Philadelphia excess foreclosure sale funds $950K class action settlement

The city of Philadelphia agreed to a $950,000 settlement to resolve claims it failed to provide homeowners with excess funds following foreclosure sales.

The settlement benefits individuals who owned property in Philadelphia that was foreclosed and sold in a sheriff sale by the city to their mortgage issuer or other executing creditor. Class members are eligible for the settlement if the winning bid on the property was greater than mortgages or liens settled after the sale.

Foreclosures occur when borrowers default on their mortgage payments. As a result of foreclosures, homes are often listed in a public auction. In some cases, the sale price of the property exceeds the mortgage balance and liens on the home — leaving leftover profits. According to Nolo, this surplus belongs to homeowners not lenders.

However, not all cities may follow these rules. 

A class action lawsuit against Philadelphia claims the city doesn’t return surplus foreclosure funds to homeowners. Instead of releasing these funds, the Philadelphia Sheriff’s Office allegedly retains excess money.

“Sheriff’s Office only requires, when the executing creditor wins the bid, to pay the costs, thereby unlawfully preventing homeowners who lost their homes from receiving the amount of the bid over and above the executing creditor’s judgment plus costs pursuant to a sale as entitled to them under Pennsylvania law,” the foreclosure class action lawsuit contends.

According to plaintiffs in the case, excess funds beyond what is allowed by Pennsylvania law should be returned to homeowners. By failing to follow these regulations and pocketing the funds for itself, the city of Philadelphia allegedly violates state law.

Philadelphia hasn’t admitted any wrongdoing but agreed to pay $950,000 to resolve these allegations.

Under the terms of the Philadelphia foreclosure settlement, class members can collect a cash payment. 

The settlement aims to compensate class members for the actual damages they are owed from the sales of their foreclosed homes. 

According to the settlement notice, average actual damages are $7,586 per class member. However, if the net settlement fund is not large enough, class members will receive a proportional share of the settlement based on their actual damages, with higher actual damages resulting in a larger share of the settlement fund.

The deadline for exclusion and objection is Aug. 23, 2022. 

The final approval hearing for the Philadelphia foreclosure settlement is scheduled for Sept. 7, 2022.

In order to receive settlement benefits, class members must submit a valid claim form by Oct. 7, 2022.

Who’s Eligible

The settlement benefits individuals who owned property in Philadelphia that was foreclosed and sold in a sheriff sale by the city to their mortgage issuer or other executing creditor. Class members are eligible for the settlement if the winning bid on the property was greater than mortgages or liens settled after the sale.

Potential Award

Varies

Proof of Purchase

No proof of purchase applicable

Claim Form

NOTE: If you do not qualify for this settlement do NOT file a claim.

Remember: you are submitting your claim under penalty of perjury. You are also harming other eligible Class Members by submitting a fraudulent claim. If you’re unsure if you qualify, please read the FAQ section of the Settlement Administrator’s website to ensure you meet all standards (Top Class Actions is not a Settlement Administrator). If you don’t qualify for this settlement, check out our database of other open class action settlements you may be eligible for.

Claim Form Deadline

10/07/2022

Case Name

Butterline v. City of Philadelphia, Case No. 2:15-cv-01429-JS, in the U.S. District Court for the Eastern District of Pennsylvania 

Final Hearing

09/07/2022

Settlement Website

PhilaForeclosure.com

Claims Administrator

Settlement Administrator
Butterline v. City of Philadelphia
c/o Settlement Administrator
P.O. Box 16
West Point, PA 19486
questions@PhilaForeclosure.com
877-882-1011

Class Counsel

Daniel C Levin
LEVIN SEDRAN & BERMAN

William Wilson
THE LAW OFFICES OF WILLIAM WILSON

Michael G Louis
MACELREE HARVEY LTD

Defense Counsel

Amy Kirby
Michael Pfautz
CITY OF PHILADELPHIA LAW DEPARTMENT