PRINTER'S NO. 1151
No. 986 Session of 1977
INTRODUCED BY O'DONNELL, IRVIS, MANDERINO, WHITE, RHODES,
TENAGLIO, RAVENSTAHL, RICHARDSON, REED, ITKIN, ZWIKL,
LAUGHLIN, BERSON, FLAHERTY, McLANE, HARPER, DOMBROWSKI,
COHEN, BITTINGER, MILLIRON, MELUSKEY, BROWN AND CAPUTO,
APRIL 26, 1977
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, APRIL 26, 1977
AN ACT
1 Providing for the disclosure by certain institutions of
2 information concerning the making of mortgage loans, the
3 procedure to be followed in doing so, making an appropriation
4 and prescribing penalties.
5 The General Assembly of the Commonwealth of Pennsylvania
6 hereby enacts as follows:
7 Section 1. Short title.
8 This act shall be known and may be cited as the "Home
9 Mortgage and Deposit Disclosure Act."
10 Section 2. Declaration of policy.
11 (a) It has been determined by the General Assembly of this
12 Commonwealth that:
13 (1) There is both a decline in the living conditions and
14 a disinvestment of funds in various neighborhoods throughout
15 the Commonwealth and that this decline and disinvestment adds
16 to the shortage of decent, safe and sanitary housing for the
17 inhabitants of the Commonwealth.
1 (2) Financial institutions which make or arrange home
2 mortgage loans may contribute to this decline and
3 disinvestment in neighborhoods by denying home financing or
4 by failing to provide home financing or reasonable terms and
5 conditions to qualified applicants on the basis of the
6 geographic location of the property which is to be purchased,
7 improved or rehabilitated.
8 (3) The customers of the financial institutions which
9 make or arrange home mortgage loans should be provided with
10 the necessary information to determine if these institutions
11 are fulfilling their responsibilities to them.
12 (b) It is declared to be the policy of the Commonwealth of
13 Pennsylvania to promote the health and welfare of its
14 inhabitants by requiring financial institutions to make
15 disclosures concerning home financing and deposits. Such
16 disclosures would provide the Commonwealth and its citizens with
17 sufficient information to enable them to determine whether
18 financial institutions are fulfilling their responsibilities to
19 their customers and are serving the housing needs of the
20 neighborhoods in which their customers reside. The disclosures
21 would assist public officials at State and local levels in their
22 determination of the distribution of public sector investments
23 in a manner designed to improve the private investment
24 environment and to aid State and local interests and priorities.
25 The policy of the Commonwealth is not intended to, nor is it to
26 be construed to encourage unsound lending practices or the
27 improper allocation of credit.
28 Section 3. Definitions.
29 The following words and phrases when used in this act shall
30 have, unless the context clearly indicates otherwise, the
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1 meanings given to them in this section:
2 "Census tract." A standard statistical area as established
3 by the United States Bureau of the Census.
4 "Department." The Department of Community Affairs.
5 "Depository institution." An office of a commercial bank,
6 savings bank, savings and loan association, homestead
7 association (including cooperative banks), credit union and any
8 other association which is in the business of or was organized
9 to hold or receive deposits.
10 "Financial institution." An office of a commercial bank,
11 savings bank, savings and loan association, building and loan
12 association, homestead association (including cooperative
13 banks), credit union, mortgage service company, mortgage broker,
14 mortgage banker, insurance company and any other such
15 association or institution which:
16 (1) is regulated, supervised, chartered or incorporated
17 by or in the Commonwealth or operates or has a place of
18 business in the Commonwealth; and
19 (2) makes or arranges mortgage loans or home improvement
20 loans.
21 A financial institution may also be a depository institution.
22 "Deposits." The money which a financial institution receives
23 to be held in saving accounts, checking accounts, time deposits
24 and other forms for investment or safekeeping.
25 "Home improvement loan." A loan, the proceeds of which are
26 to be used for the purpose of repairing, rehabilitating or
27 remodeling an existing residential dwelling.
28 "Mortgage loan." A loan which is secured by residential real
29 property.
30 "Reporting period." One six-month time interval of the
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1 biannual reporting cycle. The reporting periods are from January
2 1 to June 30 and from July 1 to December 31 of each year. The
3 first reporting period shall begin on the effective date of this
4 act.
5 Section 4. Compilation of information on mortgage and home
6 improvement loans.
7 (a) A financial institution shall compile the following
8 information for each reporting period:
9 (1) The number and total dollar amount of mortgage loans
10 which were originated by it.
11 (2) The number and total dollar amount of mortgage loans
12 which were purchased by it.
13 (3) The number and total dollar amount of mortgage loans
14 which were refinanced by it.
15 (4) The number and total unpaid balance of all
16 outstanding mortgage loans held by it.
17 (5) The number, percentage and aggregate amount of all
18 mortgage loans foreclosed by it.
19 (6) The number of written mortgage loan applications
20 denied with the reasons for the denials. The department shall
21 categorize and define the reasons for denial on the report
22 forms which the department shall supply to the financial
23 institutions pursuant to this act.
24 (b) The information relating to mortgage loans shall be
25 further itemized to disclose the following for each item:
26 (1) The number and total dollar amount of mortgage loans
27 and home improvement loans which are insured under Title II
28 of the National Housing Act or under Title V of the Housing
29 Act of 1949 or which are guaranteed under Chapter 37 of Title
30 38, United States Code.
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1 (2) The number and total dollar amount of mortgage loans
2 made to mortgagors who did not, at the time of the execution
3 of the mortgage, intend to reside in the property securing
4 the loan.
5 (3) The number and total dollar amount of home
6 improvement loans.
7 (c) The information shall be itemized by census tracts
8 within the Commonwealth. Census tracts for mortgage loans are
9 the tracts where property securing the loan is located. Census
10 tracts for home improvement loans are the tracts where the
11 property to be improved or rehabilitated is located. If no
12 census tracts are mapped for an area the information shall be
13 itemized by ZIP Code.
14 (d) The information shall be further itemized on the
15 aggregate for all mortgage loans and home improvement loans
16 which are secured by property located outside the Commonwealth.
17 Section 5. Disclosure of terms of mortgage and home improvement
18 loans.
19 A financial institution shall disclose in a report the terms,
20 i.e., down payment rates, appraisal values, interest rates and
21 other such terms, of mortgage loans and home improvement loans
22 made by it during each reporting period. The department shall
23 determine which terms and the manner in which they shall be
24 disclosed in the report. It shall prescribe the form for the
25 report and shall supply the forms to the financial institutions.
26 Section 6. Compilation of information on deposits.
27 (a) Each financial institution which is also a depository
28 institution shall compile the following information for each
29 reporting period:
30 (1) The number and total dollar amount of deposits held
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1 by it.
2 (2) The number and total dollar amount of savings
3 accounts, checking accounts and time deposits held by it.
4 (3) The number and total dollar amount of savings
5 accounts, checking accounts and time deposits which were
6 opened or deposited with it during the reporting period.
7 (b) The information shall be further itemized to:
8 (1) accounts under $100,000; and
9 (2) accounts of $100,000 and above.
10 (c) The information shall be itemized by census tracts
11 within the Commonwealth. Census tracts for deposits are the
12 tracts where the depositor maintains his principal residence
13 within the Commonwealth. If no census tracts are mapped out for
14 an area the information shall be itemized by ZIP Code.
15 (d) The information shall be further itemized on the
16 aggregate for deposits for which the depositor maintains his
17 principal residence outside of the Commonwealth.
18 Section 7. Report.
19 (a) The information required to be compiled and disclosed by
20 financial institutions shall be reported on forms prepared by
21 the department and supplied to the financial institutions.
22 (b) A financial institution shall make the report available
23 to the public for inspection and for copying at a cost not above
24 the actual copying cost to the financial institution. The
25 financial institution shall make public the availability of the
26 report by posting notice of such fact in a conspicuous place in
27 its offices. The financial institution shall notify its
28 customers of the availability of the report after each reporting
29 period by issuing a statement containing the following language:
30 "The disclosure reports on mortgage loans, home improvement
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1 loans and deposits required to be compiled and made known
2 pursuant to the Home Mortgage and Deposit Disclosure Act of the
3 Commonwealth of Pennsylvania, are available for your inspection
4 and copying at our offices."
5 (c) A financial institution, which is a main office with one
6 or more branch offices, shall combine the information required
7 to be compiled and disclosed pursuant to this act for itself and
8 its branches in one report. This combined report shall be in
9 addition to the individual reports made available by each
10 financial institution.
11 (d) The report shall be made on a biannual basis and shall
12 be made available within 60 days after the end of each reporting
13 period. The effective date of this act shall be the beginning of
14 the reporting period cycle.
15 (e) The information in a report shall be made available by
16 the financial institution for a period of five years after the
17 date it was required to be reported.
18 Section 8. Filing of report with Commonwealth.
19 (a) Financial institutions shall file the report with the
20 department for each reporting period. It shall be filed on a
21 biannual basis, within 60 days after the end of each reporting
22 period.
23 (b) The report shall be made available to the public by the
24 department for a period of five years after the date it was
25 required to be reported.
26 Section 9. Department of Community Affairs.
27 (a) The department is charged with the administration of
28 this act.
29 (b) The department shall determine what information shall be
30 required of financial institutions and shall prescribe the forms
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1 for the reports required to be filed by the financial
2 institutions.
3 (c) The department shall have the power and duty to
4 prescribe such regulations as may be necessary to carry out the
5 purposes of this act. They may contain such classifications,
6 differentiations or other provisions and may provide for such
7 adjustments and exceptions for any class of transactions as the
8 department in its sole discretion deems necessary and proper to
9 effectuate the purposes of this act.
10 (d) The department may analyze the practices of the
11 financial institutions in home financing in relationship to its
12 customers and to the housing needs and conditions of the
13 Commonwealth. To aid Commonwealth agencies, local governments
14 and the public with their investment policies, the analysis by
15 the department may be made known in a report by it to agencies
16 of the Commonwealth and local governments. Its analysis shall be
17 made available to community interest organizations.
18 Section 10. Advisory board.
19 (a) An advisory board is created for the purpose of
20 providing the department assistance in its formulation of rules
21 and regulations and in the prescribing of forms. It shall, as
22 may be deemed necessary by the department, aid in the
23 administration of this act.
24 (b) The advisory board shall consist of the following
25 members appointed by the Governor:
26 (1) the Secretary of the Department of Banking or his
27 designated representative;
28 (2) a representative of the Pennsylvania Bankers'
29 Association upon the recommendation of that organization;
30 (3) a representative of the Pennsylvania Savings and
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1 Loan League upon the recommendation of that organization;
2 (4) a representative of a political subdivision of the
3 Commonwealth;
4 (5) a representative of a community organization; and
5 (6) a citizen at large.
6 (c) The term of the appointments shall be for a period of
7 four years.
8 (d) The members of the advisory board shall not receive any
9 compensation for their services but shall be reimbursed for the
10 actual and necessary expenses incurred in the performance of
11 their duties.
12 Section 11. Enforcement.
13 (a) The department shall determine if financial institutions
14 have complied with the provisions of this act. Lack of
15 compliance shall result in one or all of the following measures:
16 (1) A financial institution shall be fined $500 per day
17 for a report which is not in compliance with the time
18 requirements of sections 7(d) and 8 (a) until the report is
19 made available to the public pursuant to section 7 and is
20 filed with the department pursuant to section 8. The
21 department may relieve an institution from the payment of
22 such penalty, in whole or in part, upon a showing to it of
23 good cause for the failure to comply with the time
24 requirements of sections 7(d) and 8(a).
25 (2) A financial institution shall be fined $10,000 for
26 incomplete or inaccurate reports. The department may relieve
27 an institution from the payment of such penalty, in whole or
28 in part, upon a showing to it of good cause for the failure
29 to submit complete and accurate reports.
30 (3) A financial institution which does not make the
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1 report available for a period of five years as required by
2 section 7(e) shall be fined $10,000.
3 (b) The fines set forth in this section shall be levied by
4 the department. The moneys collected by the department for such
5 fines shall be transferred to the General Fund.
6 Section 12. Appropriation.
7 The sum of $100,000 is appropriated to the department to
8 carry out the duties required by this act.
9 Section 13. Effective date.
10 (a) This act shall take effect January 1, 1978 and shall
11 expire December 31, 1981 unless the General Assembly extends its
12 existence prior to July 1, 1981.
13 (b) In the event the General Assembly does not continue this
14 act, the institutions required to report by this act shall
15 submit to the department, no later than March 1, 1982, a
16 disclosure report for the period ending December 31, 1981. The
17 regulatory powers granted to the department by this act shall
18 remain in effect until December 31, 1982.
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