PRIOR PRINTER'S NOS. 528, 1585                PRINTER'S NO. 1752

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 486 Session of 2007


        INTRODUCED BY BROWNE, FERLO, BOSCOLA, TOMLINSON, ERICKSON,
           RAFFERTY, RHOADES, COSTA, BAKER, STACK AND WASHINGTON,
           MARCH 15, 2007

        SENATOR ARMSTRONG, APPROPRIATIONS, RE-REPORTED AS AMENDED,
           FEBRUARY 11, 2008

                                     AN ACT

     1  Amending the act of December 3, 1959 (P.L.1688, No.621),
     2     entitled, as amended, "An act to promote the health, safety
     3     and welfare of the people of the Commonwealth by broadening
     4     the market for housing for persons and families of low and
     5     moderate income and alleviating shortages thereof, and by
     6     assisting in the provision of housing for elderly persons
     7     through the creation of the Pennsylvania Housing Finance
     8     Agency as a public corporation and government
     9     instrumentality; providing for the organization, membership
    10     and administration of the agency, prescribing its general
    11     powers and duties and the manner in which its funds are kept
    12     and audited, empowering the agency to make housing loans to
    13     qualified mortgagors upon the security of insured and
    14     uninsured mortgages, defining qualified mortgagors and
    15     providing for priorities among tenants in certain instances,
    16     prescribing interest rates and other terms of housing loans,
    17     permitting the agency to acquire real or personal property,
    18     permitting the agency to make agreements with financial
    19     institutions and Federal agencies, providing for the purchase
    20     by persons of low and moderate income of housing units, and
    21     approving the sale of housing units, permitting the agency to
    22     sell housing loans, providing for the promulgation of
    23     regulations and forms by the agency, prescribing penalties
    24     for furnishing false information, empowering the agency to
    25     borrow money upon its own credit by the issuance and sale of
    26     bonds and notes and by giving security therefor, permitting
    27     the refunding, redemption and purchase of such obligations by
    28     the agency, prescribing remedies of holders of such bonds and
    29     notes, exempting bonds and notes of the agency, the income
    30     therefrom, and the income and revenues of the agency from
    31     taxation, except transfer, death and gift taxes; making such


     1     bonds and notes legal investments for certain purposes; and
     2     indicating how the act shall become effective," further
     3     providing for general authority, for notice and institution
     4     of foreclosure proceedings, for notice requirements, for
     5     assistance payments and for repayment; and providing for an
     6     ongoing foreclosure study.

     7     The General Assembly of the Commonwealth of Pennsylvania
     8  hereby enacts as follows:
     9     Section 1.  Sections 401-C(d) and 402-C(b) of the act of
    10  December 3, 1959 (P.L.1688, No.621), known as the Housing
    11  Finance Agency Law, added December 23, 1983 (P.L.385, No.91),
    12  are amended to read:
    13     Section 401-C.  General Authority.--* * *
    14     (d)  The agency shall designate and approve nonprofit
    15  consumer credit counseling agencies in each county to be
    16  available to assist the agency in implementing the provisions of
    17  this article, including, but not limited to, mandated
    18  counseling. A "consumer credit counseling agency" shall be
    19  defined for the purpose of this article as a nonprofit consumer
    20  credit counseling agency located in Pennsylvania which is
    21  approved by the agency or a housing counseling agency certified
    22  by the United States Department of Housing and Urban
    23  Development. The agency shall maintain an up-to-date list of
    24  approved consumer credit counseling agencies for each county and
    25  publish the list on the agency's Internet website.
    26     Section 402-C.  Notice and Institution of Foreclosure
    27  Proceedings.--* * *
    28     (b)  A mortgagee shall not accelerate the maturity of any
    29  mortgage obligation covered under this article, commence any
    30  legal action including mortgage foreclosure to recover under
    31  such obligation, or take possession of any security of the
    32  mortgage debtor for such mortgage obligation until a final        <--

    20070S0486B1752                  - 2 -     

     1  determination has been made by the agency on a mortgagor's
     2  application for emergency mortgage assistance payments or the
     3  applicable time periods provided for in section 403-C have
     4  expired without the mortgagor applying for assistance in a
     5  timely fashion, whichever is earlier. A final determination may   <--
     6  not be made by the agency until the conclusion of any timely
     7  administrative appeal that may have been filed with the agency.
     8     * * *
     9     Section 2.  Section 403-C(b) of the act, amended December 21,
    10  1998 (P.L.1248, No.160), is amended to read:
    11     Section 403-C.  Notice Requirements.--* * *
    12     (b) (1)  The agency shall prepare a notice which shall
    13  include all the information required by this subsection and by
    14  section 403 of the act of January 30, 1974 (P.L.13, No.6),
    15  referred to as the Loan Interest and Protection Law, and
    16  referred to commonly as the Usury Law. This notice shall be in
    17  plain language and specifically state that the recipient of the
    18  notice may qualify for financial assistance under the
    19  Homeowner's Emergency Mortgage Assistance Program. This notice
    20  shall contain the telephone number and the address of a local
    21  consumer credit counseling agency. This notice shall be in lieu
    22  of any other notice required by law. This notice shall also
    23  advise the mortgagor of his delinquency or other default under
    24  the mortgage including an itemized breakdown of the total amount
    25  past due and that such mortgagor has thirty (30) days, plus
    26  three (3) days for mailing, to have a face-to-face meeting with
    27  [the mortgagee who sent the notice or] a consumer credit
    28  counseling agency to attempt to resolve the delinquency or
    29  default by restructuring the loan payment schedule or otherwise.
    30  The mortgagee or other person sending the notice to the
    20070S0486B1752                  - 3 -     

     1  mortgagor shall simultaneously send a copy of each notice issued
     2  to the agency by regular mail, facsimile, electronic mail or
     3  another means of electronic transfer in accordance with agency
     4  guidelines. In lieu of sending a copy of each notice, the
     5  mortgagee or other person charged with sending the notice may
     6  provide the agency, within 30 days of the end of each calendar
     7  quarter, a report listing the notices sent during the prior
     8  calendar quarter arranged by property address including zip
     9  code.
    10     (2)  The notice under paragraph (1) must be sent by a
    11  mortgagee at least thirty (30) days before the mortgagee:
    12     (i)  asks for full payment of any mortgage obligation; or
    13     (ii)  begins any legal action, including foreclosure, for
    14  money due under the mortgage obligation or to take possession of
    15  the mortgagor's security.
    16     (3)  The proposed notice under paragraph (1) shall be
    17  published by the agency in the Pennsylvania Bulletin within one
    18  hundred twenty (120) days of the effective date of this
    19  paragraph. The notice actually adopted for use by the agency
    20  shall be promulgated as part of the program guidelines required
    21  by section 401-C(b).
    22     (4)  If the mortgagor meets with a consumer credit counseling
    23  agency, the consumer credit counseling agency shall promptly
    24  notify all of the mortgagees secured by the mortgagor's real
    25  property, and no mortgagee so notified shall commence any legal
    26  action against the mortgagor's real property for a period not to
    27  exceed thirty (30) calendar days from the date that the
    28  mortgagor first meets with the consumer credit counseling
    29  agency.
    30     (5)  [The notice shall include a statement that, if the
    20070S0486B1752                  - 4 -     

     1  mortgagor is unable to resolve the delinquency or default within
     2  thirty (30) calendar days of the mortgagor's first contact with
     3  either the mortgagee or a consumer credit counseling agency, the
     4  mortgagor may apply to the agency or its duly authorized agent
     5  at the address and phone number listed in the notice in order to
     6  obtain an application and information regarding the Homeowner's
     7  Emergency Mortgage Assistance Program.] The notice shall include
     8  a statement that the mortgagor must have a face-to-face meeting
     9  with one of the designated consumer credit counseling agencies
    10  within thirty (30) calendar days plus three (3) additional days
    11  for mailing.
    12     (6)  If the mortgagor applies for mortgage assistance
    13  payments, the agency shall promptly notify all of the mortgagees
    14  secured by the mortgagor's real property. The agency shall make
    15  a determination of eligibility within sixty (60) calendar days
    16  of receipt of the mortgagor's application. During the time that
    17  the application is pending, no mortgagee may commence legal
    18  action to foreclose upon its mortgage with the mortgagor. The
    19  agency shall provide notice to the mortgagee if an
    20  administrative appeal is filed.
    21     (7)  An application for mortgage assistance may be submitted
    22  to the agency beyond the thirty (30)-day period specified in
    23  paragraph (5), and in such case, the agency shall make a
    24  determination within sixty (60) calendar days of receipt of the
    25  mortgagor's application. A late application or an administrative
    26  appeal will not stay foreclosure proceedings, but in the event
    27  the application is approved by the agency, a commenced
    28  foreclosure proceeding shall be stayed unless and until the
    29  mortgagor fails to proceed to closing and the agency rescinds
    30  its approval.
    20070S0486B1752                  - 5 -     

     1     * * *
     2     Section 3.  Section 405-C(e) of the act, added December 23,
     3  1983 (P.L.385, No.91), is amended and the section is amended by
     4  adding subsections to read:
     5     Section 405-C.  Assistance Payments.--* * *
     6     (a.1)  A mortgagee entitled to payments under this section
     7  shall provide to the agency within thirty (30) days of the
     8  agency's request the following documents and information:
     9     (1)  An itemized statement of the amounts due under the
    10  mortgage including all corporate advances incurred for which
    11  reimbursement from the mortgagor is demanded by the mortgagee.
    12  Demands for attorney fees, court costs and other advances shall
    13  be reasonable and shall reflect the amount of work and expenses
    14  actually expended and may not include any amounts incurred
    15  during any period a stay is in effect under this act.
    16     (2)  Copies of the following documents from the original
    17  mortgage transaction:
    18     (i)  The HUD-1 settlement statement.
    19     (ii)  The mortgage and note.
    20     (iii)  The appraisal, if an appraisal has been performed
    21  during the last five (5) years.
    22     (a.2)  Failure to provide in a timely fashion the documents
    23  and information required under subsection (a.1) will result in
    24  the mortgagee's forfeiture of the right to receive any late fees
    25  and attorney fees, costs and expenses.
    26     (a.3)  Upon the agency's payment of the initial payment to
    27  the mortgagee, including all corporate advances allowed by the
    28  agency, the mortgagee shall adjust its accounts to reflect that
    29  the mortgage obligation is, as of the date of receipt of such
    30  funds, reinstated and current for all purposes. The subsequent
    20070S0486B1752                  - 6 -     

     1  imposition by a mortgagee of any charges, fees or other amounts
     2  that were paid or disallowed by the agency, or waived by the
     3  mortgagee, shall be in violation of the act of December 17, 1968
     4  (P.L.1224, No.387), known as the "Unfair Trade Practices and
     5  Consumer Protection Law."
     6     * * *
     7     (b.1)  In lieu of paying arrearages under subsection (a) or
     8  ongoing assistance under subsection (b), the agency may fund a
     9  compromise pay-off of the balance of the mortgage, if the agency
    10  determines that structuring assistance in such a manner would be
    11  in the best interest of the agency and the mortgagor, as agreed
    12  to by the mortgagee.
    13     * * *
    14     (e)  If any mortgagee scheduled to receive monthly payments
    15  from the agency pursuant to this article fails to receive from
    16  the agency the full amount of such monthly payment within thirty
    17  (30) days of the scheduled due date, or if a mortgagor fails to
    18  observe and perform all the terms, covenants and conditions of
    19  the mortgage, that mortgagee may, at any time thereafter, take
    20  any legal action to enforce the mortgage without any further
    21  restriction or requirement under this article.
    22     * * *
    23     Section 4.  Section 406-C(5) of the act, amended December 21,
    24  1998 (P.L.1248, No.160), is amended to read:
    25     Section 406-C.  Repayment.--Upon approval of mortgage
    26  assistance, the agency shall enter into an agreement with the
    27  mortgagor for repayment of all mortgage assistance made by the
    28  agency plus interest as provided in paragraph (5). The agreement
    29  shall provide for monthly payments by the mortgagor and be
    30  subject to the following provisions:
    20070S0486B1752                  - 7 -     

     1     * * *
     2     (5)  Interest shall accrue on all mortgage assistance made by
     3  the agency at [the rate of nine (9) percent per annum.] a rate
     4  of interest to be determined by the agency prior to the end of
     5  each calendar year for loans closed in the next calendar year,
     6  which rate shall not exceed the interest rate established by the
     7  Department of Banking pursuant to section 301 of the act of
     8  January 30, 1974 (P.L.13, No.6), referred to as the Loan
     9  Interest and Protection Law, and referred to commonly as the
    10  Usury Law. Interest shall start to accrue whenever the mortgagor
    11  begins to make repayment under this section. Interest shall
    12  accrue only during the period in which the mortgagor is required
    13  to make repayment under this section. When any mortgage for
    14  which mortgage assistance was made is paid, interest shall then
    15  accrue on all mortgage assistance due and owing at the same rate
    16  and on the same basis as the mortgage for which the mortgage
    17  assistance was made.
    18     * * *
    19     Section 5.  The act is amended by adding a section to read:
    20     Section 412-C.  Ongoing Foreclosure Study.--The agency shall
    21  monitor foreclosure activity and trends in this Commonwealth,
    22  using data and information accumulated from notices and
    23  applications for assistance processed under this article, and
    24  shall, as appropriate, provide recommendations for addressing
    25  any problems identified in this monitoring effort.
    26     Section 6.  This act shall take effect in 60 days.



    B2L64MSP/20070S0486B1752         - 8 -
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