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Activists Find Thousands of Foreclosures Violate State Law

ACTION United members joined attorney Michael Malakoff today to call on every Sheriff in the state to stop foreclosures they say proceeded illegally between 1995 and 2008.

During those years, an estimated 150,000 families in Pennsylvania received foreclosure paperwork that did not comply with Act 91, a state law passed in 1983 that required banks to send notices to homeowners making them aware of their rights — including the right to face-to-face negotiation between their lender and legal representation. ACTION United, a community group fighting foreclosures in Pennsylvania, has found this note of rights to be missing from many case files.

"Our state enacted a fairly good administrative process so lenders and homeowners could altogether avoid litigation, save time and expense, and basically work with each other," said Malakoff, who has donated his time to help families fight illegal foreclosure. "But the letters failed to advise the homeowners of their rights to meet with the lenders."

On January 30, in response to three of Malakoff's cases, the Superior Court of Pennsylvania ruled that the letters were, in fact, illegitimate and ordered the affiliated banks' foreclosure complaints to be dismissed from the courts.

"In order for [banks] to foreclose on these people, the Superior Court says they need to start over, providing the accurate Act 91 letter and going through every single step of foreclosure because their current foreclosure is illegal," said Maryellen Deckard, Head Organizer for ACTION United.

The banks involved in these cases, Wells Fargo and HSBC, recently filed an appeal to have the entire Superior Court reconsider the ruling, Malakoff said, adding that "virtually every bank" used the same defective letter and if held, "the ruling would apply to hundreds of thousands of other people."

Many homeowners who received the letters are still fighting their cases in courts today, and it would be in the best interest of everyone to stop the process until the law becomes settled, Malakoff said.

Regarding the rights of homeowners who lost their houses without knowing the process was illegal, Deckard said she could not comment. That, she said, will be up to the courts to decide.