PRINTER'S NO. 529
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 20070S0487B0529 - 34 -
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 20070S0487B0529 - 35 -
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. B2L67MSP/20070S0487B0529 - 41 -