THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY BROWNE, D. WHITE, O'PAKE, FERLO, BAKER, BOSCOLA, M. WHITE, STACK, TARTAGLIONE, WARD, WASHINGTON AND COSTA, JUNE 5, 2009

SENATOR CORMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED, JUNE 24, 2009   

AN ACT

Amending Title 7 (Banks and Banking) of the Pennsylvania

Consolidated Statutes, in mortgage loan industry licensing 

and consumer protection, further providing for scope, for

definitions, for license requirements, for exceptions to

license requirements, for general requirements, for powers of

licensees in mortgage loan business, for mortgage lending

authority and for license applications; providing for

prelicensing and continuing education; further providing for

license fees, for license issuance, for licensee

requirements, for administration and for sanctions; and

providing for procedure for determination of noncompliance

with Federal law.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 6101 of Title 7 of the Pennsylvania

Consolidated Statutes is amended to read:

§ 6101.  Scope [of chapter] and short title.

(a)  Scope.--This chapter relates to mortgage loan industry

licensing and consumer protection. This chapter does not apply

to a banking institution or federally chartered or State-

chartered credit union, if the primary regulator of the banking

institution or federally or State-chartered credit union

supervises the banking institution or federally or State-

chartered credit union.

(b)  Short title.--This chapter shall be known and may be

cited as the Mortgage Licensing Act.

Section 2.  The definitions of "branch," "finder's fee" or

"referral fee," "first mortgage loan," "mortgage originator,"

"principal place of business," "secondary mortgage loan" and

"tangible net worth" in section 6102 of Title 7 are amended and

the section is amended by adding definitions to read:

§ 6102.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Branch."  An office or other place of business, other than

the principal place of business, [located in this Commonwealth

or any other state,] where a person engages in the mortgage loan

business subject to this chapter.

"Clerical or support duties."  Any of the following:

(1)  The receipt, collection, distribution and analysis

of information common for the processing or underwriting of a

mortgage loan.

(2)  Communicating with a consumer to obtain the

information necessary for the processing or underwriting of a

mortgage loan, to the extent that the communication does not

include:

(i)  offering or negotiating mortgage loan rates or

terms; or

(ii)  counseling consumers about mortgage loan rates

or terms.

* * *

"Dwelling."  As defined in section 103(v) of the Truth in

Lending Act (Public Law 90-321, 15 U.S.C. § 1602(v)).

"Federal banking agency."  Any of the following:

(1)  The Board of Governors of the Federal Reserve

System.

(2)  The Office of the Comptroller of the Currency.

(3)  The Office of Thrift Supervision.

(4)  The National Credit Union Administration.

(5)  The Federal Deposit Insurance Corporation.

"Finder's [fee" or "referral] fee."  Any payment of money or

other consideration for the referral of a mortgage loan to a

licensee, except for consideration paid for goods or facilities

actually furnished or services actually performed.

"First mortgage loan."  A loan which is:

(1)  made primarily for personal, family or household

use; and

(2)  secured [in whole or in part by a] by any first lien

[upon any interest in real property created by a security

agreement, including a mortgage, indenture, deed of trust or

any other similar instrument or document, which real property

is used as a one-family to four-family dwelling, a portion of

which may be used for nonresidential purposes] mortgage, deed

of trust or equivalent consensual security interest on a

dwelling or on residential real estate.

* * *

"Immediate family."  A parent, spouse, child, brother or

sister.

* * * 

"Loan processor or underwriter."  An individual who performs

clerical or support duties as an employee at the direction of

and subject to the supervision and instruction of a person

licensed or exempt from licensing under this chapter.

* * *

"Mortgage originator."

(1)  An individual [not licensed as a mortgage lender,

mortgage broker or loan correspondent under this chapter who

solicits, accepts or offers to accept mortgage loan

applications, or negotiates mortgage loan terms, in other

than a clerical or ministerial capacity and] who [is

personally in direct contact, in writing, including

electronic messaging, or by voice communication, with

consumers with regard to the solicitations, acceptances,

offers or negotiations. The term does not include directors,

partners or ultimate equitable owners of 10% or more of a

licensee.] takes a mortgage loan application or offers or

negotiates terms of a mortgage loan for compensation or gain.

(2)  The term does not include any of the following:

(i)  An individual engaged solely as a loan processor

or underwriter consistent with section 6112(8) (relating

to exceptions to license requirements).

(ii)  A person or entity solely involved in

extensions of credit relating to timeshare plans. As used

in this paragraph, the term "timeshare plan" has the

meaning given in 11 U.S.C. § 101(53D) (relating to

definitions).

(3)  Except as set forth in paragraph (4), the term does

not include an employee of a licensee or person exempt or

excepted from licensure under this chapter who solely

renegotiates terms for existing mortgage loans held or

serviced by that licensee or person and who does not

otherwise act as a mortgage originator.

(4)  The exclusion under paragraph (3) shall not apply if

the Department of Housing and Urban Development or a court of

competent jurisdiction determines that the S.A.F.E. Mortgage

Licensing Act of 2008 (110 Stat. 289, 12 U.S.C. § 5101 et

seq.) requires such an employee to be licensed as a mortgage

originator under state laws implementing the S.A.F.E.

Mortgage Licensing Act of 2008. This paragraph is subject to

section 6154 (relating to procedure for determination of

noncompliance with Federal law).

"Nationwide Mortgage Licensing System and Registry."  The

licensing system developed and maintained by the Conference of

State Bank Supervisors and the American Association of

Residential Mortgage Regulators.

"Net worth."  Assets less liabilities and assets unacceptable

to the United States Department of Housing and Urban Development

for purposes of complying with 24 CFR § 202.5(n) (relating to

general approval standards) or 202.8(b)(1) (relating to loan

correspondent lenders and mortgagees), as applicable.

"Nontraditional mortgage loan."  A mortgage loan other than a

30-year fixed rate mortgage loan.

* * *

"Principal place of business."  The primary office of a

person [located in this Commonwealth,] which is staffed on a

full-time basis and at which the person's books, records,

accounts and documents are maintained.

"Registered mortgage loan originator."  An individual who

complies with all of the following paragraphs:

(1)  Meets the definition of mortgage originator and is

an employee of:

(i)  a banking institution or federally chartered or

State-chartered credit union;

(ii)  a subsidiary owned and controlled by a

federally chartered or State-chartered credit union and

supervised by a Federal banking agency; or

(iii)  an institution regulated by the Farm Credit

Administration.

(2)  Is registered with and maintains a unique identifier

through the Nationwide Mortgage Licensing System and

Registry.

"Residential real estate."  Real property upon which is

constructed or intended to be constructed a dwelling.

"Secondary mortgage loan."  A loan which is:

(1)  made primarily for personal, family or household

use; and

(2)  secured [in whole or in part by a first] by any

secondary lien [upon any interest in real property created by

a security agreement, including a mortgage, indenture, deed

of trust or any other similar instrument or document, which

real property is subject to a prior lien and which is used as

a one-family to four-family dwelling, a portion of which may

be used for nonresidential purposes] mortgage, deed of trust

or equivalent consensual security interest on a dwelling or

on residential real estate.

* * *

"Service mortgage loan."  A collecting or remitting payment

for another, or the right to collect or remit payments for

another, of principal, interest, tax, insurance or other payment

under a mortgage loan.

["Tangible net worth."  Net worth less the following assets:

(1)  That portion of any assets pledged to secure

obligations of any person other than that of the applicant.

(2)  Any asset, except construction loan receivables

secured by first mortgages from related companies, due from

officers or stockholders of the applicant or related

companies in which the applicant's officers or stockholders

have an interest.

(3)  That portion of the value of any marketable

security, listed or unlisted, not shown at the lower of the

cost or market value, except for any shares of Federal

National Mortgage Association stock required to be held under

a servicing agreement, which are carried at cost.

(4)  Any amount in excess of the lower of the cost or

market value of mortgages in foreclosures, construction loans

or foreclosed property acquired by the applicant through

foreclosure.

(5)  Any investment shown on the balance sheet in the

applicant's joint ventures, subsidiaries, affiliates or

related companies which is greater than the value of the

assets at equity.

(6)  Goodwill.

(7)  The value placed on insurance renewals or property

management contract renewals or other similar intangibles of

the applicant.

(8)  Organization costs of the applicant.

(9)  The value of any servicing contracts held by the

applicant not determined in accordance with the American

Institute of Certified Public Accountants Statement of

Position 76-2, dated August 25, 1976, or subsequent revisions

thereto.

(10)  Any real estate held for investment where

development will not start within two years from the date of

its initial acquisition.

(11)  Any leasehold improvements not being amortized over

the lesser of the expected life of the asset or the remaining

term of the lease.

(12)  Any fees paid or collected which are not

recoverable through the closing or selling of loans.]

"Unique identifier."  A number or other identifier assigned

by the Nationwide Mortgage Licensing System and Registry.

* * *

Section 3.  Sections 6111(a) and (b) and 6112(2), (3), (4),

(5), (6), (7), (8), (9), (10), (11) and (12) of Title 7 are

amended to read:

§ 6111.  License requirements.

(a)  General rule.--Except as provided under subsections (b)

and (c) and section 6112 (relating to exceptions to license

requirements), on and after the effective date of this section,

no person shall engage in the mortgage loan business in this

Commonwealth without being licensed as a mortgage broker,

mortgage lender, mortgage loan correspondent or mortgage

originator as provided under this chapter. A mortgage originator

may not engage in the mortgage loan business unless the mortgage

originator is employed and supervised by a licensed mortgage

broker, mortgage lender or mortgage loan correspondent, person

excepted from this chapter or person excepted from licensure

under section 6112.

(b)  Licensed activity exceptions.--

(1)  A mortgage lender may act as a mortgage broker or

mortgage loan correspondent without a separate mortgage

broker or mortgage loan correspondent license [and, if

licensed as an individual, may perform the services of a

mortgage originator without a separate mortgage originator

license].

(2)  A mortgage loan correspondent may act as a mortgage

broker without a separate mortgage broker license [and, if

licensed as an individual, may perform the services of a

mortgage originator without a separate mortgage originator

license].

(3)  A person licensed as a mortgage broker may only

perform the services of a mortgage broker. [If a mortgage

broker is licensed as an individual, a mortgage broker may

perform the services of a mortgage originator without a

separate mortgage originator license.]

* * *

§ 6112.  Exceptions to license requirements.

The following persons shall not be required to be licensed

under this chapter in order to conduct the mortgage loan

business:

* * *

(2)  An attorney [authorized to practice law in this

Commonwealth] at law not otherwise engaged in or holding

himself or herself out to the public as being engaged in the

mortgage loan business who acts as a mortgage broker or a

mortgage originator in negotiating or placing a mortgage loan

in the normal course of legal practice. The exception under

this paragraph shall not apply if the attorney is compensated

by any of the following:

(i)  A mortgage broker.

(ii)  A mortgage lender.

(iii)  A mortgage loan correspondent.

(iv)  A person excepted from licensure under this

section.

(v)  A mortgage originator.

(vi)  An agent of a person listed in subparagraphs

(i) through (v).

(3)  A person who [either originates,] offers or 

negotiates [or services less than three mortgage loans in a

calendar year in this Commonwealth, unless the person is

otherwise deemed to be engaged in the mortgage loan business

by the department] terms of a mortgage loan with or on behalf

of or makes a mortgage loan to a member of the person's

immediate family.

(4)  Any agency or instrumentality of the Federal

Government or a corporation otherwise created by an act of

the United States Congress, including the Federal National

Mortgage Association, the Government National Mortgage

Association, the Veterans' Administration, the Federal Home

Loan Mortgage Corporation and the Federal Housing

Administration. To qualify for the exception under this

paragraph, the agency or instrumentality must:

(i)  in the same manner as a mortgage lender, obtain

and maintain bond coverage for mortgage originators

consistent with section 6131(c)(5) (relating to

application for license) and file an annual report

consistent with section 6135(a)(3) (relating to licensee

requirements); or

(ii)  annually, in a form acceptable to the

department, demonstrate to the department that all of the

mortgage originators employed by the agency or

instrumentality have obtained and maintained the bond

coverage required by section 6131(f)(4).

(5)  Any agency or instrumentality of a state or local

government, the District of Columbia or any territory of the

United States, including the Pennsylvania Housing Finance

Agency and other government housing finance agencies. To

qualify for the exception under this paragraph, the agency or

instrumentality must:

(i)  in the same manner as a mortgage lender, obtain

and maintain bond coverage for mortgage originators

consistent with section 6131(c)(5) and file an annual

report consistent with section 6135(a)(3); or

(ii)  annually, in a form acceptable to the

department, demonstrate to the department that all of the

mortgage originators employed by the agency or

instrumentality have obtained and maintained the bond

coverage required by section 6131(f)(4).

(6)  Consumer discount companies, except that a consumer

discount company that acts as a mortgage broker, mortgage

lender or mortgage loan correspondent other than under the

provisions of the act of April 8, 1937 (P.L.262, No.66),

known as the Consumer Discount Company Act, shall be subject

to the provisions of Subchapter C (relating to mortgage loan

business restrictions and requirements) and sections 6131(c)

(2) [and], (3) [(relating to application for license), 6135

(relating to licensee requirements)] and (5), 6138 (relating

to authority of department) and 6140(b) (relating to

penalties). Employees of licensees under the Consumer

Discount Company Act that act as mortgage originators shall

be subject to the licensing requirements of this chapter.

Consumer discount companies that employ mortgage originators

shall be subject to the same requirements as mortgage lenders

in regard to the employment and supervision of mortgage

originators.

(7)  [Except for consumer discount companies, affiliates]

Affiliates of banking institutions and subsidiaries and

affiliates of federally chartered or State-chartered credit

unions[, except that such]. The exception under this

paragraph does not apply to consumer discount companies.

Notwithstanding the exception under this paragraph, 

subsidiaries and affiliates of federally chartered or State-

chartered credit unions and affiliates of banking

institutions shall:

(i)  be subject to the provisions of Subchapter C and

sections 6135(a)(2), (3) and (4), (b) and (c), 6138 and

6140(b);

(ii)  deliver as required to the department annually

copies of financial reports made to all supervisory

agencies; [and]

(iii)  be registered with the department; and

(iv)  with the exception of subsidiaries of federally

chartered or State-chartered credit unions, in the same

manner as a mortgage lender, obtain and maintain bond

coverage for mortgage originators consistent with section

6131(c)(5).

(8)  Employees of a mortgage broker, mortgage lender or

mortgage loan correspondent, [to the extent that the

employees] or a person excepted from licensure under this

section who:

(i)  engage solely in loan processor or underwriter

activities, and do not represent to the public, through

advertising or other means of communicating or providing

information, including the use of business cards,

stationery, brochures, signs, rate lists or other

promotional items, that they can or will perform any of

the activities of a mortgage originator; or

(ii)  are not otherwise required to be licensed as

mortgage originators.

(9)  [Employees of excepted persons enumerated under this

section, unless otherwise provided under this subsection.]

Registered mortgage loan originators when acting on behalf of

their employers.

(10)  A person that makes a mortgage loan to the person's

employee as an employment benefit if the person does not hold

itself out to the public as a mortgage lender. To qualify for

the exception under this paragraph, the person must:

(i)  in the same manner as a mortgage lender, obtain

and maintain bond coverage for mortgage originators

consistent with section 6131(c)(5) and file an annual

report consistent with section 6135(a)(3); or

(ii)  annually, in a form acceptable to the

department, demonstrate to the department that all of the

mortgage originators employed by the person have obtained

and maintained the bond coverage required by section

6131(f)(4).

(11)  Nonprofit corporations not otherwise engaged in or

holding themselves out to the public as being engaged in the

mortgage loan business making mortgage loans to promote home

ownership or improvements for the disadvantaged. To qualify

for the exception under this paragraph, the nonprofit

corporation must:

(i)  in the same manner as a mortgage lender, obtain

and maintain bond coverage for mortgage originators

consistent with section 6131(c)(5) and file an annual

report consistent with section 6135(a)(3); or

(ii)  annually, in a form acceptable to the

department, demonstrate to the department that all of the

mortgage originators employed by the nonprofit

corporation have obtained and maintained the bond

coverage required by section 6131(f)(4).

(12)  A nonprofit corporation not otherwise engaged in or

holding itself out to the public as being engaged in the

mortgage loan business which meets all of the following

subparagraphs:

(i)  Does not make more than 12 mortgage loans in a

calendar year with its own funds, not including funds

borrowed through warehouse lines of credit or other

sources for the purpose of making mortgage loans.

(ii)  Makes mortgage loans which are retained in the

corporation's own portfolios and not regularly sold to

others and are made to promote and advance the cultural

traditions and lifestyles of bona fide religious

organizations.

(iii)  Does either of the following:

(A)  In the same manner as a mortgage lender,

obtains and maintains bond coverage for mortgage

originators consistent with section 6131(c)(5) and

files an annual report consistent with section

6135(a)(3).

(B)  Annually, in a form acceptable to the

department, demonstrates to the department that all

of the mortgage originators employed by the nonprofit

corporation have obtained and maintained the bond

coverage required by section 6131(f)(4).

Section 4.  Section 6121 of Title 7 is amended by adding a

paragraph to read:

§ 6121.  General requirements.

A licensee shall do all of the following:

* * *

(14)  In the case of a mortgage originator, clearly

display the mortgage originator's unique identifier on all

mortgage loan application forms and personal solicitations or

advertisements, including business cards.

Section 5.  Section 6122(a)(1) of Title 7 is amended and the

subsection is amended by adding paragraphs to read:

§ 6122.  Powers conferred on certain licensees engaged in the

mortgage loan business.

(a)  Mortgage lenders.--If they are in compliance with the

provisions of this chapter, mortgage lenders shall have the

power and authority:

(1)  To make first and secondary mortgage loans and,

subject to the limitations of this chapter, to charge and

collect [application] interest, origination fees and

delinquency charges for the loans.

* * *

(6)  To collect reasonable attorney fees of an attorney

at law upon the execution of the mortgage loan if the fees:

(i)  represent actual fees charged the licensee in

connection with the mortgage loan; and

(ii)  are evidenced by a statement for services

rendered addressed to the licensee; and

(iii)  are included in the principal of the mortgage

loan.

(7)  To collect reasonable attorney fees of an attorney

at law in the collection of a delinquent mortgage loan and to

collect court costs incurred in the collection of the

mortgage loan.

* * *

Section 6.  Section 6125(b)(2)(ii) of Title 7 is amended to

read:

§ 6125.  Mortgage lending authority.

* * *

(b)  Secondary mortgage loans.--Mortgage lenders engaged in

the secondary mortgage loan business may:

* * *

(2)  * * *

(ii)  charge and collect an [application] origination

fee not exceeding 3% of the original principal amount of

the secondary mortgage loan. The fee shall be fully

earned at the time the secondary mortgage loan is made

and may be added to the principal amount of the secondary

mortgage loan. No [application] origination fee may be

collected on subsequent advances made pursuant to an

open-end loan if the full fee of 3% of the credit limit

was collected at the time the open-end loan was made;

[or] and

* * *

Section 7.  Section 6131(a) introductory paragraph, (c)(3),

(d), (e)(2), (f), (g), (h) and (i)(1) of Title 7 are amended,

subsections (c) and (e) are amended by adding paragraphs and the

section is amended by adding a subsection to read:

§ 6131.  Application for license.

(a)  Contents.--An application for a license under this

chapter shall be on a form prescribed and provided by the

department. Consistent with sections 202 E and 405 F(1) of the

act of May 15, 1933 (P.L.565, No.111), known as the Department

of Banking Code, all applicants and licensees shall use the

Nationwide Mortgage Licensing System and Registry to obtain and

maintain licenses under this chapter.

* * *

(c)  Mortgage lender license.--The department shall issue a

mortgage lender license applied for under this chapter if the

applicant has:

* * *

(3)  Established a minimum [tangible] net worth of

$250,000 at the time of application and will, at all times

thereafter, maintain the minimum [tangible] net worth.

* * *

(5)  Obtained and will maintain a surety bond in an

amount that will provide coverage for the mortgage

originators employed by the applicant or licensee, in a form

acceptable to the department, prior to the issuance of the

license, from a surety company authorized to do business in

this Commonwealth. The following shall apply:

(i)  The amount of the bond shall be $100,000 for an

<--

applicant or licensee whose mortgage originators will

originate or originated less than $30,000,000 in mortgage

loans secured by Pennsylvania residential real estate in

a calendar year, $300,000 for an applicant or licensee

whose mortgage originators will originate or originated

$30,000,000 to $99,999,999.99 in mortgage loans secured

by Pennsylvania residential real estate in a calendar

year, $500,000 for an applicant or licensee whose

mortgage originators will originate or originated

$100,000,000 to $249,999,999.99 in mortgage loans secured

by Pennsylvania residential real estate in a calendar

year and $1,000,000 for an applicant or licensee whose

mortgage originators will originate or originated

$250,000,000 or more in mortgage loans secured by

Pennsylvania residential real estate in a calendar year.

(i)  The amount of the bond shall be:

<--

(A)  $100,000 for an applicant or licensee whose

mortgage originators will originate or originated

less than $30,000,000 in mortgage loans secured by

Pennsylvania real property in a calendar year;

(B)  $200,000 for an applicant or licensee whose

mortgage originators will originate or originated

$30,000,000 to $99,999,999.99 in mortgage loans

secured by Pennsylvania real property in a calendar

year;

(C)  $300,000 for an applicant or licensee whose

mortgage originators will originate or originated

$100,000,000 to $249,999,999.99 in mortgage loans

secured by Pennsylvania real property in a calendar

year; and

(D)  $500,000 for an applicant or licensee whose

mortgage originators will originate or originated

$250,000,000 or more in mortgage loans secured by

Pennsylvania real property in a calendar year.

(ii)  For an initial license applicant, the amount of

the bond shall be determined by the applicant's

anticipated amount of mortgage loans secured by

Pennsylvania residential real estate originated by its

mortgage originators in the first calendar year of

licensing. For a licensee, the amount of the bond shall

be determined annually by the department based upon the

amount of mortgage loans secured by Pennsylvania

residential real estate originated by the licensee's

mortgage originators as indicated on the licensee's

annual report.

(iii)  The bond shall run to the Commonwealth and

shall be for the use of the Commonwealth and for the use

of any consumer who is injured by the acts or omissions

of the licensee's mortgage originators that are related

to the mortgage loan business regulated by this chapter.

No bond shall comply with the requirements of this

section unless it contains a provision that it shall not

be canceled for any cause unless notice of intention to

cancel is given to the department at least 30 days before

the day upon which cancellation shall take effect.

Cancellation of the bond shall not invalidate the bond

regarding the period of time it was in effect.

(d)  Mortgage loan correspondent license.--The department

shall issue a loan correspondent's license applied for under

this chapter if the applicant:

(1)  Obtains and will maintain a bond in the amount of

$100,000, in a form acceptable to the department, prior to

the issuance of the license, from a surety company authorized

to do business in this Commonwealth. The bond shall run to

the Commonwealth and shall be for the use of the Commonwealth

and any person or persons who obtain a judgment against the

mortgage loan correspondent for failure to carry out the

terms of any provision for which advance fees are paid. No

bond shall comply with the requirements of this section

unless it contains a provision that it shall not be canceled

for any cause unless notice of intention to cancel is given

to the department at least 30 days before the day upon which

cancellation shall take effect. A mortgage loan correspondent

who can demonstrate to the satisfaction of the department

that the correspondent does not and will not accept advance

fees shall be exempt from the bond requirement of this

paragraph.

(2)  Establishes a minimum [tangible] net worth of

$100,000 at the time of application and will, at all times

thereafter, maintain the minimum [tangible] net worth.

(3)  Obtains and will maintain a surety bond in an amount

that will provide coverage for the mortgage originators

employed by the applicant or licensee, in a form acceptable

to the department, prior to the issuance of the license, from

a surety company authorized to do business in this

Commonwealth. The following shall apply:

(i)  The amount of the bond shall be $100,000 for an

applicant or licensee whose mortgage originators will

originate or originated less than $30,000,000 in mortgage

loans secured by Pennsylvania residential real estate in

a calendar year, $300,000 $200,000 for an applicant or

<--

licensee whose mortgage originators will originate or

originated $30,000,000 to $99,999,999.99 in mortgage

loans secured by Pennsylvania residential real estate in

a calendar year, $500,000 $300,000 for an applicant or

<--

licensee whose mortgage originators will originate or

originated $100,000,000 to $249,999,999.99 in mortgage

loans secured by Pennsylvania residential real estate in

a calendar year and $1,000,000 $500,000 for an applicant

<--

or licensee whose mortgage originators will originate or

originated $250,000,000 or more in mortgage loans secured

by Pennsylvania residential real estate in a calendar

year.

(ii)  For an initial license applicant, the amount of

the bond shall be determined by the applicant's

anticipated amount of mortgage loans secured by

Pennsylvania residential real estate originated by its

mortgage originators in the first calendar year of

licensing. For a licensee, the amount of the bond shall

be determined annually by the department based upon the

amount of mortgage loans secured by Pennsylvania

residential real estate originated by the licensee's

mortgage originators as indicated on the licensee's

annual report.

(iii)  The bond shall run to the Commonwealth and

shall be for the use of the Commonwealth and for the use

of any consumer who is injured by the acts or omissions

of the licensee's mortgage originators that are related

to the mortgage loan business regulated by this chapter.

No bond shall comply with the requirements of this

section unless it contains a provision that it shall not

be canceled for any cause unless notice of intention to

cancel is given to the department at least 30 days before

the day upon which cancellation shall take effect.

Cancellation of the bond shall not invalidate the bond

regarding the period of time it was in effect.

(e)  Mortgage broker license.--

* * *

(2)  Mortgage brokers who can demonstrate to the

satisfaction of the department that they do not and will not

accept advance fees shall be exempt from the bond requirement

of [this subsection] paragraph (1).

(3)  A mortgage broker shall obtain and maintain a surety

bond in an amount that will provide coverage for the mortgage

originators employed by the applicant or licensee, in a form

acceptable to the department, prior to the issuance of the

license, from a surety company authorized to do business in

this Commonwealth. The following shall apply:

(i)  The amount of the bond shall be $50,000 for an

applicant or licensee whose mortgage originators will

originate or originated less than $15,000,000 in mortgage

loans secured by Pennsylvania residential real estate in

a calendar year, $100,000 $75,000 for an applicant or

<--

licensee whose mortgage originators will originate or

originated $15,000,000 to $29,999,999.99 in mortgage

loans secured by Pennsylvania residential real estate in

a calendar year, $200,000 $100,000 for an applicant or

<--

licensee whose mortgage originators will originate or

originated $30,000,000 to $49,999,999.99 in mortgage

loans secured by Pennsylvania residential real estate in

a calendar year, and $300,000 $150,000 for an applicant

<--

or licensee whose mortgage originators will originate or

originated $50,000,000 or more in mortgage loans secured

by Pennsylvania residential real estate in a calendar

year.

(ii)  For an initial license applicant, the amount of

the bond shall be determined by the applicant's

anticipated amount of mortgage loans secured by

Pennsylvania residential real estate originated by its

mortgage originators in the first calendar year of

licensing. For a licensee, the amount of the bond shall

be determined annually by the department based upon the

amount of mortgage loans secured by Pennsylvania

residential real estate originated by the licensee's

mortgage originators as indicated on the licensee's

annual report.

(iii)  The bond shall run to the Commonwealth and

shall be for the use of the Commonwealth and for the use

of any consumer who is injured by the acts or omissions

of the licensee's mortgage originators that are related

to the mortgage loan business regulated by this chapter.

No bond shall comply with the requirements of this

section unless it contains a provision that it shall not

be canceled for any cause unless notice of intention to

cancel is given to the department at least 30 days before

the day upon which cancellation shall take effect.

Cancellation of the bond shall not invalidate the bond

regarding the period of time it was in effect.

(f)  Mortgage originator license.--[A mortgage originator

shall be an employee of a single mortgage broker, mortgage

lender or mortgage loan correspondent licensed under this

chapter, which licensee shall directly supervise, control and

maintain responsibility for the acts and omissions of the

mortgage originator. A mortgage originator shall be assigned to

and work out of a licensed location of the employer licensee.] A

mortgage originator shall do all of the following:

(1)  Be an employee of a single licensed mortgage broker,

mortgage lender or mortgage loan correspondent, a person

excepted from this chapter or a person excepted from

licensure under section 6112 (relating to exceptions to

license requirements). The licensee or person shall directly

supervise, control and maintain responsibility for the acts

and omissions of the mortgage originator.

(2)  Be assigned to and work out of a licensed location

of the employer licensee or a location of an employer person

excepted from this chapter or excepted from licensure under

section 6112.

(3)  Maintain a valid unique identifier issued by the

Nationwide Mortgage Licensing System and Registry.

(4)  If a person excepted from this chapter or excepted

from licensure under section 6112 does not elect to maintain

bond coverage for its mortgage originators in the same manner

as a mortgage lender, a mortgage originator employed by a

person excepted from this chapter or excepted from licensure

under section 6112 shall obtain and maintain a surety bond in

an amount that will provide coverage for the mortgage

originator, in a form acceptable to the department, prior to

the issuance of the license, from a surety company authorized

to do business in this Commonwealth. The following shall

apply:

(i)  The amount of the bond shall be $25,000 for an

applicant or licensee who will originate or originated

less than $7,500,000 in mortgage loans secured by

Pennsylvania residential real estate in a calendar year,

$50,000 for an applicant or licensee who will originate

or originated $7,500,000 to $14,999,999.99 in mortgage

loans secured by Pennsylvania residential real estate in

a calendar year, $100,000 $75,000 for an applicant or

<--

licensee who will originate or originated $15,000,000 to

$29,999,999.99 in mortgage loans secured by Pennsylvania

residential real estate in a calendar year, $200,000 

<--

$100,000 for an applicant or licensee who will originate

<--

or originated $30,000,000 to $49,999,999.99 in mortgage

loans secured by Pennsylvania residential real estate in

a calendar year and $300,000 $150,000 for an applicant or

<--

licensee who will originate or originated $50,000,000 or

more in mortgage loans secured by Pennsylvania

residential real estate in a calendar year.

(ii)  For an initial license applicant, the amount of

the bond shall be determined by the applicant's

anticipated amount of mortgage loans secured by

Pennsylvania residential real estate originated in the

first calendar year of licensing. For a licensee, the

amount of the bond shall be determined annually by the

department based upon the amount of mortgage loans

secured by Pennsylvania residential real estate

originated by the mortgage originator as indicated on the

mortgage originator's annual report.

(iii)  The bond shall run to the Commonwealth and

shall be for the use of the Commonwealth and for the use

of any consumer who is injured by the acts or omissions

of the mortgage originator that are related to the

mortgage loan business regulated by this chapter. No bond

shall comply with the requirements of this section unless

it contains a provision that it shall not be canceled for

any cause unless notice of intention to cancel is given

to the department at least 30 days before the day upon

which cancellation shall take effect. Cancellation of the

bond shall not invalidate the bond regarding the period

of time it was in effect.

[(g)  Education.--

(1)  In order to obtain a license under this chapter, an

applicant shall submit to the department with its application

evidence that the applicant, in the case of a mortgage

originator applicant, or a director, partner or ultimate

equitable owner of at least 10% of a licensee, in the case of

any other license applicant, has successfully completed a

minimum of 12 hours of instruction and a testing program

regarding the first and secondary mortgage loan businesses

and the provisions of this chapter, the act of January 30,

1974 (P.L.13, No.6), referred to as the Loan Interest and

Protection Law (Usury Law) and relevant Federal law including

the Real Estate Settlement Procedures Act of 1974 (88 Stat.

1724, 12 U.S.C. § 2601 et seq.), Truth in Lending provisions

of Title I of the Consumer Credit Protection Act (Public Law

90-321, 15 U.S.C. § 1601 et seq.) and the Equal Credit

Opportunity Act (Public Law 93-495, 15 U.S.C. § 1691 et

seq.).

(2)  In order to maintain a license:

(i)  A mortgage broker, mortgage lender or mortgage

loan correspondent shall demonstrate to the satisfaction

of the department that at least one individual from each

licensed office that is not a mortgage originator, and

all mortgage originators employed by the licensee, have

attended a minimum of six hours of continuing education

each year.

(ii)  A mortgage originator licensee shall

demonstrate to the satisfaction of the department that

the licensee has attended a minimum of six hours of

continuing education each year.

(3)  The department shall delineate the requirements for

prequalification education and testing and continuing

education by regulation. The department may review and

approve education programs and providers to satisfy the

education requirements. Providers of prequalification

education and testing and continuing education programs may

include the licensee or a subsidiary or affiliate of the

licensee. The department may charge providers of education

programs a fee, to be determined by the department, for

department review of education programs and providers.]

(g)  Nationwide Mortgage Licensing System and Registry

information challenge process.--A mortgage originator applicant

or licensee may challenge the accuracy of information entered by

the department to the Nationwide Mortgage Licensing System and

Registry regarding the mortgage originator applicant or licensee

by filing a written complaint with the department. The

department shall review the complaint and alleged inaccurate

information on the Nationwide Mortgage Licensing System and

Registry and notify the applicant or licensee of corrective

action taken by the department regarding the alleged inaccurate

information within 30 days of receipt of the complaint.

(h)  License renewals.--Licenses shall be issued for terms of

12 months and may be renewed by the department each year on a

schedule set by the department upon application by the licensee

and the payment of any and all applicable renewal fees. The

licensee shall demonstrate to the department that it is

conducting the mortgage loan business in accordance with the

requirements of this chapter and that the licensee or directors,

officers, partners, employees, agents and ultimate equitable

owners of 10% or more of the licensee continue to meet all of

the initial requirements for licensure required by this chapter

unless otherwise determined by the department.

(i)  Out-of-State applicants.--

(1)  If an applicant is not a resident of this

Commonwealth, as a condition to receiving a license under

this chapter, the applicant shall be authorized to do

business in this Commonwealth in accordance with the laws of

this Commonwealth regulating corporations and other entities

conducting business in this Commonwealth and shall maintain

at least one office [in this Commonwealth] which is the

office that shall be licensed as the principal place of

business for the purposes of this chapter. [Wholesale table

funders shall be exempt from the requirement to maintain at

least one office in this Commonwealth.]

* * *

(j)  Disclosure of mortgage originator information.--

Notwithstanding section 302 of the act of May 15, 1933 (P.L.565,

No.111), known as the Department of Banking Code, the department

shall make available to the public, including by access to the

Nationwide Mortgage Licensing System and Registry, the

employment history of a mortgage originator.

Section 8.  Title 7 is amended by adding a section to read:

§ 6131.1.  Prelicensing and continuing education.

(a)  General requirements.--

(1)  Applicants shall complete prelicensing education

required under subsection (b) and pass a written test

regarding the education under subsection (c) in order to

obtain a license under this chapter.

(2)  Licensees shall complete continuing education

required under subsection (d) in order to renew a license

under this chapter.

(b)  Prelicensing education.--

(1)  An applicant who is a mortgage originator, or a

<--

director, A mortgage originator applicant and at least one 

<--

partner or ultimate equitable owner of 10% or more of an

applicant other than a mortgage originator applicant, shall

<--

complete at least 20 hours of education programs approved in

accordance with paragraph (2), which shall include all of the

following:

(i)  Three hours of Federal law and regulations.

(ii)  Three hours of ethics, which shall include

instruction on fraud, consumer protection and fair

lending issues.

(iii)  Two hours of training related to lending

standards for the nontraditional mortgage loan

marketplace.

(iv)  Three hours of Pennsylvania law and

regulations, including this chapter, the act of December

3, 1959 (P.L.1688, No.621), known as the Housing Finance

Agency Law and the act of January 30, 1974 (P.L.13,

No.6), referred to as the Loan Interest and Protection

Law.

(2)  Prelicensing education programs shall be reviewed

and approved by the Nationwide Mortgage Licensing System and

Registry or as otherwise determined by the department based

upon reasonable standards. Review and approval of a

prelicensing education program shall include review and

approval of the program provider.

(3)  A prelicensing education program approved by the

Nationwide Mortgage Licensing System and Registry or as

otherwise determined by the department may be provided by the

employer of the applicant or an entity which is affiliated

with the applicant by an agency contract, or any subsidiary

or affiliate of such employer or entity.

(4)  Prelicensing education programs may be offered

either in a classroom, online or by any other means approved

by the Nationwide Mortgage Licensing System and Registry or

as otherwise determined by the department.

(5)  Except for prelicensing education programs under

paragraph (1)(iv), prelicensing education programs approved

by the Nationwide Mortgage Licensing System and Registry or

as otherwise determined by the department and completed for

another state license application shall be accepted as credit

toward completion of the prelicensing education requirements

of this chapter if the education programs have been

successfully completed within the 12 months immediately

preceding the date of the submission of the applicant's

license application.

(6)  An applicant that was previously licensed under this

chapter that is applying to become licensed again under this

chapter must demonstrate that the applicant has completed all

of the continuing education requirements for the year in

which the applicant was last licensed under this chapter.

(c)  Prelicensing written test.--

(1)  An applicant who is a mortgage originator, or a

<--

director, A mortgage originator applicant and at least one  

<--

partner or ultimate equitable owner of 10% or more of an

applicant other than a mortgage originator applicant, shall

<--

pass, in accordance with the standards established under this

subsection, a qualified written test developed by the

Nationwide Mortgage Licensing System and Registry and

administered by a test provider approved by the Nationwide

Mortgage Licensing System and Registry based upon reasonable

standards. The portion of the test regarding Pennsylvania-

specific law shall be administered by a test provider

approved by the department or as otherwise determined by the

department under subsection (e).

(2)  A written test shall not be treated as a qualified

written test for purposes of paragraph (1) unless the test

adequately measures the applicant's knowledge and

comprehension in appropriate subject areas, including:

(i)  Ethics.

(ii)  Federal law and regulation pertaining to

mortgage origination.

(iii)  Pennsylvania law and regulation pertaining to

mortgage origination.

(iv)  Federal and Pennsylvania law and regulation

related to fraud, consumer protection, the nontraditional

mortgage marketplace and fair lending issues.

(3)  A test provider approved by the Nationwide Mortgage

Licensing System and Registry or as otherwise determined by

the department may provide a test at the location of the

employer of the applicant or an entity which is affiliated

with the applicant by an agency contract, or any subsidiary

or affiliate of the employer or entity.

(4)  (i)  An applicant shall not be considered to have

passed a qualified written test unless the individual

achieves a test score of not less than 75% correct

answers to questions.

(ii)  An applicant may retake a test three

consecutive times with each consecutive taking occurring

at least 30 days after the preceding test.

(iii)  After failing three consecutive tests, an

applicant shall wait at least six months before taking

the test again.

(iv)  A formerly licensed mortgage originator

applicant who has been unlicensed for five continuous

years or longer shall retake a test. Any time during

which the individual is a registered mortgage loan

originator shall not be counted toward the five-year

continuous period.

(d)  Continuing education.--

(1)  A licensee who is a mortgage originator or one

individual from each licensed office of a mortgage broker,

mortgage lender or mortgage loan correspondent that is not a

mortgage originator, unless all of the nonclerical staff of a

particular licensed office are licensed as mortgage

originators, shall complete at least eight hours of education

programs in accordance with paragraph (2), which shall

include all of the following:

(i)  Three hours of Federal law and regulations.

(ii)  Two hours of ethics, which shall include

instruction on fraud, consumer protection and fair

lending issues.

(iii)  Two hours of training related to lending

standards for the nontraditional mortgage loan

marketplace.

(iv)  One hour of Pennsylvania law, including this

chapter, the act of December 3, 1959 (P.L.1688, No.621),

known as the Housing Finance Agency Law and the act of

January 30, 1974 (P.L.13, No.6), referred to as the Loan

Interest and Protection Law.

(2)  Continuing education programs shall be reviewed and

approved by the Nationwide Mortgage Licensing System and

Registry or as otherwise determined by the department based

upon reasonable standards. Review and approval of a

continuing education program shall include review and

approval of the program provider.

(3)  A continuing education program approved by the

Nationwide Mortgage Licensing System and Registry or as

otherwise determined by the department may be provided by the

employer of the licensee or an entity which is affiliated

with the licensee by an agency contract, or any subsidiary or

affiliate of the employer or entity.

(4)  Continuing education programs may be offered either

in a classroom, online or by any other means approved by the

Nationwide Mortgage Licensing System and Registry or as

otherwise determined by the department.

(5)  A licensee may only receive credit for a continuing

education program in the year in which the program is taken

and may not take the same continuing education program in the

same or successive years to meet the requirements of this

subsection.

(6)  A licensed mortgage originator who is an instructor

of an approved continuing education program may receive

credit for the licensed mortgage loan originator's own

continuing education requirement at the rate of two hours

credit for every one hour taught.

(7)  Except for the continuing education program under

paragraph (1)(iv), continuing education programs approved by

the Nationwide Mortgage Licensing System and Registry or as

otherwise determined by the department and completed for

another state shall be accepted as credit toward completion

of the continuing education requirements of this chapter.

(e)  Pennsylvania-specific education and testing programs.--

(1)  Pennsylvania-specific education and testing programs

shall be approved by the department, unless otherwise

determined by the department. The department may charge

education and testing providers a fee, to be determined by

the department, for department review of Pennsylvania-

specific education and testing programs.