Appropriations Committee Approves Mortgage Reform Bills

Senator Browne's Legislative package headed for final Senate vote

The Senate Appropriations Committee today (February 11) approved six bills introduced by Senator Pat Browne (R-16) targeting predatory and other questionable mortgage lending practices in Pennsylvania.

The Committee's approval sets the stage for a final vote by the Senate on Senate Bills 483, 484, 485, 486, 487 and 488.

"I am pleased that the Appropriations Committee reported these bills out and sent them on to the full Senate for a final vote. There has been a tremendous amount of concern regarding the mortgage lending industry and its problems over the last several years," Senator Browne said. "It is incumbent upon us to adjust our banking codes and other codes to try to better protect consumers in one of their most important decisions and that is taking on a mortgage to secure a primary residence."

Senate Bill 483 would amend the Loan Interest and Protection Law of 1974 to increase the monetary cap in the Act from $50,000 to $200,000. "The most important protection is eliminating pre-payment penalties for loans $200,000 or less," said Senator Browne.

Senate Bill 484 would permit the Department to publicly release information on pending enforcement actions and fines levied against non-depository licensees.

Senate Bill 485 would amend the Real estate Appraisers Certification Act regarding board membership, disciplinary measures and penalties.

Senate Bill 486 would amend the Housing Finance Agency Law to require lenders to send copies of foreclosure notices to the Pennsylvania Housing Finance Agency so that mortgage foreclosures can be monitored on a statewide basis.

Senate Bill 487 would amend the Mortgage Bankers and Brokers and Consumer Equity Protection Act to create a new licensing category for individual mortgage originators who deal directly with the consumer by soliciting, accepting or offering to accept mortgage loan applications or negotiating mortgage loan terms.

Senate Bill 488 would amend the Secondary Mortgage Loan Act to create a new licensing category for individual mortgage originators who deal directly with the consumer by soliciting, accepting or offering to accept secondary mortgage loans (home equity) applications or negotiating secondary mortgage loan terms.

"Right now mortgage lenders and brokers are licensed, but those who originate the loans and go through paper work with the consumer and negotiate terms are not," Senator Browne said. "This licensing category, which is being considered by other states and the federal government, is an important to protect consumers in the future. It's my belief that those in the business of soliciting, advertising and dealing directly with consumers in regards to mortgage loans should be required to have a basic fiduciary responsibility similar to other circumstances where people are licensed to sell financial products in the marketplace."

Senator Browne introduced the bills based on the findings of a mortgage industry study mandated by House Resolution 364, which was adopted in 2003. This Resolution directed the Department of Banking to study residential lending practices in Pennsylvania, examine trends in foreclosures and document lending practices that are harmful to consumers.

Contact:

Lesley Crozier
(717) 787-1349