Legal Question in Real Estate Law in Pennsylvania

Re: real estate note holders

You should be giving written notices of default, in accordance with the "notice" requirements in the note and mortgage, to your borrower each time you receive a late or no payment. The late charge should be added to the balance due, and you may also refuse to accept late payments without the late charge included.

It is unlikely that you would be able to get back the balance owed if you try to sell the paper, although I believe that there are buyers. They deeply discount the value of the note and mortgage.

Your other recourse is to foreclose on the mortgage and sue on the note. However, with a first mortgage in place, if you successfully foreclose and someone else buys the property at foreclosure sale, it will be subject to the first mortgage.

You may want to notify the holder of the first mortgage of the defaults. They may also constitute a default under the first mortgage.

There are certain protections for borrowers and restrictions on what a mortgage holder may do if the property is the borrower's primary residence.

In order to be sure that you are correctly exercising your remedies, you should consult with a real estate lawyer who routinely handles mortgage foreclosures in the county where the property is located.