Introduction

Home mortgage lenders, assignees and servicers (hereinafter, creditors) are facing what appears to be an increasing influx of both individual and putative class action lawsuits brought by defaulted borrowers who allege that the pre-foreclosure notices the borrowers received violated various state and federal consumer protection laws.¹

In Pennsylvania, for example, financial institutions often find themselves defending against claims that their pre-foreclosure notice practices violate: Pennsylvania’s Loan Interest and Protection Law (Act 6);² Pennsylvania’s Housing Finance Agency Law (Act 91);³ the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL);⁴ and/or other federal and state consumer protection laws.⁵ Typically, these suits involve a wide range of claims, e.g., from purported deviations in the language of the creditor’s notice as compared to that promulgated by the legislature, to an assessment of allegedly improper fees. In the current legal environment, it is reasonable to assume that there is no prospective end in sight to the spread of these types of challenges to creditor’s pre-foreclosure notice practices.

That being said, based upon experience counseling clients on their internal pre-foreclosure notice procedures, it seems clear that the proactive implementation by creditors of selected best practices with respect to pre-foreclosure notices may help to provide “safe harbor” protections from potential liability in these types of cases.⁶ Thus, creditors may wish to proactively consider reviewing their pre-foreclosure notice templates and streamlining their pre-foreclosure notice processes in order to coordinate a well-defined and universal system with their foreclosure counsel or perhaps even bring the pre-foreclosure notice process entirely in-house. To illustrate these points, this article provides a brief overview of the minefield that Pennsylvania pre-foreclosure notice law has become.

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