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(C) Engaged in recommending, referring or
2steering a borrower or prospective borrower in the
3manner provided under paragraph (1)(iii) of the
4definition of "offer or negotiate terms of a mortgage
5loan for compensation or gain" to a banking
6institution, licensed mortgage lender, licensed
7mortgage loan correspondent, licensed mortgage broker
8or person exempt from licensing in a manner
9incidental to and in the normal course of his or her
10securities brokerage activities.

11(D) Not otherwise acting as a mortgage
12originator as defined in paragraph (1)(i), (ii) or
13(iii).

14(E) Not in receipt of any compensation or gain
15for such activities from the person making or
16brokering the loan, or a borrower or prospective
17borrower.

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

19(A) An employee of an insurance agency licensed
20under the act of May 17, 1921 (P.L.789, No.285), 
21known as The Insurance Department Act of 1921.

22(B) Registered as an insurance agent or broker
23under The Insurance Department Act of 1921.

24(C) Engaged in recommending, referring or 
25steering a borrower or prospective borrower in the 
26manner provided under paragraph (1)(iii) of the 
27definition of "offer or negotiate terms of a mortgage 
28loan for compensation or gain" to a banking 
29institution, licensed mortgage lender licensed 
30mortgage loan correspondent, licensed mortgage broker
 

1or person exempt from licensing in a manner 
2incidental to and in the normal course of his or her 
3insurance activities.

4(D) Not otherwise acting as a mortgage
5originator as defined in paragraph (1)(i), (ii) or
6(iii).

7(E) Not in receipt of any compensation or gain
8for such activities from the person making or
9brokering the loan, or a borrower or prospective
10borrower.

11"Nationwide Mortgage Licensing System and Registry." The
12licensing system developed and maintained by the Conference of
13State Bank Supervisors and the American Association of
14Residential Mortgage Regulators.

15"Net worth." Assets less liabilities and assets unacceptable
16to the United States Department of Housing and Urban Development
17for purposes of complying with 24 CFR § 202.5(n) (relating to
18general approval standards) or 202.8(b)(1) (relating to loan
19correspondent lenders and mortgagees), as applicable.

20"Nonoriginating person." A person, other than an individual,
21that does not engage in the mortgage loan business but is
22required to have loan processors or underwriters employed or
23supervised and controlled by the person licensed as mortgage
24originators.

25"Nontraditional mortgage loan." A mortgage loan other than a
2630-year fixed rate mortgage loan.

27"Offer or negotiate terms of a mortgage loan for compensation
28or gain."

29(1) (i) Presenting for consideration by a borrower or
30prospective borrower particular mortgage loan terms;

1(ii) communicating directly or indirectly with a
2borrower or prospective borrower for the purpose of
3reaching a mutual understanding about prospective
4mortgage loan terms; or

5(iii) recommending, referring or steering a borrower
6or prospective borrower to a particular lender or set of
7mortgage loan terms, in accordance with a duty to or
8incentive from any person other than the borrower or
9prospective borrower.

10(2) Receiving or expecting to receive payment of money
11or anything of value in connection with the activities
12described in paragraph (1) or as a result of any mortgage
13loan terms entered into as a result of those activities.

14"Open-end loan." A mortgage loan made by a mortgage lender
15under this chapter pursuant to an agreement between the mortgage
16lender and the consumer whereby all of the following apply:

17(1) The mortgage lender may permit the consumer to
18obtain advances of money from the licensee from time to time
19or the mortgage lender may advance money on behalf of the
20consumer from time to time as directed by the consumer.

21(2) The amount of each advance, interest and permitted
22charges and costs are debited to the consumer's account and
23payments and other credits are credited to the same account.

24(3) Interest is computed on the unpaid principal balance
25or balances of the account outstanding from time to time.

26(4) The consumer has the privilege of paying the account
27in full at any time or, if the account is not in default, in
28monthly installments of fixed or determinable amounts as
29provided in the open-end loan agreement.

30"Person." An individual, association, joint venture or

1joint-stock company, partnership, limited partnership, limited
2partnership association, limited liability company, business
3corporation, nonprofit corporation or any other group of
4individuals, however organized.

5"Primary market." The market wherein mortgage loans are
6originated between a lender and a consumer.

7"Principal place of business." The primary office of a
8person [which is staffed on a full-time basis and] at which the
9person's books, records, accounts and documents are maintained.

10"Purchase-money mortgage loan." A mortgage loan that is a
11residential mortgage transaction as defined in 12 CFR 226.2(a)
12(24) (relating to definitions and rules of construction).

13"Qualifying individual." An individual identified by a
14mortgage broker, mortgage lender or mortgage loan correspondent
15in the Nationwide Mortgage Licensing System and Registry who:

16(1) Is a mortgage originator or meets the licensing
17requirements of a mortgage originator.

18(2) Is a management-level officer assigned to the
19principal place of business of a mortgage broker, mortgage
20lender or mortgage loan correspondent.

21"Registered mortgage loan originator." An individual who
22complies with all of the following paragraphs:

23(1) Meets the definition of mortgage originator and is
24an employee of:

25(i) a banking institution or federally chartered or
26State-chartered credit union;

27(ii) a subsidiary owned and controlled by a
28federally chartered or State-chartered credit union and
29supervised by a Federal banking agency; or

30(iii) an institution regulated by the Farm Credit

1Administration.

2(2) Is registered with and maintains a unique identifier
3through the Nationwide Mortgage Licensing System and
4Registry.

5"Residential real estate." Real property upon which is
6constructed or intended to be constructed a dwelling.

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

8(1) made primarily for personal, family or household
9use; and

10(2) secured by any secondary lien mortgage, deed of
11trust or equivalent consensual security interest on a
12dwelling or on residential real estate.

13"Secondary mortgage loan business." The mortgage loan
14business as applied to secondary mortgage loans.

15"Service mortgage loan." A collecting or remitting payment
16for another, or the right to collect or remit payments for
17another, of principal, interest, tax, insurance or other payment
18under a mortgage loan.

19"Take a mortgage loan application." Receiving a mortgage
20loan application for the purpose of facilitating a decision
21whether to extend an offer of mortgage loan terms to a borrower
22or prospective borrower or to accept the terms offered by a
23borrower or prospective borrower in response to a solicitation,
24whether the application is received directly or indirectly from
25the borrower or prospective borrower.

26"Unique identifier." A number or other identifier assigned
27by the Nationwide Mortgage Licensing System and Registry.

28"Wholesale table funder." A licensed mortgage lender or
29person exempt under section 6112(1) or (7) (relating to
30exceptions to license requirements) who, in the regular course

1of business, provides the funding for the closing of mortgage
2loans through mortgage loan correspondents and who by assignment
3obtains title to the mortgage loans.

4§ 6111. License requirements.

5(a) General rule.--Except as provided under subsections (b)
6and (c) and section 6112 (relating to exceptions to license
7requirements), on and after the effective date of this section,
8no person shall engage in the mortgage loan business in this
9Commonwealth without being licensed as a mortgage broker,
10mortgage lender, mortgage loan correspondent or mortgage
11originator as provided under this chapter. A mortgage originator
12may not engage in the mortgage loan business unless the mortgage
13originator is [employed and supervised] sponsored in the 
14Nationwide Mortgage Licensing System and Registry by a licensed
15mortgage broker, mortgage lender or mortgage loan correspondent, 
16person excepted from this chapter or person excepted from 
17licensure under section 6112 and is under the direct supervision 
18and control of the sponsoring licensee or excepted person.

19* * *

20§ 6112. Exceptions to license requirements.

21The following persons shall not be required to be licensed
22under this chapter in order to conduct the mortgage loan
23business:

24(1) A banking institution or a federally chartered or
25State-chartered credit union, if the primary regulator of the
26banking institution or federally chartered or State-chartered
27credit union supervises the banking institution or federally
28chartered or State-chartered credit union. A banking 
29institution or a federally chartered or State-chartered 
30credit union may register with the department for the purpose
 

1of having individuals under its direct supervision and 
2control licensed as mortgage originators, provided that the 
3registered entity meet any of the following requirements:

4(i) In the same manner as a mortgage lender, obtains
5and maintains bond coverage for mortgage originators
6consistent with section 6131(c)(5) (relating to
7application for license) and files a periodic report
8consistent with section 6135(a)(3) (relating to licensee
9requirements).

10(ii) Annually, in a form acceptable to the
11department, demonstrates to the department that all of
12the mortgage originators employed by or under the direct
13supervision and control of the entity have obtained and
14maintained the bond coverage required under section
156131(f)(4).

16(2) An attorney at law not otherwise engaged in or
17holding himself or herself out to the public as being engaged
18in the mortgage loan business who acts as a mortgage broker
19or a mortgage originator in negotiating or placing a mortgage
20loan in the normal course of legal practice. The exception 
21under this paragraph shall not apply if the attorney is 
22compensated by any of the following:

23(i) A mortgage broker.

24(ii) A mortgage lender.

25(iii) A mortgage loan correspondent.

26(iv) A person excepted from licensure under this
27section.

28(v) A mortgage originator.

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

1(3) A person who [offers or negotiates terms of a 
2mortgage loan with or on behalf of or makes a mortgage loan 
3to a member of the person's immediate family.] originates or 
4negotiates less than four mortgage loans in a calendar year, 
5unless determined to be engaged in the mortgage loan business 
6by the department.

7(4) Any agency or instrumentality of the Federal
8Government or a corporation otherwise created by an act of
9the United States Congress, including the Federal National
10Mortgage Association, the Government National Mortgage
11Association, the Veterans' Administration, the Federal Home
12Loan Mortgage Corporation and the Federal Housing
13Administration, and employees thereof acting within the scope 
14of their employment. [To qualify for the exception under this 
15paragraph, the agency or instrumentality must ensure 
16employees required to be licensed as mortgage originators 
17have completed the requirements under section 6131.1 
18(relating to prelicensing and continuing education), have 
19obtained the required mortgage originator license and:

20(i) in the same manner as a mortgage lender, obtain
21and maintain bond coverage for mortgage originators
22consistent with section 6131(c)(5) (relating to
23application for license) and file an annual report
24consistent with section 6135(a)(3) (relating to licensee
25requirements); or

26(ii) annually, in a form acceptable to the
27department, demonstrate to the department that all of the
28mortgage originators employed by the agency or
29instrumentality have obtained and maintained the bond
30coverage required by section 6131(f)(4).]

1(5) Any agency or instrumentality of a state or local
2government, the District of Columbia or any territory of the
3United States, including the Pennsylvania Housing Finance
4Agency and other government housing finance agencies, and 
5employees thereof acting within the scope of their 
6employment. [To qualify for the exception under this 
7paragraph, the agency or instrumentality must ensure 
8employees required to be licensed as mortgage originators 
9have completed the requirements under section 6131.1, have 
10obtained the required mortgage originator license and:

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

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

20(6) Consumer discount companies, except that a consumer
21discount company that acts as a mortgage broker, mortgage
22lender or mortgage loan correspondent [other than under the
23provisions of the act of April 8, 1937 (P.L.262, No.66),
24known as the Consumer Discount Company Act], shall be subject
25to the provisions of Subchapter C (relating to mortgage loan
26business restrictions and requirements) and sections 6131(c)
27(2), (3) and (5), 6135, 6138 (relating to authority of
28department) and 6140(b) (relating to penalties). Employees or 
29individuals under the direct supervision and control of
30licensees under the Consumer Discount Company Act that act as

1mortgage originators shall be subject to the licensing
2requirements of this chapter. Consumer discount companies
3that employ or directly supervise and control mortgage
4originators shall be subject to the same requirements as
5mortgage lenders in regard to the employment and supervision
6of mortgage originators.

7(7) Affiliates of banking institutions and subsidiaries
8and affiliates of federally chartered or State-chartered
9credit unions. The exception under this paragraph does not 
10apply to consumer discount companies. Notwithstanding the 
11exception under this paragraph, subsidiaries and affiliates
12of federally chartered or State-chartered credit unions and 
13affiliates of banking institutions shall:

14(i) be subject to the provisions of Subchapter C and
15sections 6135(a)(2), (3) and (4), (b) and (c), 6138 and
166140(b);

17(ii) deliver as required to the department annually
18copies of financial reports made to all supervisory
19agencies;

20(iii) be registered with the department;

21(iv) in the same manner as a mortgage lender, obtain
22and maintain bond coverage for mortgage originators
23consistent with section 6131(c)(5); and

24(v) ensure employees required to be licensed as
25mortgage originators have completed the requirements
26under section 6131.1 (relating to prelicensing and 
27continuing education) and have obtained the required
28mortgage originator license.

29(8) Employees or individuals under the direct 
30supervision and control of a mortgage broker, mortgage lender

1or mortgage loan correspondent, or a person excepted from 
2licensure under this section, who[:

3(i) engage solely in loan processor or underwriter
4activities, and do not represent to the public, through
5advertising or other means of communicating or providing
6information, including the use of business cards,
7stationery, brochures, signs, rate lists or other
8promotional items, that they can or will perform any of
9the activities of a mortgage originator; or

10(ii)] are not otherwise required to be licensed as
11mortgage originators.

12(9) Registered mortgage loan originators when acting on 
13behalf of their employers.

14(11) [Nonprofit corporations not otherwise engaged in or
15holding themselves out to the public as being engaged in the
16mortgage loan business making mortgage loans to promote home
17ownership or improvements for the disadvantaged. To qualify 
18for the exception under this paragraph, the nonprofit 
19corporation must ensure employees required to be licensed as 
20mortgage originators have completed the requirements under 
21section 6131.1, have obtained the required mortgage 
22originator license and:

23(i) in the same manner as a mortgage lender, obtain
24and maintain bond coverage for mortgage originators
25consistent with section 6131(c)(5) and file an annual
26report consistent with section 6135(a)(3); or

27(ii) annually, in a form acceptable to the
28department, demonstrate to the department that all of the
29mortgage originators employed by the nonprofit
30corporation have obtained and maintained the bond

1coverage required by section 6131(f)(4).] A bona fide 
2nonprofit organization and employees of the organization 
3acting within the scope of their employment, unless 
4otherwise deemed to be engaged in the mortgage loan 
5business by the department, provided:

6(i) The organization shall be subject to the
7provisions of Subchapter C and sections 6135(a)(2), (3)
8and (4) and (c), 6138 and 6140(b).

9(ii) The organization shall be registered with the
10department.

11(iii) As required under 24 CFR § 3400.103(e)(7)(iii)
12(relating to individuals required to be licensed by
13states), the department must periodically examine the
14books and activities of an organization it determines is
15a bona fide nonprofit organization and revoke its status
16as a bona fide nonprofit organization if it does not
17continue to meet the criteria under 24 CFR §
183400.103(e)(7)(ii).

19(iv) For residential mortgage loans to have terms
20that are favorable to the borrower, the department must
21determine that the terms are consistent with loan
22origination in a public or charitable context, rather
23than a commercial context.

24(v) The department shall make the list of bona fide
25nonprofit organizations available on its Internet
26website.

27[(12) A nonprofit corporation not otherwise engaged in
28or holding itself out to the public as being engaged in the
29mortgage loan business which meets all of the following
30subparagraphs:

1(i) Does not make more than 12 mortgage loans in a
2calendar year with its own funds, not including funds
3borrowed through warehouse lines of credit or other
4sources for the purpose of making mortgage loans.

5(ii) Makes mortgage loans which are retained in the
6corporation's own portfolios and not regularly sold to
7others and are made to promote and advance the cultural
8traditions and lifestyles of bona fide religious
9organizations.

10(iii) Does either of the following:

11(A) In the same manner as a mortgage lender,
12obtains and maintains bond coverage for mortgage
13originators consistent with section 6131(c)(5) and
14files an annual report consistent with section
156135(a)(3).

16(B) Annually, in a form acceptable to the
17department, demonstrates to the department that all
18of the mortgage originators employed by the nonprofit
19corporation have obtained and maintained the bond
20coverage required by section 6131(f)(4).

21(iv) Ensures employees required to be licensed as
22mortgage originators have completed the requirements
23under section 6131.1 and have obtained the required
24mortgage originator license.]

25(13) An installment seller of, or holder of installment
26sales contracts secured by, manufactured homes who is
27licensed under the act of June 28, 1947 (P.L.1110, No.476),
28known as the Motor Vehicle Sales Finance Act, provided the
29installment seller or holder only engages in the mortgage
30loan business regarding installment sales contracts secured

1by manufactured homes that are purchase-money mortgage loans.
2To qualify for the exception under this paragraph, the
3installment seller or holder must:

4(i) Obtain a license as a mortgage originator, if
5licensed as an individual under the Motor Vehicle Sales
6Finance Act.

7(ii) Be registered with the department.

8(iii) Do either of the following:

9(A) In the same manner as a mortgage lender or
10mortgage broker, as applicable depending upon whether
11the installment seller or holder makes or brokers
12installment sales contracts secured by manufactured
13homes that are purchase-money mortgage loans, obtain
14and maintain bond coverage for mortgage originators
15consistent with section 6131(c)(5) or (e)(3) and file
16[an annual] a periodic report consistent with section
176135(a)(3); or

18(B) Annually demonstrate to the department that
19the mortgage originators employed by, or under the 
20direct supervision and control of, the installment
21seller or holder have obtained and maintained the
22bond coverage required by section 6131(f)(4) in a
23form acceptable to the department.

24(iv) Ensure employees or individuals under the 
25direct supervision and control of the installment seller 
26or holder required to be licensed as mortgage originators
27have completed the requirements under section 6131.1 and
28have obtained the required mortgage originator license.

29(14) A nonoriginating person, unless otherwise deemed to
30be engaged in the mortgage loan business by the department,

1except that the nonoriginating person shall:

2(i) Be subject to the provisions of Subchapter C and
3sections 6135(a)(2), (3) and (4) and (c), 6138 and
46140(b).

5(ii) Be registered with the department.

6(iii) In the same manner as a mortgage broker,
7obtain and maintain bond coverage for mortgage
8originators consistent with section 6131(c)(5).

9(iv) Ensure employees or individuals under the
10direct supervision and control of the person required to
11be licensed as mortgage originators have completed the
12requirements under section 6131.1 and have obtained the
13required mortgage originator license.

14(15) Notwithstanding section 6151 (relating to
15applicability), a mortgage originator licensed by one or more
16other states and physically located in this Commonwealth that
17does not engage in any transactions involving Pennsylvania
18consumers, dwellings or residential real estate.

19(16) A person who engages in mortgage loan modifications
20for existing mortgage loans held or serviced by that person
21or that person's employer and who does not otherwise engage
22in the mortgage loan business.

23§ 6121. General requirements.

24A licensee shall do all of the following:

25* * *

26(2) Comply with all applicable State law, including the
27provisions of the act of December 3, 1959 (P.L.1688, No.621),
28known as the Housing Finance Agency Law, that are applicable
29to the licensee and the act of December 9, 2002 (P.L.1530, 
30No.197), known as the Mortgage Satisfaction Act.

1* * *

2(8) If a mortgage loan is paid in full and, in the case
3of an open-end loan, the mortgage lender is no longer
4obligated to make future advances to the consumer, the
5mortgage lender shall do all of the following:

6(i) Cancel any insurance provided by the licensee in
7connection with the mortgage loan and refund to the
8consumer, in accordance with regulations promulgated by
9the Insurance Department, any unearned portion of the
10premium for the insurance.

11(ii) Stamp or write on the face of the mortgage loan
12agreement or promissory note evidencing the mortgage loan
13"Paid in Full" or "Canceled," the date paid and, within
1460 days, return the mortgage loan agreement or promissory
15note to the consumer.

16(iii) Release any lien on [real property] the 
17dwelling or residential real estate and cancel the same
18of record and, at the time the mortgage loan agreement or
19promissory note evidencing the mortgage loan is returned,
20deliver to the consumer good and sufficient assignments,
21releases or any other certificate, instrument or document
22as may be necessary to evidence the release.

23* * *

24(13) In the case of a mortgage broker, mortgage lender or
25mortgage loan correspondent, do all of the following:

26(i) Maintain supervision and control of and
27responsibility for the acts and omissions of all mortgage
28originators [employed] sponsored by the licensee.

29(ii) Maintain a list of all current and former
30mortgage originators [employed] sponsored by the licensee

1and the dates of the [employment] sponsorship.

2(iii) In the event that a licensee believes that a
3mortgage originator [employed] sponsored by the licensee
4has engaged in any activity that is illegal or in
5violation of this chapter or any regulation or statement
6of policy promulgated under this chapter, the licensee
7shall provide the department with written notification of
8the belief and the licensee's proposed corrective
9measures within 30 days. A licensee shall not be liable
10to a mortgage originator in connection with the
11notification.

12* * *

13Section 2. Section 6123(8) of Title 7 is amended and the
14section is amended by adding a paragraph to read:

15§ 6123. Mortgage loan business prohibitions.

16A licensee engaging in the mortgage loan business shall not:

17* * *

18(8) In the case of a mortgage originator, accept any
19fees from consumers in the mortgage originator's own name. A
20mortgage originator may accept fees payable to the mortgage
21originator's [employer] sponsoring licensee and fees payable
22to third-party entities on behalf of the mortgage
23originator's [employer] sponsoring licensee. A mortgage
24originator may not accept advance fees payable to the
25mortgage originator's [employer] sponsoring licensee unless
26the licensee is authorized to collect advance fees under this
27chapter.

28(9) In the case of a mortgage originator, engage in the
29mortgage loan business other than on behalf of the single
30mortgage broker, mortgage lender or mortgage loan

1correspondent or a person excepted from this chapter or a
2person excepted from licensure under section 6112 (relating
3to exceptions to license requirements) that sponsors the
4mortgage originator.

5Section 3. Sections 6126(7), 6131, 6131.1(b), (c) and (d),
66135(a) and (b), 6136(a), 6137, 6138(b), (d), (e) and (f),
76139(a), 6140(b) and 6151 of the title Title 7 are amended to<-
8read:

9§ 6126. Requirements as to open-end loans.

10The following shall apply:

11* * *

12(7) Notwithstanding any other provisions in this chapter
13to the contrary, a mortgage lender may retain any security
14interest in a dwelling or real or personal property until the
15open-end loan is terminated, provided that, if there is no
16outstanding balance in the account and there is no commitment
17by the licensee to make advances, the mortgage lender shall,
18within ten days following written demand by the consumer,
19deliver to the consumer a release of the mortgage, indenture,
20deed of trust or any other similar instrument or document on
21any [real property] dwelling or residential real estate taken
22as security for the open-end loan. The mortgage lender shall
23include on all billing statements provided in connection with
24an open-end loan a statement that the licensee retains a
25security interest in the consumer's [real property] dwelling 
26or residential real estate whenever the security interest has
27not been released.

28* * *

29§ 6131. Application for license.

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

1chapter shall be on a form prescribed and provided by the
2department. Consistent with sections 202 E and 405 F(1) of the
3act of May 15, 1933 (P.L.565, No.111), known as the Department
4of Banking and Securities Code, all applicants and licensees
5shall use the Nationwide Mortgage Licensing System and Registry
6to obtain and maintain licenses under this chapter.

7(1) In the case of a mortgage broker, mortgage lender or
8mortgage loan correspondent, the application shall include
9the following:

10(i) The name of the applicant.

11(ii) The address of the principal place of business
12and any branches of the applicant [and the address or
13addresses where the applicant's mortgage loan business is
14to be conducted].

15(iii) The full name, official title and business
16address of each director and principal officer of the
17mortgage loan business.

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

20(2) In the case of a mortgage originator, the
21application shall include the following:

22(i) The name of the applicant.

23(ii) The name of the [employer licensee] sponsoring 
24licensee or excepted person of the applicant and location
25of the [employer licensee] excepted person or licensed 
26location of the licensee to which the applicant is
27assigned.

28(iii) Any other information that may be required by
29the department.

30(3) An applicant shall demonstrate to the department

1that policies and procedures have been developed to receive
2and process consumer inquiries and grievances promptly and
3fairly.

4(a.1) Licensing of principal place of business and
5branches.--All applicants and licensees must establish and
6maintain a separate license for the principal place of business
7and each branch.

8(b) Duty to update.--All applicants and licensees shall be
9required to provide the department with written notice of the
10change in any information contained in an application for a
11license or for any renewal of a license within ten days of an
12applicant or licensee becoming aware of the change.

13(c) Mortgage lender license.--The department shall issue a
14mortgage lender license applied for under this chapter if the
15applicant has:

16[(1) Been approved by or meets the current criteria for
17approval of at least one of the following:

18(i) Federal National Mortgage Association.

19(ii) Federal Home Loan Mortgage Corporation.

20(iii) Federal Housing Administration.]

21(2) Been approved for and will continue to maintain as a
22licensee a line of credit, repurchase agreement or equivalent
23mortgage-funding capability of not less than $1,000,000.

24(3) Established a minimum net worth of $250,000 at the
25time of application and will, at all times thereafter,
26maintain the minimum net worth.

27(4) Been approved for and will continue to maintain as a
28licensee fidelity bond coverage in accordance with the
29guidelines established by the Federal National Mortgage
30Association or the Federal Home Loan Mortgage Corporation.

1(5) Obtained and will maintain a surety bond in an
2amount that will provide coverage for the mortgage
3originators [employed] sponsored by the applicant or
4licensee, in a form acceptable to the department, prior to
5the issuance of the license, from a surety company authorized
6to do business in this Commonwealth. The following shall
7apply:

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

9(A) $100,000 for an applicant or licensee whose
10mortgage originators will originate or originated
11less than $30,000,000 in mortgage loans secured by
12Pennsylvania [real property] dwellings or residential 
13real estate in a calendar year;

14(B) $200,000 for an applicant or licensee whose
15mortgage originators will originate or originated
16$30,000,000 to $99,999,999.99 in mortgage loans
17secured by Pennsylvania [real property] dwellings or 
18residential real estate in a calendar year;

19(C) $300,000 for an applicant or licensee whose
20mortgage originators will originate or originated
21$100,000,000 to $249,999,999.99 in mortgage loans
22secured by Pennsylvania [real property] dwellings or 
23residential real estate in a calendar year; and

24(D) $500,000 for an applicant or licensee whose
25mortgage originators will originate or originated
26$250,000,000 or more in mortgage loans secured by
27Pennsylvania [real property] 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 by its mortgage originators in the first
4calendar year of licensing. For a licensee, the amount of
5the bond shall be determined annually by the department
6based upon the amount of mortgage loans secured by
7Pennsylvania dwellings or residential real estate
8originated by the licensee's mortgage originators as
9indicated on the licensee's [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 licensee's mortgage originators that are related
14to the mortgage loan business regulated by this chapter.
15No bond shall comply with the requirements of this
16section unless it contains a provision that it shall not
17be canceled for any cause unless notice of intention to
18cancel is given to the department at least 30 days before
19the day upon which cancellation shall take effect.
20Cancellation of the bond shall not invalidate the bond
21regarding the period of time it was in effect.

22(6) Designated an individual as the qualifying
23individual for the principal place of business and separate
24individuals as branch managers for each branch, as
25applicable.

26(d) Mortgage loan correspondent license.--The department
27shall issue a loan correspondent's license applied for under
28this chapter if the applicant:

29(1) Obtains and will maintain a bond in the amount of
30$100,000, in a form acceptable to the department, prior to

1the issuance of the license, from a surety company authorized
2to do business in this Commonwealth. The bond shall run to
3the Commonwealth and shall be for the use of the Commonwealth
4and any person or persons who obtain a judgment against the
5mortgage loan correspondent for failure to carry out the
6terms of any provision for which advance fees are paid. No
7bond shall comply with the requirements of this section
8unless it contains a provision that it shall not be canceled
9for any cause unless notice of intention to cancel is given
10to the department at least 30 days before the day upon which
11cancellation shall take effect. A mortgage loan correspondent
12who can demonstrate to the satisfaction of the department
13that the correspondent does not and will not accept advance
14fees shall be exempt from the bond requirement of this
15paragraph.

16(2) Establishes a minimum net worth of $100,000 at the
17time of application and will, at all times thereafter,
18maintain the minimum net worth.

19(3) Obtains and will maintain a surety bond in an amount
20that will provide coverage for the mortgage originators
21[employed] sponsored by the applicant or licensee, in a form
22acceptable to the department, prior to the issuance of the
23license, from a surety company authorized to do business in
24this Commonwealth. The following shall apply:

25(i) The amount of the bond shall be $100,000 for an
26applicant or licensee whose mortgage originators will
27originate or originated less than $30,000,000 in mortgage
28loans secured by Pennsylvania dwellings or residential
29real estate in a calendar year; $200,000 for an applicant
30or licensee whose mortgage originators will originate or

1originated $30,000,000 to $99,999,999.99 in mortgage
2loans secured by Pennsylvania dwellings or residential
3real estate in a calendar year; $300,000 for an applicant
4or licensee whose mortgage originators will originate or
5originated $100,000,000 to $249,999,999.99 in mortgage
6loans secured by Pennsylvania dwellings or residential
7real estate in a calendar year; and $500,000 for an
8applicant or licensee whose mortgage originators will
9originate or originated $250,000,000 or more in mortgage
10loans secured by Pennsylvania dwellings or residential
11real estate in a calendar year.

12(ii) For an initial license applicant, the amount of
13the bond shall be determined by the applicant's
14anticipated amount of mortgage loans secured by
15Pennsylvania dwellings or residential real estate
16originated by its mortgage originators in the first
17calendar year of licensing. For a licensee, the amount of
18the bond shall be determined annually by the department
19based upon the amount of mortgage loans secured by
20Pennsylvania dwellings or residential real estate
21originated by the licensee's mortgage originators as
22indicated on the licensee's [annual] periodic report.

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

1cancel is given to the department at least 30 days before
2the day upon which cancellation shall take effect.
3Cancellation of the bond shall not invalidate the bond
4regarding the period of time it was in effect.

5(4) Designates an individual as the qualifying
6individual for the principal place of business and separate
7individuals as branch managers for each branch, as
8applicable.

9(e) Mortgage broker license.--

10(1) The department shall issue a mortgage broker license
11applied for under this chapter if the applicant obtains and
12will maintain a bond in the amount of $100,000, in a form
13acceptable to the department, prior to the issuance of the
14license, from a surety company authorized to do business in
15this Commonwealth. The bond shall be a penal bond conditioned
16on compliance with this chapter and subject to forfeiture by
17the department and shall run to the Commonwealth for its use.
18The bond shall also be for the use of any person against the
19mortgage broker for failure to carry out the terms of any
20provision for which advance fees are paid. If the person is
21aggrieved, the person may, with the written consent of the
22department, recover advance fees and costs from the bond by
23filing a claim with the surety company or maintaining an
24action on the bond. In the alternative, an aggrieved person
25may recover advance fees and costs by filing a formal
26complaint against the mortgage broker with the department
27which shall adjudicate the matter. The adjudication shall be
28binding upon the surety company and enforceable by the
29department in Commonwealth Court and by an aggrieved person
30in any court. Any aggrieved person seeking to recover advance

1fees and costs from a bond that has already been forfeited by
2the department or which the department is in the process of
3forfeiting may recover payment on the bond if, after filing a
4petition with the department, the department consents to the
5aggrieved person's requested payment or portion thereof. The
6department may pay the aggrieved person from the bond
7proceeds it recovers. Nothing in this section shall be
8construed as limiting the ability of any court or magisterial
9district judge to award to any aggrieved person other
10damages, court costs and attorney fees as permitted by law,
11but those claims that are not advance fees or related costs
12may not be recovered from the bond. The department, in its
13discretion, may consent to or order pro rata or other
14recovery on the bond for any aggrieved person if claims
15against the bond may or do exceed its full monetary amount.
16No bond shall comply with the requirements of this section
17unless it contains a provision that it shall not be canceled
18for any cause unless notice of intention to cancel is given
19to the department at least 30 days before the day upon which
20cancellation shall take effect. Cancellation of the bond
21shall not invalidate the bond regarding the period of time it
22was in effect.

23(2) Mortgage brokers who can demonstrate to the
24satisfaction of the department that they do not and will not
25accept advance fees shall be exempt from the bond requirement
26of paragraph (1).

27(3) A mortgage broker shall obtain and maintain a surety
28bond in an amount that will provide coverage for the mortgage
29originators [employed] sponsored by the applicant or
30licensee, in a form acceptable to the department, prior to

1the issuance of the license, from a surety company authorized
2to do business in this Commonwealth. The following shall
3apply:

4(i) The amount of the bond shall be $50,000 for an
5applicant or licensee whose mortgage originators will
6originate or originated less than $15,000,000 in mortgage
7loans secured by Pennsylvania dwellings or residential
8real estate in a calendar year; $75,000 for an applicant
9or licensee whose mortgage originators will originate or
10originated $15,000,000 to $29,999,999.99 in mortgage
11loans secured by Pennsylvania dwellings or residential
12real estate in a calendar year; $100,000 for an applicant
13or licensee whose mortgage originators will originate or
14originated $30,000,000 to $49,999,999.99 in mortgage
15loans secured by Pennsylvania dwellings or residential
16real estate in a calendar year; and $150,000 for an
17applicant or licensee whose mortgage originators will
18originate or originated $50,000,000 or more in mortgage
19loans secured by Pennsylvania dwellings or residential
20real estate in a calendar year.

21(ii) For an initial license applicant, the amount of
22the bond shall be determined by the applicant's
23anticipated amount of mortgage loans secured by
24Pennsylvania dwellings or residential real estate
25originated by its mortgage originators in the first
26calendar year of licensing. For a licensee, the amount of
27the bond shall be determined annually by the department
28based upon the amount of mortgage loans secured by
29Pennsylvania dwellings or residential real estate
30originated by the licensee's mortgage originators as

1indicated on the licensee's [annual] periodic report.

2(iii) The bond shall run to the Commonwealth and
3shall be for the use of the Commonwealth and for the use
4of any consumer who is injured by the acts or omissions
5of the licensee's mortgage originators that are related
6to the mortgage loan business regulated by this chapter.
7No bond shall comply with the requirements of this
8section unless it contains a provision that it shall not
9be canceled for any cause unless notice of intention to
10cancel is given to the department at least 30 days before
11the day upon which cancellation shall take effect.
12Cancellation of the bond shall not invalidate the bond
13regarding the period of time it was in effect.

14(4) A mortgage broker shall designate an individual as
15the qualifying individual for the principal place of business
16and separate individuals as branch managers for each branch,
17as applicable.

18(f) Mortgage originator license.--A mortgage originator
19shall do all of the following:

20(1) Be an employee of [a single], or under the direct 
21supervision and control of, a licensed mortgage broker,
22mortgage lender or mortgage loan correspondent, a person
23excepted from this chapter or a person excepted from
24licensure under section 6112 (relating to exceptions to
25license requirements). The licensee or person shall sponsor 
26the mortgage originator in the Nationwide Mortgage Licensing 
27System and Registry and directly supervise, control and
28maintain responsibility for the acts and omissions of the
29mortgage originator.

30(2) Be assigned to and work out of a licensed location

1of the [employer] sponsoring licensee or a location of [an
2employer] a sponsoring person excepted from this chapter or
3excepted from licensure under section 6112[.], which, in the 
4case of a sponsoring licensee, may be either the mortgage 
5originator's residence or a location of the licensee that is 
6within 100 miles of the mortgage originator's residence.

7(3) Maintain a valid unique identifier issued by the
8Nationwide Mortgage Licensing System and Registry.

9(4) If a person excepted from this chapter or excepted
10from licensure under section 6112 does not elect to maintain
11bond coverage for its mortgage originators in the same manner
12as a mortgage lender, a mortgage originator employed by or 
13under the direct supervision and control of a person excepted
14from this chapter or excepted from licensure under section
156112 shall obtain and maintain a surety bond in an amount
16that will provide coverage for the mortgage originator, in a
17form acceptable to the department, prior to the issuance of
18the license, from a surety company authorized to do business
19in this Commonwealth. The following shall apply:

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

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

9(ii) For an initial license applicant, the amount of
10the bond shall be determined by the applicant's
11anticipated amount of mortgage loans secured by
12Pennsylvania dwellings or residential real estate
13originated in the first calendar year of licensing. For a
14licensee, the amount of the bond shall be determined
15annually by the department based upon the amount of
16mortgage loans secured by Pennsylvania dwellings or 
17residential real estate originated by the mortgage
18originator as indicated on the mortgage originator's
19[annual] periodic report.

20(iii) The bond shall run to the Commonwealth and
21shall be for the use of the Commonwealth and for the use
22of any consumer who is injured by the acts or omissions
23of the mortgage originator that are related to the
24mortgage loan business regulated by this chapter. No bond
25shall comply with the requirements of this section unless
26it contains a provision that it shall not be canceled for
27any cause unless notice of intention to cancel is given
28to the department at least 30 days before the day upon
29which cancellation shall take effect. Cancellation of the
30bond shall not invalidate the bond regarding the period

1of time it was in effect.

2(5) Only engage in the mortgage loan business on behalf
3of the single mortgage broker, mortgage lender or mortgage
4loan correspondent or a person excepted from this chapter or
5a person excepted from licensure under section 6112 that
6sponsors the mortgage originator.

7(g) Nationwide Mortgage Licensing System and Registry
8information challenge process.--A mortgage originator applicant
9or licensee may challenge the accuracy of information entered by
10the department to the Nationwide Mortgage Licensing System and
11Registry regarding the mortgage originator applicant or licensee
12by filing a written complaint with the department. The
13department shall review the complaint and alleged inaccurate
14information on the Nationwide Mortgage Licensing System and
15Registry and notify the applicant or licensee of corrective
16action taken by the department regarding the alleged inaccurate
17information within 30 days of receipt of the complaint.

18(h) License renewals.--Licenses shall be issued for terms
19[of 12] not to exceed 14 months and may be renewed by the
20department each year on a schedule set by the department upon
21application by the licensee and the payment of any and all
22applicable renewal fees. The licensee shall demonstrate to the
23department that it is conducting the mortgage loan business in
24accordance with the requirements of this chapter and that the
25licensee or directors, officers, partners, employees, mortgage 
26originators, agents and ultimate equitable owners of 10% or more
27of the licensee continue to meet all of the initial requirements
28for licensure required by this chapter unless otherwise
29determined by the department.

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

1(1) If an applicant is not a resident of this
2Commonwealth, as a condition to receiving a license under
3this chapter, the applicant shall be authorized to do
4business in this Commonwealth in accordance with the laws of
5this Commonwealth regulating corporations and other entities
6conducting business in this Commonwealth and shall maintain
7at least one office which is the office that shall be
8licensed as the principal place of business for the purposes
9of this chapter.

10(2) Out-of-State applicants shall file with the license
11application an irrevocable consent, duly acknowledged, that
12suits and actions may be commenced against that person in the
13courts of this Commonwealth by the service of process of any
14pleading upon the department in the usual manner provided for
15service of process and pleadings by the laws and court rules
16of this Commonwealth. The consent shall provide that this
17service shall be as valid and binding as if service had been
18made personally upon the person in this Commonwealth. In all
19cases where process or pleadings are served upon the
20department under the provisions of this section, the process
21or pleadings shall be served in triplicate; one copy shall be
22filed in the department's offices and the others shall be
23forwarded by the department, by certified or registered mail,
24return receipt requested, to the last known principal place
25of business of the person.

26(j) Disclosure of mortgage originator information.--
27Notwithstanding section 302 of the act of May 15, 1933 (P.L.565,
28No.111), known as the Department of Banking and Securities Code,
29the department shall make available to the public, including by
30access to the Nationwide Mortgage Licensing System and Registry,

1the employment history of a mortgage originator.

2§ 6131.1. Prelicensing and continuing education.

3* * *

4(b) Prelicensing education.--

5(1) A mortgage originator applicant, and at least one 
6[partner or ultimate equitable owner of 10% or more of an 
7applicant other than a mortgage originator] qualifying 
8individual of a mortgage broker, mortgage lender or mortgage 
9loan correspondent applicant, shall complete at least 20 
10hours of education programs approved in accordance with 
11paragraph (2), which shall include all of the following:

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

13(ii) Three hours of ethics, which shall include
14instruction on fraud, consumer protection and fair
15lending issues.

16(iii) Two hours of training related to lending
17standards for the nontraditional mortgage loan
18marketplace.

19(iv) Three hours of Pennsylvania law and
20regulations, including this chapter, the act of December
213, 1959 (P.L.1688, No.621), known as the Housing Finance
22Agency Law, and the act of January 30, 1974 (P.L.13,
23No.6), referred to as the Loan Interest and Protection
24Law.

25(2) Prelicensing education programs shall be reviewed
26and approved by the Nationwide Mortgage Licensing System and
27Registry or as otherwise determined by the department based
28upon reasonable standards. Review and approval of a
29prelicensing education program shall include review and
30approval of the program provider.

1(3) A prelicensing education program approved by the
2Nationwide Mortgage Licensing System and Registry or as
3otherwise determined by the department may be provided by the
4[employer] sponsor of the applicant or an entity which is
5affiliated with the applicant by an agency contract, or any
6subsidiary or affiliate of such [employer] sponsor or entity.

7(4) Prelicensing education programs may be offered
8either in a classroom, online or by any other means approved
9by the Nationwide Mortgage Licensing System and Registry or
10as otherwise determined by the department.

11(5) Except for prelicensing education programs under
12paragraph (1)(iv), prelicensing education programs approved
13by the Nationwide Mortgage Licensing System and Registry or
14as otherwise determined by the department and completed for
15another State license application shall be accepted as credit
16toward completion of the prelicensing education requirements
17of this chapter [if the education programs have been
18successfully completed within the 12 months immediately
19preceding the date of the submission of the applicant's
20license application].

21(6) An applicant that was previously licensed under this
22chapter that is applying to become licensed again under this
23chapter must demonstrate that the applicant has completed all
24of the continuing education requirements for the year in
25which the applicant was last licensed under this chapter.

26(c) Prelicensing written test.--

27(1) A mortgage originator applicant, and at least one 
28[partner or ultimate equitable owner of 10% or more of an 
29applicant other than a mortgage originator] qualifying 
30individual of a mortgage broker, mortgage lender or mortgage
 

1loan correspondent applicant, shall pass, in accordance with 
2the standards established under this subsection, a qualified 
3written test developed by the Nationwide Mortgage Licensing 
4System and Registry and administered by a test provider 
5approved by the Nationwide Mortgage Licensing System and 
6Registry based upon reasonable standards. The [portion of 
7the] department may also require applicants to pass a test 
8regarding Pennsylvania-specific law, which shall be 
9administered by a test provider approved by the department or 
10as otherwise determined by the department under subsection 
11(e).

12(2) A written test shall not be treated as a qualified
13written test for purposes of paragraph (1) unless the test
14adequately measures the applicant's knowledge and
15comprehension in appropriate subject areas, including:

16(i) Ethics.

17(ii) Federal law and regulation pertaining to
18mortgage origination.

19(iii) Pennsylvania law and regulation pertaining to
20mortgage origination, unless otherwise determined by the 
21department.

22(iv) Federal and Pennsylvania law and regulation
23related to fraud, consumer protection, the nontraditional
24mortgage marketplace and fair lending issues.

25(3) A test provider approved by the Nationwide Mortgage
26Licensing System and Registry or as otherwise determined by
27the department may provide a test at the location of the
28[employer] sponsor of the applicant or an entity which is
29affiliated with the applicant by an agency contract, or any
30subsidiary or affiliate of the [employer] sponsor or entity.

1(4) (i) An applicant shall not be considered to have
2passed a qualified written test unless the individual
3achieves a test score of not less than 75% correct
4answers to questions.

5(ii) An applicant may [retake] take a test three
6consecutive times with each consecutive taking occurring
7at least 30 days after the preceding test.

8(iii) After failing three consecutive tests, an
9applicant shall wait at least six months before taking
10the test again.

11(iv) A formerly licensed mortgage originator
12applicant who has been unlicensed for five continuous
13years or longer shall retake a test. Any time during
14which the individual is a registered mortgage loan
15originator shall not be counted toward the five-year
16continuous period.

17(d) Continuing education.--

18(1) A licensee who is a mortgage originator and [one 
19individual from each licensed office] all branch managers and 
20qualifying individuals of a mortgage broker, mortgage lender 
21or mortgage loan correspondent [that is not a mortgage 
22originator, unless all of the nonclerical staff of a 
23particular licensed office are licensed as mortgage 
24originators,] shall annually complete at least eight hours of 
25education programs in accordance with paragraph (2), which 
26shall include all of the following:

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

28(ii) Two hours of ethics, which shall include
29instruction on fraud, consumer protection and fair
30lending issues.

1(iii) Two hours of training related to lending
2standards for the nontraditional mortgage loan
3marketplace.

4(iv) One hour of Pennsylvania law, including this
5chapter, the act of December 3, 1959 (P.L.1688, No.621),
6known as the Housing Finance Agency Law, and the act of
7January 30, 1974 (P.L.13, No.6), referred to as the Loan
8Interest and Protection Law.

9(2) Continuing education programs shall be reviewed and
10approved by the Nationwide Mortgage Licensing System and
11Registry or as otherwise determined by the department based
12upon reasonable standards. Review and approval of a
13continuing education program shall include review and
14approval of the program provider.

15(3) A continuing education program approved by the
16Nationwide Mortgage Licensing System and Registry or as
17otherwise determined by the department may be provided by the
18[employer] sponsor of the licensee or an entity which is
19affiliated with the licensee by an agency contract, or any
20subsidiary or affiliate of the [employer] sponsor or entity.

21(4) Continuing education programs may be offered either
22in a classroom, online or by any other means approved by the
23Nationwide Mortgage Licensing System and Registry or as
24otherwise determined by the department.

25(5) A licensee may only receive credit for a continuing
26education program in the year in which the program is taken
27and may not take the same continuing education program in the
28same or successive years to meet the requirements of this
29subsection.

30(6) A licensed mortgage originator who is an instructor

1of an approved continuing education program may receive
2credit for the licensed mortgage loan originator's own
3continuing education requirement at the rate of two hours
4credit for every one hour taught.

5(7) Except for the continuing education program under
6paragraph (1)(iv), continuing education programs approved by
7the Nationwide Mortgage Licensing System and Registry or as
8otherwise determined by the department and completed for
9another state shall be accepted as credit toward completion
10of the continuing education requirements of this chapter.

11(8) An individual who is a mortgage originator, branch
12manager or qualifying individual of a mortgage broker,
13mortgage lender or mortgage loan correspondent is not
14required to complete the requirements of this subsection in
15any licensing year in which the individual has completed the
16requirements of subsection (b).

17* * *

18§ 6135. Licensee requirements.

19(a) Requirements of licensee.--

20[(1) A licensee who is a mortgage broker, mortgage
21lender or mortgage loan correspondent shall conspicuously
22display, at each licensed place of business, its license and
23copies of the licenses of all mortgage originators assigned
24to that location. A licensee who is a mortgage originator
25shall keep the license in the immediate possession of the
26licensee whenever the licensee is engaged in the mortgage
27loan business.]

28(2) Each licensee shall maintain at its principal place
29of business, or at another place if agreed to by the
30department, the original or a copy of any books, accounts,

1records and documents, or electronic or similar access
2thereto, of the business conducted under the license as
3prescribed by the department to enable the department to
4determine whether the business of the licensee is being
5conducted in accordance with the provisions of this chapter
6and the regulations, statements of policy or orders issued
7under this chapter. All instruments, documents, accounts, 
8books and records relating to the mortgage loan business 
9shall be kept separate and apart from the records of any 
10other business conducted by the licensee. Records of first 
11and secondary mortgage loans shall be easily distinguishable 
12and easily separated. All records shall be preserved and kept 
13available for investigation or examination by the department 
14for a period of four years, unless otherwise determined by 
15the department. The department shall have free access to and
16authorization to examine records maintained by the licensee.
17The costs of the examination, including travel costs, shall
18be borne by the licensee. The department may deny or revoke
19the authority to maintain records at another place for good
20cause in the interest of protection for Commonwealth
21consumers, including for the licensee's failure to provide
22books, accounts, records or documents to the department upon
23request.

24(3) A mortgage broker, mortgage lender or mortgage loan
25correspondent, or a mortgage originator that is required to 
26obtain and maintain its own bond coverage under section 
276131(f)(4) (relating to application for license), [on a date
28determined by the department,] shall file periodically, as 
29determined by the department, a report with the department or 
30the Nationwide Mortgage Licensing System and Registry, as
 

1determined by the department, setting forth such information
2as the department shall require concerning the first or
3secondary mortgage loan business conducted by the licensee
4[during the preceding calendar year. The report shall be on a
5form provided by the department and shall be filed with the 
6Nationwide Mortgage Licensing System and Registry]. Licensees
7who fail to file the required report at the date required by
8the department may be subject to a penalty of $100 for each
9day after the due date until the report is filed.

10(4) Each licensee shall be subject to examination by the
11department at its discretion, at which time the department
12shall have free access, during regular business hours, to the
13licensee's place or places of business and to all
14instruments, documents, accounts, books and records which
15pertain to a licensee's first or secondary mortgage loan
16business. The department may examine a licensee at any time
17if the department deems the examination to be necessary or
18desirable. The cost of any such examination shall be borne by
19the licensee.

20(5) Each licensee shall include in all advertisements
21[language indicating that the licensee is licensed by the
22department. In the case of a mortgage originator, all
23advertising shall include the name of the mortgage
24originator's employer and the mortgage originator's unique 
25identifier] the licensee's unique identifier.

26(b) Accounting records.--[The] For licensees with minimum 
27net worth requirements pursuant to this chapter, the licensee's
28accounting records must be constructed and maintained in
29compliance with generally accepted accounting principles or as
30provided by department regulation.

1* * *

2§ 6136. Licensee limitations.

3(a) Name and changes to name.--A licensee cannot transact
4any business under this chapter under any other name or names
5except those names designated in its license. A mortgage
6originator may not use any other name other than the mortgage
7originator's personal legal name. A licensee that changes its
8name or place or places of business shall notify the department
9or the Nationwide Mortgage Licensing System and Registry, as 
10determined by the department, within ten days of the change[,
11and the department shall issue a certificate to the licensee, if
12appropriate, which shall specify the licensee's new name or
13address].

14* * *

15§ 6137. Surrender of license.

16Upon satisfying the department that all creditors of a
17licensee have been paid or that other arrangements satisfactory
18to the creditors and the department have been made, a licensee
19may voluntarily surrender its license to the department by
20[delivering its license to the department with] providing the 
21department or the Nationwide Mortgage Licensing System and 
22Registry, as determined by the department, written notice that
23the license is being voluntarily surrendered, but an action by a
24licensee shall not affect the licensee's civil or criminal
25liability for acts committed.

26§ 6138. Authority of department.

27* * *

28(b) Hearings.--A person aggrieved by a decision of the
29department may appeal the decision of the department to the
30[Secretary of Banking] commission. The appeal shall be conducted

1under 2 Pa.C.S. Ch. 5 Subch. A (relating to practice and
2procedure of Commonwealth agencies).

3* * *

4(d) Final orders.--A decision of the [Secretary of Banking] 
5commission, or an unappealed order of the department, shall be a
6final order of the department and shall be enforceable in a
7court of competent jurisdiction. The department may publish
8final adjudications issued under this section, subject to
9redaction or modification to preserve confidentiality. The 
10department shall regularly report violations of this chapter, 
11enforcement actions and other relevant information to the 
12Nationwide Mortgage Licensing System and Registry.

13(e) Appeals.--A person aggrieved by a decision of the
14[Secretary of Banking] commission may appeal the decision under
152 Pa.C.S. Ch. 7 Subch. A. (relating to judicial review of
16Commonwealth agency action).

17(f) Orders affecting mortgage originators.--An order issued
18against a licensee is applicable to the mortgage originators
19[employed] sponsored by the licensee.

20§ 6139. Suspension, revocation or refusal.

21(a) Departmental action.--The department may suspend, revoke
22or refuse to renew a license issued under this chapter if any
23fact or condition exists or is discovered which, if it had
24existed or had been discovered at the time of filing of the
25application for the license, would have warranted the department
26in refusing to issue the license or if a licensee or director,
27officer, partner, employee, mortgage originator or owner of a
28licensee has:

29(1) Made a material misstatement in an application or
30any report or submission required by this chapter or any

1department regulation, statement of policy or order.

2(2) Failed to comply with or violated any provision of
3this chapter or any regulation or order promulgated or issued
4by the department under this chapter.

5(3) Engaged in dishonest, fraudulent or illegal
6practices or conduct in a business or unfair or unethical
7practices or conduct in connection with the mortgage loan
8business.

9(4) Been convicted of or pleaded guilty or nolo
10contendere to a crime of moral turpitude or felony.

11(5) Permanently or temporarily been enjoined by a court
12of competent jurisdiction from engaging in or continuing
13conduct or a practice involving an aspect of the mortgage
14loan business.

15(6) Become the subject of an order of the department
16denying, suspending or revoking a license applied for or
17issued under this chapter.

18(7) Become the subject of a United States Postal Service
19fraud order.

20(8) Failed to comply with the requirements of this
21chapter to make and keep records prescribed by regulation,
22statement of policy or order of the department, to produce
23records required by the department or to file financial
24reports or other information that the department by
25regulation, statement of policy or order may require.

26(9) Become the subject of an order of the department
27denying, suspending or revoking a license under the
28provisions of any other law administered by the department.

29(10) Demonstrated negligence or incompetence in
30performing an act for which the licensee is required to hold

1a license under this chapter.

2(11) Accepted an advance fee without having obtained the
3bond required by section 6131(d)(1) or (e)(1) (relating to
4application for license).

5(12) Become insolvent, meaning that the liabilities of
6the applicant or licensee exceed the assets of the applicant
7or licensee or that the applicant or licensee cannot meet the
8obligations of the applicant or licensee as they mature or is
9in such financial condition that the applicant or licensee
10cannot continue in business with safety to the customers of
11the applicant or licensee.

12(13) Failed to complete the requirements of section 
136131.1 (relating to prelicensing and continuing education).

14(14) In the case of a mortgage broker, mortgage lender
15or mortgage loan correspondent, conducted the mortgage loan
16business through an unlicensed mortgage originator.

17(15) Failed to comply with the terms of any agreement
18under which the department authorizes a licensee to maintain
19records at a place other than the licensee's principal place
20of business.

21* * *

22§ 6140. Penalties.

23* * *

24(b) Violation by licensee.--A person licensed under this
25chapter or director, officer, owner, partner, employee, mortgage 
26originator or agent of a licensee who violates a provision of
27this chapter or who commits any action which would subject the
28licensee to suspension, revocation or nonrenewal under section
296139 may be fined by the department up to $10,000 for each
30offense.

1§ 6151. Applicability.

2The provisions of this chapter shall apply to:

3(1) Any mortgage loan which is:

4(i) negotiated, offered or otherwise transacted
5within this Commonwealth, in whole or in part, whether by
6the ultimate lender or any other person;

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

8(iii) notwithstanding the place of execution,
9secured by [real property] a dwelling or residential real 
10estate located in this Commonwealth.

11(2) Any person who engages in the mortgage loan business
12in this Commonwealth.

13Section 4. Section 6154 of Title 7 is repealed:

14[§ 6154. Procedure for determination of noncompliance with
15Federal law.

16(a) Applicability.--This section applies if, because of a
17determination under paragraph (4) of the definition of "mortgage
18originator" in section 6102 (relating to definitions), an
19employee:

20(1) is required to be licensed as a mortgage originator
21under state laws implementing the S.A.F.E. Mortgage Licensing
22Act of 2008 (110 Stat. 289, 12 U.S.C. § 5101 et seq.); and

23(2) is thus required to be licensed as a mortgage
24originator.

25(b) Continuation.--An employee specified in subsection (a)
26may continue to act in the employee's current capacity if the
27employee files an application for a mortgage originator license
28with the department within 60 days of the date of the
29determination.]

30Section 5. This act shall take effect in 60 days.