When the housing bubble burst, foreclosure became a more common occurrence than in the past.

However, what some foreclosed homeowners are discovering is that their lenders can come after them legally for the money owed, in addition to seizing the property.

Reporter community blogger “Professor Deb” Webb, a mortgage consultant, said that Pennsylvania is a “judicial state.” That means that the note you signed when you signed your mortgage papers gives the lender the right to seek a mortgage deficiency judgment in court.

It doesn’t help, she said, that the Corbett Administration shut down the state Homeowners’ Emergency Mortgage Assistance Program (HEMAP), which had been in place since 1983. One saving grace could be relaxed eligibility changes proposed to the Home Affordable Refinance Program by President Obama, which would allow those with loans from Fannie Mae or Freddie Mac to refinance with much lower rates and lower their home loan payments.

“I tell anybody, if they say they’re in the process (of foreclosure), they need to reach out and talk to the lender. They need to have an attorney willing to talk to them too,” she said.

Webb added that homeowners desperate to avoid foreclosure should be wary of foreclosure modification scams.

“Check if they have a license from the National Mortgage Licensing System,” she said.

“Traditionally, I’ve seen very few deficiency cases,” said Patrick McMenamin, an attorney in Hatfield Township.

However, McMenamin said, that with the continued turbulence in the housing market, and more banks either creating service charge fees, or raising existing fees, he’s not surprised that it’s become an issue.

The foreclosure process itself takes time, he said, and homeowners that have defaulted shouldn’t feel they need to immediately vacate their house.

Banks are usually willing to waive a deficiency judgment, he said, if you try to reach some sort of agreement with them. But consult an attorney before you do, he said.

“If somebody comes to me, I can probably keep them in their home for another 18 to 24 months,” McMenamin said.

Ed Hughes, president of Univest’s Mortgage Banking Unit, concurred with Webb and McMenamin that it’s a much more attractive option for a lender to work with a homeowner, rather than mortgage deficiency legal action.

“If you anticipate an issue, talk to your servicer or lender as soon as possible,” he said.

Hughes gave an example of a proactive customer that called and said that this year’s Verizon strike was adversely affecting his employment status. He anticipated falling behind on his payments. “We were able to put in place a contingency plan,” Hughes said.

Mortgage deficiency judgments are pursued “only in the likelihood of repayment” and “the lender or servicer has reason to believe that the consumer has other forms of liquid assets,” Hughes said.

They are also more likely to happen to “folks that are uncooperative or not returning phone calls,” or those that decide to just walk away from the home altogether. When that happens, lenders are “not left with any other alternatives,” he said.

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