Pennsylvania's Homeowner's Emergency Mortgage Act (Act 91) requires a mortgagee that intends to foreclose on a residential mortgage to send a notice advising the delinquent homeowner that he has "thirty (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." In Beneficial Consumer Discount Company v. Vukman, the Pennsylvania Supreme Court held that a mortgagee's failure to include the entirety of this "face-to-face meeting" language in an Act 91 notice does not divest Pennsylvania's trial courts of subject matter jurisdiction to hear a foreclosure action by the mortgagee.
In Beneficial, the mortgagor, Pamela Vukman, defaulted on her mortgage and Beneficial, her mortgagee, sent her an Act 91 notice. The notice informed Vukman of her right to a face-to-face meeting with a counseling agency, but did not say that she also had the option to meet face-to-face with Beneficial. Beneficial later filed a foreclosure action and, ultimately, obtained a judgment against Vukman and acquired her property through a sheriff's sale.
Vukman filed a motion to set aside both the judgment and sale. In that motion, she argued for the first time that Beneficial's Act 91 notice was deficient and, therefore, that the trial court lacked subject matter jurisdiction to hear Beneficial's foreclosure action. The trial court agreed and, because lack of subject matter jurisdiction is a defense that cannot be waived, set aside the sheriff's sale and the judgment against Vukman. The Superior Court affirmed.
On appeal, the Pennsylvania Supreme Court first confirmed that Beneficial's Act 91 notice was deficient because it did not offer Vukman the option of meeting face-to-face with Beneficial (in a concurring opinion, two Justices opined that Beneficial's notice was sufficient). However, the Court concluded that "defective Act 91 notice does not implicate the jurisdiction of the court." Rather, the Court held that Act 91 imposes procedural requirements that mortgagees must follow before bringing a foreclosure action. Unlike lack of subject matter jurisdiction, failure to comply with procedural requirements, the Court held, is a defense that can be waived. Therefore, the Court rejected the trial court's finding that it lacked subject matter jurisdiction, reversed the trial court's order, and remanded the case.
It is unclear whether the trial court on remand will simply reenter the judgment against Vukman and reinstate the sheriff's sale, or entertain further proceedings on the issue of whether Vukman waived her objection to the defect in Beneficial's Act 91 notice. The case does, however, send a clear message to mortgagees: In Act 91 notices, offer mortgagors the choice of meeting face-to-face with either the mortgagee or a counseling agency, or risk litigating the sufficiency of the notice.
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