PRINTER'S NO. 3635
No. 2588 Session of 1976
INTRODUCED BY O'DONNELL, IRVIS, LAUGHLIN, M. E. MILLER JR.,
LEDERER, COHEN, MYERS, RAPPAPORT, REED AND RICHARDSON,
JUNE 30, 1976
REFERRED TO COMMITTEE ON BUSINESS AND COMMERCE, JUNE 30, 1976
AN ACT
1 Providing for the disclosure of certain financial data by
2 financial institutions; and making an appropriation.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Short Title.--This act shall be known and may be
6 cited as the "Home Mortgage and Deposit Disclosure Act."
7 Section 2. Finding of Fact and Declaration of Policy.--(a)
8 It has been determined by the General Assembly of this
9 Commonwealth:
10 (1) That there has been a decline in the living conditions
11 of neighborhoods and communities due to the failure of financial
12 institutions to provide adequate home financing to qualified
13 applicants on reasonable terms and conditions.
14 (2) That financial institutions have failed to fulfill their
15 responsibilities to their customers by denying home financing to
16 qualified applicants on the basis of the geographic location of
17 the property which is to be purchased, improved or
1 rehabilitated.
2 (3) That customers of financial institutions should be
3 provided with the necessary information to determine if the
4 financial institutions are fulfilling their responsibilities to
5 them.
6 (4) That the problems of the Commonwealth and its
7 inhabitants due to the shortage of decent, adequate housing have
8 been aggravated and increased by financial institutions which
9 deny home financing to qualified applicants on the basis of the
10 geographic location of the property which is to be purchased,
11 improved or rehabilitated.
12 (b) It is declared to be the policy of the Commonwealth of
13 Pennsylvania to promote the health and welfare of its
14 inhabitants by requiring financial institutions to make
15 disclosures concerning home financing and deposits. Such
16 disclosures would provide the Commonwealth and its citizens with
17 sufficient information to enable them to determine whether
18 financial institutions are fulfilling their responsibilities to
19 their customers and are serving the housing needs of the
20 neighborhoods in which their customers reside. The disclosures
21 would assist public officials at both the State and local levels
22 in their determination of the distribution of public sector
23 investments in a manner designed to improve the private
24 investment environment and to aid State and local interests and
25 priorities. Further, such policy of the Commonwealth is not
26 intended to nor is to be construed to encourage unsound lending
27 practices or the allocation of credit.
28 Section 3. Definitions.--The following words and terms, when
29 used in this act, shall have unless the context clearly
30 indicates otherwise, the meaning ascribed to them in this
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1 section:
2 "Census tract." A standard statistical area as established
3 by the United States Bureau of the Census.
4 "Deposits." The money which a financial institution receives
5 to be held in saving accounts, checking accounts, time deposits
6 and all other forms for investment or safekeeping.
7 "Financial institution." Any office of a commercial bank,
8 savings bank, savings and loan association, building and loan
9 association, homestead association, including cooperative banks,
10 credit union, mortgage service company, mortgage broker,
11 insurance company, and any other such association or institution
12 which:
13 (i) is regulated, supervised, chartered, or incorporated by
14 or in the Commonwealth; and
15 (ii) makes mortgage loans or home improvement loans or holds
16 deposits.
17 "Home improvement loan." A loan, secured or unsecured, the
18 proceeds of which are to be used for the purpose of repairing,
19 rehabilitating or remodeling an existing residential dwelling.
20 "Mortgage loan." A loan which is secured by residential real
21 property.
22 "Reporting period." A six month time interval of the
23 biannual reporting cycle. The reporting periods are from January
24 1 to June 30 and from July 1 to December 31 of each year, and
25 the first reporting period begins on the effective date of this
26 act.
27 Section 4. Compilation of Data.--(a) Each financial
28 institution, home or branch office, must compile the following
29 information or data for each reporting period:
30 (1) The number and total dollar amount of mortgage loans and
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1 home improvement loans which were originated by that
2 institution.
3 (2) The number and total dollar amount of mortgage loans and
4 home improvement loans which were purchased or refinanced by
5 that institution.
6 (3) The number and total unpaid balance of all outstanding
7 mortgage loans and home improvement loans held by that
8 institution.
9 (4) The number, percentage, and aggregate amount of all
10 mortgage loans foreclosed by that institution.
11 (5) The number of written mortgage loan and home improvement
12 loan applications denied with the reasons for denial such as
13 insufficient income, bad credit risk, and so forth.
14 (6) The number and total dollar amount of all deposits held
15 by that institution.
16 (7) The number and total dollar amount of all savings
17 accounts, checking accounts and time accounts on deposit with
18 that institution.
19 (8) The number and total dollar amount of all savings
20 accounts, checking accounts and time accounts which were opened
21 in that institution during the reporting period.
22 (b) The data required to be complied in subsection (a) shall
23 be itemized by census tracts both within and outside the
24 Commonwealth. Census tracts for mortgage loans are the tracts
25 where property securing the loan is located, census tracts for
26 home improvement loans are the tracts where the property is to
27 be improved or rehabilitated is located, and census tracts for
28 deposits are the tracts where the depositor maintains his
29 principal residence.
30 (c) The data required by subsection (a)(1) through (5) and
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1 by subsection (b) for mortgage loans and home improvement loans
2 shall be further itemized in order to disclose for each item the
3 following:
4 (1) The number and total dollar amount of mortgage loans and
5 home improvement loans which are insured under Title II of the
6 National Housing Act or under Title V of the Housing Act of 1949
7 or which are guaranteed under Chapter 37 of Title 38, United
8 States Code (FHA, FmHA, or VA loans).
9 (2) The number and total dollar amount of mortgage loans
10 made to mortgagors who did not, at the time of the execution of
11 the mortgage intend to reside in the property securing the
12 mortgage loan.
13 Section 5. Report.--(a) The information required to be
14 compiled by financial institutions pursuant to section 4 shall
15 be made known in a report.
16 (b) Each financial institution shall maintain and make
17 available the report to the public for inspection and for
18 copying at a cost not above the actual copying cost to the
19 financial institution. The financial institution shall make
20 public the availability of the report by posting notice of such
21 fact in a conspicuous place in its office. Whenever a financial
22 institution issues any statements to its customers, the
23 financial institution shall notify its customers of the reports
24 availability by including the following language in such
25 statements:
26 "The disclosure reports on mortgage loans, home improvement
27 loans and deposits required to be compiled and made known
28 pursuant to the Home Mortgage and Deposit Disclosure Act, Act
29 of , P.L. , No. , are now available
30 for your inspection and copying at our office."
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1 (c) A financial institution, which is a home office with one
2 or more branch offices, shall further combine the information
3 required to be compiled in section 4 for itself and its branches
4 in one report. This combined report is in addition to the
5 individual reports maintained and made available by each
6 financial institution.
7 (d) Any information required to be compiled under section 4
8 and made known in a report under this section shall be
9 maintained and made available by the financial institution for a
10 period of five years after the close of the first reporting
11 period during which such information is required to be
12 maintained and made available.
13 (e) The report required by this section shall be made on a
14 biannual basis and shall be made available within 60 days after
15 the end of each reporting period based on the effective date of
16 this act as the beginning of the reporting period cycle.
17 Section 6. Filing of Report with Commonwealth.--(a)
18 Financial institutions shall file the report, as required by
19 section 5, with the Department of Banking and the Department of
20 Community Affairs for each reporting period. This report shall
21 be filed on a biannual basis, within 60 days after the end of
22 each reporting period based on the effective date of this act as
23 the beginning of the reporting period cycle.
24 (b) The report, required to be filed under this section,
25 shall be maintained and made available to the public by the
26 Department of Banking and the Department of Community Affairs
27 for a period of five years after the deadline for filing as set
28 forth in subsection (a).
29 Section 7. Disclosure Board.--(a) A disclosure board shall
30 be established to ensure compliance by financial institutions
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1 with the provisions of this act and to coordinate the functions
2 of the Departments of Banking and Community Affairs under this
3 act. The board shall be composed of seven members of which the
4 Governor shall appoint five members and the Secretaries of the
5 Departments of Banking and Community Affairs shall be members,
6 exofficio.
7 (b) The duties of the disclosure board shall be to prescribe
8 such regulations as may be necessary to carry out the purposes
9 of this act. These regulations may contain such classifications,
10 differentiations, or other provisions, and may provide for such
11 adjustments and exceptions for any class of transactions, as in
12 the judgment of the disclosure board are necessary and proper to
13 effectuate the purposes of this act, and prevent circumvention
14 or evasion thereof, or to facilitate compliance therewith.
15 Section 8. Enforcement.--Failure by financial institutions
16 to comply with the provisions of this act shall result in the
17 following penalties:
18 (1) Financial institutions shall be fined $500 per day for
19 reports which are not in compliance with the time requirements
20 of sections 5(e) and 6(a) until such reports are filed with both
21 the Department of Banking and the Department of Community
22 Affairs pursuant to section 6 and are made available to the
23 public pursuant to section 5.
24 (2) Financial institutions shall be fined $10,000 for
25 incomplete and/or inaccurate reports as determined by the board.
26 Section 9. Department of Community Affairs.--The Department
27 of Community Affairs will use the information obtained from the
28 reports and will study the practices and actions of the
29 financial institutions in the home financing area in
30 relationship to its customers and to the housing needs and
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1 conditions of the Commonwealth. Further, the Department of
2 Community Affairs will make recommendations concerning
3 depository investments to agencies and instrumentalities of the
4 Commonwealth and to local governments on the basis of
5 information obtained from the reports.
6 Section 10. Appropriations.--The sum of , or as
7 much thereof as may be necessary, is hereby appropriated to the
8 Department of Banking, the Department of Community Affairs and
9 the disclosure board to carry out the provisions of this act.
10 Section 11. Effective Date.--This act shall take effect
11 January 1, 1977.
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