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                                                       PRINTER'S NO. 529

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 487 Session of 2007


        INTRODUCED BY BROWNE, FERLO, BOSCOLA, PILEGGI, TOMLINSON,
           ERICKSON, FUMO, RHOADES, COSTA AND BAKER, MARCH 15, 2007

        REFERRED TO BANKING AND INSURANCE, MARCH 15, 2007

                                     AN ACT

     1  Amending the act of December 22, 1989 (P.L.687, No.90), entitled
     2     "An act providing for the regulation and licensing of
     3     mortgage bankers and mortgage brokers; imposing additional
     4     powers and duties on the Department of Banking and the State
     5     Real Estate Commission; and providing penalties," further
     6     providing for definitions, for license requirements and
     7     exemptions, for application for license, for annual license
     8     fee, for issuance of license, for license duration, for
     9     licensee requirements, for licensee limitations, for
    10     authority of department or commission, for fees, for
    11     suspension, revocation or refusal, for penalties, for
    12     referral fees and for Real Estate Recovery Fund.

    13     The General Assembly of the Commonwealth of Pennsylvania
    14  hereby enacts as follows:
    15     Section 1.  The definitions of "commission," "finder's fee,"
    16  "limited mortgage broker," "nonpurchase money mortgage loan" and
    17  "person" in section 302 of the act of December 22, 1989
    18  (P.L.687, No.90), known as the Mortgage Bankers and Brokers and
    19  Consumer Equity Protection Act, amended June 25, 2001 (P.L.621,
    20  No.55), are amended and the section is amended by adding
    21  definitions to read:
    22  Section 302.  Definitions.


     1     The following words and phrases when used in this chapter
     2  shall have the meanings given to them in this section unless the
     3  context clearly indicates otherwise:
     4     * * *
     5     "Applicant."  A person who applies for a license under this
     6  chapter.
     7     * * *
     8     ["Commission."  The State Real Estate Commission.
     9     "Finder's fee" or "referral fee."  Any payment of money or
    10  other consideration for the referral of a mortgage loan to a
    11  lender, but shall not include consideration paid for goods or
    12  facilities actually furnished or services actually performed.]
    13     * * *
    14     ["Limited mortgage broker."  An individual who directly or
    15  indirectly negotiates or places nonpurchase money mortgage loans
    16  for others in the primary market for consideration.]
    17     * * *
    18     "Mortgage originator."  An individual not licensed as a
    19  mortgage banker, mortgage broker or loan correspondent under
    20  this chapter who solicits, accepts or offers to accept mortgage
    21  loan applications or negotiates mortgage loan terms in other
    22  than a clerical or ministerial capacity. The term does not
    23  include directors, partners or ultimate equitable owners of 10%
    24  or more of a licensee.
    25     ["Nonpurchase money mortgage loan."  A mortgage loan the
    26  proceeds of which are not used to finance the purchase of the
    27  real property securing the mortgage loan.]
    28     "Person."  An individual, association, joint venture or
    29  joint-stock company, partnership, limited partnership, limited
    30  partnership association, limited liability company, business
    20070S0487B0529                  - 2 -     

     1  corporation, nonprofit corporation, or any other group of
     2  individuals, however organized.
     3     * * *
     4     Section 2.  Sections 303, 304, 305, 306, 307, 308, 309 and
     5  310 of the act, amended June 25, 2001 (P.L.621, No.55), are
     6  amended to read:
     7  Section 303.  License requirements and exemptions.
     8     (a)  License required.--On and after the effective date of
     9  this act, no person shall [act as a mortgage banker, loan
    10  correspondent, mortgage broker or limited mortgage broker]
    11  engage in the first mortgage loan business in this Commonwealth
    12  without a license as provided for in this chapter.[, provided,
    13  however, that any person licensed as a mortgage banker may also
    14  act as a loan correspondent or mortgage broker and any person
    15  licensed as a loan correspondent may also act as a mortgage
    16  broker without a separate license. A person licensed as a
    17  mortgage broker may only perform the services of a mortgage
    18  broker.] A mortgage originator may not engage in the first
    19  mortgage loan business unless the mortgage originator is
    20  employed and supervised by a licensed mortgage banker, mortgage
    21  broker or loan correspondent.
    22     (a.1)  Licensed activity exceptions.--
    23         (1)  A mortgage banker may act as a mortgage broker or
    24     loan correspondent without a separate mortgage broker or loan
    25     correspondent license and, if licensed as an individual, may
    26     perform the services of a mortgage originator without a
    27     separate mortgage originator license.
    28         (2)  A loan correspondent may act as a mortgage broker
    29     without a separate mortgage broker license and, if licensed
    30     as an individual, may perform the services of a mortgage
    20070S0487B0529                  - 3 -     

     1     originator without a separate mortgage originator license.
     2         (3)  A person licensed as a mortgage broker may only
     3     perform the services of a mortgage broker. If a mortgage
     4     broker is licensed as an individual, a mortgage broker may
     5     perform the services of a mortgage originator without a
     6     separate mortgage originator license.
     7     (b)  Exceptions.--The following persons shall not be required
     8  to be licensed under this chapter in order to conduct the first
     9  mortgage loan business but shall be subject to those provisions
    10  of this chapter as specifically provided in this section:
    11         (1)  A State-chartered bank, bank and trust company,
    12     savings bank, private bank or national bank, a State or
    13     federally chartered savings and loan association, a federally
    14     chartered savings bank or a State or federally chartered
    15     credit union.
    16         (2)  An attorney authorized to practice law in this
    17     Commonwealth, who acts as a mortgage broker in negotiating or
    18     placing a mortgage loan in the normal course of legal
    19     practice.
    20         [(3)  A person licensed pursuant to the provisions of the
    21     act of February 19, 1980 (P.L.15, No.9), known as the Real
    22     Estate Licensing and Registration Act, who is principally
    23     engaged in a third-party real estate brokerage business, but
    24     only to the extent that he provides information, verbal or
    25     written, to or negotiates or places a mortgage loan for a
    26     buyer of real estate and is not compensated by the buyer or
    27     any other person for providing such information or
    28     negotiating or placing such mortgage loan. If he is
    29     compensated for providing such information or negotiating or
    30     placing such mortgage loan, he shall be subject to the
    20070S0487B0529                  - 4 -     

     1     provisions of sections 308, 310, 311 and 314(b), excluding
     2     section 308(a)(1).
     3         (4)  A seller of a dwelling, if he has resided in the
     4     dwelling at least one year and as part of the purchase price
     5     receives a first mortgage executed by the purchaser.]
     6         (5)  A person who either originates or negotiates less
     7     than three mortgage loans in a calendar year in this
     8     Commonwealth unless he is otherwise deemed to be engaged in
     9     the first mortgage loan business.
    10         [(6)  Builders, when obtaining mortgages for their own
    11     construction or for the sale of their own construction.]
    12         (7)  Any agency or instrumentality of the Federal
    13     Government or a corporation otherwise created by an act of
    14     the United States Congress, including, but not limited to,
    15     the Federal National Mortgage Association, the Government
    16     National Mortgage Association, the Veterans' Administration,
    17     the Federal Home Loan Mortgage Corporation and the Federal
    18     Housing Administration.
    19         (8)  [The] Any agency or instrumentality of State or
    20     local government, the District of Columbia or any territory,
    21     including the Pennsylvania Housing Finance Agency and other
    22     government housing finance agencies.
    23         (9)  A licensee under the act of April 8, 1937 (P.L.262,
    24     No.66), known as the Consumer Discount Company Act, except
    25     that any such licensee who makes a mortgage loan other than
    26     under the provisions of that act shall be subject to the
    27     provisions of sections 304(b)(2) and (3), 308, 310 and
    28     314(b), excluding section 308(a)(1). Employees of licensees
    29     under the Consumer Discount Company Act that act as mortgage
    30     originators shall be subject to the licensing requirements of
    20070S0487B0529                  - 5 -     

     1     this chapter. Consumer discount companies that employ
     2     mortgage originators shall be subject to the same
     3     requirements as mortgage bankers in regard to the employment
     4     and supervision of mortgage originators.
     5         (10)  Except [for licensees described] as provided in
     6     paragraph (9), subsidiaries and affiliates of the following
     7     institutions: State-chartered banks, bank and trust
     8     companies, savings banks, private banks, savings and loan
     9     associations and credit unions or national banks, federally
    10     chartered savings and loan associations, federally chartered
    11     savings banks and federally chartered credit unions, except
    12     that such subsidiaries and affiliates [of institutions
    13     enumerated in this paragraph] shall:
    14             (i)  be subject to the provisions of sections 308,
    15         309(a)(3), 310 and 314(b), excluding section 308(a)(1);
    16             (ii)  deliver as required to the department annually
    17         copies of financial reports made to all supervisory
    18         agencies; and
    19             (iii)  be registered with the department.
    20         (11)  Employees of a mortgage banker, mortgage broker and
    21     loan correspondent licensee [or excepted persons acting for
    22     their employers.] to the extent that such employees are not
    23     otherwise required to be licensed as mortgage originators.
    24         [(12)  An insurance company, association or exchange
    25     authorized to transact business in this Commonwealth under
    26     the act of May 17, 1921 (P.L.682, No.284), known as The
    27     Insurance Company Law of 1921, and any subsidiaries and
    28     affiliates thereof, except that such subsidiaries and
    29     affiliates shall:
    30             (i)  be subject to the provisions of sections 308,
    20070S0487B0529                  - 6 -     

     1         309(a)(3), 310 and 314(b), excluding section 308(a)(1);
     2             (ii)  deliver as required to the department annually
     3         copies of financial reports made to all supervisory
     4         agencies; and
     5             (iii)  be registered with the department.]
     6         (13)  Any person who makes a mortgage loan to an employee
     7     of that person as an employment benefit, given that person
     8     does not hold himself out to the public as a first mortgage
     9     lender.
    10         (14)  Nonprofit corporations making mortgage loans to
    11     promote home ownership or improvements for the disadvantaged,
    12     given that the corporation does not hold itself out to the
    13     public as a first mortgage lender.
    14         (15)  A nonprofit corporation making not more than 12
    15     mortgage loans a calendar year with its own funds, that shall
    16     not include funds borrowed through warehouse lines of credit
    17     or other sources for the purpose of making mortgage loans,
    18     which loans are retained in the corporation's own portfolios
    19     and not regularly sold to others and are made to promote and
    20     advance the cultural traditions and lifestyles of bona fide
    21     religious organizations provided that the corporation does
    22     not hold itself out to the public as a first mortgage lender.
    23         (16)  Employees of excepted persons enumerated in this
    24     section, unless otherwise provided in this subsection.
    25     (c)  Loans for business or commercial purposes.--This chapter
    26  shall not apply to mortgage loans made for business or
    27  commercial purposes.
    28  Section 304.  Application for license.
    29     (a)  Contents.--An application for a license to act as a
    30  mortgage banker, loan correspondent, mortgage broker or [limited
    20070S0487B0529                  - 7 -     

     1  mortgage broker] mortgage originator shall be on such forms as
     2  may be prescribed and provided by the department. [Each] In the
     3  case of the mortgage banker, loan correspondent or mortgage
     4  broker, the application shall include the address or addresses
     5  where business is to be conducted, the full name, official title
     6  and business address of each director and principal officer of
     7  the business and any other information that may be required by
     8  the department. In the case of a mortgage originator, the
     9  application shall include the name of the applicant, the name of
    10  the licensee employing the applicant and the location of the
    11  employer licensee to which the applicant is assigned and any
    12  other information that may be required by the department. An
    13  applicant shall demonstrate to the department that policies and
    14  procedures have been developed to receive and process customer
    15  inquiries and grievances promptly and fairly.
    16     (b)  Mortgage banker's license.--The department shall issue a
    17  mortgage banker's license applied for pursuant to this chapter
    18  if the applicant establishes that he has met the following
    19  conditions:
    20         (1)  That he is approved by or meets the current criteria
    21     for approval of at least one of the following:
    22             (i)  Federal National Mortgage Association.
    23             (ii)  Federal Home Loan Mortgage Corporation.
    24             (iii)  Federal Housing Administration.
    25         (2)  That he maintains or is approved for, and will
    26     continue to maintain as a licensee, a line of credit,
    27     repurchase agreement or equivalent mortgage-funding
    28     capability of not less than $1,000,000.
    29         (3)  That he has a minimum tangible net worth of $250,000
    30     at the time of application and will, at all times thereafter,
    20070S0487B0529                  - 8 -     

     1     maintain such minimum net worth, provided, however, that
     2     those applicants who were in business prior to June 20, 1990,
     3     may be licensed with a minimum tangible net worth of $100,000
     4     if, in the opinion of the department, the applicant has
     5     established that it has an otherwise adequate financial
     6     structure and operating history.
     7         (4)  That he will maintain fidelity bond coverage in
     8     accordance with the guidelines established by the Federal
     9     National Mortgage Association or the Federal Home Loan
    10     Mortgage Corporation.
    11     (b.1)  Loan correspondent's license.--The department shall
    12  issue a loan correspondent's license applied for pursuant to
    13  this chapter if the applicant establishes that he has met the
    14  following conditions:
    15         (1)  That he is eligible to and will obtain and maintain
    16     a bond in the amount of $100,000, in a form acceptable to the
    17     department, prior to the issuance of the license, from a
    18     surety company authorized to do business in this
    19     Commonwealth. The bond shall run to the Commonwealth of
    20     Pennsylvania and shall be for the use of the Commonwealth and
    21     any person or persons who obtain a judgment against the loan
    22     correspondent for failure to carry out the terms of any
    23     provision for which advance fees are paid. No bond shall
    24     comply with the requirements of this section unless it
    25     contains a provision that it shall not be canceled for any
    26     cause unless notice of intention to cancel is given to the
    27     department at least 30 days before the day upon which
    28     cancellation shall take effect.
    29         (2)  That he has a minimum tangible net worth of $100,000
    30     at the time of application and will, at all times thereafter,
    20070S0487B0529                  - 9 -     

     1     maintain such minimum net worth.
     2         (3)  Notwithstanding subparagraph (ii), an applicant who
     3     was in the business as a mortgage banker, mortgage broker or
     4     otherwise authorized to engage in the first mortgage loan
     5     business by the department prior to the effective date of
     6     this section who files an application within 90 days after
     7     the effective date of this section may be licensed for one
     8     year with a minimum tangible net worth of $50,000.
     9     Thereafter, for a period of one year, the applicant may
    10     continue to be licensed with a minimum tangible net worth of
    11     $75,000. Following that period, the applicant may continue to
    12     be licensed with a minimum tangible net worth of $100,000.
    13     (c)  Mortgage broker's license.--
    14         (1)  The department shall issue a mortgage broker's
    15     license applied for pursuant to this chapter if the applicant
    16     establishes that he is eligible to and will obtain and
    17     maintain a bond in the amount of $100,000, in a form
    18     acceptable to the department, prior to the issuance of the
    19     license, from a surety company authorized to do business in
    20     this Commonwealth. The bond shall be a penal bond conditioned
    21     on compliance with this chapter and subject to forfeiture by
    22     the department and shall run to the Commonwealth of
    23     Pennsylvania for its use. The bond shall also be for the use
    24     of any person against the mortgage broker for failure to
    25     carry out the terms of any provision for which advance fees
    26     are paid. If such person is aggrieved, he may, with the
    27     written assent of the department, recover advance fees and
    28     costs from the bond by filing a claim with the surety company
    29     or maintaining an action on the bond. In the alternative, an
    30     aggrieved person may recover advance fees and costs by filing
    20070S0487B0529                 - 10 -     

     1     a formal complaint against the mortgage broker with the
     2     department which shall adjudicate the matter. Such an
     3     adjudication shall be binding upon the surety company and
     4     enforceable by the department in Commonwealth Court and by an
     5     aggrieved person in any court. Any aggrieved person seeking
     6     to recover advance fees and costs from a bond that has
     7     already been forfeited by the department or which the
     8     department is in the process of forfeiting may recover
     9     payment on such bond if, after filing a petition with the
    10     department, the department assents to his requested payment
    11     or portion thereof. The department may pay the aggrieved
    12     person from the bond proceeds it recovered in such case.
    13     Nothing in this section shall be construed as limiting the
    14     ability of any court or district justice to award to any
    15     aggrieved person other damages, court costs and attorney fees
    16     as permitted by law, but those claims that are not advance
    17     fees or related costs may not be recovered from the bond. The
    18     department, in its discretion, may assent to or order pro
    19     rata or other recovery on the bond for any aggrieved person
    20     if claims against the bond may or do exceed its full monetary
    21     amount. No bond shall comply with the requirements of this
    22     section unless it contains a provision that it shall not be
    23     canceled for any cause unless notice of intention to cancel
    24     is given to the department at least 30 days before the day
    25     upon which cancellation shall take effect. Cancellation of
    26     the bond shall not invalidate the bond regarding the period
    27     of time it was in effect.
    28         (2)  Mortgage brokers who can demonstrate to the
    29     satisfaction of the department that they do not accept
    30     advance fees shall be exempt from the bond requirement of
    20070S0487B0529                 - 11 -     

     1     this subsection.
     2     [(c.1)  Limited mortgage broker's license.--The department
     3  shall issue a limited mortgage broker's license applied for
     4  pursuant to this chapter if the applicant establishes that he is
     5  an individual who operates from one location and maintains no
     6  branch offices and can demonstrate to the satisfaction of the
     7  department that he accepts or collects no advance fees.]
     8     (c.2)  Mortgage originator license.--A mortgage originator
     9  shall be an employee of a single mortgage banker, mortgage
    10  broker or loan correspondent licensed under this chapter, which
    11  licensee shall directly supervise, control and maintain
    12  responsibility for the acts and omissions of the mortgage
    13  originator. A mortgage originator shall be assigned to a
    14  licensed location of the employer licensee.
    15     (d)  [Foreign corporation.--] Requirements for out-of-State
    16  applicants.--
    17         (1)  If the applicant is [a foreign corporation] not a
    18     resident of this Commonwealth, that [corporation] applicant
    19     shall be authorized to do business in this Commonwealth in
    20     accordance with the law of this Commonwealth regulating
    21     corporations and other entities conducting business in this
    22     Commonwealth and shall maintain at least one office in this
    23     Commonwealth which is the office that shall be licensed as
    24     the principal place of business for the purposes of this
    25     chapter. [A foreign corporation which will act only in the
    26     capacity of a] A wholesale table funder shall be exempt from
    27     the requirement that it maintain at least one office in this
    28     Commonwealth. [The corporation]
    29         (2)  An applicant shall file with the application an
    30     irrevocable consent, duly acknowledged, that suits and
    20070S0487B0529                 - 12 -     

     1     actions may be commenced against that [licensee] person in
     2     the courts of this Commonwealth by the service of process of
     3     any pleading upon the department in the usual manner provided
     4     for service of process and pleadings by the statutes and
     5     court rules of this Commonwealth. The consent shall provide
     6     that this service shall be as valid and binding as if service
     7     had been made personally upon the [licensee] person in this
     8     Commonwealth. In all cases where process or pleadings are
     9     served upon the department pursuant to the provisions of this
    10     section, such process or pleadings shall be served in
    11     triplicate; one copy shall be filed in the [Office of the
    12     Secretary of Banking] department and the others shall be
    13     forwarded by the department, by certified or registered mail,
    14     return receipt requested, to the last known principal place
    15     of business in the Commonwealth and to the [corporation's]
    16     person's principal place of business.
    17     [(e)  Education.--To maintain a mortgage banker's, a loan
    18  correspondent's or a mortgage broker's license, the applicant or
    19  licensee shall demonstrate to the satisfaction of the secretary
    20  that at least one individual from each licensed office has
    21  attended a minimum of six hours of such continuing education
    22  each year. To maintain a limited mortgage broker's license, the
    23  licensee shall demonstrate to the satisfaction of the secretary
    24  that he has attended at least two hours of continuing education
    25  each year. The secretary shall delineate the requirements for
    26  such continuing education by regulation within three years of
    27  the effective date of this act. The secretary may review and
    28  approve continuing education programs and providers to satisfy
    29  the continuing education requirement. The secretary may charge
    30  providers of continuing education programs a fee, to be
    20070S0487B0529                 - 13 -     

     1  determined by the secretary, for department review of continuing
     2  education programs and providers.]
     3     (e)  Education requirements.--
     4         (1)  In order to obtain a license under this chapter, an
     5     applicant shall submit to the department with its application
     6     evidence that the applicant or an officer of the applicant
     7     has successfully completed a minimum of 12 hours of
     8     instruction and a testing program regarding the first
     9     mortgage loan business and the provisions of this chapter,
    10     the act of January 30, 1974 (P.L.13, No.6), referred to as
    11     the Loan Interest and Protection Law, and relevant Federal
    12     law including the Real Estate Settlement Procedures Act of
    13     1974 (88 Stat. 1724, 12 U.S.C. §§ 2601-2617), the Truth in
    14     Lending Act (82 Stat. 146, 15 U.S.C. §§ 1601-1667f), and the
    15     Equal Credit Opportunity Act (88 Stat. 1521, 15 U.S.C. §§
    16     1691-1691f).
    17         (2)  In order to maintain a license:
    18             (i)  A mortgage banker, mortgage broker or loan
    19         correspondent shall demonstrate to the satisfaction of
    20         the department that at least one individual from each
    21         licensed office that is not a mortgage originator, and
    22         all mortgage originators employed by the licensee, have
    23         attended a minimum of six hours of continuing education
    24         each year.
    25             (ii)  A mortgage originator licensee shall
    26         demonstrate to the satisfaction of the department that he
    27         has attended a minimum of six hours of continuing
    28         education each year.
    29         (3)  The department shall delineate the requirements for
    30     prequalification education, testing and continuing education
    20070S0487B0529                 - 14 -     

     1     by regulation, including by permitting in-house
     2     prequalification education, testing and continuing education.
     3     The department may review and approve education programs and
     4     providers to satisfy the education requirements. The
     5     department may charge providers of education programs a fee,
     6     to be determined by the department, for department review of
     7     education programs and providers.
     8     (f)  Duty to update.--All applicants and licensees shall be
     9  required to provide the department with written notice of the
    10  change in any information contained in an application for a
    11  license or for any renewal of a license within ten days of an
    12  applicant or licensee becoming aware of such change.
    13     (g)  License renewals.--Licenses shall be issued for terms of
    14  12 months and may be renewed by the department each year on a
    15  schedule set by the department upon application by the licensee
    16  and the payment of all applicable renewal fees. The licensee
    17  shall demonstrate to the department that it is conducting the
    18  first mortgage loan business in accordance with the requirements
    19  of this chapter and that the directors, officers, partners,
    20  employees, agents and ultimate equitable owners of 10% or more
    21  of the licensee continue to meet all of the initial requirements
    22  for licensure required by this chapter unless otherwise
    23  determined by the department.
    24  Section 305.  Annual license fee.
    25     [(a)  General rule.--A mortgage banker, mortgage broker or
    26  applicant shall pay to the department at the time an application
    27  is filed an initial license fee for the principal place of
    28  business and an additional license fee for each branch office as
    29  provided for in section 603-A of the act of April 9, 1929
    30  (P.L.177, No.175), known as The Administrative Code of 1929. On
    20070S0487B0529                 - 15 -     

     1  or before July 1 of each year and thereafter, a licensee shall
     2  pay a license renewal fee for the principal place of business
     3  and an additional license renewal fee for each branch office as
     4  provided for in section 603-A of The Administrative Code of
     5  1929. An applicant for a license to operate as a loan
     6  correspondent shall pay the department the same fee for the
     7  initial license for principal place of business, each branch
     8  office and annual license renewal as provided for mortgage
     9  bankers licensed under section 603-A of The Administrative Code
    10  of 1929. An applicant for a license to operate as a limited
    11  mortgage broker shall pay to the department at the time an
    12  application is filed an initial license fee of $250. On or
    13  before July 1 of each year thereafter, a limited mortgage broker
    14  licensee shall pay a renewal fee of $200.
    15     (b)  Recovery of costs.--No abatement of any license fee
    16  shall be made if the license is issued for a period of less than
    17  one year. The department shall be entitled to recover any cost
    18  of investigation in excess of license or renewal fees from the
    19  licensee or from any person who is not licensed under this
    20  chapter but who is presumed to be engaged in business
    21  contemplated by this chapter.]
    22     (a)  Initial application fees.--An applicant shall pay to the
    23  department at the time an application is filed an initial
    24  application fee as follows:
    25         (1)  for mortgage bankers and loan correspondents, $1,500
    26     for the principal place of business in this Commonwealth and
    27     an additional fee of $1,500 for each branch office;
    28         (2)  for mortgage brokers, $1,000 for the principal place
    29     of business in this Commonwealth and an additional fee of
    30     $250 for each branch office; or
    20070S0487B0529                 - 16 -     

     1         (3)  for mortgage originators, $200.
     2     (b)  Renewal application fees.--Prior to each annual renewal
     3  of a license, a licensee shall pay to the department a license
     4  renewal fee as follows:
     5         (1)  for mortgage bankers and loan correspondents, $750
     6     for the principal place of business in this Commonwealth and
     7     an additional fee of $750 for each branch office;
     8         (2)  for mortgage brokers, $500 for the principal place
     9     of business in this Commonwealth and an additional fee of
    10     $250 for each branch office; or
    11         (3)  for mortgage originators, $200.
    12     (c)  Fee limitation.--For a licensee that employs 50 or more
    13  mortgage originators, the initial application fee and license
    14  renewal fee shall be $50 per mortgage originator, to a maximum
    15  of $10,000 total per year.
    16     (d)  No abatement of fee.--No abatement of a licensee fee
    17  shall be made if the license is issued for a period of less than
    18  one year.
    19  Section 306.  Issuance of license.
    20     (a)  Time limit.--Within 60 days after a complete application
    21  is received, the department shall either issue a license or, for
    22  any reason for which the department may suspend, revoke or
    23  refuse to renew a license as provided for by section 313, refuse
    24  to issue a license. Upon receipt of an application for license,
    25  the department shall conduct such investigation of the applicant
    26  or a director, officer, partner, employee, agent or ultimate
    27  equitable owner of 10% or more of the applicant as it deems
    28  necessary. [to determine that the applicant and its officers,
    29  directors and principals are of good character and ethical
    30  reputation.] The 60-day time limit specified in this subsection
    20070S0487B0529                 - 17 -     

     1  may be extended by the department for an additional 30 days if
     2  the department determines that such extension is necessary. The
     3  department shall provide written notification to any applicant
     4  whose application review has been extended and include the final
     5  date by which a decision shall be rendered regarding the
     6  application.
     7     (b)  Appeal of denial.--If the department refuses to issue a
     8  license, it shall notify the applicant, in writing, of the
     9  denial and the reason therefor and of the applicant's right to
    10  appeal from such action to the [Commonwealth Court] secretary.
    11  An appeal from the department's refusal to approve an
    12  application for a license shall be filed by the applicant within
    13  30 days of notice thereof.
    14     (c)  Contents of license.--Each license issued by the
    15  department shall specify:
    16         (1)  The name and address of the licensee, the address so
    17     specified to be that of the licensee's principal place of
    18     business within this Commonwealth or, for a licensee acting
    19     only in the capacity of a wholesale table funder, either in
    20     or outside of this Commonwealth.
    21         (2)  The licensee's reference number, which may remain
    22     the same from year to year despite variations in annual
    23     license numbers which may result from the renewal of licenses
    24     by mechanical techniques.
    25         (3)  Such other information as the department shall
    26     require to carry out the purposes of this chapter.
    27     (d)  Denial of license due to conviction.--
    28         (1)  The department may deny a license if it finds that
    29     the applicant or any person who is a director, officer,
    30     partner, agent, employee or ultimate equitable owner of 10%
    20070S0487B0529                 - 18 -     

     1     or more of the applicant has been convicted of a
     2     [misdemeanor] crime of moral turpitude or felony in any
     3     jurisdiction or of a crime which, if convicted in this
     4     Commonwealth, would constitute a [misdemeanor] crime of moral
     5     turpitude or felony under the laws of this Commonwealth. For
     6     the purposes of this chapter, a person shall be deemed to
     7     have been convicted of a crime if the person:
     8             (i)  shall have pleaded guilty or nolo contendere to
     9         a charge thereof before a court or Federal magistrate
    10         [or]; or
    11             (ii)  shall have been found guilty thereof by the
    12         decision or judgment of a court or Federal magistrate or
    13         by the verdict of a jury, irrespective of the
    14         pronouncement of sentence or the suspension thereof,
    15         unless the pleas of guilty or nolo contendere or the
    16         decision, judgment or verdict shall have been set aside,
    17         vacated, reversed or otherwise abrogated by lawful
    18         judicial process.
    19         (2)  A license under this chapter shall be deemed to be a
    20     covered license within the meaning of section 405 of the act
    21     of May 15, 1933 (P.L.565, No.111), known as the Department of
    22     Banking Code. The department shall notify a licensee if a
    23     covered individual within the meaning of section 405 of the
    24     Department of Banking Code that is or will be employed or
    25     contracted by the licensee has a criminal background that
    26     renders the employee unfit for employment in the first
    27     mortgage loan business.
    28     (e)  Denial of license for other reason.--The department may
    29  deny a license or otherwise restrict a license if it finds
    30  [that, within two years prior to or from the date of the
    20070S0487B0529                 - 19 -     

     1  application,] the applicant or any person who is a director,
     2  officer, partner, agent, employee or ultimate equitable owner of
     3  10% or more of the applicant:
     4         (1)  has had a license application or license issued by
     5     the department denied, not renewed, suspended or revoked;
     6         (2)  is the subject of an order of the department;
     7     [denying, suspending or revoking a license as a mortgage
     8     banker, loan correspondent, mortgage broker or limited
     9     mortgage broker; or]
    10         (3)  has violated or failed to comply with any provision
    11     of this chapter or any [rule] regulation, statement of policy
    12     or order of the department[.];
    13         (4)  does not possess the financial responsibility,
    14     character, reputation, integrity and general fitness to
    15     command the confidence of the public and to warrant the
    16     belief that the first mortgage loan business will be operated
    17     lawfully, honestly, fairly and within the legislative intent
    18     of this chapter and in accordance with the general laws of
    19     this Commonwealth; or
    20         (5)  has an outstanding debt to the Commonwealth or any
    21     Commonwealth agency.
    22     (f)  Imposing conditions on licenses.--The department may
    23  impose conditions on the issuance of any license under this
    24  chapter. If the department determines that conditions imposed
    25  upon a licensee have not been fulfilled, the department may take
    26  any action authorized under this chapter against such licensee
    27  that the department deems necessary.
    28     (g)  Conditional licenses.--In the case of mortgage
    29  originator applicants, the department may issue mortgage
    30  originator licenses effective immediately upon receipt of an
    20070S0487B0529                 - 20 -     

     1  application, which licenses shall be conditional licenses issued
     2  under this subsection.
     3  Section 307.  License duration.
     4     A license issued by the department shall:
     5         (1)  Be renewed on [July 1 of each year upon payment of
     6     the annual renewal fee and after a determination that the
     7     licensee is conducting business in accordance with the
     8     provisions of this chapter is made by the department.]
     9     completion of the requirements of section 304(g). No refund
    10     of any portion of the license fee shall be made if the
    11     license is voluntarily surrendered to the department or
    12     suspended or revoked by the department prior to its
    13     expiration date.
    14         (2)  Be immediately invalid if the [mortgage banker's
    15     corporate charter is voided in accordance with the provisions
    16     of any law of this Commonwealth or any other state.]
    17     licensee's authority to conduct business is voided under any
    18     law of this Commonwealth or any other state, unless the
    19     licensee demonstrates to the satisfaction of the department
    20     that the applicable court or governmental entity was clearly
    21     erroneous in voiding the licensee's authority to conduct
    22     business.
    23         (3)  Not be assignable or transferable by operation of
    24     law or [otherwise without the written consent of the
    25     department] in any other fashion.
    26  Section 308.  Licensee requirements.
    27     (a)  Requirements on licensee.--A licensee shall:
    28         (1)  [Conspicuously] In the case of a mortgage banker,
    29     mortgage broker or loan correspondent, conspicuously display
    30     [its license] at each licensed place of business[.] its
    20070S0487B0529                 - 21 -     

     1     license and copies of the licenses of all mortgage
     2     originators assigned to that location. In the case of a
     3     mortgage originator, the license shall be maintained in the
     4     immediate possession of the licensee whenever the licensee is
     5     engaged in the mortgage loan business.
     6         (2)  Maintain, at its principal place of business within
     7     this Commonwealth, or at such place within or outside this
     8     Commonwealth if agreed to by the [Secretary of Banking or the
     9     commission] department, either the original or a copy of such
    10     books, accounts, records and documents, or electronic or
    11     other similar access thereto, of the business conducted under
    12     the license as may be prescribed by the department [or
    13     commission] to enable [them] it to determine whether the
    14     business of the licensee is being conducted in accordance
    15     with the provisions of this chapter and the regulations,
    16     statements of policy and orders[, rules and regulations]
    17     issued under this chapter. The department, at its
    18     determination, shall have free access to and authorization to
    19     examine records maintained within or outside of this
    20     Commonwealth. The costs of the examination, including travel
    21     costs, shall be borne by the licensee. The [secretary]
    22     department may deny or revoke the authority to maintain
    23     records outside of this Commonwealth for good cause in the
    24     interest of consumer protection for Commonwealth borrowers,
    25     including for the licensee's failure to provide books,
    26     accounts, records or documents to the department upon
    27     request.
    28         (3)  [Annually] In the case of a mortgage banker,
    29     mortgage broker or loan correspondent, annually, before May
    30     1, file a report with the department or commission which
    20070S0487B0529                 - 22 -     

     1     shall set forth such information as the department or
     2     commission shall require concerning the business conducted as
     3     a licensee during the preceding calendar year. The report
     4     shall be in writing, under oath, and on a form provided by
     5     the department. Licensees failing to file the required report
     6     by May 1 shall be subject to a penalty of $100 each day after
     7     May 1 until the report is filed.
     8         (4)  Be subject to examination by the department [or
     9     commission] at the discretion of the department [or
    10     commission] at which time the department [or commission]
    11     shall have free access, during regular business hours, to the
    12     licensee's place or places of business in this Commonwealth
    13     and to all instruments, documents, accounts, books and
    14     records which pertain to a licensee's first mortgage loan
    15     business, whether maintained in or outside of this
    16     Commonwealth. The department [or commission] may examine a
    17     licensee at any time if the department [or commission] deems
    18     such examination to be necessary or desirable. The cost of
    19     any such examination shall be borne by the licensee.
    20         (5)  Comply with all provisions of the act of January 30,
    21     1974 (P.L.13, No.6), referred to as the Loan Interest and
    22     Protection Law, provided, however, that this shall not be
    23     deemed an override of section 501 of the Depository
    24     Institutions Deregulation and Monetary Control Act of 1980
    25     (94 Stat. 161, 12 U.S.C. § 1735f-7a) or the Alternative
    26     Mortgage Transaction Parity Act of 1982 (96 Stat. 1545, 12
    27     U.S.C. § 3801 et seq.).
    28         (6)  Comply with the provisions of the act of December
    29     23, 1983 (P.L.385, No.91), entitled "An act amending the act
    30     of December 3, 1959 (P.L.1688, No.621), entitled, as amended,
    20070S0487B0529                 - 23 -     

     1     'An act to promote the health, safety and welfare of the
     2     people of the Commonwealth by broadening the market for
     3     housing for persons and families of low and moderate income
     4     and alleviating shortages thereof, and by assisting in the
     5     provision of housing for elderly persons through the creation
     6     of the Pennsylvania Housing Finance Agency as a public
     7     corporation and government instrumentality; providing for the
     8     organization, membership and administration of the agency,
     9     prescribing its general powers and duties and the manner in
    10     which its funds are kept and audited, empowering the agency
    11     to make housing loans to qualified mortgagors upon the
    12     security of insured and uninsured mortgages, defining
    13     qualified mortgagors and providing for priorities among
    14     tenants in certain instances, prescribing interest rates and
    15     other terms of housing loans, permitting the agency to
    16     acquire real or personal property, permitting the agency to
    17     make agreements with financial institutions and Federal
    18     agencies, providing for the purchase by persons of low and
    19     moderate income of housing units, and approving the sale of
    20     housing units, permitting the agency to sell housing loans,
    21     providing for the promulgation of regulations and forms by
    22     the agency, prescribing penalties for furnishing false
    23     information, empowering the agency to borrow money upon its
    24     own credit by the issuance and sale of bonds and notes and by
    25     giving security therefor, permitting the refunding,
    26     redemption and purchase of such obligations by the agency,
    27     prescribing remedies of holders of such bonds and notes,
    28     exempting bonds and notes of the agency, the income
    29     therefrom, and the income and revenues of the agency from
    30     taxation, except transfer, death and gift taxes; making such
    20070S0487B0529                 - 24 -     

     1     bonds and notes legal investments for certain purposes; and
     2     indicating how the act shall become effective,' providing for
     3     homeowner's emergency assistance."
     4         (7)  Provide for periodic accounting of any escrow
     5     accounts held by the licensee to the borrowers not less than
     6     annually, showing the amounts received from the borrower and
     7     the amounts disbursed.
     8         (8)  Refund all fees, other than those fees paid by the
     9     licensee to a third party, paid by an applicant borrower when
    10     a mortgage loan is not produced within the time specified by
    11     the mortgage banker, loan correspondent[,] or mortgage broker
    12     [or limited mortgage broker] at the rate, term and overall
    13     cost agreed to by the borrower, provided, however, that this
    14     provision shall not apply when the failure to produce a loan
    15     is due solely to the borrower's negligence, his refusal to
    16     accept and close on a loan commitment or his refusal or
    17     inability to provide information necessary for processing,
    18     including, but not limited to, employment verifications and
    19     verifications of deposits. The licensee shall disclose to the
    20     borrower, in writing, at the time of a loan application which
    21     fees paid or to be paid are nonrefundable.
    22         (9)  Ensure that all lock-in agreements shall be in
    23     writing and shall contain at least the following provisions:
    24             (i)  The expiration date of the lock-in, if any.
    25             (ii)  The interest rate locked in, if any.
    26             (iii)  The discount points locked in, if any.
    27             (iv)  The [commitment] fee locked in, if any.
    28             (v)  The lock-in fee, if any.
    29         (10)  Include in all advertisements language indicating
    30     that the licensee is licensed by the department. In the case
    20070S0487B0529                 - 25 -     

     1     of a mortgage originator, include in all advertising the name
     2     of the mortgage originator's employer.
     3         (11)  Allow for the evidence of any insurance required in
     4     connection with a loan by a policy or binder or a copy of
     5     either.
     6         (12)  In the case of a mortgage broker, mortgage lender
     7     or mortgage loan correspondent:
     8             (i)  maintain supervision and control of, and
     9         responsibility for, the acts and omissions of all
    10         mortgage originators employed by the licensee;
    11             (ii)  maintain a list of all current and former
    12         mortgage originators employed by the licensee and the
    13         dates of such employment; and
    14             (iii)  in the event that a licensee has evidence that
    15         a mortgage originator employed by the licensee has
    16         engaged in any activity that is illegal or in violation
    17         of this chapter or any regulation or statement of policy
    18         promulgated pursuant to this chapter, the licensee shall
    19         provide the department with written notification of such
    20         evidence and the licensee's proposed corrective measures
    21         within 30 days. A licensee shall not be liable to a
    22         mortgage originator in connection with such notification.
    23     (b)  Accounting records.--[After the effective date of this
    24  act, the] The licensee's accounting records must be constructed
    25  and maintained in compliance with generally accepted accounting
    26  principles [if the licensee is a mortgage banker or in such
    27  manner] or as may be provided by regulation [for all other
    28  licensees, and all]. All of the aforementioned instruments,
    29  documents, accounts, books and records shall be kept separate
    30  and apart from the records of any other business conducted by
    20070S0487B0529                 - 26 -     

     1  the licensee and shall be preserved and kept available for
     2  investigation or examination by the department [or commission]
     3  for at least two years after a mortgage loan has been paid in
     4  full. The provisions of this subsection shall not apply to any
     5  instrument, document, account, book or record that is assigned,
     6  sold or transferred to another person, nor shall the two-year
     7  requirement apply to an instrument or document which must be
     8  returned to a borrower at the time a mortgage loan is paid in
     9  full.
    10     (c)  Copies.--If copies of instruments, documents, accounts,
    11  books or records are maintained under subsection (a)(2), they
    12  may be photostatic, microfilm or electronic copies or copies
    13  provided in some other manner approved by the [Secretary of
    14  Banking or the commission] department, as long as access to
    15  information required by the [secretary or commission] department
    16  exists electronically at all times within this Commonwealth.
    17     [(d)  Limited powers.--The powers conferred upon the
    18  commission by this section, excluding subsection (a)(1), shall
    19  only be exercised by the commission in relation to persons
    20  licensed pursuant to the provisions of the act of February 19,
    21  1980 (P.L.15, No.9), known as the Real Estate Licensing and
    22  Registration Act, who are subject to this section under section
    23  303(b)(3), and the exercise of such power by the commission in
    24  relation to such persons shall be exclusive.]
    25  Section 309.  Licensee limitations.
    26     (a)  Prohibitions.--A licensee shall not:
    27         (1)  Transact any business subject to the provisions of
    28     this chapter under any other name except those designated in
    29     its license[.] or registered or otherwise qualified as a
    30     fictitious name. A mortgage originator may not use any name
    20070S0487B0529                 - 27 -     

     1     other than the mortgage originator's personal legal name. A
     2     licensee that changes its name or place or places of business
     3     shall [immediately] notify the department within ten days of
     4     the change, which shall issue a certificate, if appropriate,
     5     to the licensee which shall specify the licensee's new name
     6     or address.
     7         (2)  Conduct any business other than any business
     8     regulated by the department in any place of business licensed
     9     pursuant to this chapter without at least 90 days' prior
    10     written notification to the department.
    11         (3)  Disburse the proceeds of a mortgage loan in any form
    12     other than cash, electronic fund transfer, certified check or
    13     cashier's check where such proceeds are disbursed by the
    14     licensee to a closing agent. This paragraph shall not be
    15     construed as requiring a lender to utilize a closing agent
    16     and shall not apply to disbursements by check directly from
    17     the licensee's account payable to the borrower, borrower
    18     designees or other parties due funds from the closing.
    19         (4)  In the case of a loan correspondent, service
    20     mortgage loans.
    21         (5)  In the case of a mortgage broker or [limited
    22     mortgage broker] mortgage originator, commit to close or
    23     close mortgage loans in its own name, service mortgage loans,
    24     enter into lock-in agreements or collect lock-in fees,
    25     provided, however, that a mortgage broker or [limited
    26     mortgage broker] mortgage originator can provide a lender's
    27     lock-in agreement to a borrower on behalf of that lender and
    28     collect lock-in fees on the lender's behalf payable to that
    29     lender.
    30         (6)  In the case of a mortgage originator, accept any
    20070S0487B0529                 - 28 -     

     1     fees from consumers in the mortgage originator's own name. A
     2     mortgage originator may accept fees payable to the mortgage
     3     originator's employer licensee and fees payable to third-
     4     party entities on behalf of the mortgage originator's
     5     employer licensee. A mortgage originator may not accept
     6     advance fees payable to the mortgage originator's employer
     7     licensee unless such licensee is authorized to collect
     8     advance fees under this chapter.
     9     (b)  Authority to close loans in attorneys' and title
    10  insurance companies or agencies' offices.--Nothing contained in
    11  this chapter shall prohibit any licensee or person exempt from
    12  licensure hereunder from closing any loans made under the
    13  provisions of this chapter in the offices of attorneys-at-law
    14  licensed by and located in this Commonwealth and title insurance
    15  companies or agencies licensed by and located in this
    16  Commonwealth.
    17  Section 310.  Authority of department or commission.
    18     [(a)  Department regulations.--Except as provided in
    19  subsection (b), the department shall have the authority to issue
    20  rules and regulations and orders as may be necessary for the
    21  proper conduct of the business of a mortgage banker, loan
    22  correspondent, a mortgage broker or limited mortgage broker and
    23  for the enforcement of this chapter, including, but not limited
    24  to, cease and desist orders, notices of fines and such other
    25  orders as the department in its discretion may issue.
    26     (b)  Joint regulations.--The department and the commission
    27  shall have the authority to jointly issue rules and regulations
    28  as may be necessary to carry out the purposes of sections 308,
    29  310 and 314(b), excluding section 308(a)(1). Initial rules and
    30  regulations shall be jointly issued by the department and the
    20070S0487B0529                 - 29 -     

     1  commission within 180 days after the effective date of this
     2  subsection.
     3     (c)  Powers.--The department and the commission shall have
     4  the authority to:
     5         (1)  Examine any instrument, document, account, book,
     6     record or file of a licensee or any other person, or make
     7     such other investigation as may be necessary to administer
     8     the provisions of this chapter.
     9         (2)  Conduct administrative hearings on any matter
    10     pertaining to this chapter, issue subpoenas to compel the
    11     attendance of witnesses and the production of instruments,
    12     documents, accounts, books and records at any such hearing,
    13     which may be retained by the department or commission until
    14     the completion of all proceedings in connection with which
    15     they were produced, and administer oaths and affirmations to
    16     any person whose testimony is required. In the event a person
    17     fails to comply with a subpoena issued by the department or
    18     commission or to testify on any matter concerning which he
    19     may be lawfully interrogated, on application by the
    20     department or commission, the Commonwealth Court may issue an
    21     order requiring the attendance of such person, the production
    22     of instruments, documents, accounts, books or records or the
    23     giving of testimony.
    24         (3)  Request and receive any information or records of
    25     any kind, including a report of criminal history record
    26     information, from any Federal, State, local or foreign
    27     government entity, regarding any applicant for a license,
    28     licensee or any person related in any way to the business of
    29     such applicant or licensee, at a cost to be paid by the
    30     applicant or licensee.
    20070S0487B0529                 - 30 -     

     1     (d)  Limited powers.--The powers conferred upon the
     2  commission by subsection (c) shall only be exercised by the
     3  commission in relation to persons licensed pursuant to the
     4  provisions of the act of February 19, 1980 (P.L.15, No.9), known
     5  as the Real Estate Licensing and Registration Act, who are
     6  subject to subsection (c) under section 303(b)(3) and the
     7  exercise of such power by the commission in relation to such
     8  persons shall be exclusive.]
     9     (a)  General authority.--The department shall have the
    10  authority to:
    11         (1)  Examine any instrument, document, account, book,
    12     record or file of a licensee or any person having a
    13     connection to the licensee or make such other investigation
    14     as may be necessary to administer the provisions of this
    15     chapter. Pursuant to this authority, the department may
    16     remove any instrument, document, account, book, record or
    17     file of a licensee to a location outside of the licensee's
    18     office location. The costs of the examination shall be borne
    19     by the licensee or the entity subject to the examination.
    20         (2)  Conduct administrative hearings on any matter
    21     pertaining to this chapter, issue subpoenas to compel the
    22     attendance of witnesses and the production of instruments,
    23     documents, accounts, books and records at any such hearing.
    24     The instruments, documents, accounts, books and records may
    25     be retained by the department until the completion of all
    26     proceedings in connection with which the materials were
    27     produced. A department official may administer oaths and
    28     affirmations to a person whose testimony is required. In the
    29     event a person fails to comply with a subpoena issued by the
    30     department or to testify on a matter concerning which he may
    20070S0487B0529                 - 31 -     

     1     be lawfully interrogated, on application by the department,
     2     the Commonwealth Court may issue an order requiring the
     3     attendance of the person, the production of instruments,
     4     documents, accounts, books and records and the giving of
     5     testimony.
     6         (3)  Request and receive information or records of any
     7     kind, including reports of criminal history record
     8     information from any Federal, state, local or foreign
     9     government entity regarding an applicant for a license,
    10     licensee or person related in any way to the business of the
    11     applicant or licensee, at a cost to be paid by the applicant
    12     or licensee.
    13         (4)  Require a licensee or nonlicensee to pay the
    14     department's costs incurred while conducting an investigation
    15     of the licensee or nonlicensee for purposes of issuance or
    16     renewal of a license or for any violation of this chapter,
    17     regardless of whether such costs are in excess of license or
    18     renewal fees paid by a licensee.
    19         (5)  Issue regulations, statements of policy or orders as
    20     may be necessary for the proper conduct of the first mortgage
    21     loan business by licensees, the issuance and renewal of
    22     licenses and the enforcement of this chapter.
    23         (6)  Prohibit or permanently remove an individual
    24     responsible for a violation of this chapter from working in
    25     his present capacity or in any other capacity related to
    26     activities regulated by the department.
    27         (7)  Order a person to make restitution for actual
    28     damages to consumers caused by any violation of this chapter.
    29         (8)  Issue cease and desist orders that are effective
    30     immediately, subject to a hearing as specified in subsection
    20070S0487B0529                 - 32 -     

     1     (b) within 14 days of the issuance of the order.
     2         (9)  Impose such other conditions as the department deems
     3     appropriate.
     4     (b)  Hearings.--A person aggrieved by a decision of the
     5  department may appeal the decision of the department to the
     6  secretary. The appeal shall be conducted under 2 Pa.C.S Ch. 5
     7  Subch. A (relating to practice and procedure of Commonwealth
     8  agencies).
     9     (c)  Injunctions.--The department may maintain an action for
    10  an injunction or other process against a person to restrain and
    11  prevent the person from engaging in an activity violating this
    12  chapter.
    13     (d)  Final orders.--A decision of the secretary shall be a
    14  final order of the department and shall be enforceable in a
    15  court of competent jurisdiction. The department may publish
    16  final adjudications issued under this section, subject to
    17  redaction or modification to preserve confidentiality.
    18     (e)  Appeals.--A person aggrieved by a decision of the
    19  secretary may appeal the decision under 2 Pa.C.S. Ch. 7 Subch. A
    20  (relating to judicial review of Commonwealth agency action).
    21     (f)  Orders affecting mortgage originators.--An order issued
    22  against a licensee is applicable to the mortgage originators
    23  employed by the licensee.
    24     Section 3.  Section 311 of the act, amended June 25, 2001
    25  (P.L.621, No.55), is repealed:
    26  [Section 311.  Fees.
    27     (a)  Certain fees prohibited.--No real estate broker or
    28  salesperson who has received a fee, commission or other valuable
    29  consideration in connection with the sale or transfer of real
    30  estate shall be paid or receive a fee or other compensation,
    20070S0487B0529                 - 33 -     

     1  directly or indirectly, for providing mortgage brokering
     2  services in connection with the origination of a mortgage loan
     3  relative to such sale or transfer of real estate, but such
     4  broker or salesperson may receive a fee in connection with such
     5  mortgage loan transaction which shall not exceed an amount as
     6  established by the commission pursuant to this section.
     7     (b)  Regulations.--The commission shall, within 180 days of
     8  the effective date of this subsection, promulgate rules and
     9  regulations establishing the maximum fees which a real estate
    10  broker or salesperson may charge for services rendered in
    11  connection with mortgage brokering services. Said fees shall:
    12         (1)  Be for actual services rendered in connection with
    13     the origination of a mortgage loan.
    14         (2)  Be expressed in terms of dollars or as a percentage
    15     of the mortgage loan being created.
    16     (c)  Formulation procedure.--Prior to the publication of any
    17  notice of proposed rulemaking under this section, the commission
    18  shall hold public hearings to afford any interested party,
    19  including the department, full opportunity to present testimony,
    20  comment thereon and make recommendations regarding the
    21  formulation of such rules and regulations. The department shall
    22  also have 30 days following the close of the hearings to submit
    23  further comments and recommendations to the commission. The
    24  procedure contained in this section shall be in addition to the
    25  requirements contained in the act of June 25, 1982 (P.L.633,
    26  No.181), known as the Regulatory Review Act, and shall not
    27  affect any right the department may have to participate in the
    28  rulemaking process following the commission's publication of
    29  proposed rules and regulations as permitted by that act. In
    30  establishing the maximum fees allowable, the commission shall
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     1  consider the nature of the services performed by the real estate
     2  broker or salesperson and the time required for the performance
     3  thereof.
     4     (d)  Licensing option.--A real estate broker or salesperson
     5  who is also a bona fide mortgage broker, mortgage banker or loan
     6  correspondent who holds himself out publicly as such shall have
     7  the option of being licensed and regulated by the department, in
     8  which case he shall not be subject to the fee limitations
     9  provided for in this section or the rules and regulations
    10  promulgated by the commission hereunder.
    11     (e)  Disclosure.--No real estate broker or salesperson shall
    12  receive a fee, commission or other valuable consideration
    13  pursuant to this section and the regulations promulgated
    14  hereunder unless he makes the following written disclosure to
    15  the buyer in at least ten-point boldface capital letters.
    16             The real estate broker in this transaction who has
    17         offered to assist me in obtaining a mortgage loan has
    18         advised me of the following:
    19             (1)  He does not represent any particular mortgage
    20         lender; or the name of the mortgage lender he represents
    21         is.........................
    22             (2)  I am not required to obtain the mortgage for the
    23         purchase of the real estate from the mortgage banker whom
    24         the broker represents.
    25             (3)  The real estate broker has a fiduciary
    26         obligation to the seller, from whom he will receive a
    27         commission.
    28             (4)  Should the real estate broker violate any of the
    29         provisions of the Real Estate Licensing and Registration
    30         Act or the Mortgage Bankers and Brokers Act I may file a
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     1         complaint with the Pennsylvania Real Estate Commission.]
     2     Section 4.  Sections 313 and 314 of the act, amended June 25,
     3  2001 (P.L.621, No.55), are amended to read:
     4  Section 313.  Suspension, revocation or refusal.
     5     (a)  Departmental action.--The department may suspend, revoke
     6  or refuse to renew any license issued pursuant to this chapter
     7  [after giving 30 days' written notice forwarded to the
     8  licensee's principal place of business, by registered or
     9  certified mail, return receipt requested, stating the
    10  contemplated action and the reason therefor, if the department
    11  shall find, after the licensee has had an opportunity to be
    12  heard, that the] if any fact or condition exists or is
    13  discovered which, if it had existed or had been discovered at
    14  the time of filing of the application for such license, would
    15  have warranted the department in refusing to issue such license
    16  or if a licensee or director, officer, partner, employee or
    17  owner of a licensee has:
    18         (1)  Made any false or material misstatement in his
    19     application or any report or submission required by this
    20     chapter or department regulation, statement of policy or
    21     order.
    22         (2)  Failed to comply with or violated any provision of
    23     this chapter or any rule, regulation, statement of policy or
    24     order promulgated or issued by the department pursuant to
    25     this chapter.
    26         (3)  If licensed under section [304(c)] 304(b.1)(1)(i) or
    27     (c), accepted an advance fee without having obtained the bond
    28     required by section 304(b.1)(1)(i) or (c)(1).
    29         (4)  Become insolvent, meaning that the liabilities of
    30     the applicant or licensee exceed the assets of the applicant
    20070S0487B0529                 - 36 -     

     1     or licensee or that the applicant or licensee cannot meet the
     2     obligations of the applicant or licensee as they mature, or
     3     is in such financial condition that the applicant or licensee
     4     cannot continue in business with safety to the customers of
     5     the applicant or licensee.
     6         (5)  Engaged in dishonest, fraudulent or illegal
     7     practices or conduct in any business or unfair or unethical
     8     practices or conduct in connection with the mortgage
     9     business.
    10         (6)  Been convicted of [a misdemeanor or of a] or plead
    11     guilty or nolo contendere to a crime of moral turpitude
    12     felony.
    13         [(7)  Filed an application for a license which, as of the
    14     date the license was issued or as of the date of an order
    15     denying, suspending or revoking a license, was incomplete in
    16     any material respect or contained any statement that was, in
    17     light of the circumstances under which it was made, false or
    18     misleading with respect to any material fact.]
    19         (8)  Permanently or temporarily been enjoined by a court
    20     of competent jurisdiction from engaging in or continuing any
    21     conduct or practice involving any aspect of the mortgage
    22     business.
    23         (9)  Become the subject of an order of the department
    24     denying, suspending or revoking a license [as a mortgage
    25     banker, mortgage broker, limited mortgage broker or loan
    26     correspondent] under the provisions of this chapter.
    27         (10)  Become the subject of a United States Postal
    28     Service fraud order [that is currently effective and was
    29     issued within the last five years].
    30         (11)  Failed to comply with the requirements of this
    20070S0487B0529                 - 37 -     

     1     chapter to make and keep records prescribed by [rule]
     2     regulation, statement of policy or order of the department,
     3     to produce such records required by the department or to file
     4     any financial reports or other information the department by
     5     [rule] regulation, statement of policy or order may require.
     6         (12)  Become the subject of an order of the department
     7     denying, suspending or revoking a license under the
     8     provisions of any other law administered by the department.
     9         [(13)  Failed to comply with a cease and desist order
    10     entered after notice and opportunity for hearing and issued
    11     by the department within the last five years.]
    12         (14)  Demonstrated negligence or incompetence in
    13     performing any act for which the licensee is required to hold
    14     a license under this chapter.
    15         [(15)  In the case of a limited mortgage broker,
    16     negotiated or placed, either directly or indirectly, a
    17     mortgage loan other than a nonpurchase money mortgage loan as
    18     defined in this chapter.
    19  The hearing and notice provisions of this section shall not
    20  apply if the licensee's corporate charter is voided in
    21  accordance with the provisions of any law of this or any other
    22  state, in which event the department may suspend or revoke the
    23  license.]
    24         (16)  Failed to complete the qualifying or continuing
    25     education as required by section 304(e).
    26         (17)  In the case of a mortgage banker, loan
    27     correspondent or mortgage broker, conducted the first
    28     mortgage loan business through an unlicensed mortgage
    29     originator.
    30         (18)  Failed to comply with the terms of any agreement
    20070S0487B0529                 - 38 -     

     1     under which the department authorizes a licensee to maintain
     2     records at a place other than the licensee's principal place
     3     of business.
     4     (b)  Reinstatement.--The department may subsequently
     5  reinstate a license which has been suspended or revoked or renew
     6  a license which had previously been refused for renewal if the
     7  condition which warranted the original action has been corrected
     8  and the department has reason to believe that such condition is
     9  not likely to occur again and the licensee satisfies the
    10  requirements of this chapter.
    11  Section 314.  Penalties.
    12     (a)  Nonlicensees.--Any person who is not licensed by the
    13  department or is not exempted from the licensing requirements in
    14  accordance with the provisions of this chapter and who engages
    15  in the first loan mortgage business [of a mortgage banker, loan
    16  correspondent, mortgage broker or limited mortgage broker]
    17  commits a felony of the third degree.
    18     (b)  Nonlicensees subject to the provisions of this
    19  chapter.--Any person who is subject to the provisions of this
    20  chapter, even though not licensed hereunder, or any person who
    21  is not licensed by the department or is not exempt from the
    22  licensing requirements, who violates any of the provisions to
    23  which it is subject shall be subject to a fine levied by the
    24  department or commission of up to [$2,000] $10,000 for each
    25  offense. [Any such nonlicensed person who commits three or more
    26  offenses may, at the discretion of the department or commission,
    27  be prohibited from engaging in the first mortgage loan business
    28  unless licensed under this chapter.]
    29     (c)  Violations by licensees.--Any person licensed under the
    30  provisions of this chapter or any director, officer, employee or
    20070S0487B0529                 - 39 -     

     1  agent of a licensee who shall violate the provisions of this
     2  chapter or shall direct or consent to such violations shall be
     3  subject to a fine levied by the department of up to [$2,000]
     4  $10,000 for each offense.
     5     [(d)  Limited powers.--The powers conferred upon the
     6  commission by subsection (b) shall only be exercised by the
     7  commission in relation to persons licensed pursuant to the
     8  provisions of the act of February 19, 1980 (P.L.15, No.9), known
     9  as the Real Estate Licensing and Registration Act, who are
    10  subject to subsection (b) under section 303(b)(3) and the
    11  exercise of such power by the commission in relation to such
    12  persons shall be exclusive.]
    13     Section 5.  Sections 316 and 317 of the act, amended June 25,
    14  2001 (P.L.621, No.55) are repealed:
    15  [Section 316.  Referral fees.
    16     Nothing in this chapter shall permit a real estate broker or
    17  salesperson, who receives a fee, commission or other valuable
    18  consideration relating to the sale of residential real property,
    19  to be paid or receive a finder's fee or a referral fee for the
    20  referral of a mortgage loan to a lender in connection with that
    21  sale, whether or not the real estate broker or salesperson is
    22  licensed and regulated by the department.
    23  Section 317.  Real Estate Recovery Fund.
    24     Any person injured by the wrongful act, default or
    25  misrepresentation of a person engaged in the activities of a
    26  mortgage broker who is exempt from licensure under this chapter
    27  by virtue of being licensed pursuant to the act of February 19,
    28  1980 (P.L.15, No.9), known as the Real Estate Licensing and
    29  Registration Act, shall be entitled to seek recovery from the
    30  Real Estate Recovery Fund established by the Real Estate
    20070S0487B0529                 - 40 -     

     1  Licensing and Registration Act notwithstanding the fact that
     2  such wrongful act, default or misrepresentation occurred in
     3  conjunction with mortgage-brokering activities subject, however,
     4  to all other terms and conditions of the Real Estate Licensing
     5  and Registration Act regarding recovery from that fund.]
     6     Section 6.  This act shall take effect in 60 days.
















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