its terms” gave the mortgage company its cause of action. To act on that cause of action, according to the Court, the mortgage company was required to give the statutory notice. Ultimately, the Court concluded that despite the defectiveness of the required notice, the lower court’s jurisdiction was not affected, and remanded to the case to the trial court.