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        PRIOR PRINTER'S NOS. 529, 1613                PRINTER'S NO. 1753

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 487 Session of 2007


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

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

                                     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:


     1  Section 302.  Definitions.
     2     The following words and phrases when used in this chapter
     3  shall have the meanings given to them in this section unless the
     4  context clearly indicates otherwise:
     5     * * *
     6     "Applicant."  A person who applies for a license under this
     7  chapter.
     8     "Banking institution."  A State-chartered bank, bank and
     9  trust company, savings bank, private bank, national bank, State
    10  or federally chartered savings association or a subsidiary of
    11  any of the entities under this definition.
    12     * * *
    13     ["Commission."  The State Real Estate Commission.
    14     "Finder's fee" or "referral fee."  Any payment of money or
    15  other consideration for the referral of a mortgage loan to a
    16  lender, but shall not include consideration paid for goods or
    17  facilities actually furnished or services actually performed.]
    18     * * *
    19     ["Limited mortgage broker."  An individual who directly or
    20  indirectly negotiates or places nonpurchase money mortgage loans
    21  for others in the primary market for consideration.]
    22     * * *
    23     "Mortgage originator."  An individual not licensed as a
    24  mortgage banker, mortgage broker or loan correspondent under
    25  this chapter who solicits, accepts or offers to accept mortgage
    26  loan applications or negotiates mortgage loan terms in other
    27  than a clerical or ministerial capacity. The term does not
    28  include directors, partners or ultimate equitable owners of 10%
    29  or more of a licensee.
    30     ["Nonpurchase money mortgage loan."  A mortgage loan the
    20070S0487B1753                  - 2 -     

     1  proceeds of which are not used to finance the purchase of the
     2  real property securing the mortgage loan.]
     3     "Person."  An individual, association, joint venture or
     4  joint-stock company, partnership, limited partnership, limited
     5  partnership association, limited liability company, business
     6  corporation, nonprofit corporation, or any other group of
     7  individuals, however organized.
     8     * * *
     9     Section 2.  Sections 303, 304, 305, 306, 307, 308, 309 and
    10  310 of the act, amended June 25, 2001 (P.L.621, No.55), are
    11  amended to read:
    12  Section 303.  License requirements and exemptions.
    13     (a)  License required.--On and after the effective date of
    14  this act, no person shall [act as a mortgage banker, loan
    15  correspondent, mortgage broker or limited mortgage broker]
    16  engage in the first mortgage loan business in this Commonwealth
    17  without a license as provided for in this chapter.[, provided,
    18  however, that any person licensed as a mortgage banker may also
    19  act as a loan correspondent or mortgage broker and any person
    20  licensed as a loan correspondent may also act as a mortgage
    21  broker without a separate license. A person licensed as a
    22  mortgage broker may only perform the services of a mortgage
    23  broker.] A mortgage originator may not engage in the first
    24  mortgage loan business unless the mortgage originator is
    25  employed and supervised by a licensed mortgage banker, mortgage
    26  broker or loan correspondent.
    27     (a.1)  Licensed activity exceptions.--
    28         (1)  A mortgage banker may act as a mortgage broker or
    29     loan correspondent without a separate mortgage broker or loan
    30     correspondent license and, if licensed as an individual, may
    20070S0487B1753                  - 3 -     

     1     perform the services of a mortgage originator without a
     2     separate mortgage originator license.
     3         (2)  A loan correspondent may act as a mortgage broker
     4     without a separate mortgage broker license and, if licensed
     5     as an individual, may perform the services of a mortgage
     6     originator without a separate mortgage originator license.
     7         (3)  A person licensed as a mortgage broker may only
     8     perform the services of a mortgage broker. If a mortgage
     9     broker is licensed as an individual, a mortgage broker may
    10     perform the services of a mortgage originator without a
    11     separate mortgage originator license.
    12     (b)  Exceptions.--The following persons shall not be required
    13  to be licensed under this chapter in order to conduct the first
    14  mortgage loan business but shall be subject to those provisions
    15  of this chapter as specifically provided in this section:
    16         [(1)  A State-chartered bank, bank and trust company,
    17     savings bank, private bank or national bank, a State or
    18     federally chartered savings and loan association, a federally
    19     chartered savings bank or a State or federally chartered
    20     credit union.]
    21         (1)  A banking institution or a State or federally
    22     chartered credit union if the primary regulator of the
    23     banking institution or State or federally chartered credit
    24     union supervises the banking institution or State or
    25     federally chartered credit union.
    26         (2)  An attorney authorized to practice law in this
    27     Commonwealth, who acts as a mortgage broker in negotiating or
    28     placing a mortgage loan in the normal course of legal
    29     practice.
    30         [(3)  A person licensed pursuant to the provisions of the
    20070S0487B1753                  - 4 -     

     1     act of February 19, 1980 (P.L.15, No.9), known as the Real
     2     Estate Licensing and Registration Act, who is principally
     3     engaged in a third-party real estate brokerage business, but
     4     only to the extent that he provides information, verbal or
     5     written, to or negotiates or places a mortgage loan for a
     6     buyer of real estate and is not compensated by the buyer or
     7     any other person for providing such information or
     8     negotiating or placing such mortgage loan. If he is
     9     compensated for providing such information or negotiating or
    10     placing such mortgage loan, he shall be subject to the
    11     provisions of sections 308, 310, 311 and 314(b), excluding
    12     section 308(a)(1).
    13         (4)  A seller of a dwelling, if he has resided in the
    14     dwelling at least one year and as part of the purchase price
    15     receives a first mortgage executed by the purchaser.]
    16         (5)  A person who either originates or negotiates less
    17     than three mortgage loans in a calendar year in this
    18     Commonwealth unless he is otherwise deemed to be engaged in
    19     the first mortgage loan business.
    20         [(6)  Builders, when obtaining mortgages for their own
    21     construction or for the sale of their own construction.]
    22         (7)  Any agency or instrumentality of the Federal
    23     Government or a corporation otherwise created by an act of
    24     the United States Congress, including, but not limited to,
    25     the Federal National Mortgage Association, the Government
    26     National Mortgage Association, the Veterans' Administration,
    27     the Federal Home Loan Mortgage Corporation and the Federal
    28     Housing Administration.
    29         (8)  [The] Any agency or instrumentality of State or
    30     local government, the District of Columbia or any territory,
    20070S0487B1753                  - 5 -     

     1     including the Pennsylvania Housing Finance Agency and other
     2     government housing finance agencies.
     3         (9)  A licensee under the act of April 8, 1937 (P.L.262,
     4     No.66), known as the Consumer Discount Company Act, except
     5     that any such licensee who makes a mortgage loan other than
     6     under the provisions of that act shall be subject to the
     7     provisions of sections 304(b)(2) and (3), 308, 310 and
     8     314(b), excluding section 308(a)(1). Employees of licensees
     9     under the Consumer Discount Company Act that act as mortgage
    10     originators shall be subject to the licensing requirements of
    11     this chapter. Consumer discount companies that employ
    12     mortgage originators shall be subject to the same
    13     requirements as mortgage bankers in regard to the employment
    14     and supervision of mortgage originators.
    15         [(10)  Except for licensees described in paragraph (9),
    16     subsidiaries and affiliates of the following institutions:
    17     State-chartered banks, bank and trust companies, savings
    18     banks, private banks, savings and loan associations and
    19     credit unions or national banks, federally chartered savings
    20     and loan associations, federally chartered savings banks and
    21     federally chartered credit unions, except that such
    22     subsidiaries and affiliates of institutions enumerated in
    23     this paragraph shall:]
    24         (10)  Subsidiaries EXCEPT AS PROVIDED UNDER PARAGRAPH      <--
    25     (9), AFFILIATES OF BANKING INSTITUTIONS AND SUBSIDIARIES and
    26     affiliates of State or AND federally chartered credit unions   <--
    27     except that the subsidiaries and affiliates shall:
    28             (i)  be subject to the provisions of sections 308,
    29         309(a)(3), 310 and 314(b), excluding section 308(a)(1);
    30             (ii)  deliver as required to the department annually
    20070S0487B1753                  - 6 -     

     1         copies of financial reports made to all supervisory
     2         agencies; and
     3             (iii)  be registered with the department.
     4         (11)  Employees of a mortgage banker, mortgage broker and
     5     loan correspondent licensee [or excepted persons acting for
     6     their employers.] to the extent that such employees are not
     7     otherwise required to be licensed as mortgage originators.
     8         [(12)  An insurance company, association or exchange
     9     authorized to transact business in this Commonwealth under
    10     the act of May 17, 1921 (P.L.682, No.284), known as The
    11     Insurance Company Law of 1921, and any subsidiaries and
    12     affiliates thereof, except that such subsidiaries and
    13     affiliates 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         (13)  Any person who makes a mortgage loan to an employee
    21     of that person as an employment benefit, given that person
    22     does not hold himself out to the public as a first mortgage
    23     lender.
    24         (14)  Nonprofit corporations making mortgage loans to
    25     promote home ownership or improvements for the disadvantaged,
    26     given that the corporation does not hold itself out to the
    27     public as a first mortgage lender.
    28         (15)  A nonprofit corporation making not more than 12
    29     mortgage loans a calendar year with its own funds, that shall
    30     not include funds borrowed through warehouse lines of credit
    20070S0487B1753                  - 7 -     

     1     or other sources for the purpose of making mortgage loans,
     2     which loans are retained in the corporation's own portfolios
     3     and not regularly sold to others and are made to promote and
     4     advance the cultural traditions and lifestyles of bona fide
     5     religious organizations provided that the corporation does
     6     not hold itself out to the public as a first mortgage lender.
     7         (16)  Employees of excepted persons enumerated in this
     8     section, unless otherwise provided in this subsection.
     9     (c)  Loans for business or commercial purposes.--This chapter
    10  shall not apply to mortgage loans made for business or
    11  commercial purposes.
    12  Section 304.  Application for license.
    13     (a)  Contents.--An application for a license to act as a
    14  mortgage banker, loan correspondent, mortgage broker or [limited
    15  mortgage broker] mortgage originator shall be on such forms as
    16  may be prescribed and provided by the department. [Each] In the
    17  case of the mortgage banker, loan correspondent or mortgage
    18  broker, the application shall include the address or addresses
    19  where business is to be conducted, the full name, official title
    20  and business address of each director and principal officer of
    21  the business and any other information that may be required by
    22  the department. In the case of a mortgage originator, the
    23  application shall include the name of the applicant, the name of
    24  the licensee employing the applicant and the location of the
    25  employer licensee to which the applicant is assigned and any
    26  other information that may be required by the department. An
    27  applicant shall demonstrate to the department that policies and
    28  procedures have been developed to receive and process customer
    29  inquiries and grievances promptly and fairly.
    30     (b)  Mortgage banker's license.--The department shall issue a
    20070S0487B1753                  - 8 -     

     1  mortgage banker's license applied for pursuant to this chapter
     2  if the applicant establishes that he has met the following
     3  conditions:
     4         (1)  That he is approved by or meets the current criteria
     5     for approval of at least one of the following:
     6             (i)  Federal National Mortgage Association.
     7             (ii)  Federal Home Loan Mortgage Corporation.
     8             (iii)  Federal Housing Administration.
     9         (2)  That he maintains or is approved for, and will
    10     continue to maintain as a licensee, a line of credit,
    11     repurchase agreement or equivalent mortgage-funding
    12     capability of not less than $1,000,000.
    13         (3)  That he has a minimum tangible net worth of $250,000
    14     at the time of application and will, at all times thereafter,
    15     maintain such minimum net worth, provided, however, that
    16     those applicants who were in business prior to June 20, 1990,
    17     may be licensed with a minimum tangible net worth of $100,000
    18     if, in the opinion of the department, the applicant has
    19     established that it has an otherwise adequate financial
    20     structure and operating history.
    21         (4)  That he will maintain fidelity bond coverage in
    22     accordance with the guidelines established by the Federal
    23     National Mortgage Association or the Federal Home Loan
    24     Mortgage Corporation.
    25     (b.1)  Loan correspondent's license.--The department shall
    26  issue a loan correspondent's license applied for pursuant to
    27  this chapter if the applicant establishes that he has met the
    28  following conditions:
    29         (1)  That he is eligible to and will obtain and maintain
    30     a bond in the amount of $100,000, in a form acceptable to the
    20070S0487B1753                  - 9 -     

     1     department, prior to the issuance of the license, from a
     2     surety company authorized to do business in this
     3     Commonwealth. The bond shall run to the Commonwealth of
     4     Pennsylvania and shall be for the use of the Commonwealth and
     5     any person or persons who obtain a judgment against the loan
     6     correspondent for failure to carry out the terms of any
     7     provision for which advance fees are paid. No bond shall
     8     comply with the requirements of this section unless it
     9     contains a provision that it shall not be canceled for any
    10     cause unless notice of intention to cancel is given to the
    11     department at least 30 days before the day upon which
    12     cancellation shall take effect.
    13         (2)  That he has a minimum tangible net worth of $100,000
    14     at the time of application and will, at all times thereafter,
    15     maintain such minimum net worth.
    16         (3)  Notwithstanding subparagraph (ii), an applicant who
    17     was in the business as a mortgage banker, mortgage broker or
    18     otherwise authorized to engage in the first mortgage loan
    19     business by the department prior to the effective date of
    20     this section who files an application within 90 days after
    21     the effective date of this section may be licensed for one
    22     year with a minimum tangible net worth of $50,000.
    23     Thereafter, for a period of one year, the applicant may
    24     continue to be licensed with a minimum tangible net worth of
    25     $75,000. Following that period, the applicant may continue to
    26     be licensed with a minimum tangible net worth of $100,000.
    27     (c)  Mortgage broker's license.--
    28         (1)  The department shall issue a mortgage broker's
    29     license applied for pursuant to this chapter if the applicant
    30     establishes that he is eligible to and will obtain and
    20070S0487B1753                 - 10 -     

     1     maintain a bond in the amount of $100,000, in a form
     2     acceptable to the department, prior to the issuance of the
     3     license, from a surety company authorized to do business in
     4     this Commonwealth. The bond shall be a penal bond conditioned
     5     on compliance with this chapter and subject to forfeiture by
     6     the department and shall run to the Commonwealth of
     7     Pennsylvania for its use. The bond shall also be for the use
     8     of any person against the mortgage broker for failure to
     9     carry out the terms of any provision for which advance fees
    10     are paid. If such person is aggrieved, he may, with the
    11     written assent of the department, recover advance fees and
    12     costs from the bond by filing a claim with the surety company
    13     or maintaining an action on the bond. In the alternative, an
    14     aggrieved person may recover advance fees and costs by filing
    15     a formal complaint against the mortgage broker with the
    16     department which shall adjudicate the matter. Such an
    17     adjudication shall be binding upon the surety company and
    18     enforceable by the department in Commonwealth Court and by an
    19     aggrieved person in any court. Any aggrieved person seeking
    20     to recover advance fees and costs from a bond that has
    21     already been forfeited by the department or which the
    22     department is in the process of forfeiting may recover
    23     payment on such bond if, after filing a petition with the
    24     department, the department assents to his requested payment
    25     or portion thereof. The department may pay the aggrieved
    26     person from the bond proceeds it recovered in such case.
    27     Nothing in this section shall be construed as limiting the
    28     ability of any court or district justice to award to any
    29     aggrieved person other damages, court costs and attorney fees
    30     as permitted by law, but those claims that are not advance
    20070S0487B1753                 - 11 -     

     1     fees or related costs may not be recovered from the bond. The
     2     department, in its discretion, may assent to or order pro
     3     rata or other recovery on the bond for any aggrieved person
     4     if claims against the bond may or do exceed its full monetary
     5     amount. No bond shall comply with the requirements of this
     6     section unless it contains a provision that it shall not be
     7     canceled for any cause unless notice of intention to cancel
     8     is given to the department at least 30 days before the day
     9     upon which cancellation shall take effect. Cancellation of
    10     the bond shall not invalidate the bond regarding the period
    11     of time it was in effect.
    12         (2)  Mortgage brokers who can demonstrate to the
    13     satisfaction of the department that they do not accept
    14     advance fees shall be exempt from the bond requirement of
    15     this subsection.
    16     [(c.1)  Limited mortgage broker's license.--The department
    17  shall issue a limited mortgage broker's license applied for
    18  pursuant to this chapter if the applicant establishes that he is
    19  an individual who operates from one location and maintains no
    20  branch offices and can demonstrate to the satisfaction of the
    21  department that he accepts or collects no advance fees.]
    22     (c.2)  Mortgage originator license.--A mortgage originator
    23  shall be an employee of a single mortgage banker, mortgage
    24  broker or loan correspondent licensed under this chapter, which
    25  licensee shall directly supervise, control and maintain
    26  responsibility for the acts and omissions of the mortgage
    27  originator. A mortgage originator shall be assigned to a
    28  licensed location of the employer licensee.
    29     (d)  [Foreign corporation.--] Requirements for out-of-State
    30  applicants.--
    20070S0487B1753                 - 12 -     

     1         (1)  If the applicant is [a foreign corporation] not a
     2     resident of this Commonwealth, that [corporation] applicant
     3     shall be authorized to do business in this Commonwealth in
     4     accordance with the law of this Commonwealth regulating
     5     corporations and other entities conducting business in this
     6     Commonwealth and shall maintain at least one office in this
     7     Commonwealth which is the office that shall be licensed as
     8     the principal place of business for the purposes of this
     9     chapter. [A foreign corporation which will act only in the
    10     capacity of a] A wholesale table funder shall be exempt from
    11     the requirement that it maintain at least one office in this
    12     Commonwealth. [The corporation]
    13         (2)  An applicant shall file with the application an
    14     irrevocable consent, duly acknowledged, that suits and
    15     actions may be commenced against that [licensee] person in
    16     the courts of this Commonwealth by the service of process of
    17     any pleading upon the department in the usual manner provided
    18     for service of process and pleadings by the statutes and
    19     court rules of this Commonwealth. The consent shall provide
    20     that this service shall be as valid and binding as if service
    21     had been made personally upon the [licensee] person in this
    22     Commonwealth. In all cases where process or pleadings are
    23     served upon the department pursuant to the provisions of this
    24     section, such process or pleadings shall be served in
    25     triplicate; one copy shall be filed in the [Office of the
    26     Secretary of Banking] department and the others shall be
    27     forwarded by the department, by certified or registered mail,
    28     return receipt requested, to the last known principal place
    29     of business in the Commonwealth and to the [corporation's]
    30     person's principal place of business.
    20070S0487B1753                 - 13 -     

     1     [(e)  Education.--To maintain a mortgage banker's, a loan
     2  correspondent's or a mortgage broker's license, the applicant or
     3  licensee shall demonstrate to the satisfaction of the secretary
     4  that at least one individual from each licensed office has
     5  attended a minimum of six hours of such continuing education
     6  each year. To maintain a limited mortgage broker's license, the
     7  licensee shall demonstrate to the satisfaction of the secretary
     8  that he has attended at least two hours of continuing education
     9  each year. The secretary shall delineate the requirements for
    10  such continuing education by regulation within three years of
    11  the effective date of this act. The secretary may review and
    12  approve continuing education programs and providers to satisfy
    13  the continuing education requirement. The secretary may charge
    14  providers of continuing education programs a fee, to be
    15  determined by the secretary, for department review of continuing
    16  education programs and providers.]
    17     (e)  Education requirements.--
    18         (1)  In order to obtain a license under this chapter, an
    19     applicant shall submit to the department with its application
    20     evidence that the applicant or an officer of the applicant
    21     has successfully completed a minimum of 12 hours of
    22     instruction and a testing program regarding the first
    23     mortgage loan business and the provisions of this chapter,
    24     the act of January 30, 1974 (P.L.13, No.6), referred to as
    25     the Loan Interest and Protection Law, and relevant Federal
    26     law including the Real Estate Settlement Procedures Act of
    27     1974 (88 Stat. 1724, 12 U.S.C. §§ 2601-2617), the Truth in
    28     Lending Act (82 Stat. 146, 15 U.S.C. §§ 1601-1667f), and the
    29     Equal Credit Opportunity Act (88 Stat. 1521, 15 U.S.C. §§
    30     1691-1691f).
    20070S0487B1753                 - 14 -     

     1         (2)  In order to maintain a license:
     2             (i)  A mortgage banker, mortgage broker or loan
     3         correspondent shall demonstrate to the satisfaction of
     4         the department that at least one individual from each
     5         licensed office that is not a mortgage originator, and
     6         all mortgage originators employed by the licensee, have
     7         attended a minimum of six hours of continuing education
     8         each year.
     9             (ii)  A mortgage originator licensee shall
    10         demonstrate to the satisfaction of the department that he
    11         has attended a minimum of six hours of continuing
    12         education each year.
    13         (3)  The department shall delineate the requirements for
    14     prequalification education, testing and continuing education
    15     by regulation, including by permitting in-house
    16     prequalification education, testing and continuing education.
    17     The department may review and approve education programs and
    18     providers to satisfy the education requirements. The
    19     department may charge providers of education programs a fee,
    20     to be determined by the department, for department review of
    21     education programs and providers.
    22     (f)  Duty to update.--All applicants and licensees shall be
    23  required to provide the department with written notice of the
    24  change in any information contained in an application for a
    25  license or for any renewal of a license within ten days of an
    26  applicant or licensee becoming aware of such change.
    27     (g)  License renewals.--Licenses shall be issued for terms of
    28  12 months and may be renewed by the department each year on a
    29  schedule set by the department upon application by the licensee
    30  and the payment of all applicable renewal fees. The licensee
    20070S0487B1753                 - 15 -     

     1  shall demonstrate to the department that it is conducting the
     2  first mortgage loan business in accordance with the requirements
     3  of this chapter and that the directors, officers, partners,
     4  employees, agents and ultimate equitable owners of 10% or more
     5  of the licensee continue to meet all of the initial requirements
     6  for licensure required by this chapter unless otherwise
     7  determined by the department.
     8  Section 305.  Annual license fee.
     9     [(a)  General rule.--A mortgage banker, mortgage broker or
    10  applicant shall pay to the department at the time an application
    11  is filed an initial license fee for the principal place of
    12  business and an additional license fee for each branch office as
    13  provided for in section 603-A of the act of April 9, 1929
    14  (P.L.177, No.175), known as The Administrative Code of 1929. On
    15  or before July 1 of each year and thereafter, a licensee shall
    16  pay a license renewal fee for the principal place of business
    17  and an additional license renewal fee for each branch office as
    18  provided for in section 603-A of The Administrative Code of
    19  1929. An applicant for a license to operate as a loan
    20  correspondent shall pay the department the same fee for the
    21  initial license for principal place of business, each branch
    22  office and annual license renewal as provided for mortgage
    23  bankers licensed under section 603-A of The Administrative Code
    24  of 1929. An applicant for a license to operate as a limited
    25  mortgage broker shall pay to the department at the time an
    26  application is filed an initial license fee of $250. On or
    27  before July 1 of each year thereafter, a limited mortgage broker
    28  licensee shall pay a renewal fee of $200.
    29     (b)  Recovery of costs.--No abatement of any license fee
    30  shall be made if the license is issued for a period of less than
    20070S0487B1753                 - 16 -     

     1  one year. The department shall be entitled to recover any cost
     2  of investigation in excess of license or renewal fees from the
     3  licensee or from any person who is not licensed under this
     4  chapter but who is presumed to be engaged in business
     5  contemplated by this chapter.]
     6     (a)  Initial application fees.--An applicant shall pay to the
     7  department at the time an application is filed an initial
     8  application fee as follows:
     9         (1)  for mortgage bankers and loan correspondents, $1,500
    10     for the principal place of business in this Commonwealth and
    11     an additional fee of $1,500 for each branch office;
    12         (2)  for mortgage brokers, $1,000 for the principal place
    13     of business in this Commonwealth and an additional fee of
    14     $250 for each branch office; or
    15         (3)  for mortgage originators, $200.
    16     (b)  Renewal application fees.--Prior to each annual renewal
    17  of a license, a licensee shall pay to the department a license
    18  renewal fee as follows:
    19         (1)  for mortgage bankers and loan correspondents, $750
    20     for the principal place of business in this Commonwealth and
    21     an additional fee of $750 for each branch office;
    22         (2)  for mortgage brokers, $500 for the principal place
    23     of business in this Commonwealth and an additional fee of
    24     $250 for each branch office; or
    25         (3)  for mortgage originators, $100.
    26     (c)  Fee limitation.--For a licensee that employs 50 or more
    27  mortgage originators, the initial application fee and license
    28  renewal fee shall be $50 per mortgage originator, to a maximum
    29  of $10,000 total per year.
    30     (d)  No abatement of fee.--No abatement of a licensee fee
    20070S0487B1753                 - 17 -     

     1  shall be made if the license is issued for a period of less than
     2  one year.
     3  Section 306.  Issuance of license.
     4     (a)  Time limit.--Within 60 days after a complete application
     5  is received, the department shall either issue a license or, for
     6  any reason for which the department may suspend, revoke or
     7  refuse to renew a license as provided for by section 313, refuse
     8  to issue a license. Upon receipt of an application for license,
     9  the department shall conduct such investigation of the applicant
    10  or a director, officer, partner, employee, agent or ultimate
    11  equitable owner of 10% or more of the applicant as it deems
    12  necessary. [to determine that the applicant and its officers,
    13  directors and principals are of good character and ethical
    14  reputation.] The 60-day time limit specified in this subsection
    15  may be extended by the department for an additional 30 days if
    16  the department determines that such extension is necessary. The
    17  department shall provide written notification to any applicant
    18  whose application review has been extended and include the final
    19  date by which a decision shall be rendered regarding the
    20  application.
    21     (b)  Appeal of denial.--If the department refuses to issue a
    22  license, it shall notify the applicant, in writing, of the
    23  denial and the reason therefor and of the applicant's right to
    24  appeal from such action to the [Commonwealth Court] secretary.
    25  An appeal from the department's refusal to approve an
    26  application for a license shall be filed by the applicant within
    27  30 days of notice thereof.
    28     (c)  Contents of license.--Each license issued by the
    29  department shall specify:
    30         (1)  The name and address of the licensee, the address so
    20070S0487B1753                 - 18 -     

     1     specified to be that of the licensee's principal place of
     2     business within this Commonwealth or, for a licensee acting
     3     only in the capacity of a wholesale table funder, either in
     4     or outside of this Commonwealth.
     5         (2)  The licensee's reference number, which may remain
     6     the same from year to year despite variations in annual
     7     license numbers which may result from the renewal of licenses
     8     by mechanical techniques.
     9         (3)  Such other information as the department shall
    10     require to carry out the purposes of this chapter.
    11     (d)  Denial of license due to conviction.--
    12         (1)  The department may deny a license if it finds that
    13     the applicant or any person who is a director, officer,
    14     partner, agent, employee or ultimate equitable owner of 10%
    15     or more of the applicant has been convicted of a
    16     [misdemeanor] crime of moral turpitude or felony in any
    17     jurisdiction or of a crime which, if convicted in this
    18     Commonwealth, would constitute a [misdemeanor] crime of moral
    19     turpitude or felony under the laws of this Commonwealth. For
    20     the purposes of this chapter, a person shall be deemed to
    21     have been convicted of a crime if the person:
    22             (i)  shall have pleaded guilty or nolo contendere to
    23         a charge thereof before a court or Federal magistrate
    24         [or]; or
    25             (ii)  shall have been found guilty thereof by the
    26         decision or judgment of a court or Federal magistrate or
    27         by the verdict of a jury, irrespective of the
    28         pronouncement of sentence or the suspension thereof,
    29         unless the pleas of guilty or nolo contendere or the
    30         decision, judgment or verdict shall have been set aside,
    20070S0487B1753                 - 19 -     

     1         vacated, reversed or otherwise abrogated by lawful
     2         judicial process.
     3         (2)  A license under this chapter shall be deemed to be a
     4     covered license within the meaning of section 405 of the act
     5     of May 15, 1933 (P.L.565, No.111), known as the Department of
     6     Banking Code. The department shall notify a licensee if a
     7     covered individual within the meaning of section 405 of the
     8     Department of Banking Code that is or will be employed or
     9     contracted by the licensee has a criminal background that
    10     renders the employee unfit for employment in the first
    11     mortgage loan business.
    12     (e)  Denial of license for other reason.--The department may
    13  deny a license or otherwise restrict a license if it finds
    14  [that, within two years prior to or from the date of the
    15  application,] the applicant or any person who is a director,
    16  officer, partner, agent, employee or ultimate equitable owner of
    17  10% or more of the applicant:
    18         (1)  has had a license application or license issued by
    19     the department denied, not renewed, suspended or revoked;
    20         (2)  is the subject of an order of the department;
    21     [denying, suspending or revoking a license as a mortgage
    22     banker, loan correspondent, mortgage broker or limited
    23     mortgage broker; or]
    24         (3)  has violated or failed to comply with any provision
    25     of this chapter or any [rule] regulation, statement of policy
    26     or order of the department[.];
    27         (4)  does not possess the financial responsibility,
    28     character, reputation, integrity and general fitness to
    29     command the confidence of the public and to warrant the
    30     belief that the first mortgage loan business will be operated
    20070S0487B1753                 - 20 -     

     1     lawfully, honestly, fairly and within the legislative intent
     2     of this chapter and in accordance with the general laws of
     3     this Commonwealth; or
     4         (5)  has an outstanding debt to the Commonwealth or any
     5     Commonwealth agency.
     6     (f)  Imposing conditions on licenses.--The department may
     7  impose conditions on the issuance of any license under this
     8  chapter. If the department determines that conditions imposed
     9  upon a licensee have not been fulfilled, the department may take
    10  any action authorized under this chapter against such licensee
    11  that the department deems necessary.
    12     (g)  Conditional licenses.--In the case of mortgage
    13  originator applicants, the department may issue mortgage
    14  originator licenses effective immediately upon receipt of an
    15  application, which licenses shall be conditional licenses issued
    16  under this subsection.
    17  Section 307.  License duration.
    18     A license issued by the department shall:
    19         (1)  Be renewed on [July 1 of each year upon payment of
    20     the annual renewal fee and after a determination that the
    21     licensee is conducting business in accordance with the
    22     provisions of this chapter is made by the department.]
    23     completion of the requirements of section 304(g). No refund
    24     of any portion of the license fee shall be made if the
    25     license is voluntarily surrendered to the department or
    26     suspended or revoked by the department prior to its
    27     expiration date.
    28         (2)  Be immediately invalid if the [mortgage banker's
    29     corporate charter is voided in accordance with the provisions
    30     of any law of this Commonwealth or any other state.]
    20070S0487B1753                 - 21 -     

     1     licensee's authority to conduct business is voided under any
     2     law of this Commonwealth or any other state, unless the
     3     licensee demonstrates to the satisfaction of the department
     4     that the applicable court or governmental entity was clearly
     5     erroneous in voiding the licensee's authority to conduct
     6     business.
     7         (3)  Not be assignable or transferable by operation of
     8     law or [otherwise without the written consent of the
     9     department] in any other fashion.
    10  Section 308.  Licensee requirements.
    11     (a)  Requirements on licensee.--A licensee shall:
    12         (1)  [Conspicuously] In the case of a mortgage banker,
    13     mortgage broker or loan correspondent, conspicuously display
    14     [its license] at each licensed place of business[.] its
    15     license and copies of the licenses of all mortgage
    16     originators assigned to that location. In the case of a
    17     mortgage originator, the license shall be maintained in the
    18     immediate possession of the licensee whenever the licensee is
    19     engaged in the mortgage loan business.
    20         (2)  Maintain, at its principal place of business within
    21     this Commonwealth, or at such place within or outside this
    22     Commonwealth if agreed to by the [Secretary of Banking or the
    23     commission] department, either the original or a copy of such
    24     books, accounts, records and documents, or electronic or
    25     other similar access thereto, of the business conducted under
    26     the license as may be prescribed by the department [or
    27     commission] to enable [them] it to determine whether the
    28     business of the licensee is being conducted in accordance
    29     with the provisions of this chapter and the regulations,
    30     statements of policy and orders[, rules and regulations]
    20070S0487B1753                 - 22 -     

     1     issued under this chapter. The department, at its
     2     determination, shall have free access to and authorization to
     3     examine records maintained within or outside of this
     4     Commonwealth. The costs of the examination, including travel
     5     costs, shall be borne by the licensee. The [secretary]
     6     department may deny or revoke the authority to maintain
     7     records outside of this Commonwealth for good cause in the
     8     interest of consumer protection for Commonwealth borrowers,
     9     including for the licensee's failure to provide books,
    10     accounts, records or documents to the department upon
    11     request.
    12         [(3)  Annually, before May 1, file a report with the
    13     department or commission which shall set forth such
    14     information as the department or commission shall require
    15     concerning the business conducted as a licensee during the
    16     preceding calendar year. The report shall be in writing,
    17     under oath, and on a form provided by the department.]
    18         (3)  In the case of a mortgage banker, mortgage broker or
    19     loan correspondent, annually, on a date determined by the
    20     department, file a report with the department which shall set
    21     forth the information as the department shall require
    22     concerning the business conducted as a licensee during the
    23     preceding calendar year. The report shall be on a form
    24     provided by the department. Licensees failing to file the
    25     required report on the date required by the department may be
    26     subject to a penalty of $100 for each day after the due date
    27     the report is not filed.
    28         (4)  Be subject to examination by the department [or
    29     commission] at the discretion of the department [or
    30     commission] at which time the department [or commission]
    20070S0487B1753                 - 23 -     

     1     shall have free access, during regular business hours, to the
     2     licensee's place or places of business in this Commonwealth
     3     and to all instruments, documents, accounts, books and
     4     records which pertain to a licensee's first mortgage loan
     5     business, whether maintained in or outside of this
     6     Commonwealth. The department [or commission] may examine a
     7     licensee at any time if the department [or commission] deems
     8     such examination to be necessary or desirable. The cost of
     9     any such examination shall be borne by the licensee.
    10         (5)  Comply with all provisions of the act of January 30,
    11     1974 (P.L.13, No.6), referred to as the Loan Interest and
    12     Protection Law, provided, however, that this shall not be
    13     deemed an override of section 501 of the Depository
    14     Institutions Deregulation and Monetary Control Act of 1980
    15     (94 Stat. 161, 12 U.S.C. § 1735f-7a) or the Alternative
    16     Mortgage Transaction Parity Act of 1982 (96 Stat. 1545, 12
    17     U.S.C. § 3801 et seq.).
    18         (6)  Comply with the provisions of the act of December
    19     23, 1983 (P.L.385, No.91), entitled "An act amending the act
    20     of December 3, 1959 (P.L.1688, No.621), entitled, as amended,
    21     'An act to promote the health, safety and welfare of the
    22     people of the Commonwealth by broadening the market for
    23     housing for persons and families of low and moderate income
    24     and alleviating shortages thereof, and by assisting in the
    25     provision of housing for elderly persons through the creation
    26     of the Pennsylvania Housing Finance Agency as a public
    27     corporation and government instrumentality; providing for the
    28     organization, membership and administration of the agency,
    29     prescribing its general powers and duties and the manner in
    30     which its funds are kept and audited, empowering the agency
    20070S0487B1753                 - 24 -     

     1     to make housing loans to qualified mortgagors upon the
     2     security of insured and uninsured mortgages, defining
     3     qualified mortgagors and providing for priorities among
     4     tenants in certain instances, prescribing interest rates and
     5     other terms of housing loans, permitting the agency to
     6     acquire real or personal property, permitting the agency to
     7     make agreements with financial institutions and Federal
     8     agencies, providing for the purchase by persons of low and
     9     moderate income of housing units, and approving the sale of
    10     housing units, permitting the agency to sell housing loans,
    11     providing for the promulgation of regulations and forms by
    12     the agency, prescribing penalties for furnishing false
    13     information, empowering the agency to borrow money upon its
    14     own credit by the issuance and sale of bonds and notes and by
    15     giving security therefor, permitting the refunding,
    16     redemption and purchase of such obligations by the agency,
    17     prescribing remedies of holders of such bonds and notes,
    18     exempting bonds and notes of the agency, the income
    19     therefrom, and the income and revenues of the agency from
    20     taxation, except transfer, death and gift taxes; making such
    21     bonds and notes legal investments for certain purposes; and
    22     indicating how the act shall become effective,' providing for
    23     homeowner's emergency assistance."
    24         (7)  Provide for periodic accounting of any escrow
    25     accounts held by the licensee to the borrowers not less than
    26     annually, showing the amounts received from the borrower and
    27     the amounts disbursed.
    28         (8)  Refund all fees, other than those fees paid by the
    29     licensee to a third party, paid by an applicant borrower when
    30     a mortgage loan is not produced within the time specified by
    20070S0487B1753                 - 25 -     

     1     the mortgage banker, loan correspondent[,] or mortgage broker
     2     [or limited mortgage broker] at the rate, term and overall
     3     cost agreed to by the borrower, provided, however, that this
     4     provision shall not apply when the failure to produce a loan
     5     is due solely to the borrower's negligence, his refusal to
     6     accept and close on a loan commitment or his refusal or
     7     inability to provide information necessary for processing,
     8     including, but not limited to, employment verifications and
     9     verifications of deposits. The licensee shall disclose to the
    10     borrower, in writing, at the time of a loan application which
    11     fees paid or to be paid are nonrefundable.
    12         (9)  Ensure that all lock-in agreements shall be in
    13     writing and shall contain at least the following provisions:
    14             (i)  The expiration date of the lock-in, if any.
    15             (ii)  The interest rate locked in, if any.
    16             (iii)  The discount points locked in, if any.
    17             (iv)  The [commitment] fee locked in, if any.
    18             (v)  The lock-in fee, if any.
    19         (10)  Include in all advertisements language indicating
    20     that the licensee is licensed by the department. In the case
    21     of a mortgage originator, include in all advertising the name
    22     of the mortgage originator's employer.
    23         (11)  Allow for the evidence of any insurance required in
    24     connection with a loan by a policy or binder or a copy of
    25     either.
    26         (12)  In the case of a mortgage broker, mortgage lender
    27     or mortgage loan correspondent:
    28             (i)  maintain supervision and control of, and
    29         responsibility for, the acts and omissions of all
    30         mortgage originators employed by the licensee;
    20070S0487B1753                 - 26 -     

     1             (ii)  maintain a list of all current and former
     2         mortgage originators employed by the licensee and the
     3         dates of such employment; and
     4             (iii)  in the event that a licensee has evidence that
     5         a mortgage originator employed by the licensee has
     6         engaged in any activity that is illegal or in violation
     7         of this chapter or any regulation or statement of policy
     8         promulgated pursuant to this chapter, the licensee shall
     9         provide the department with written notification of such
    10         evidence and the licensee's proposed corrective measures
    11         within 30 days. A licensee shall not be liable to a
    12         mortgage originator in connection with such notification.
    13     (b)  Accounting records.--[After the effective date of this
    14  act, the] The licensee's accounting records must be constructed
    15  and maintained in compliance with generally accepted accounting
    16  principles [if the licensee is a mortgage banker or in such
    17  manner] or as may be provided by regulation [for all other
    18  licensees, and all]. All of the aforementioned instruments,
    19  documents, accounts, books and records shall be kept separate
    20  and apart from the records of any other business conducted by
    21  the licensee and shall be preserved and kept available for
    22  investigation or examination by the department [or commission]
    23  for at least two years after a mortgage loan has been paid in
    24  full. The provisions of this subsection shall not apply to any
    25  instrument, document, account, book or record that is assigned,
    26  sold or transferred to another person, nor shall the two-year
    27  requirement apply to an instrument or document which must be
    28  returned to a borrower at the time a mortgage loan is paid in
    29  full.
    30     (c)  Copies.--If copies of instruments, documents, accounts,
    20070S0487B1753                 - 27 -     

     1  books or records are maintained under subsection (a)(2), they
     2  may be photostatic, microfilm or electronic copies or copies
     3  provided in some other manner approved by the [Secretary of
     4  Banking or the commission] department, as long as access to
     5  information required by the [secretary or commission] department
     6  exists electronically at all times within this Commonwealth.
     7     [(d)  Limited powers.--The powers conferred upon the
     8  commission by this section, excluding subsection (a)(1), shall
     9  only be exercised by the commission in relation to persons
    10  licensed pursuant to the provisions of the act of February 19,
    11  1980 (P.L.15, No.9), known as the Real Estate Licensing and
    12  Registration Act, who are subject to this section under section
    13  303(b)(3), and the exercise of such power by the commission in
    14  relation to such persons shall be exclusive.]
    15  Section 309.  Licensee limitations.
    16     (a)  Prohibitions.--A licensee shall not:
    17         (1)  Transact any business subject to the provisions of
    18     this chapter under any other name except those designated in
    19     its license[.] or registered or otherwise qualified as a
    20     fictitious name. A mortgage originator may not use any name
    21     other than the mortgage originator's personal legal name. A
    22     licensee that changes its name or place or places of business
    23     shall [immediately] notify the department within ten days of
    24     the change, which shall issue a certificate, if appropriate,
    25     to the licensee which shall specify the licensee's new name
    26     or address.
    27         (2)  Conduct any business other than any business
    28     regulated by the department in any place of business licensed
    29     pursuant to this chapter without at least 90 days' prior
    30     written notification to the department.
    20070S0487B1753                 - 28 -     

     1         (3)  Disburse the proceeds of a mortgage loan in any form
     2     other than cash, electronic fund transfer, certified check or
     3     cashier's check where such proceeds are disbursed by the
     4     licensee to a closing agent. This paragraph shall not be
     5     construed as requiring a lender to utilize a closing agent
     6     and shall not apply to disbursements by check directly from
     7     the licensee's account payable to the borrower, borrower
     8     designees or other parties due funds from the closing.
     9         (4)  In the case of a loan correspondent, service
    10     mortgage loans.
    11         (5)  In the case of a mortgage broker or [limited
    12     mortgage broker] mortgage originator, commit to close or
    13     close mortgage loans in its own name, service mortgage loans,
    14     enter into lock-in agreements or collect lock-in fees,
    15     provided, however, that a mortgage broker or [limited
    16     mortgage broker] mortgage originator can provide a lender's
    17     lock-in agreement to a borrower on behalf of that lender and
    18     collect lock-in fees on the lender's behalf payable to that
    19     lender.
    20         (6)  In the case of a mortgage originator, accept any
    21     fees from consumers in the mortgage originator's own name. A
    22     mortgage originator may accept fees payable to the mortgage
    23     originator's employer licensee and fees payable to third-
    24     party entities on behalf of the mortgage originator's
    25     employer licensee. A mortgage originator may not accept
    26     advance fees payable to the mortgage originator's employer
    27     licensee unless such licensee is authorized to collect
    28     advance fees under this chapter.
    29     (b)  Authority to close loans in attorneys' and title
    30  insurance companies or agencies' offices.--Nothing contained in
    20070S0487B1753                 - 29 -     

     1  this chapter shall prohibit any licensee or person exempt from
     2  licensure hereunder from closing any loans made under the
     3  provisions of this chapter in the offices of attorneys-at-law
     4  licensed by and located in this Commonwealth and title insurance
     5  companies or agencies licensed by and located in this
     6  Commonwealth.
     7  Section 310.  Authority of department or commission.
     8     [(a)  Department regulations.--Except as provided in
     9  subsection (b), the department shall have the authority to issue
    10  rules and regulations and orders as may be necessary for the
    11  proper conduct of the business of a mortgage banker, loan
    12  correspondent, a mortgage broker or limited mortgage broker and
    13  for the enforcement of this chapter, including, but not limited
    14  to, cease and desist orders, notices of fines and such other
    15  orders as the department in its discretion may issue.
    16     (b)  Joint regulations.--The department and the commission
    17  shall have the authority to jointly issue rules and regulations
    18  as may be necessary to carry out the purposes of sections 308,
    19  310 and 314(b), excluding section 308(a)(1). Initial rules and
    20  regulations shall be jointly issued by the department and the
    21  commission within 180 days after the effective date of this
    22  subsection.
    23     (c)  Powers.--The department and the commission shall have
    24  the authority to:
    25         (1)  Examine any instrument, document, account, book,
    26     record or file of a licensee or any other person, or make
    27     such other investigation as may be necessary to administer
    28     the provisions of this chapter.
    29         (2)  Conduct administrative hearings on any matter
    30     pertaining to this chapter, issue subpoenas to compel the
    20070S0487B1753                 - 30 -     

     1     attendance of witnesses and the production of instruments,
     2     documents, accounts, books and records at any such hearing,
     3     which may be retained by the department or commission until
     4     the completion of all proceedings in connection with which
     5     they were produced, and administer oaths and affirmations to
     6     any person whose testimony is required. In the event a person
     7     fails to comply with a subpoena issued by the department or
     8     commission or to testify on any matter concerning which he
     9     may be lawfully interrogated, on application by the
    10     department or commission, the Commonwealth Court may issue an
    11     order requiring the attendance of such person, the production
    12     of instruments, documents, accounts, books or records or the
    13     giving of testimony.
    14         (3)  Request and receive any information or records of
    15     any kind, including a report of criminal history record
    16     information, from any Federal, State, local or foreign
    17     government entity, regarding any applicant for a license,
    18     licensee or any person related in any way to the business of
    19     such applicant or licensee, at a cost to be paid by the
    20     applicant or licensee.
    21     (d)  Limited powers.--The powers conferred upon the
    22  commission by subsection (c) shall only be exercised by the
    23  commission in relation to persons licensed pursuant to the
    24  provisions of the act of February 19, 1980 (P.L.15, No.9), known
    25  as the Real Estate Licensing and Registration Act, who are
    26  subject to subsection (c) under section 303(b)(3) and the
    27  exercise of such power by the commission in relation to such
    28  persons shall be exclusive.]
    29     (a)  General authority.--The department shall have the
    30  authority to:
    20070S0487B1753                 - 31 -     

     1         (1)  Examine any instrument, document, account, book,
     2     record or file of a licensee or any person having a
     3     connection to the licensee or make such other investigation
     4     as may be necessary to administer the provisions of this
     5     chapter. Pursuant to this authority, the department may
     6     remove any instrument, document, account, book, record or
     7     file of a licensee to a location outside of the licensee's
     8     office location. The costs of the examination shall be borne
     9     by the licensee or the entity subject to the examination.
    10         (2)  Conduct administrative hearings on any matter
    11     pertaining to this chapter, issue subpoenas to compel the
    12     attendance of witnesses and the production of instruments,
    13     documents, accounts, books and records at any such hearing.
    14     The instruments, documents, accounts, books and records may
    15     be retained by the department until the completion of all
    16     proceedings in connection with which the materials were
    17     produced. A department official may administer oaths and
    18     affirmations to a person whose testimony is required. In the
    19     event a person fails to comply with a subpoena issued by the
    20     department or to testify on a matter concerning which he may
    21     be lawfully interrogated, on application by the department,
    22     the Commonwealth Court may issue an order requiring the
    23     attendance of the person, the production of instruments,
    24     documents, accounts, books and records and the giving of
    25     testimony.
    26         (3)  Request and receive information or records of any
    27     kind, including reports of criminal history record
    28     information from any Federal, state, local or foreign
    29     government entity regarding an applicant for a license,
    30     licensee or person related in any way to the business of the
    20070S0487B1753                 - 32 -     

     1     applicant or licensee, at a cost to be paid by the applicant
     2     or licensee.
     3         (4)  Require a licensee or nonlicensee to pay the
     4     department's costs incurred while conducting an investigation
     5     of the licensee or nonlicensee for purposes of issuance or
     6     renewal of a license or for any violation of this chapter,
     7     regardless of whether such costs are in excess of license or
     8     renewal fees paid by a licensee.
     9         (5)  Issue regulations, statements of policy or orders as
    10     may be necessary for the proper conduct of the first mortgage
    11     loan business by licensees, the issuance and renewal of
    12     licenses and the enforcement of this chapter.
    13         (6)  Prohibit or permanently remove an individual
    14     responsible for a violation of this chapter from working in
    15     his present capacity or in any other capacity related to
    16     activities regulated by the department.
    17         (7)  Order a person to make restitution for actual
    18     damages to consumers caused by any violation of this chapter.
    19         (8)  Issue cease and desist orders that are effective
    20     immediately, subject to a hearing as specified in subsection
    21     (b) within 14 days of the issuance of the order.
    22         (9)  Impose such other conditions as the department deems
    23     appropriate.
    24     (b)  Hearings.--A person aggrieved by a decision of the
    25  department may appeal the decision of the department to the
    26  secretary. The appeal shall be conducted under 2 Pa.C.S Ch. 5
    27  Subch. A (relating to practice and procedure of Commonwealth
    28  agencies).
    29     (c)  Injunctions.--The department may maintain an action for
    30  an injunction or other process against a person to restrain and
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     1  prevent the person from engaging in an activity violating this
     2  chapter.
     3     (d)  Final orders.--A decision of the secretary shall be a
     4  final order of the department and shall be enforceable in a
     5  court of competent jurisdiction. The department may publish
     6  final adjudications issued under this section, subject to
     7  redaction or modification to preserve confidentiality.
     8     (e)  Appeals.--A person aggrieved by a decision of the
     9  secretary may appeal the decision under 2 Pa.C.S. Ch. 7 Subch. A
    10  (relating to judicial review of Commonwealth agency action).
    11     (f)  Orders affecting mortgage originators.--An order issued
    12  against a licensee is applicable to the mortgage originators
    13  employed by the licensee.
    14     Section 3.  Section 311 of the act, amended June 25, 2001
    15  (P.L.621, No.55), is repealed:
    16  [Section 311.  Fees.
    17     (a)  Certain fees prohibited.--No real estate broker or
    18  salesperson who has received a fee, commission or other valuable
    19  consideration in connection with the sale or transfer of real
    20  estate shall be paid or receive a fee or other compensation,
    21  directly or indirectly, for providing mortgage brokering
    22  services in connection with the origination of a mortgage loan
    23  relative to such sale or transfer of real estate, but such
    24  broker or salesperson may receive a fee in connection with such
    25  mortgage loan transaction which shall not exceed an amount as
    26  established by the commission pursuant to this section.
    27     (b)  Regulations.--The commission shall, within 180 days of
    28  the effective date of this subsection, promulgate rules and
    29  regulations establishing the maximum fees which a real estate
    30  broker or salesperson may charge for services rendered in
    20070S0487B1753                 - 34 -     

     1  connection with mortgage brokering services. Said fees shall:
     2         (1)  Be for actual services rendered in connection with
     3     the origination of a mortgage loan.
     4         (2)  Be expressed in terms of dollars or as a percentage
     5     of the mortgage loan being created.
     6     (c)  Formulation procedure.--Prior to the publication of any
     7  notice of proposed rulemaking under this section, the commission
     8  shall hold public hearings to afford any interested party,
     9  including the department, full opportunity to present testimony,
    10  comment thereon and make recommendations regarding the
    11  formulation of such rules and regulations. The department shall
    12  also have 30 days following the close of the hearings to submit
    13  further comments and recommendations to the commission. The
    14  procedure contained in this section shall be in addition to the
    15  requirements contained in the act of June 25, 1982 (P.L.633,
    16  No.181), known as the Regulatory Review Act, and shall not
    17  affect any right the department may have to participate in the
    18  rulemaking process following the commission's publication of
    19  proposed rules and regulations as permitted by that act. In
    20  establishing the maximum fees allowable, the commission shall
    21  consider the nature of the services performed by the real estate
    22  broker or salesperson and the time required for the performance
    23  thereof.
    24     (d)  Licensing option.--A real estate broker or salesperson
    25  who is also a bona fide mortgage broker, mortgage banker or loan
    26  correspondent who holds himself out publicly as such shall have
    27  the option of being licensed and regulated by the department, in
    28  which case he shall not be subject to the fee limitations
    29  provided for in this section or the rules and regulations
    30  promulgated by the commission hereunder.
    20070S0487B1753                 - 35 -     

     1     (e)  Disclosure.--No real estate broker or salesperson shall
     2  receive a fee, commission or other valuable consideration
     3  pursuant to this section and the regulations promulgated
     4  hereunder unless he makes the following written disclosure to
     5  the buyer in at least ten-point boldface capital letters.
     6             The real estate broker in this transaction who has
     7         offered to assist me in obtaining a mortgage loan has
     8         advised me of the following:
     9             (1)  He does not represent any particular mortgage
    10         lender; or the name of the mortgage lender he represents
    11         is.........................
    12             (2)  I am not required to obtain the mortgage for the
    13         purchase of the real estate from the mortgage banker whom
    14         the broker represents.
    15             (3)  The real estate broker has a fiduciary
    16         obligation to the seller, from whom he will receive a
    17         commission.
    18             (4)  Should the real estate broker violate any of the
    19         provisions of the Real Estate Licensing and Registration
    20         Act or the Mortgage Bankers and Brokers Act I may file a
    21         complaint with the Pennsylvania Real Estate Commission.]
    22     Section 4.  Sections 313 and 314 of the act, amended June 25,
    23  2001 (P.L.621, No.55), are amended to read:
    24  Section 313.  Suspension, revocation or refusal.
    25     (a)  Departmental action.--The department may suspend, revoke
    26  or refuse to renew any license issued pursuant to this chapter
    27  [after giving 30 days' written notice forwarded to the
    28  licensee's principal place of business, by registered or
    29  certified mail, return receipt requested, stating the
    30  contemplated action and the reason therefor, if the department
    20070S0487B1753                 - 36 -     

     1  shall find, after the licensee has had an opportunity to be
     2  heard, that the] if any fact or condition exists or is
     3  discovered which, if it had existed or had been discovered at
     4  the time of filing of the application for such license, would
     5  have warranted the department in refusing to issue such license
     6  or if a licensee or director, officer, partner, employee or
     7  owner of a licensee has:
     8         (1)  Made any false or material misstatement in his
     9     application or any report or submission required by this
    10     chapter or department regulation, statement of policy or
    11     order.
    12         (2)  Failed to comply with or violated any provision of
    13     this chapter or any rule, regulation, statement of policy or
    14     order promulgated or issued by the department pursuant to
    15     this chapter.
    16         (3)  If licensed under section [304(c)] 304(b.1)(1)(i) or
    17     (c), accepted an advance fee without having obtained the bond
    18     required by section 304(b.1)(1)(i) or (c)(1).
    19         (4)  Become insolvent, meaning that the liabilities of
    20     the applicant or licensee exceed the assets of the applicant
    21     or licensee or that the applicant or licensee cannot meet the
    22     obligations of the applicant or licensee as they mature, or
    23     is in such financial condition that the applicant or licensee
    24     cannot continue in business with safety to the customers of
    25     the applicant or licensee.
    26         (5)  Engaged in dishonest, fraudulent or illegal
    27     practices or conduct in any business or unfair or unethical
    28     practices or conduct in connection with the mortgage
    29     business.
    30         (6)  Been convicted of [a misdemeanor or of a] or plead
    20070S0487B1753                 - 37 -     

     1     guilty or nolo contendere to a crime of moral turpitude
     2     felony.
     3         [(7)  Filed an application for a license which, as of the
     4     date the license was issued or as of the date of an order
     5     denying, suspending or revoking a license, was incomplete in
     6     any material respect or contained any statement that was, in
     7     light of the circumstances under which it was made, false or
     8     misleading with respect to any material fact.]
     9         (8)  Permanently or temporarily been enjoined by a court
    10     of competent jurisdiction from engaging in or continuing any
    11     conduct or practice involving any aspect of the mortgage
    12     business.
    13         (9)  Become the subject of an order of the department
    14     denying, suspending or revoking a license [as a mortgage
    15     banker, mortgage broker, limited mortgage broker or loan
    16     correspondent] under the provisions of this chapter.
    17         (10)  Become the subject of a United States Postal
    18     Service fraud order [that is currently effective and was
    19     issued within the last five years].
    20         (11)  Failed to comply with the requirements of this
    21     chapter to make and keep records prescribed by [rule]
    22     regulation, statement of policy or order of the department,
    23     to produce such records required by the department or to file
    24     any financial reports or other information the department by
    25     [rule] regulation, statement of policy or order may require.
    26         (12)  Become the subject of an order of the department
    27     denying, suspending or revoking a license under the
    28     provisions of any other law administered by the department.
    29         [(13)  Failed to comply with a cease and desist order
    30     entered after notice and opportunity for hearing and issued
    20070S0487B1753                 - 38 -     

     1     by the department within the last five years.]
     2         (14)  Demonstrated negligence or incompetence in
     3     performing any act for which the licensee is required to hold
     4     a license under this chapter.
     5         [(15)  In the case of a limited mortgage broker,
     6     negotiated or placed, either directly or indirectly, a
     7     mortgage loan other than a nonpurchase money mortgage loan as
     8     defined in this chapter.
     9  The hearing and notice provisions of this section shall not
    10  apply if the licensee's corporate charter is voided in
    11  accordance with the provisions of any law of this or any other
    12  state, in which event the department may suspend or revoke the
    13  license.]
    14         (16)  Failed to complete the qualifying or continuing
    15     education as required by section 304(e).
    16         (17)  In the case of a mortgage banker, loan
    17     correspondent or mortgage broker, conducted the first
    18     mortgage loan business through an unlicensed mortgage
    19     originator.
    20         (18)  Failed to comply with the terms of any agreement
    21     under which the department authorizes a licensee to maintain
    22     records at a place other than the licensee's principal place
    23     of business.
    24     (b)  Reinstatement.--The department may subsequently
    25  reinstate a license which has been suspended or revoked or renew
    26  a license which had previously been refused for renewal if the
    27  condition which warranted the original action has been corrected
    28  and the department has reason to believe that such condition is
    29  not likely to occur again and the licensee satisfies the
    30  requirements of this chapter.
    20070S0487B1753                 - 39 -     

     1  Section 314.  Penalties.
     2     (a)  Nonlicensees.--Any person who is not licensed by the
     3  department or is not exempted from the licensing requirements in
     4  accordance with the provisions of this chapter and who engages
     5  in the first loan mortgage business [of a mortgage banker, loan
     6  correspondent, mortgage broker or limited mortgage broker]
     7  commits a felony of the third degree.
     8     (b)  Nonlicensees subject to the provisions of this
     9  chapter.--Any person who is subject to the provisions of this
    10  chapter, even though not licensed hereunder, or any person who
    11  is not licensed by the department or is not exempt from the
    12  licensing requirements, who violates any of the provisions to
    13  which it is subject shall be subject to a fine levied by the
    14  department or commission of up to [$2,000] $10,000 for each
    15  offense. [Any such nonlicensed person who commits three or more
    16  offenses may, at the discretion of the department or commission,
    17  be prohibited from engaging in the first mortgage loan business
    18  unless licensed under this chapter.]
    19     (c)  Violations by licensees.--Any person licensed under the
    20  provisions of this chapter or any director, officer, employee or
    21  agent of a licensee who shall violate the provisions of this
    22  chapter or shall direct or consent to such violations shall be
    23  subject to a fine levied by the department of up to [$2,000]
    24  $10,000 for each offense.
    25     [(d)  Limited powers.--The powers conferred upon the
    26  commission by subsection (b) shall only be exercised by the
    27  commission in relation to persons licensed pursuant to the
    28  provisions of the act of February 19, 1980 (P.L.15, No.9), known
    29  as the Real Estate Licensing and Registration Act, who are
    30  subject to subsection (b) under section 303(b)(3) and the
    20070S0487B1753                 - 40 -     

     1  exercise of such power by the commission in relation to such
     2  persons shall be exclusive.]
     3     Section 5.  Sections 316 and 317 of the act, amended June 25,
     4  2001 (P.L.621, No.55) are repealed:
     5  [Section 316.  Referral fees.
     6     Nothing in this chapter shall permit a real estate broker or
     7  salesperson, who receives a fee, commission or other valuable
     8  consideration relating to the sale of residential real property,
     9  to be paid or receive a finder's fee or a referral fee for the
    10  referral of a mortgage loan to a lender in connection with that
    11  sale, whether or not the real estate broker or salesperson is
    12  licensed and regulated by the department.
    13  Section 317.  Real Estate Recovery Fund.
    14     Any person injured by the wrongful act, default or
    15  misrepresentation of a person engaged in the activities of a
    16  mortgage broker who is exempt from licensure under this chapter
    17  by virtue of being licensed pursuant to the act of February 19,
    18  1980 (P.L.15, No.9), known as the Real Estate Licensing and
    19  Registration Act, shall be entitled to seek recovery from the
    20  Real Estate Recovery Fund established by the Real Estate
    21  Licensing and Registration Act notwithstanding the fact that
    22  such wrongful act, default or misrepresentation occurred in
    23  conjunction with mortgage-brokering activities subject, however,
    24  to all other terms and conditions of the Real Estate Licensing
    25  and Registration Act regarding recovery from that fund.]
    26     Section 6.  This act shall take effect in 60 days.



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