1Amending Title 7 (Banks and Banking) of the Pennsylvania
2Consolidated Statutes, further providing for definitions, for
3license requirements, for exceptions to license requirements,
4for general requirements, for mortgage loan business
5prohibitions, for requirements as to open-end loans, for
6application for license, for prelicensing and continuing
7education, for licensee requirements, for licensee
8limitations, for surrender of license, for authority of
9department, for suspension, revocation or refusal, for
10penalties, for applicability and for procedure for
11determination on noncompliance with Federal law.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. Sections 6102, 6111(a), 6112 and 6121(2), (8) and
15(13) of Title 7 of the Pennsylvania Consolidated Statutes are
16amended to read:

17§ 6102. Definitions.

18The following words and phrases when used in this chapter
19shall have the meanings given to them in this section unless the
20context clearly indicates otherwise:

21"Administrative or clerical tasks."  The receipt, collection

1and distribution of information common for the processing or
2underwriting of a mortgage loan and communication with a
3consumer to obtain information necessary for the processing or
4underwriting of a mortgage loan.

5"Advance fee." Any funds requested by or to be paid to a
6person in advance of or during the processing of a mortgage loan
7application, excluding those fees paid by a consumer directly to
8a credit agency reporting bureau, title company or real estate
9appraiser.

10"Applicant." A person who applies for a license under this
11chapter.

12"Application."  A request, in any form, for an offer, or a
13response to a solicitation of an offer, of mortgage loan terms,
14and the information about the borrower or prospective borrower
15that is customary or necessary in a decision on whether to make
16such an offer.

17"Banking institution." Any of the following:

18(1) A State-chartered bank, bank and trust company,
19savings bank or private bank.

20(2) A national bank.

21(3) A federally chartered or State-chartered savings
22association.

23(4) A subsidiary of any of the entities listed under
24this definition.

25"Billing cycle." In respect to open-end mortgage loans, the
26time interval between periodic billing dates. A billing cycle
27shall be considered to be a monthly cycle if the closing date of
28the cycle is the same date each month or does not vary by more
29than four days from that date.

30"Bona fide nonprofit organization."  A person that:

1(1) Has the status of a tax-exempt organization under
2section 501(c)(3) of the Internal Revenue Code of 1986
3(Public Law 99-514, 26 U.S.C. § 501(c)(3)).

4(2) Promotes affordable housing or provides
5homeownership education, or similar services.

6(3) Conducts its activities in a manner that serves
7public or charitable purposes.

8(4) Receives funding and revenue and charges fees in a
9manner that does not incentivize it or its employees to act
10other than in the best interests of its clients.

11(5) Compensates its employees in a manner that does not
12incentivize employees to act other than in the best interests
13of its clients.

14(6) Provides or identifies for the borrower mortgage
15loans with terms favorable to the borrower and comparable to
16mortgage loans and housing assistance provided under
17government housing assistance programs.

18(7) Meets other standards as determined by the
19department.

20"Branch." An office or other place of business, other than
21the principal place of business, where a person engages in the
22mortgage loan business subject to this chapter. The term does 
23not include a location where the licensee-sponsored mortgage 
24originator contacts consumers or processes mortgage loans, 
25provided that the location is not:

26(1) owned or controlled by a licensee. For purposes of
27this definition, a location is not considered to be owned or
28controlled by a licensee if the location is under the control
29of a subsidiary or affiliate of the licensee, is primarily
30used by the subsidiary or affiliate and is only used by the

1licensee on an incidental basis for the convenience of a
2consumer;

3(2) advertised or represented to consumers as an
4operating location of the mortgage originator or the mortgage
5originator's sponsor; or

6(3) a place where records regarding the licensee's
7mortgage loan business are stored.

8"Branch manager." The supervisor of a branch.

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

10(1) The receipt, collection, distribution and analysis
11of information common for the processing or underwriting of a
12mortgage loan.

13(2) Communicating with a consumer to obtain the
14information necessary for the processing or underwriting of a
15mortgage loan, to the extent that the communication does not
16include:

17(i) offering or negotiating mortgage loan rates or
18terms; or

19(ii) counseling consumers about mortgage loan rates
20or terms.

21"Commercial context." Acting for the purpose of obtaining
22anything of value for an individual, or for an entity or
23individual for which the individual acts, rather than
24exclusively for public, charitable or family purposes.

25"Commission." The Banking and Securities Commission of the
26Commonwealth, as established under Subarticle C of Article XI-A
27of the act of May 15, 1933 (P.L.565, No.111), known as the
28Department of Banking and Securities Code.

29"Consumer discount company." A licensee under the act of
30April 8, 1937 (P.L.262, No.66), known as the Consumer Discount

1Company Act.

2"Department." The Department of Banking and Securities of
3the Commonwealth.

4"Dwelling." As defined in section 103(v) of the Truth in
5Lending Act (Public Law 90-321, 15 U.S.C. § 1602(v)).

6"Employee."

7(1) An individual:

8(i) Whose manner and means of performance of work
9are subject to the right of control of, or are controlled
10by, a person.

11(ii) Whose compensation for Federal income tax
12purposes is reported, or required to be reported, on a W-
132 form issued by the controlling person.

14(2) The term includes such binding definition as may be
15issued by the Federal banking agencies in connection with
16their implementation of their responsibilities under the
17S.A.F.E. Mortgage Licensing Act of 2008 (110 Stat. 289, 12
18U.S.C. § 5101 et seq).

19"Federal banking agency." Any of the following:

20(1) The Board of Governors of the Federal Reserve
21System.

22(2) The Office of the Comptroller of the Currency.

23[(3) The Office of Thrift Supervision.

24(4)] (3) The National Credit Union Administration.

25[(5)] (4) The Federal Deposit Insurance Corporation.

26"Finder's fee." Any payment of money or other consideration
27for the referral of a mortgage loan to a licensee, except for
28consideration paid for goods or facilities actually furnished or
29services actually performed.

30"First mortgage loan." A loan which is:

1(1) made primarily for personal, family or household
2use; and

3(2) secured by any first lien mortgage, deed of trust or
4equivalent consensual security interest on a dwelling or on
5residential real estate.

6"First mortgage loan business." The mortgage loan business
7as applied to first mortgage loans.

8"Habitually and repeatedly." Engaging in any activity at
9least four times in a calendar year.

10"Holder." As defined in section 3 of the act of June 28,
111947 (P.L.1110, No.476), known as the Motor Vehicle Sales
12Finance Act.

13"Immediate family." A parent, spouse, child, brother or
14sister.

15"Installment sales contract." As defined in section 3(10) of
16the act of June 28, 1947 (P.L.1110, No.476), known as the Motor
17Vehicle Sales Finance Act.

18"Installment seller." As defined in section 3 of the act of
19June 28, 1947 (P.L.1110, No.476), known as the Motor Vehicle
20Sales Finance Act.

21"Lease-purchase agreement."

22(1) A deferred purchase of a dwelling or residential
23real estate whereby:

24(i) An individual makes installment payments to the
25seller of the dwelling or residential real estate.

26(ii) The seller retains title to the dwelling or
27residential real estate until some or all of the
28installment payments are completed.

29(2) The term does not include an agreement whereby:

30(i) An individual is not obligated to purchase the

1dwelling or residential real estate.

2(ii) The final payment approximates the fair value
3of the dwelling or residential real estate or the
4anticipated fair value of the dwelling or residential
5real estate and is not a nominal amount.

6"Licensee." A person who is licensed under this chapter.

7"Loan processor or underwriter." An individual who performs
8clerical or support duties [as an employee at the direction of
9and subject to the supervision and instruction of a person
10licensed or exempt from licensing under this chapter].

11"Lock-in agreement." An agreement between a mortgage lender
12and a consumer whereby the mortgage lender guarantees, until a
13specified date, the availability of a specified rate of interest
14or specified formula by which the rate of interest and a
15specific number of discount points will be determined, if the
16mortgage loan is approved and closed by the specified date. If a
17specified date is not determinable, the mortgage lender may
18fulfill the requirement of this definition by setting forth with
19specificity the method by which the duration of the lock-in
20period will be determined.

21"Manufactured home." Both of the following:

22(1) A manufactured home as defined in section 603(6) of
23the National Manufactured Housing Construction and Safety
24Standards Act of 1974 (Public Law 93-383, 42 U.S.C. §
255402(6)).

26(2) A mobile home as defined in 75 Pa.C.S. § 102
27(relating to definitions).

28"Mortgage broker." A person who engages in the mortgage loan
29business by directly or indirectly negotiating or placing
30mortgage loans for others in the primary market for

1consideration.

2"Mortgage lender." A person who engages in the mortgage loan
3business by directly or indirectly originating and closing
4mortgage loans with its own funds in the primary market for
5consideration.

6"Mortgage loan." A first or secondary mortgage loan, or
7both, a lease-purchase agreement or a mortgage loan 
8modification, as the context may require.

9"Mortgage loan business." The business of advertising,
10causing to be advertised, soliciting, negotiating or arranging
11in the ordinary course of business or offering to make or making
12mortgage loans.

13"Mortgage loan correspondent." A person who engages in the
14mortgage loan business by directly or indirectly originating and
15closing mortgage loans in his or her own name utilizing funds
16provided by a wholesale table funder or other funding sources
17under the circumstances described under section 6123(6)
18(relating to mortgage loan business prohibitions) and
19simultaneously assigning the mortgage loans to the wholesale
20table funder.

21"Mortgage loan modification." An agreement that revises the
22terms of an existing mortgage loan, including an agreement to
23reduce mortgage loan payment amounts, balance or interest rate
24or to waive any accrued or prospective mortgage loan charges.
25The term does not include any agreement to refinance a mortgage
26loan into a new mortgage loan.

27"Mortgage originator."

28[(1) An individual who takes a mortgage loan application
29or offers or negotiates terms of a mortgage loan for
30compensation or gain.

1(2) The term does not include any of the following:

2(i) An individual engaged solely as a loan processor
3or underwriter consistent with section 6112(8) (relating
4to exceptions to license requirements).

5(ii) A person or entity solely involved in
6extensions of credit relating to timeshare plans. As used
7in this paragraph, the term "timeshare plan" has the
8meaning given in 11 U.S.C. § 101(53D) (relating to
9definitions).

10(3) Except as set forth in paragraph (4), the term does
11not include an employee of a licensee or person exempt or
12excepted from licensure under this chapter who solely
13renegotiates terms for existing mortgage loans held or
14serviced by that licensee or person and who does not
15otherwise act as a mortgage originator.

16(4) The exclusion under paragraph (3) shall not apply if
17the United States Department of Housing and Urban Development
18or a court of competent jurisdiction determines that the
19S.A.F.E. Mortgage Licensing Act of 2008 (110 Stat. 289, 12
20U.S.C. § 5101 et seq.) requires such an employee to be
21licensed as a mortgage originator under state laws
22implementing the S.A.F.E. Mortgage Licensing Act of 2008.
23This paragraph is subject to section 6154 (relating to
24procedure for determination of noncompliance with Federal
25law).]

26(1) An individual who, in a commercial context and
27habitually and repeatedly does any of the following:

28(i) Takes a mortgage loan application.

29(ii) Offers or negotiates terms of a mortgage loan
30for compensation or gain.

1(iii) Represents to the public, through advertising
2or other means of communicating or providing information,
3including the use of business cards, stationary,
4brochures, signs, rate lists or other promotional items,
5that the individual can or will perform the activities
6described in subparagraphs (i) and (ii).

7(2) The term does not include any of the following:

8(i) An individual who is involved only in extensions
9of credit relating to timeshare plans, as that term is
10defined in 11 U.S.C. § 101(53D) (relating to
11definitions).

12(ii) An individual who performs only clerical or
13support duties and meets any of the following
14requirements:

15(A) Who does so at the direction of and subject
16to the supervision and instruction of an individual
17who:

18(I) Is licensed and registered in accordance
19with this chapter.

20(II) Is not required to be licensed in
21accordance with section 6112(9)(relating to
22exceptions to license requirements).

23(B) Who performs such duties solely with respect
24to transactions for which the individual who acts as
25a mortgage originator is not required to be licensed,
26in accordance with subparagraph (i), (v), or (vi).

27(iii) An individual who performs only purely
28administrative or clerical tasks on behalf of a mortgage
29originator.

30(iv) An individual who is a registered mortgage loan

1originator.

2(v) An individual employed by an agency or
3instrumentality of the Federal Government or a
4corporation otherwise created by an act of the Congress
5of the United States or an agency or instrumentality of a
6state or local government, the District of Columbia or
7any territory of the United States, including the
8Pennsylvania Housing Finance Agency and other government
9housing finance agencies, who acts as a mortgage
10originator within the scope of employment.

11(vi) An individual who is employed by a bona fide
12nonprofit organization who acts as a mortgage originator
13within the scope of employment.

14(vii) An individual employed by a licensee or person
15exempt or excepted from licensure under this chapter who
16solely engages in mortgage loan modifications for
17existing mortgage loans held or serviced by that licensee
18or person and who does not otherwise act as a mortgage
19originator.

20(viii) A loan processor or underwriter employed by a
21licensee or person exempt or excepted from licensure
22under this chapter, provided that the loan processor or
23underwriter:

24(A)  Is under the direct supervision and control
25of a licensed mortgage originator or registered
26mortgage loan originator.

27(B)  Acts as a loan processor or underwriter
28solely for the individual's employer.

29(C)  Does not represent to the public, through
30advertising or other means of communicating or

1providing information, including the use of business
2cards, stationery, brochures, signs, rate lists or
3other promotional items, that the person can or will
4perform any of the activities of a mortgage
5originator.

<-6(ix) An individual who is all of the following:

7(A) An employee of a broker-dealer registered
8under section 301 of the act of December 5, 1972 
9(P.L.1280, No.284), known as the Pennsylvania 
10Securities Act of 1972.

11(B) Registered as a securities agent under
12section 301 of the Pennsylvania Securities Act of
131972.

14(C) Engaged in recommending, referring or
15steering a borrower or prospective borrower in the
16manner provided under paragraph (1)(iii) of the
17definition of "offer or negotiate terms of a mortgage
18loan for compensation or gain" to a lender that is a
19banking institution, in a manner incidental to, and
20in the normal course of his or her securities
21brokerage activities.

22(D) Not otherwise acting as a mortgage
23originator.

24(x) An individual who is all of the following:

25(A) An employee of a title insurance company
26incorporated or authorized to do business in this
27Commonwealth under the act of May 17, 1921 (P.L.682, 
28No.284), known as The Insurance Company Law of 1921,
29or an insurance agency licensed under the act of May 
3017, 1921 (P.L.789, No.285), known as The Insurance
 

1Department Act of 1921.

2(B) Registered as an insurance agent or broker
3under The Insurance Department Act of 1921.

4(C) Engaged in recommending, referring or
5steering a borrower or prospective borrower in the
6manner provided under paragraph (1)(iii) of the
7definition of "offer or negotiate terms of a mortgage
8loan for compensation or gain" to a lender that is a
9banking institution, in a manner incidental to, and
10in the normal course of his or her insurance
11activities.

12(D) Not otherwise acting as a mortgage
13originator.

14(xi) Any other individual as determined by a
15regulation or statement of policy adopted by the
16department for which licensure as an mortgage originator
17is not required by virtue of the extent to which the
18individual and the individual's employer are otherwise
19regulated under Federal or State law, provided that the
20individual is all of the following:

21(A) Engaged in recommending, referring or
22steering a borrower or prospective borrower in the
23manner provided under paragraph (1)(iii) of the
24definition of "offer or negotiate terms of a mortgage
25loan for compensation or gain" to a lender that is a
26banking institution, in a manner incidental to, and
27in the normal course of his or her duties to his or
28her employer.

29(B) Not otherwise acting as a mortgage
30originator.

1"Nationwide Mortgage Licensing System and Registry." The
2licensing system developed and maintained by the Conference of
3State Bank Supervisors and the American Association of
4Residential Mortgage Regulators.

5"Net worth." Assets less liabilities and assets unacceptable
6to the United States Department of Housing and Urban Development
7for purposes of complying with 24 CFR § 202.5(n) (relating to
8general approval standards) or 202.8(b)(1) (relating to loan
9correspondent lenders and mortgagees), as applicable.

10"Nonoriginating person." A person, other than an individual,
11that does not engage in the mortgage loan business but is
12required to have loan processors or underwriters employed or
13supervised and controlled by the person licensed as mortgage
14originators.

15"Nontraditional mortgage loan." A mortgage loan other than a
1630-year fixed rate mortgage loan.

17"Offer or negotiate terms of a mortgage loan for compensation
18or gain."

19(1) (i) Presenting for consideration by a borrower or
20prospective borrower particular mortgage loan terms;

21(ii) communicating directly or indirectly with a
22borrower or prospective borrower for the purpose of
23reaching a mutual understanding about prospective
24mortgage loan terms; or

25(iii) recommending, referring or steering a borrower
26or prospective borrower to a particular lender or set of
27mortgage loan terms, in accordance with a duty to or
28incentive from any person other than the borrower or
29prospective borrower.

30(2) Receiving or expecting to receive payment of money

1or anything of value in connection with the activities
2described in paragraph (1) or as a result of any mortgage
3loan terms entered into as a result of those activities.

4"Open-end loan." A mortgage loan made by a mortgage lender
5under this chapter pursuant to an agreement between the mortgage
6lender and the consumer whereby all of the following apply:

7(1) The mortgage lender may permit the consumer to
8obtain advances of money from the licensee from time to time
9or the mortgage lender may advance money on behalf of the
10consumer from time to time as directed by the consumer.

11(2) The amount of each advance, interest and permitted
12charges and costs are debited to the consumer's account and
13payments and other credits are credited to the same account.

14(3) Interest is computed on the unpaid principal balance
15or balances of the account outstanding from time to time.

16(4) The consumer has the privilege of paying the account
17in full at any time or, if the account is not in default, in
18monthly installments of fixed or determinable amounts as
19provided in the open-end loan agreement.

20"Person." An individual, association, joint venture or
21joint-stock company, partnership, limited partnership, limited
22partnership association, limited liability company, business
23corporation, nonprofit corporation or any other group of
24individuals, however organized.

25"Primary market." The market wherein mortgage loans are
26originated between a lender and a consumer.

27"Principal place of business." The primary office of a
28person [which is staffed on a full-time basis and] at which the
29person's books, records, accounts and documents are maintained.

30"Purchase-money mortgage loan." A mortgage loan that is a

1residential mortgage transaction as defined in 12 CFR 226.2(a)
2(24) (relating to definitions and rules of construction).

3"Qualifying individual." An individual identified by a
4mortgage broker, mortgage lender or mortgage loan correspondent
5in the Nationwide Mortgage Licensing System and Registry who:

6(1) Is a mortgage originator or meets the licensing
7requirements of a mortgage originator.

8(2) Is a management-level officer assigned to the
9principal place of business of a mortgage broker, mortgage
10lender or mortgage loan correspondent.

11"Registered mortgage loan originator." An individual who
12complies with all of the following paragraphs:

13(1) Meets the definition of mortgage originator and is
14an employee of:

15(i) a banking institution or federally chartered or
16State-chartered credit union;

17(ii) a subsidiary owned and controlled by a
18federally chartered or State-chartered credit union and
19supervised by a Federal banking agency; or

20(iii) an institution regulated by the Farm Credit
21Administration.

22(2) Is registered with and maintains a unique identifier
23through the Nationwide Mortgage Licensing System and
24Registry.

25"Residential real estate." Real property upon which is
26constructed or intended to be constructed a dwelling.

27"Secondary mortgage loan." A loan which is:

28(1) made primarily for personal, family or household
29use; and

30(2) secured by any secondary lien mortgage, deed of

1trust or equivalent consensual security interest on a
2dwelling or on residential real estate.

3"Secondary mortgage loan business." The mortgage loan
4business as applied to secondary mortgage loans.

5"Service mortgage loan." A collecting or remitting payment
6for another, or the right to collect or remit payments for
7another, of principal, interest, tax, insurance or other payment
8under a mortgage loan.

9"Take a mortgage loan application." Receiving a mortgage
10loan application for the purpose of facilitating a decision
11whether to extend an offer of mortgage loan terms to a borrower
12or prospective borrower or to accept the terms offered by a
13borrower or prospective borrower in response to a solicitation,
14whether the application is received directly or indirectly from
15the borrower or prospective borrower.

16"Unique identifier." A number or other identifier assigned
17by the Nationwide Mortgage Licensing System and Registry.

18"Wholesale table funder." A licensed mortgage lender or
19person exempt under section 6112(1) or (7) (relating to
20exceptions to license requirements) who, in the regular course
21of business, provides the funding for the closing of mortgage
22loans through mortgage loan correspondents and who by assignment
23obtains title to the mortgage loans.

24§ 6111. License requirements.

25(a) General rule.--Except as provided under subsections (b)
26and (c) and section 6112 (relating to exceptions to license
27requirements), on and after the effective date of this section,
28no person shall engage in the mortgage loan business in this
29Commonwealth without being licensed as a mortgage broker,
30mortgage lender, mortgage loan correspondent or mortgage

1originator as provided under this chapter. A mortgage originator
2may not engage in the mortgage loan business unless the mortgage
3originator is [employed and supervised] sponsored in the 
4Nationwide Mortgage Licensing System and Registry by a licensed
5mortgage broker, mortgage lender or mortgage loan correspondent, 
6person excepted from this chapter or person excepted from 
7licensure under section 6112 and is under the direct supervision 
8and control of the sponsoring licensee or excepted person.

9* * *

10§ 6112. Exceptions to license requirements.

11The following persons shall not be required to be licensed
12under this chapter in order to conduct the mortgage loan
13business:

14(1) A banking institution or a federally chartered or
15State-chartered credit union, if the primary regulator of the
16banking institution or federally chartered or State-chartered
17credit union supervises the banking institution or federally
18chartered or State-chartered credit union. A banking 
19institution or a federally chartered or State-chartered 
20credit union may register with the department for the purpose 
21of having individuals under its direct supervision and 
22control licensed as mortgage originators, provided that the 
23registered entity meet any of the following requirements:

24(i) In the same manner as a mortgage lender, obtains
25and maintains bond coverage for mortgage originators
26consistent with section 6131(c)(5) (relating to
27application for license) and files a periodic report
28consistent with section 6135(a)(3) (relating to licensee
29requirements).

30(ii) Annually, in a form acceptable to the

1department, demonstrates to the department that all of
2the mortgage originators employed by or under the direct
3supervision and control of the entity have obtained and
4maintained the bond coverage required under section
56131(f)(4).

6(2) An attorney at law not otherwise engaged in or
7holding himself or herself out to the public as being engaged
8in the mortgage loan business who acts as a mortgage broker
9or a mortgage originator in negotiating or placing a mortgage
10loan in the normal course of legal practice. The exception 
11under this paragraph shall not apply if the attorney is 
12compensated by any of the following:

13(i) A mortgage broker.

14(ii) A mortgage lender.

15(iii) A mortgage loan correspondent.

16(iv) A person excepted from licensure under this
17section.

18(v) A mortgage originator.

19(vi) An agent of a person listed in subparagraphs
20(i), (ii), (iii), (iv) and (v).

21(3) A person who [offers or negotiates terms of a 
22mortgage loan with or on behalf of or makes a mortgage loan 
23to a member of the person's immediate family.] originates or 
24negotiates less than four mortgage loans in a calendar year, 
25unless determined to be engaged in the mortgage loan business 
26by the department.

27(4) Any agency or instrumentality of the Federal
28Government or a corporation otherwise created by an act of
29the United States Congress, including the Federal National
30Mortgage Association, the Government National Mortgage

1Association, the Veterans' Administration, the Federal Home
2Loan Mortgage Corporation and the Federal Housing
3Administration, and employees thereof acting within the scope 
4of their employment. [To qualify for the exception under this 
5paragraph, the agency or instrumentality must ensure 
6employees required to be licensed as mortgage originators 
7have completed the requirements under section 6131.1 
8(relating to prelicensing and continuing education), have 
9obtained the required mortgage originator license and:

10(i) in the same manner as a mortgage lender, obtain
11and maintain bond coverage for mortgage originators
12consistent with section 6131(c)(5) (relating to
13application for license) and file an annual report
14consistent with section 6135(a)(3) (relating to licensee
15requirements); or

16(ii) annually, in a form acceptable to the
17department, demonstrate to the department that all of the
18mortgage originators employed by the agency or
19instrumentality have obtained and maintained the bond
20coverage required by section 6131(f)(4).]

21(5) Any agency or instrumentality of a state or local
22government, the District of Columbia or any territory of the
23United States, including the Pennsylvania Housing Finance
24Agency and other government housing finance agencies, and 
25employees thereof acting within the scope of their 
26employment. [To qualify for the exception under this 
27paragraph, the agency or instrumentality must ensure 
28employees required to be licensed as mortgage originators 
29have completed the requirements under section 6131.1, have 
30obtained the required mortgage originator license and:

1(i) in the same manner as a mortgage lender, obtain
2and maintain bond coverage for mortgage originators
3consistent with section 6131(c)(5) and file an annual
4report consistent with section 6135(a)(3); or

5(ii) annually, in a form acceptable to the
6department, demonstrate to the department that all of the
7mortgage originators employed by the agency or
8instrumentality have obtained and maintained the bond
9coverage required by section 6131(f)(4).]

10(6) Consumer discount companies, except that a consumer
11discount company that acts as a mortgage broker, mortgage
12lender or mortgage loan correspondent [other than under the
13provisions of the act of April 8, 1937 (P.L.262, No.66),
14known as the Consumer Discount Company Act], shall be subject
15to the provisions of Subchapter C (relating to mortgage loan
16business restrictions and requirements) and sections 6131(c)
17(2), (3) and (5), 6135, 6138 (relating to authority of
18department) and 6140(b) (relating to penalties). Employees or 
19individuals under the direct supervision and control of
20licensees under the Consumer Discount Company Act that act as
21mortgage originators shall be subject to the licensing
22requirements of this chapter. Consumer discount companies
23that employ or directly supervise and control mortgage
24originators shall be subject to the same requirements as
25mortgage lenders in regard to the employment and supervision
26of mortgage originators.

27(7) Affiliates of banking institutions and subsidiaries
28and affiliates of federally chartered or State-chartered
29credit unions. The exception under this paragraph does not 
30apply to consumer discount companies. Notwithstanding the
 

1exception under this paragraph, subsidiaries and affiliates
2of federally chartered or State-chartered credit unions and 
3affiliates of banking institutions shall:

4(i) be subject to the provisions of Subchapter C and
5sections 6135(a)(2), (3) and (4), (b) and (c), 6138 and
66140(b);

7(ii) deliver as required to the department annually
8copies of financial reports made to all supervisory
9agencies;

10(iii) be registered with the department;

11(iv) in the same manner as a mortgage lender, obtain
12and maintain bond coverage for mortgage originators
13consistent with section 6131(c)(5); and

14(v) ensure employees required to be licensed as
15mortgage originators have completed the requirements
16under section 6131.1 (relating to prelicensing and 
17continuing education) and have obtained the required
18mortgage originator license.

19(8) Employees or individuals under the direct 
20supervision and control of a mortgage broker, mortgage lender
21or mortgage loan correspondent, or a person excepted from 
22licensure under this section, who[:

23(i) engage solely in loan processor or underwriter
24activities, and do not represent to the public, through
25advertising or other means of communicating or providing
26information, including the use of business cards,
27stationery, brochures, signs, rate lists or other
28promotional items, that they can or will perform any of
29the activities of a mortgage originator; or

30(ii)] are not otherwise required to be licensed as

1mortgage originators.

2(9) Registered mortgage loan originators when acting on 
3behalf of their employers.

4(11) [Nonprofit corporations not otherwise engaged in or
5holding themselves out to the public as being engaged in the
6mortgage loan business making mortgage loans to promote home
7ownership or improvements for the disadvantaged. To qualify 
8for the exception under this paragraph, the nonprofit 
9corporation must ensure employees required to be licensed as 
10mortgage originators have completed the requirements under 
11section 6131.1, have obtained the required mortgage 
12originator license and:

13(i) in the same manner as a mortgage lender, obtain
14and maintain bond coverage for mortgage originators
15consistent with section 6131(c)(5) and file an annual
16report consistent with section 6135(a)(3); or

17(ii) annually, in a form acceptable to the
18department, demonstrate to the department that all of the
19mortgage originators employed by the nonprofit
20corporation have obtained and maintained the bond
21coverage required by section 6131(f)(4).] A bona fide 
22nonprofit organization and employees of the organization 
23acting within the scope of their employment, unless 
24otherwise deemed to be engaged in the mortgage loan 
25business by the department, provided:

26(i) The organization shall be subject to the
27provisions of Subchapter C and sections 6135(a)(2), (3)
28and (4) and (c), 6138 and 6140(b).

29(ii) The organization shall be registered with the
30department.

1(iii) As required under 24 CFR § 3400.103(e)(7)(iii)
2(relating to individuals required to be licensed by
3states), the department must periodically examine the
4books and activities of an organization it determines is
5a bona fide nonprofit organization and revoke its status
6as a bona fide nonprofit organization if it does not
7continue to meet the criteria under 24 CFR §
83400.103(e)(7)(ii).

9(iv) For residential mortgage loans to have terms
10that are favorable to the borrower, the department must
11determine that the terms are consistent with loan
12origination in a public or charitable context, rather
13than a commercial context.

14(v) The department shall make the list of bona fide
15nonprofit organizations available on its Internet
16website.

17[(12) A nonprofit corporation not otherwise engaged in
18or holding itself out to the public as being engaged in the
19mortgage loan business which meets all of the following
20subparagraphs:

21(i) Does not make more than 12 mortgage loans in a
22calendar year with its own funds, not including funds
23borrowed through warehouse lines of credit or other
24sources for the purpose of making mortgage loans.

25(ii) Makes mortgage loans which are retained in the
26corporation's own portfolios and not regularly sold to
27others and are made to promote and advance the cultural
28traditions and lifestyles of bona fide religious
29organizations.

30(iii) Does either of the following:

1(A) In the same manner as a mortgage lender,
2obtains and maintains bond coverage for mortgage
3originators consistent with section 6131(c)(5) and
4files an annual report consistent with section
56135(a)(3).

6(B) Annually, in a form acceptable to the
7department, demonstrates to the department that all
8of the mortgage originators employed by the nonprofit
9corporation have obtained and maintained the bond
10coverage required by section 6131(f)(4).

11(iv) Ensures employees required to be licensed as
12mortgage originators have completed the requirements
13under section 6131.1 and have obtained the required
14mortgage originator license.]

15(13) An installment seller of, or holder of installment
16sales contracts secured by, manufactured homes who is
17licensed under the act of June 28, 1947 (P.L.1110, No.476),
18known as the Motor Vehicle Sales Finance Act, provided the
19installment seller or holder only engages in the mortgage
20loan business regarding installment sales contracts secured
21by manufactured homes that are purchase-money mortgage loans.
22To qualify for the exception under this paragraph, the
23installment seller or holder must:

24(i) Obtain a license as a mortgage originator, if
25licensed as an individual under the Motor Vehicle Sales
26Finance Act.

27(ii) Be registered with the department.

28(iii) Do either of the following:

29(A) In the same manner as a mortgage lender or
30mortgage broker, as applicable depending upon whether

1the installment seller or holder makes or brokers
2installment sales contracts secured by manufactured
3homes that are purchase-money mortgage loans, obtain
4and maintain bond coverage for mortgage originators
5consistent with section 6131(c)(5) or (e)(3) and file
6[an annual] a periodic report consistent with section
76135(a)(3); or

8(B) Annually demonstrate to the department that
9the mortgage originators employed by, or under the 
10direct supervision and control of, the installment
11seller or holder have obtained and maintained the
12bond coverage required by section 6131(f)(4) in a
13form acceptable to the department.

14(iv) Ensure employees or individuals under the 
15direct supervision and control of the installment seller 
16or holder required to be licensed as mortgage originators
17have completed the requirements under section 6131.1 and
18have obtained the required mortgage originator license.

19(14) A nonoriginating person, unless otherwise deemed to
20be engaged in the mortgage loan business by the department,
21except that the nonoriginating person shall:

22(i) Be subject to the provisions of Subchapter C and
23sections 6135(a)(2), (3) and (4) and (c), 6138 and
246140(b).

25(ii) Be registered with the department.

26(iii) In the same manner as a mortgage broker,
27obtain and maintain bond coverage for mortgage
28originators consistent with section 6131(c)(5).

29(iv) Ensure employees or individuals under the
30direct supervision and control of the person required to

1be licensed as mortgage originators have completed the
2requirements under section 6131.1 and have obtained the
3required mortgage originator license.

4(15) Notwithstanding section 6151 (relating to
5applicability), a mortgage originator licensed by one or more
6other states and physically located in this Commonwealth that
7does not engage in any transactions involving Pennsylvania
8consumers, dwellings or residential real estate.

9(16) A person who engages in mortgage loan modifications
10for existing mortgage loans held or serviced by that person
11or that person's employer and who does not otherwise engage
12in the mortgage loan business.

13§ 6121. General requirements.

14A licensee shall do all of the following:

15* * *

16(2) Comply with all applicable State law, including the
17provisions of the act of December 3, 1959 (P.L.1688, No.621),
18known as the Housing Finance Agency Law, that are applicable
19to the licensee and the act of December 9, 2002 (P.L.1530, 
20No.197), known as the Mortgage Satisfaction Act.

21* * *

22(8) If a mortgage loan is paid in full and, in the case
23of an open-end loan, the mortgage lender is no longer
24obligated to make future advances to the consumer, the
25mortgage lender shall do all of the following:

26(i) Cancel any insurance provided by the licensee in
27connection with the mortgage loan and refund to the
28consumer, in accordance with regulations promulgated by
29the Insurance Department, any unearned portion of the
30premium for the insurance.

1(ii) Stamp or write on the face of the mortgage loan
2agreement or promissory note evidencing the mortgage loan
3"Paid in Full" or "Canceled," the date paid and, within
460 days, return the mortgage loan agreement or promissory
5note to the consumer.

6(iii) Release any lien on [real property] the 
7dwelling or residential real estate and cancel the same
8of record and, at the time the mortgage loan agreement or
9promissory note evidencing the mortgage loan is returned,
10deliver to the consumer good and sufficient assignments,
11releases or any other certificate, instrument or document
12as may be necessary to evidence the release.

13* * *

14(13) In the case of a mortgage broker, mortgage lender or
15mortgage loan correspondent, do all of the following:

16(i) Maintain supervision and control of and
17responsibility for the acts and omissions of all mortgage
18originators [employed] sponsored by the licensee.

19(ii) Maintain a list of all current and former
20mortgage originators [employed] sponsored by the licensee
21and the dates of the [employment] sponsorship.

22(iii) In the event that a licensee believes that a
23mortgage originator [employed] sponsored by the licensee
24has engaged in any activity that is illegal or in
25violation of this chapter or any regulation or statement
26of policy promulgated under this chapter, the licensee
27shall provide the department with written notification of
28the belief and the licensee's proposed corrective
29measures within 30 days. A licensee shall not be liable
30to a mortgage originator in connection with the

1notification.

2* * *

3Section 2. Section 6123(8) of Title 7 is amended and the
4section is amended by adding a paragraph to read:

5§ 6123. Mortgage loan business prohibitions.

6A licensee engaging in the mortgage loan business shall not:

7* * *

8(8) In the case of a mortgage originator, accept any
9fees from consumers in the mortgage originator's own name. A
10mortgage originator may accept fees payable to the mortgage
11originator's [employer] sponsoring licensee and fees payable
12to third-party entities on behalf of the mortgage
13originator's [employer] sponsoring licensee. A mortgage
14originator may not accept advance fees payable to the
15mortgage originator's [employer] sponsoring licensee unless
16the licensee is authorized to collect advance fees under this
17chapter.

18(9) In the case of a mortgage originator, engage in the
19mortgage loan business other than on behalf of the single
20mortgage broker, mortgage lender or mortgage loan
21correspondent or a person excepted from this chapter or a
22person excepted from licensure under section 6112 (relating
23to exceptions to license requirements) that sponsors the
24mortgage originator.

25Section 3. Sections 6126(7), 6131, 6131.1(b), (c) and (d),
266135(a) and (b), 6136(a), 6137, 6138(b), (d), (e) and (f),
276139(a), 6140(b) and 6151 of the title Title 7 are amended to<-
28read:

29§ 6126. Requirements as to open-end loans.

30The following shall apply:

1* * *

2(7) Notwithstanding any other provisions in this chapter
3to the contrary, a mortgage lender may retain any security
4interest in a dwelling or real or personal property until the
5open-end loan is terminated, provided that, if there is no
6outstanding balance in the account and there is no commitment
7by the licensee to make advances, the mortgage lender shall,
8within ten days following written demand by the consumer,
9deliver to the consumer a release of the mortgage, indenture,
10deed of trust or any other similar instrument or document on
11any [real property] dwelling or residential real estate taken
12as security for the open-end loan. The mortgage lender shall
13include on all billing statements provided in connection with
14an open-end loan a statement that the licensee retains a
15security interest in the consumer's [real property] dwelling 
16or residential real estate whenever the security interest has
17not been released.

18* * *

19§ 6131. Application for license.

20(a) Contents.--An application for a license under this
21chapter shall be on a form prescribed and provided by the
22department. Consistent with sections 202 E and 405 F(1) of the
23act of May 15, 1933 (P.L.565, No.111), known as the Department
24of Banking and Securities Code, all applicants and licensees
25shall use the Nationwide Mortgage Licensing System and Registry
26to obtain and maintain licenses under this chapter.

27(1) In the case of a mortgage broker, mortgage lender or
28mortgage loan correspondent, the application shall include
29the following:

30(i) The name of the applicant.

1(ii) The address of the principal place of business
2and any branches of the applicant [and the address or
3addresses where the applicant's mortgage loan business is
4to be conducted].

5(iii) The full name, official title and business
6address of each director and principal officer of the
7mortgage loan business.

8(iv) Any other information that may be required by
9the department.

10(2) In the case of a mortgage originator, the
11application shall include the following:

12(i) The name of the applicant.

13(ii) The name of the [employer licensee] sponsoring 
14licensee or excepted person of the applicant and location
15of the [employer licensee] excepted person or licensed 
16location of the licensee to which the applicant is
17assigned.

18(iii) Any other information that may be required by
19the department.

20(3) An applicant shall demonstrate to the department
21that policies and procedures have been developed to receive
22and process consumer inquiries and grievances promptly and
23fairly.

24(a.1) Licensing of principal place of business and
25branches.--All applicants and licensees must establish and
26maintain a separate license for the principal place of business
27and each branch.

28(b) Duty to update.--All applicants and licensees shall be
29required to provide the department with written notice of the
30change in any information contained in an application for a

1license or for any renewal of a license within ten days of an
2applicant or licensee becoming aware of the change.

3(c) Mortgage lender license.--The department shall issue a
4mortgage lender license applied for under this chapter if the
5applicant has:

6[(1) Been approved by or meets the current criteria for
7approval of at least one of the following:

8(i) Federal National Mortgage Association.

9(ii) Federal Home Loan Mortgage Corporation.

10(iii) Federal Housing Administration.]

11(2) Been approved for and will continue to maintain as a
12licensee a line of credit, repurchase agreement or equivalent
13mortgage-funding capability of not less than $1,000,000.

14(3) Established a minimum net worth of $250,000 at the
15time of application and will, at all times thereafter,
16maintain the minimum net worth.

17(4) Been approved for and will continue to maintain as a
18licensee fidelity bond coverage in accordance with the
19guidelines established by the Federal National Mortgage
20Association or the Federal Home Loan Mortgage Corporation.

21(5) Obtained and will maintain a surety bond in an
22amount that will provide coverage for the mortgage
23originators [employed] sponsored by the applicant or
24licensee, in a form acceptable to the department, prior to
25the issuance of the license, from a surety company authorized
26to do business in this Commonwealth. The following shall
27apply:

28(i) The amount of the bond shall be:

29(A) $100,000 for an applicant or licensee whose
30mortgage originators will originate or originated

1less than $30,000,000 in mortgage loans secured by
2Pennsylvania [real property] dwellings or residential 
3real estate in a calendar year;

4(B) $200,000 for an applicant or licensee whose
5mortgage originators will originate or originated
6$30,000,000 to $99,999,999.99 in mortgage loans
7secured by Pennsylvania [real property] dwellings or 
8residential real estate in a calendar year;

9(C) $300,000 for an applicant or licensee whose
10mortgage originators will originate or originated
11$100,000,000 to $249,999,999.99 in mortgage loans
12secured by Pennsylvania [real property] dwellings or 
13residential real estate in a calendar year; and

14(D) $500,000 for an applicant or licensee whose
15mortgage originators will originate or originated
16$250,000,000 or more in mortgage loans secured by
17Pennsylvania [real property] dwellings or residential 
18real estate in a calendar year.

19(ii) For an initial license applicant, the amount of
20the bond shall be determined by the applicant's
21anticipated amount of mortgage loans secured by
22Pennsylvania dwellings or residential real estate
23originated by its mortgage originators in the first
24calendar year of licensing. For a licensee, the amount of
25the bond shall be determined annually by the department
26based upon the amount of mortgage loans secured by
27Pennsylvania dwellings or residential real estate
28originated by the licensee's mortgage originators as
29indicated on the licensee's [annual] periodic report.

30(iii) The bond shall run to the Commonwealth and

1shall be for the use of the Commonwealth and for the use
2of any consumer who is injured by the acts or omissions
3of the licensee's mortgage originators that are related
4to the mortgage loan business regulated by this chapter.
5No bond shall comply with the requirements of this
6section unless it contains a provision that it shall not
7be canceled for any cause unless notice of intention to
8cancel is given to the department at least 30 days before
9the day upon which cancellation shall take effect.
10Cancellation of the bond shall not invalidate the bond
11regarding the period of time it was in effect.

12(6) Designated an individual as the qualifying
13individual for the principal place of business and separate
14individuals as branch managers for each branch, as
15applicable.

16(d) Mortgage loan correspondent license.--The department
17shall issue a loan correspondent's license applied for under
18this chapter if the applicant:

19(1) Obtains and will maintain a bond in the amount of
20$100,000, in a form acceptable to the department, prior to
21the issuance of the license, from a surety company authorized
22to do business in this Commonwealth. The bond shall run to
23the Commonwealth and shall be for the use of the Commonwealth
24and any person or persons who obtain a judgment against the
25mortgage loan correspondent for failure to carry out the
26terms of any provision for which advance fees are paid. No
27bond shall comply with the requirements of this section
28unless it contains a provision that it shall not be canceled
29for any cause unless notice of intention to cancel is given
30to the department at least 30 days before the day upon which

1cancellation shall take effect. A mortgage loan correspondent
2who can demonstrate to the satisfaction of the department
3that the correspondent does not and will not accept advance
4fees shall be exempt from the bond requirement of this
5paragraph.

6(2) Establishes a minimum net worth of $100,000 at the
7time of application and will, at all times thereafter,
8maintain the minimum net worth.

9(3) Obtains and will maintain a surety bond in an amount
10that will provide coverage for the mortgage originators
11[employed] sponsored by the applicant or licensee, in a form
12acceptable to the department, prior to the issuance of the
13license, from a surety company authorized to do business in
14this Commonwealth. The following shall apply:

15(i) The amount of the bond shall be $100,000 for an
16applicant or licensee whose mortgage originators will
17originate or originated less than $30,000,000 in mortgage
18loans secured by Pennsylvania dwellings or residential
19real estate in a calendar year; $200,000 for an applicant
20or licensee whose mortgage originators will originate or
21originated $30,000,000 to $99,999,999.99 in mortgage
22loans secured by Pennsylvania dwellings or residential
23real estate in a calendar year; $300,000 for an applicant
24or licensee whose mortgage originators will originate or
25originated $100,000,000 to $249,999,999.99 in mortgage
26loans secured by Pennsylvania dwellings or residential
27real estate in a calendar year; and $500,000 for an
28applicant or licensee whose mortgage originators will
29originate or originated $250,000,000 or more in mortgage
30loans secured by Pennsylvania dwellings or residential

1real estate in a calendar year.

2(ii) For an initial license applicant, the amount of
3the bond shall be determined by the applicant's
4anticipated amount of mortgage loans secured by
5Pennsylvania dwellings or residential real estate
6originated by its mortgage originators in the first
7calendar year of licensing. For a licensee, the amount of
8the bond shall be determined annually by the department
9based upon the amount of mortgage loans secured by
10Pennsylvania dwellings or residential real estate
11originated by the licensee's mortgage originators as
12indicated on the licensee's [annual] periodic report.

13(iii) The bond shall run to the Commonwealth and
14shall be for the use of the Commonwealth and for the use
15of any consumer who is injured by the acts or omissions
16of the licensee's mortgage originators that are related
17to the mortgage loan business regulated by this chapter.
18No bond shall comply with the requirements of this
19section unless it contains a provision that it shall not
20be canceled for any cause unless notice of intention to
21cancel is given to the department at least 30 days before
22the day upon which cancellation shall take effect.
23Cancellation of the bond shall not invalidate the bond
24regarding the period of time it was in effect.

25(4) Designates an individual as the qualifying
26individual for the principal place of business and separate
27individuals as branch managers for each branch, as
28applicable.

29(e) Mortgage broker license.--

30(1) The department shall issue a mortgage broker license

1applied for under this chapter if the applicant obtains and
2will maintain a bond in the amount of $100,000, in a form
3acceptable to the department, prior to the issuance of the
4license, from a surety company authorized to do business in
5this Commonwealth. The bond shall be a penal bond conditioned
6on compliance with this chapter and subject to forfeiture by
7the department and shall run to the Commonwealth for its use.
8The bond shall also be for the use of any person against the
9mortgage broker for failure to carry out the terms of any
10provision for which advance fees are paid. If the person is
11aggrieved, the person may, with the written consent of the
12department, recover advance fees and costs from the bond by
13filing a claim with the surety company or maintaining an
14action on the bond. In the alternative, an aggrieved person
15may recover advance fees and costs by filing a formal
16complaint against the mortgage broker with the department
17which shall adjudicate the matter. The adjudication shall be
18binding upon the surety company and enforceable by the
19department in Commonwealth Court and by an aggrieved person
20in any court. Any aggrieved person seeking to recover advance
21fees and costs from a bond that has already been forfeited by
22the department or which the department is in the process of
23forfeiting may recover payment on the bond if, after filing a
24petition with the department, the department consents to the
25aggrieved person's requested payment or portion thereof. The
26department may pay the aggrieved person from the bond
27proceeds it recovers. Nothing in this section shall be
28construed as limiting the ability of any court or magisterial
29district judge to award to any aggrieved person other
30damages, court costs and attorney fees as permitted by law,

1but those claims that are not advance fees or related costs
2may not be recovered from the bond. The department, in its
3discretion, may consent to or order pro rata or other
4recovery on the bond for any aggrieved person if claims
5against the bond may or do exceed its full monetary amount.
6No bond shall comply with the requirements of this section
7unless it contains a provision that it shall not be canceled
8for any cause unless notice of intention to cancel is given
9to the department at least 30 days before the day upon which
10cancellation shall take effect. Cancellation of the bond
11shall not invalidate the bond regarding the period of time it
12was in effect.

13(2) Mortgage brokers who can demonstrate to the
14satisfaction of the department that they do not and will not
15accept advance fees shall be exempt from the bond requirement
16of paragraph (1).

17(3) A mortgage broker shall obtain and maintain a surety
18bond in an amount that will provide coverage for the mortgage
19originators [employed] sponsored by the applicant or
20licensee, in a form acceptable to the department, prior to
21the issuance of the license, from a surety company authorized
22to do business in this Commonwealth. The following shall
23apply:

24(i) The amount of the bond shall be $50,000 for an
25applicant or licensee whose mortgage originators will
26originate or originated less than $15,000,000 in mortgage
27loans secured by Pennsylvania dwellings or residential
28real estate in a calendar year; $75,000 for an applicant
29or licensee whose mortgage originators will originate or
30originated $15,000,000 to $29,999,999.99 in mortgage

1loans secured by Pennsylvania dwellings or residential
2real estate in a calendar year; $100,000 for an applicant
3or licensee whose mortgage originators will originate or
4originated $30,000,000 to $49,999,999.99 in mortgage
5loans secured by Pennsylvania dwellings or residential
6real estate in a calendar year; and $150,000 for an
7applicant or licensee whose mortgage originators will
8originate or originated $50,000,000 or more in mortgage
9loans secured by Pennsylvania dwellings or residential
10real estate in a calendar year.

11(ii) For an initial license applicant, the amount of
12the bond shall be determined by the applicant's
13anticipated amount of mortgage loans secured by
14Pennsylvania dwellings or residential real estate
15originated by its mortgage originators in the first
16calendar year of licensing. For a licensee, the amount of
17the bond shall be determined annually by the department
18based upon the amount of mortgage loans secured by
19Pennsylvania dwellings or residential real estate
20originated by the licensee's mortgage originators as
21indicated on the licensee's [annual] periodic report.

22(iii) The bond shall run to the Commonwealth and
23shall be for the use of the Commonwealth and for the use
24of any consumer who is injured by the acts or omissions
25of the licensee's mortgage originators that are related
26to the mortgage loan business regulated by this chapter.
27No bond shall comply with the requirements of this
28section unless it contains a provision that it shall not
29be canceled for any cause unless notice of intention to
30cancel is given to the department at least 30 days before

1the day upon which cancellation shall take effect.
2Cancellation of the bond shall not invalidate the bond
3regarding the period of time it was in effect.

4(4) A mortgage broker shall designate an individual as
5the qualifying individual for the principal place of business
6and separate individuals as branch managers for each branch,
7as applicable.

8(f) Mortgage originator license.--A mortgage originator
9shall do all of the following:

10(1) Be an employee of [a single], or under the direct 
11supervision and control of, a licensed mortgage broker,
12mortgage lender or mortgage loan correspondent, a person
13excepted from this chapter or a person excepted from
14licensure under section 6112 (relating to exceptions to
15license requirements). The licensee or person shall sponsor 
16the mortgage originator in the Nationwide Mortgage Licensing 
17System and Registry and directly supervise, control and
18maintain responsibility for the acts and omissions of the
19mortgage originator.

20(2) Be assigned to and work out of a licensed location
21of the [employer] sponsoring licensee or a location of [an
22employer] a sponsoring person excepted from this chapter or
23excepted from licensure under section 6112[.], which, in the 
24case of a sponsoring licensee, may be either the mortgage 
25originator's residence or a location of the licensee that is 
26within 100 miles of the mortgage originator's residence.

27(3) Maintain a valid unique identifier issued by the
28Nationwide Mortgage Licensing System and Registry.

29(4) If a person excepted from this chapter or excepted
30from licensure under section 6112 does not elect to maintain

1bond coverage for its mortgage originators in the same manner
2as a mortgage lender, a mortgage originator employed by or 
3under the direct supervision and control of a person excepted
4from this chapter or excepted from licensure under section
56112 shall obtain and maintain a surety bond in an amount
6that will provide coverage for the mortgage originator, in a
7form acceptable to the department, prior to the issuance of
8the license, from a surety company authorized to do business
9in this Commonwealth. The following shall apply:

10(i) The amount of the bond shall be $25,000 for an
11applicant or licensee who will originate or originated
12less than $7,500,000 in mortgage loans secured by
13Pennsylvania dwellings or residential real estate in a
14calendar year; $50,000 for an applicant or licensee who
15will originate or originated $7,500,000 to $14,999,999.99
16in mortgage loans secured by Pennsylvania dwellings or 
17residential real estate in a calendar year; $75,000 for
18an applicant or licensee who will originate or originated
19$15,000,000 to $29,999,999.99 in mortgage loans secured
20by Pennsylvania dwellings or residential real estate in a
21calendar year; $100,000 for an applicant or licensee who
22will originate or originated $30,000,000 to
23$49,999,999.99 in mortgage loans secured by Pennsylvania
24dwellings or residential real estate in a calendar year;
25and $150,000 for an applicant or licensee who will
26originate or originated $50,000,000 or more in mortgage
27loans secured by Pennsylvania dwellings or residential
28real estate in a calendar year.

29(ii) For an initial license applicant, the amount of
30the bond shall be determined by the applicant's

1anticipated amount of mortgage loans secured by
2Pennsylvania dwellings or residential real estate
3originated in the first calendar year of licensing. For a
4licensee, the amount of the bond shall be determined
5annually by the department based upon the amount of
6mortgage loans secured by Pennsylvania dwellings or 
7residential real estate originated by the mortgage
8originator as indicated on the mortgage originator's
9[annual] periodic report.

10(iii) The bond shall run to the Commonwealth and
11shall be for the use of the Commonwealth and for the use
12of any consumer who is injured by the acts or omissions
13of the mortgage originator that are related to the
14mortgage loan business regulated by this chapter. No bond
15shall comply with the requirements of this section unless
16it contains a provision that it shall not be canceled for
17any cause unless notice of intention to cancel is given
18to the department at least 30 days before the day upon
19which cancellation shall take effect. Cancellation of the
20bond shall not invalidate the bond regarding the period
21of time it was in effect.

22(5) Only engage in the mortgage loan business on behalf
23of the single mortgage broker, mortgage lender or mortgage
24loan correspondent or a person excepted from this chapter or
25a person excepted from licensure under section 6112 that
26sponsors the mortgage originator.

27(g) Nationwide Mortgage Licensing System and Registry
28information challenge process.--A mortgage originator applicant
29or licensee may challenge the accuracy of information entered by
30the department to the Nationwide Mortgage Licensing System and

1Registry regarding the mortgage originator applicant or licensee
2by filing a written complaint with the department. The
3department shall review the complaint and alleged inaccurate
4information on the Nationwide Mortgage Licensing System and
5Registry and notify the applicant or licensee of corrective
6action taken by the department regarding the alleged inaccurate
7information within 30 days of receipt of the complaint.

8(h) License renewals.--Licenses shall be issued for terms
9[of 12] not to exceed 14 months and may be renewed by the
10department each year on a schedule set by the department upon
11application by the licensee and the payment of any and all
12applicable renewal fees. The licensee shall demonstrate to the
13department that it is conducting the mortgage loan business in
14accordance with the requirements of this chapter and that the
15licensee or directors, officers, partners, employees, mortgage 
16originators, agents and ultimate equitable owners of 10% or more
17of the licensee continue to meet all of the initial requirements
18for licensure required by this chapter unless otherwise
19determined by the department.

20(i) Out-of-State applicants.--

21(1) If an applicant is not a resident of this
22Commonwealth, as a condition to receiving a license under
23this chapter, the applicant shall be authorized to do
24business in this Commonwealth in accordance with the laws of
25this Commonwealth regulating corporations and other entities
26conducting business in this Commonwealth and shall maintain
27at least one office which is the office that shall be
28licensed as the principal place of business for the purposes
29of this chapter.

30(2) Out-of-State applicants shall file with the license

1application an irrevocable consent, duly acknowledged, that
2suits and actions may be commenced against that person in the
3courts of this Commonwealth by the service of process of any
4pleading upon the department in the usual manner provided for
5service of process and pleadings by the laws and court rules
6of this Commonwealth. The consent shall provide that this
7service shall be as valid and binding as if service had been
8made personally upon the person in this Commonwealth. In all
9cases where process or pleadings are served upon the
10department under the provisions of this section, the process
11or pleadings shall be served in triplicate; one copy shall be
12filed in the department's offices and the others shall be
13forwarded by the department, by certified or registered mail,
14return receipt requested, to the last known principal place
15of business of the person.

16(j) Disclosure of mortgage originator information.--
17Notwithstanding section 302 of the act of May 15, 1933 (P.L.565,
18No.111), known as the Department of Banking and Securities Code,
19the department shall make available to the public, including by
20access to the Nationwide Mortgage Licensing System and Registry,
21the employment history of a mortgage originator.

22§ 6131.1. Prelicensing and continuing education.

23* * *

24(b) Prelicensing education.--

25(1) A mortgage originator applicant, and at least one 
26[partner or ultimate equitable owner of 10% or more of an 
27applicant other than a mortgage originator] qualifying 
28individual of a mortgage broker, mortgage lender or mortgage 
29loan correspondent applicant, shall complete at least 20 
30hours of education programs approved in accordance with
 

1paragraph (2), which shall include all of the following:

2(i) Three hours of Federal law and regulations.

3(ii) Three hours of ethics, which shall include
4instruction on fraud, consumer protection and fair
5lending issues.

6(iii) Two hours of training related to lending
7standards for the nontraditional mortgage loan
8marketplace.

9(iv) Three hours of Pennsylvania law and
10regulations, including this chapter, the act of December
113, 1959 (P.L.1688, No.621), known as the Housing Finance
12Agency Law, and the act of January 30, 1974 (P.L.13,
13No.6), referred to as the Loan Interest and Protection
14Law.

15(2) Prelicensing education programs shall be reviewed
16and approved by the Nationwide Mortgage Licensing System and
17Registry or as otherwise determined by the department based
18upon reasonable standards. Review and approval of a
19prelicensing education program shall include review and
20approval of the program provider.

21(3) A prelicensing education program approved by the
22Nationwide Mortgage Licensing System and Registry or as
23otherwise determined by the department may be provided by the
24[employer] sponsor of the applicant or an entity which is
25affiliated with the applicant by an agency contract, or any
26subsidiary or affiliate of such [employer] sponsor or entity.

27(4) Prelicensing education programs may be offered
28either in a classroom, online or by any other means approved
29by the Nationwide Mortgage Licensing System and Registry or
30as otherwise determined by the department.

1(5) Except for prelicensing education programs under
2paragraph (1)(iv), prelicensing education programs approved
3by the Nationwide Mortgage Licensing System and Registry or
4as otherwise determined by the department and completed for
5another State license application shall be accepted as credit
6toward completion of the prelicensing education requirements
7of this chapter [if the education programs have been
8successfully completed within the 12 months immediately
9preceding the date of the submission of the applicant's
10license application].

11(6) An applicant that was previously licensed under this
12chapter that is applying to become licensed again under this
13chapter must demonstrate that the applicant has completed all
14of the continuing education requirements for the year in
15which the applicant was last licensed under this chapter.

16(c) Prelicensing written test.--

17(1) A mortgage originator applicant, and at least one 
18[partner or ultimate equitable owner of 10% or more of an 
19applicant other than a mortgage originator] qualifying 
20individual of a mortgage broker, mortgage lender or mortgage 
21loan correspondent applicant, shall pass, in accordance with 
22the standards established under this subsection, a qualified 
23written test developed by the Nationwide Mortgage Licensing 
24System and Registry and administered by a test provider 
25approved by the Nationwide Mortgage Licensing System and 
26Registry based upon reasonable standards. The [portion of 
27the] department may also require applicants to pass a test 
28regarding Pennsylvania-specific law, which shall be 
29administered by a test provider approved by the department or 
30as otherwise determined by the department under subsection
 

1(e).

2(2) A written test shall not be treated as a qualified
3written test for purposes of paragraph (1) unless the test
4adequately measures the applicant's knowledge and
5comprehension in appropriate subject areas, including:

6(i) Ethics.

7(ii) Federal law and regulation pertaining to
8mortgage origination.

9(iii) Pennsylvania law and regulation pertaining to
10mortgage origination, unless otherwise determined by the 
11department.

12(iv) Federal and Pennsylvania law and regulation
13related to fraud, consumer protection, the nontraditional
14mortgage marketplace and fair lending issues.

15(3) A test provider approved by the Nationwide Mortgage
16Licensing System and Registry or as otherwise determined by
17the department may provide a test at the location of the
18[employer] sponsor of the applicant or an entity which is
19affiliated with the applicant by an agency contract, or any
20subsidiary or affiliate of the [employer] sponsor or entity.

21(4) (i) An applicant shall not be considered to have
22passed a qualified written test unless the individual
23achieves a test score of not less than 75% correct
24answers to questions.

25(ii) An applicant may [retake] take a test three
26consecutive times with each consecutive taking occurring
27at least 30 days after the preceding test.

28(iii) After failing three consecutive tests, an
29applicant shall wait at least six months before taking
30the test again.

1(iv) A formerly licensed mortgage originator
2applicant who has been unlicensed for five continuous
3years or longer shall retake a test. Any time during
4which the individual is a registered mortgage loan
5originator shall not be counted toward the five-year
6continuous period.

7(d) Continuing education.--

8(1) A licensee who is a mortgage originator and [one 
9individual from each licensed office] all branch managers and 
10qualifying individuals of a mortgage broker, mortgage lender 
11or mortgage loan correspondent [that is not a mortgage 
12originator, unless all of the nonclerical staff of a 
13particular licensed office are licensed as mortgage 
14originators,] shall annually complete at least eight hours of 
15education programs in accordance with paragraph (2), which 
16shall include all of the following:

17(i) Three hours of Federal law and regulations.

18(ii) Two hours of ethics, which shall include
19instruction on fraud, consumer protection and fair
20lending issues.

21(iii) Two hours of training related to lending
22standards for the nontraditional mortgage loan
23marketplace.

24(iv) One hour of Pennsylvania law, including this
25chapter, the act of December 3, 1959 (P.L.1688, No.621),
26known as the Housing Finance Agency Law, and the act of
27January 30, 1974 (P.L.13, No.6), referred to as the Loan
28Interest and Protection Law.

29(2) Continuing education programs shall be reviewed and
30approved by the Nationwide Mortgage Licensing System and

1Registry or as otherwise determined by the department based
2upon reasonable standards. Review and approval of a
3continuing education program shall include review and
4approval of the program provider.

5(3) A continuing education program approved by the
6Nationwide Mortgage Licensing System and Registry or as
7otherwise determined by the department may be provided by the
8[employer] sponsor of the licensee or an entity which is
9affiliated with the licensee by an agency contract, or any
10subsidiary or affiliate of the [employer] sponsor or entity.

11(4) Continuing education programs may be offered either
12in a classroom, online or by any other means approved by the
13Nationwide Mortgage Licensing System and Registry or as
14otherwise determined by the department.

15(5) A licensee may only receive credit for a continuing
16education program in the year in which the program is taken
17and may not take the same continuing education program in the
18same or successive years to meet the requirements of this
19subsection.

20(6) A licensed mortgage originator who is an instructor
21of an approved continuing education program may receive
22credit for the licensed mortgage loan originator's own
23continuing education requirement at the rate of two hours
24credit for every one hour taught.

25(7) Except for the continuing education program under
26paragraph (1)(iv), continuing education programs approved by
27the Nationwide Mortgage Licensing System and Registry or as
28otherwise determined by the department and completed for
29another state shall be accepted as credit toward completion
30of the continuing education requirements of this chapter.

1(8) An individual who is a mortgage originator, branch
2manager or qualifying individual of a mortgage broker,
3mortgage lender or mortgage loan correspondent is not
4required to complete the requirements of this subsection in
5any licensing year in which the individual has completed the
6requirements of subsection (b).

7* * *

8§ 6135. Licensee requirements.

9(a) Requirements of licensee.--

10[(1) A licensee who is a mortgage broker, mortgage
11lender or mortgage loan correspondent shall conspicuously
12display, at each licensed place of business, its license and
13copies of the licenses of all mortgage originators assigned
14to that location. A licensee who is a mortgage originator
15shall keep the license in the immediate possession of the
16licensee whenever the licensee is engaged in the mortgage
17loan business.]

18(2) Each licensee shall maintain at its principal place
19of business, or at another place if agreed to by the
20department, the original or a copy of any books, accounts,
21records and documents, or electronic or similar access
22thereto, of the business conducted under the license as
23prescribed by the department to enable the department to
24determine whether the business of the licensee is being
25conducted in accordance with the provisions of this chapter
26and the regulations, statements of policy or orders issued
27under this chapter. All instruments, documents, accounts, 
28books and records relating to the mortgage loan business 
29shall be kept separate and apart from the records of any 
30other business conducted by the licensee. Records of first
 

1and secondary mortgage loans shall be easily distinguishable 
2and easily separated. All records shall be preserved and kept 
3available for investigation or examination by the department 
4for a period of four years, unless otherwise determined by 
5the department. The department shall have free access to and
6authorization to examine records maintained by the licensee.
7The costs of the examination, including travel costs, shall
8be borne by the licensee. The department may deny or revoke
9the authority to maintain records at another place for good
10cause in the interest of protection for Commonwealth
11consumers, including for the licensee's failure to provide
12books, accounts, records or documents to the department upon
13request.

14(3) A mortgage broker, mortgage lender or mortgage loan
15correspondent, or a mortgage originator that is required to 
16obtain and maintain its own bond coverage under section 
176131(f)(4) (relating to application for license), [on a date
18determined by the department,] shall file periodically, as 
19determined by the department, a report with the department or 
20the Nationwide Mortgage Licensing System and Registry, as 
21determined by the department, setting forth such information
22as the department shall require concerning the first or
23secondary mortgage loan business conducted by the licensee
24[during the preceding calendar year. The report shall be on a
25form provided by the department and shall be filed with the 
26Nationwide Mortgage Licensing System and Registry]. Licensees
27who fail to file the required report at the date required by
28the department may be subject to a penalty of $100 for each
29day after the due date until the report is filed.

30(4) Each licensee shall be subject to examination by the

1department at its discretion, at which time the department
2shall have free access, during regular business hours, to the
3licensee's place or places of business and to all
4instruments, documents, accounts, books and records which
5pertain to a licensee's first or secondary mortgage loan
6business. The department may examine a licensee at any time
7if the department deems the examination to be necessary or
8desirable. The cost of any such examination shall be borne by
9the licensee.

10(5) Each licensee shall include in all advertisements
11[language indicating that the licensee is licensed by the
12department. In the case of a mortgage originator, all
13advertising shall include the name of the mortgage
14originator's employer and the mortgage originator's unique 
15identifier] the licensee's unique identifier.

16(b) Accounting records.--[The] For licensees with minimum 
17net worth requirements pursuant to this chapter, the licensee's
18accounting records must be constructed and maintained in
19compliance with generally accepted accounting principles or as
20provided by department regulation.

21* * *

22§ 6136. Licensee limitations.

23(a) Name and changes to name.--A licensee cannot transact
24any business under this chapter under any other name or names
25except those names designated in its license. A mortgage
26originator may not use any other name other than the mortgage
27originator's personal legal name. A licensee that changes its
28name or place or places of business shall notify the department
29or the Nationwide Mortgage Licensing System and Registry, as 
30determined by the department, within ten days of the change[,

1and the department shall issue a certificate to the licensee, if
2appropriate, which shall specify the licensee's new name or
3address].

4* * *

5§ 6137. Surrender of license.

6Upon satisfying the department that all creditors of a
7licensee have been paid or that other arrangements satisfactory
8to the creditors and the department have been made, a licensee
9may voluntarily surrender its license to the department by
10[delivering its license to the department with] providing the 
11department or the Nationwide Mortgage Licensing System and 
12Registry, as determined by the department, written notice that
13the license is being voluntarily surrendered, but an action by a
14licensee shall not affect the licensee's civil or criminal
15liability for acts committed.

16§ 6138. Authority of department.

17* * *

18(b) Hearings.--A person aggrieved by a decision of the
19department may appeal the decision of the department to the
20[Secretary of Banking] commission. The appeal shall be conducted
21under 2 Pa.C.S. Ch. 5 Subch. A (relating to practice and
22procedure of Commonwealth agencies).

23* * *

24(d) Final orders.--A decision of the [Secretary of Banking] 
25commission, or an unappealed order of the department, shall be a
26final order of the department and shall be enforceable in a
27court of competent jurisdiction. The department may publish
28final adjudications issued under this section, subject to
29redaction or modification to preserve confidentiality. The 
30department shall regularly report violations of this chapter,
 

1enforcement actions and other relevant information to the 
2Nationwide Mortgage Licensing System and Registry.

3(e) Appeals.--A person aggrieved by a decision of the
4[Secretary of Banking] commission may appeal the decision under
52 Pa.C.S. Ch. 7 Subch. A. (relating to judicial review of
6Commonwealth agency action).

7(f) Orders affecting mortgage originators.--An order issued
8against a licensee is applicable to the mortgage originators
9[employed] sponsored by the licensee.

10§ 6139. Suspension, revocation or refusal.

11(a) Departmental action.--The department may suspend, revoke
12or refuse to renew a license issued under this chapter if any
13fact or condition exists or is discovered which, if it had
14existed or had been discovered at the time of filing of the
15application for the license, would have warranted the department
16in refusing to issue the license or if a licensee or director,
17officer, partner, employee, mortgage originator or owner of a
18licensee has:

19(1) Made a material misstatement in an application or
20any report or submission required by this chapter or any
21department regulation, statement of policy or order.

22(2) Failed to comply with or violated any provision of
23this chapter or any regulation or order promulgated or issued
24by the department under this chapter.

25(3) Engaged in dishonest, fraudulent or illegal
26practices or conduct in a business or unfair or unethical
27practices or conduct in connection with the mortgage loan
28business.

29(4) Been convicted of or pleaded guilty or nolo
30contendere to a crime of moral turpitude or felony.

1(5) Permanently or temporarily been enjoined by a court
2of competent jurisdiction from engaging in or continuing
3conduct or a practice involving an aspect of the mortgage
4loan business.

5(6) Become the subject of an order of the department
6denying, suspending or revoking a license applied for or
7issued under this chapter.

8(7) Become the subject of a United States Postal Service
9fraud order.

10(8) Failed to comply with the requirements of this
11chapter to make and keep records prescribed by regulation,
12statement of policy or order of the department, to produce
13records required by the department or to file financial
14reports or other information that the department by
15regulation, statement of policy or order may require.

16(9) Become the subject of an order of the department
17denying, suspending or revoking a license under the
18provisions of any other law administered by the department.

19(10) Demonstrated negligence or incompetence in
20performing an act for which the licensee is required to hold
21a license under this chapter.

22(11) Accepted an advance fee without having obtained the
23bond required by section 6131(d)(1) or (e)(1) (relating to
24application for license).

25(12) Become insolvent, meaning that the liabilities of
26the applicant or licensee exceed the assets of the applicant
27or licensee or that the applicant or licensee cannot meet the
28obligations of the applicant or licensee as they mature or is
29in such financial condition that the applicant or licensee
30cannot continue in business with safety to the customers of

1the applicant or licensee.

2(13) Failed to complete the requirements of section 
36131.1 (relating to prelicensing and continuing education).

4(14) In the case of a mortgage broker, mortgage lender
5or mortgage loan correspondent, conducted the mortgage loan
6business through an unlicensed mortgage originator.

7(15) Failed to comply with the terms of any agreement
8under which the department authorizes a licensee to maintain
9records at a place other than the licensee's principal place
10of business.

11* * *

12§ 6140. Penalties.

13* * *

14(b) Violation by licensee.--A person licensed under this
15chapter or director, officer, owner, partner, employee, mortgage 
16originator or agent of a licensee who violates a provision of
17this chapter or who commits any action which would subject the
18licensee to suspension, revocation or nonrenewal under section
196139 may be fined by the department up to $10,000 for each
20offense.

21§ 6151. Applicability.

22The provisions of this chapter shall apply to:

23(1) Any mortgage loan which is:

24(i) negotiated, offered or otherwise transacted
25within this Commonwealth, in whole or in part, whether by
26the ultimate lender or any other person;

27(ii) made or executed within this Commonwealth; or

28(iii) notwithstanding the place of execution,
29secured by [real property] a dwelling or residential real 
30estate located in this Commonwealth.

1(2) Any person who engages in the mortgage loan business
2in this Commonwealth.

3Section 4. Section 6154 of Title 7 is repealed:

4[§ 6154. Procedure for determination of noncompliance with
5Federal law.

6(a) Applicability.--This section applies if, because of a
7determination under paragraph (4) of the definition of "mortgage
8originator" in section 6102 (relating to definitions), an
9employee:

10(1) is required to be licensed as a mortgage originator
11under state laws implementing the S.A.F.E. Mortgage Licensing
12Act of 2008 (110 Stat. 289, 12 U.S.C. § 5101 et seq.); and

13(2) is thus required to be licensed as a mortgage
14originator.

15(b) Continuation.--An employee specified in subsection (a)
16may continue to act in the employee's current capacity if the
17employee files an application for a mortgage originator license
18with the department within 60 days of the date of the
19determination.]

20Section 5. This act shall take effect in 60 days.