Death by Foreclosure

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Monica Christie and Mario A. What happens to a foreclosure action when a party defendant passes away?

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If there is such a thing--the best case scenario is if the decedent held title to the property with another party defendant, either as joint tenants with rights of survivorship; as husband and wife tenants by the entirety or if the decedent deeded away the property prior to their death. In such cases, under operation of law, the remaining party in title is the sole owner of the property and the decedent and his estate representative can be dropped from the action. In some cases, the mortgagee must waive its rights to a deficiency judgment against the estate.

In cases where substitution is easily accomplished, virtually the only delay would arise during the time the mortgagee is obtaining the proof of death and during the motion for substitution is pending.

The gold standard of proof of death is a death certificate or letters testamentary granted by a Surrogate. Based upon my experience, generally, a death certificate is not available until six 6 months after death. Letters of Testamentary and the underlying petitions can be obtained by a Surrogate Court Search.

Under some conditions, the court will accept an obituary as proof of death, if published in a paper or on a funeral home website. In one case, this practitioner has proven death by a police report detailing the suicide of the party defendant. In another case, through a newspaper article reporting the fire of the property and the death of its owners. If the property is held solely by the decedent or if the property is held as tenants in common then we run into a substitution of estate issues.

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The general rule is that death of a party divests the court of jurisdiction until such time as a representative of the estate is substituted. The proper party would be served with the action and be afforded all the procedural safeguards mandated by due process. The girls can't see you like this,' " DaCosta said.

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Immediately, DaCosta called her lender, who told her to appear in court on the scheduled date, she said. But as time passed, stress mounted, and as more bill collectors called, DaCosta began to wonder: Should she bother with court at all? She was intimidated and confused about how it would work. Courtroom appears to be an ordinary courtroom inside the winding hallways of City Hall. Gold columns tower behind the court's bench, while oil paintings of judges decorate the walls. A jury box sits in the corner. Every Thursday, however, the courtroom transforms.

Court is in session, yet no judge presides. Defendants like DaCosta appear, but no jury decides their fate.

» Dying with a mortgage: What happens to your home?

The city has operated its Residential Mortgage Foreclosure Diversion Program every week since April with one mission: Spearheaded by Judge Annette M. The program works by simply pausing a foreclosure process that otherwise would be careening toward sheriff's sale, staffers say.

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Only owner-occupied residential properties experiencing a mortgage foreclosure are eligible for the program. Tax foreclosure cases are handled separately. To observers, the simultaneous negotiations may seem impossibly casual. But in the last decade, the program has saved more than 11, homes, according to city data, a 55 percent success rate. A total 21, homeowners have participated in the program, data show, though 9, homeowners citywide still eventually lost their homes.

Compared with , when foreclosure filings in Philadelphia surpassed 8, annually, according to data from the local Reinvestment Fund , the volume of foreclosure filings has diminished — though not disappeared. In May, one in every homeowners in Philadelphia experienced a foreclosure proceeding, according to Attom Data Solutions — a rate that exceeds thousands of other cities nationwide.

And many of today's filings are no longer linked to bad loans of the mids, the data show.

How to Deal With a Foreclosure as an Estate Executor

The housing counselors and attorneys who sit in the room — hailing from jobs at community development corporations or firms like Community Legal Services and SeniorLAW Center — say there is no one reason why homeowners come to the program. Some are like DaCosta, well-educated and established, but down on their luck.

Others have struggled for years. Many homeowners who arrive these days, according to staff, are seniors with federally insured loans called reverse mortgages, which allow homeowners older than 62 to convert their home's equity into cash. But as the number of these loans has risen in recent years, so has the number of foreclosures, as senior homeowners, still obligated to pay taxes and insurance on the house, let those payments lapse — triggering legal action by a lender. As a whole, about 80 percent of homeowners who receive notices ultimately show up in court, according to the city.

Of the nearly 6, homeowners who did not participate in the diversion program in the last 10 years, more than two-thirds eventually lost their homes, city data show. To get homeowners into the courtroom, city officials rely on more than just legal paperwork.