Yes, until the sheriff sale
A foreclosure does not take the house away from you when it starts. In Pennsylvania it is a court case that ends in a sheriff sale, and until that sale you are still the owner. You can list the house, accept an offer, and close, just as you could before the foreclosure, with one condition: the lender’s mortgage has to be paid off at closing, or the lender has to agree in writing to accept less.
The Federal Trade Commission puts the case for selling plainly: “Selling your home may get you the money you need to pay off your whole mortgage. That helps you avoid late and legal fees, limit damage to your credit rating, and protect your equity in the property” (FTC).
What the sale has to pay off
The number that matters is the payoff: the amount needed to pay the loan in full on the closing date. In a foreclosure it also includes the costs the lender has added; the FTC notes the process “can also add hundreds or thousands of dollars in additional costs to your loan” (FTC).
- Ask for it in writing, early. A servicer must send “an accurate statement of the total outstanding balance that would be required to pay the consumer’s obligation in full as of a specified date,” within a reasonable time and “in no case more than seven business days” after a written request. That limit does not apply when the loan “is in bankruptcy or foreclosure”; then the rule requires only a reasonable time (12 CFR 1026.36(c)(3)). Once the foreclosure is filed, you can also ask the lender’s attorney.
- Other liens count too. A second mortgage, a home equity line, a court judgment, or unpaid taxes or utility liens also have to be paid or released for the buyer to get clear title. The title company finds them in its title search.
- Then the math. The FTC describes your equity as “the difference between how much your home is worth and what you owe on the mortgage.” If the sale price covers the payoff, the other liens, and the costs of the sale, you can sell normally, and what is left is yours.
Getting it done before the sale date
- Find the sale date. The written notice of the sale gives its “time and place” (Pa.R.C.P. 3129.2), and the Allegheny County Sheriff’s Office posts each month’s sale list on its website, with each property’s status (Allegheny County Sheriff).
- Request the payoff. Put it in writing to the servicer or the lender’s attorney, and ask for a figure good through a closing date a few weeks out.
- Choose how to sell. Listing with an agent can bring a higher price when there is time for showings and a buyer’s mortgage approval. A cash buyer who buys as-is can close sooner, usually for less. Either way, the closing has to happen before the sale.
- Tell the lender. Send the lender’s attorney a copy of the signed agreement of sale and ask whether it will postpone the sale. The FTC notes that “if you have a pending sales contract, or if you can show that you’re putting your home on the market, your servicer or lender might postpone foreclosure proceedings.” The lender can stay the sale by “written direction of the plaintiff to the sheriff” (Pa.R.C.P. 3183), or postpone it to a date within 130 days without new notice (Pa.R.C.P. 3129.3). It does not have to do either, so do not count on a postponement until it is in writing.
- Close with a title company. The title company pays off the mortgage and any other liens from the sale, pays the closing costs, and sends you the rest. Read the settlement statement before you sign it.
If the closing cannot happen in time, catching up may still be possible. For loans covered by Act 6, an owner can cure the default “at any time at least one hour prior to the commencement of bidding at a sheriff sale” (41 P.S. § 404). Our guide on how to stop foreclosure in Pennsylvania covers that and the other options.
If you owe more than the house is worth
Then a regular sale cannot pay off the loan, and the lender has to agree to a short sale. The Consumer Financial Protection Bureau describes it as “a sale of your home for less than what you owe on your mortgage,” and calls it “a type of loss mitigation” (CFPB). That matters for timing: a complete loss mitigation application received “more than 37 days before a foreclosure sale” must be decided before the servicer can hold the sale (12 CFR 1024.41).
The FTC’s advice is to find out whether the lender “will fully waive the difference” and not separately seek a deficiency judgment, and to “get the agreement in writing.” Our guide to short sales in Pennsylvania covers the process.
When it is too late to sell
Once the bidding ends at the sheriff sale, the house is sold. “The Right of Redemption does not apply to any property sold at the Mortgage Foreclosure Sheriff Sale” (Philadelphia Sheriff’s Office). The Allegheny County Sheriff’s notice says you may stay “until the full amount due is paid to the Sheriff and the Sheriff gives a deed to the buyer” (Allegheny County Sheriff), and the deed follows 20 to 40 days after the sheriff files the schedule of distribution (Pa.R.C.P. 3135). But the house is no longer yours to sell.
Watch out for offers that are not really sales
Some offers to people in foreclosure ask you to sign the deed over first, with a promise that you can rent the house and buy it back later. The FTC warns that “transferring the deed does not transfer the mortgage, so you’ll still owe payments on your mortgage loan,” and that the scammer “usually doesn’t sell the home back to you” (FTC). A real sale has a written agreement of sale, a title company or attorney handling the closing, and a settlement statement that shows the payoff to your lender and what you receive.