BANKS AND BANKING (7 PA.C.S.) - REGULATING MORTGAGE LOAN INDUSTRY
 PRACTICE, LICENSURE AND PENALTIES, AND UNLICENSED MORTGAGE LOAN ACTIVITY
                  Act of Jul. 8, 2008, P.L. 796, No. 56               Cl. 07
                             Session of 2008
                               No. 2008-56

     HB 2179

                                  AN ACT

     Amending Titles 7 (Banks and Banking) and 18 (Crimes and
        Offenses) of the Pennsylvania Consolidated Statutes,
        regulating the mortgage loan industry in terms of practice,
        licensure and penalties; providing for unlicensed mortgage
        loan activity; and making related repeals.

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

        Section 1.  Title 7 of the Pennsylvania Consolidated Statutes
     is amended by adding parts to read:
                                  PART I
                          PRELIMINARY PROVISIONS
                                (Reserved)
                                 PART II
                                LICENSING
     Ch.
     61.  Mortgage Loan Industry Licensing and Consumer Protection
                                CHAPTER 61
         MORTGAGE LOAN INDUSTRY LICENSING AND CONSUMER PROTECTION
     Subch.
        A.  Preliminary Provisions
        B.  License Requirements and Exceptions
        C.  Mortgage Loan Business Restrictions and Requirements
        D.  Administrative and Licensure Provisions
        E.  Miscellaneous Provisions
                               SUBCHAPTER A
                          PRELIMINARY PROVISIONS
     Sec.
     6101.  Scope of chapter.
     6102.  Definitions.
      § 6101.  Scope of chapter.
        This chapter relates to mortgage loan industry licensing and
     consumer protection. This chapter does not apply to a banking
     institution or federally chartered or State-chartered credit
     union, if the primary regulator of the banking institution or
     federally or State-chartered credit union supervises the banking
     institution or federally or State-chartered credit union.
      § 6102.  Definitions.
        The following words and phrases when used in this chapter
     shall have the meanings given to them in this section unless the
     context clearly indicates otherwise:
        "Advance fee."  Any funds requested by or to be paid to a
     person in advance of or during the processing of a mortgage loan
     application, excluding those fees paid by a consumer directly to
     a credit agency reporting bureau, title company or real estate
     appraiser.
        "Applicant."  A person who applies for a license under this
     chapter.
        "Banking institution."  Any of the following:
            (1)  A State-chartered bank, bank and trust company,
        savings bank or private bank.
            (2)  A national bank.
            (3)  A federally chartered or State-chartered savings
        association.
            (4)  A subsidiary of any of the entities listed under
        this definition.
        "Billing cycle."  In respect to open-end mortgage loans, the
     time interval between periodic billing dates. A billing cycle
     shall be considered to be a monthly cycle if the closing date of
     the cycle is the same date each month or does not vary by more
     than four days from that date.
        "Branch."  An office or other place of business, other than
     the principal place of business, located in this Commonwealth or
     any other state, where a person engages in the mortgage loan
     business subject to this chapter.
        "Consumer discount company."  A licensee under the act of
     April 8, 1937 (P.L.262, No.66), known as the Consumer Discount
     Company Act.
        "Department."  The Department of Banking of the Commonwealth.
        "Finder's fee" or "referral fee."  Any payment of money or
     other consideration for the referral of a mortgage loan to a
     licensee, except for consideration paid for goods or facilities
     actually furnished or services actually performed.
        "First mortgage loan."  A loan which is secured in whole or
     in part by a first lien upon any interest in real property
     created by a security agreement, including a mortgage,
     indenture, deed of trust or any other similar instrument or
     document, which real property is used as a one-family to four-
     family dwelling, a portion of which may be used for
     nonresidential purposes.
        "First mortgage loan business."  The mortgage loan business
     as applied to first mortgage loans.
        "Licensee."  A person who is licensed under this chapter.
        "Lock-in agreement."  An agreement between a mortgage lender
     and a consumer whereby the mortgage lender guarantees, until a
     specified date, the availability of a specified rate of interest
     or specified formula by which the rate of interest and a
     specific number of discount points will be determined, if the
     mortgage loan is approved and closed by the specified date. If a
     specified date is not determinable, the mortgage lender may
     fulfill the requirement of this definition by setting forth with
     specificity the method by which the duration of the lock-in
     period will be determined.
        "Mortgage broker."  A person who engages in the mortgage loan
     business by directly or indirectly negotiating or placing
     mortgage loans for others in the primary market for
     consideration.
        "Mortgage lender."  A person who engages in the mortgage loan
     business by directly or indirectly originating and closing
     mortgage loans with its own funds in the primary market for
     consideration.
        "Mortgage loan."  A first or secondary mortgage loan, or
     both, as the context may require.
        "Mortgage loan business."  The business of advertising,
     causing to be advertised, soliciting, negotiating or arranging
     in the ordinary course of business or offering to make or making
     mortgage loans.
        "Mortgage loan correspondent."  A person who engages in the
     mortgage loan business by directly or indirectly originating and
     closing mortgage loans in his or her own name utilizing funds
     provided by a wholesale table funder or other funding sources
     under the circumstances described under section 6123(6)
     (relating to mortgage loan business prohibitions) and
     simultaneously assigning the mortgage loans to the wholesale
     table funder.
        "Mortgage originator."  An individual not licensed as a
     mortgage lender, mortgage broker or loan correspondent under
     this chapter who solicits, accepts or offers to accept mortgage
     loan applications, or negotiates mortgage loan terms, in other
     than a clerical or ministerial capacity and who is personally in
     direct contact, in writing, including electronic messaging, or
     by voice communication, with consumers with regard to the
     solicitations, acceptances, offers or negotiations. The term
     does not include directors, partners or ultimate equitable
     owners of 10% or more of a licensee.
        "Open-end loan."  A mortgage loan made by a mortgage lender
     under this chapter pursuant to an agreement between the mortgage
     lender and the consumer whereby all of the following apply:
            (1)  The mortgage lender may permit the consumer to
        obtain advances of money from the licensee from time to time
        or the mortgage lender may advance money on behalf of the
        consumer from time to time as directed by the consumer.
            (2)  The amount of each advance, interest and permitted
        charges and costs are debited to the consumer's account and
        payments and other credits are credited to the same account.
            (3)  Interest is computed on the unpaid principal balance
        or balances of the account outstanding from time to time.
            (4)  The consumer has the privilege of paying the account
        in full at any time or, if the account is not in default, in
        monthly installments of fixed or determinable amounts as
        provided in the open-end loan agreement.
        "Person."  An individual, association, joint venture or
     joint-stock company, partnership, limited partnership, limited
     partnership association, limited liability company, business
     corporation, nonprofit corporation or any other group of
     individuals, however organized.
        "Primary market."  The market wherein mortgage loans are
     originated between a lender and a consumer.
        "Principal place of business."  The primary office of a
     person located in this Commonwealth, which is staffed on a full-
     time basis and at which the person's books, records, accounts
     and documents are maintained.
        "Secondary mortgage loan."  A loan which is secured in whole
     or in part by a lien upon any interest in real property created
     by a security agreement, including a mortgage, indenture, deed
     of trust or any other similar instrument or document, which real
     property is subject to a prior lien and which is used as a one-
     family to four-family dwelling, a portion of which may be used
     for nonresidential purposes.
        "Secondary mortgage loan business."  The mortgage loan
     business as applied to secondary mortgage loans.
        "Tangible net worth."  Net worth less the following assets:
            (1)  That portion of any assets pledged to secure
        obligations of any person other than that of the applicant.
            (2)  Any asset, except construction loan receivables
        secured by first mortgages from related companies, due from
        officers or stockholders of the applicant or related
        companies in which the applicant's officers or stockholders
        have an interest.
            (3)  That portion of the value of any marketable
        security, listed or unlisted, not shown at the lower of the
        cost or market value, except for any shares of Federal
        National Mortgage Association stock required to be held under
        a servicing agreement, which are carried at cost.
            (4)  Any amount in excess of the lower of the cost or
        market value of mortgages in foreclosures, construction loans
        or foreclosed property acquired by the applicant through
        foreclosure.
            (5)  Any investment shown on the balance sheet in the
        applicant's joint ventures, subsidiaries, affiliates or
        related companies which is greater than the value of the
        assets at equity.
            (6)  Goodwill.
            (7)  The value placed on insurance renewals or property
        management contract renewals or other similar intangibles of
        the applicant.
            (8)  Organization costs of the applicant.
            (9)  The value of any servicing contracts held by the
        applicant not determined in accordance with the American
        Institute of Certified Public Accountants Statement of
        Position 76-2, dated August 25, 1976, or subsequent revisions
        thereto.
            (10)  Any real estate held for investment where
        development will not start within two years from the date of
        its initial acquisition.
            (11)  Any leasehold improvements not being amortized over
        the lesser of the expected life of the asset or the remaining
        term of the lease.
            (12)  Any fees paid or collected which are not
        recoverable through the closing or selling of loans.
        "Wholesale table funder."  A licensed mortgage lender or
     person exempt under section 6112(1) or (7) (relating to
     exceptions to license requirements) who, in the regular course
     of business, provides the funding for the closing of mortgage
     loans through mortgage loan correspondents and who by assignment
     obtains title to the mortgage loans.
                               SUBCHAPTER B
                   LICENSE REQUIREMENTS AND EXCEPTIONS
     Sec.
     6111.  License requirements.
     6112.  Exceptions to license requirements.
      § 6111.  License requirements.
        (a)  General rule.--Except as provided under subsections (b)
     and (c) and section 6112 (relating to exceptions to license
     requirements), on and after the effective date of this section,
     no person shall engage in the mortgage loan business in this
     Commonwealth without being licensed as a mortgage broker,
     mortgage lender, mortgage loan correspondent or mortgage
     originator as provided under this chapter. A mortgage originator
     may not engage in the mortgage loan business unless the mortgage
     originator is employed and supervised by a licensed mortgage
     broker, mortgage lender or mortgage loan correspondent.
        (b)  Licensed activity exceptions.--
            (1)  A mortgage lender may act as a mortgage broker or
        mortgage loan correspondent without a separate mortgage
        broker or mortgage loan correspondent license and, if
        licensed as an individual, may perform the services of a
        mortgage originator without a separate mortgage originator
        license.
            (2)  A mortgage loan correspondent may act as a mortgage
        broker without a separate mortgage broker license and, if
        licensed as an individual, may perform the services of a
        mortgage originator without a separate mortgage originator
        license.
            (3)  A person licensed as a mortgage broker may only
        perform the services of a mortgage broker. If a mortgage
        broker is licensed as an individual, a mortgage broker may
        perform the services of a mortgage originator without a
        separate mortgage originator license.
        (c)  Loans for business or commercial purposes.--This chapter
     shall not apply to mortgage loans made for business or
     commercial purposes.
      § 6112.  Exceptions to license requirements.
        The following persons shall not be required to be licensed
     under this chapter in order to conduct the mortgage loan
     business:
            (1)  A banking institution or a federally chartered or
        State-chartered credit union, if the primary regulator of the
        banking institution or federally chartered or State-chartered
        credit union supervises the banking institution or federally
        chartered or State-chartered credit union.
            (2)  An attorney authorized to practice law in this
        Commonwealth not otherwise engaged in or holding himself or
        herself out to the public as being engaged in the mortgage
        loan business who acts as a mortgage broker in negotiating or
        placing a mortgage loan in the normal course of legal
        practice.
            (3)  A person who either originates, negotiates or
        services less than three mortgage loans in a calendar year in
        this Commonwealth, unless the person is otherwise deemed to
        be engaged in the mortgage loan business by the department.
            (4)  Any agency or instrumentality of the Federal
        Government or a corporation otherwise created by an act of
        the United States Congress, including the Federal National
        Mortgage Association, the Government National Mortgage
        Association, the Veterans' Administration, the Federal Home
        Loan Mortgage Corporation and the Federal Housing
        Administration.
            (5)  Any agency or instrumentality of a state or local
        government, the District of Columbia or any territory of the
        United States, including the Pennsylvania Housing Finance
        Agency and other government housing finance agencies.
            (6)  Consumer discount companies, except that a consumer
        discount company that acts as a mortgage broker, mortgage
        lender or mortgage loan correspondent other than under the
        provisions of the act of April 8, 1937 (P.L.262, No.66),
        known as the Consumer Discount Company Act, shall be subject
        to the provisions of Subchapter C (relating to mortgage loan
        business restrictions and requirements) and sections
        6131(c)(2) and (3) (relating to application for license),
        6135 (relating to licensee requirements), 6138 (relating to
        authority of department) and 6140(b) (relating to penalties).
        Employees of licensees under the Consumer Discount Company
        Act that act as mortgage originators shall be subject to the
        licensing requirements of this chapter. Consumer discount
        companies that employ mortgage originators shall be subject
        to the same requirements as mortgage lenders in regard to the
        employment and supervision of mortgage originators.
            (7)  Except for consumer discount companies, affiliates
        of banking institutions and subsidiaries and affiliates of
        federally chartered or State-chartered credit unions, except
        that such subsidiaries and affiliates shall:
                (i)  be subject to the provisions of Subchapter C and
            sections 6135(a)(2), (3) and (4), (b) and (c), 6138 and
            6140(b);
                (ii)  deliver as required to the department annually
            copies of financial reports made to all supervisory
            agencies; and
                (iii)  be registered with the department.
            (8)  Employees of a mortgage broker, mortgage lender or
        mortgage loan correspondent, to the extent that the employees
        are not otherwise required to be licensed as mortgage
        originators.
            (9)  Employees of excepted persons enumerated under this
        section, unless otherwise provided under this subsection.
            (10)  A person that makes a mortgage loan to the person's
        employee as an employment benefit if the person does not hold
        itself out to the public as a mortgage lender.
            (11)  Nonprofit corporations not otherwise engaged in or
        holding themselves out to the public as being engaged in the
        mortgage loan business making mortgage loans to promote home
        ownership or improvements for the disadvantaged.
            (12)  A nonprofit corporation not otherwise engaged in or
        holding itself out to the public as being engaged in the
        mortgage loan business which meets all of the following:
                (i)  Does not make more than 12 mortgage loans in a
            calendar year with its own funds, not including funds
            borrowed through warehouse lines of credit or other
            sources for the purpose of making mortgage loans.
                (ii)  Makes mortgage loans which are retained in the
            corporation's own portfolios and not regularly sold to
            others and are made to promote and advance the cultural
            traditions and lifestyles of bona fide religious
            organizations.
                               SUBCHAPTER C
           MORTGAGE LOAN BUSINESS RESTRICTIONS AND REQUIREMENTS
     Sec.
     6121.  General requirements.
     6122.  Powers conferred on certain licensees engaged in the
            mortgage loan business.
     6123.  Mortgage loan business prohibitions.
     6124.  Prohibited clauses in mortgage loan documents.
     6125.  Mortgage lending authority.
     6126.  Requirements as to open-end loans.
      § 6121.  General requirements.
        A licensee shall do all of the following:
            (1)  Comply with all provisions of the act of January 30,
        1974 (P.L.13, No.6), referred to as the Loan Interest and
        Protection Law (Usury Law). This paragraph shall not
        supersede section 501 of the Depository Institutions
        Deregulation and Monetary Control Act of 1980 (94 Stat. 161,
        12 U.S.C. § 1735f-7a) or the Alternative Mortgage Transaction
        Parity Act of 1982 (96 Stat. 1545, 12 U.S.C. §§ 3801-3806 et
        seq.).
            (2)  Comply with the provisions of the act of December 3,
        1959 (P.L.1688, No.621), known as the Housing Finance Agency
        Law, that are applicable to the licensee.
            (3)  Comply with all applicable Federal law, including
        the Real Estate Settlement Procedures Act (88 Stat. 1724, 12
        U.S.C. §§ 2601 et seq.), the Truth in Lending Act (82 Stat.
        146, 15 U.S.C. §§ 1601 et seq.) and the Equal Credit
        Opportunity Act (88 Stat. 1521, 15 U.S.C. §§ 1691 et seq.).
            (4)  Give to the consumer a copy of the promissory note
        evidencing the mortgage loan and any mortgage loan agreement,
        mortgage instrument or other document evidencing a mortgage
        loan signed by the consumer.
            (5)  Give to the consumer written evidence of credit
        life, credit accident and health, credit unemployment and
        property insurance, if any, provided by the licensee to the
        consumer.
            (6)  If a payment is made in cash on account of a
        mortgage loan, give to the consumer at the time the payment
        is actually received a written receipt which shall show the
        account number or other identification mark or symbol, date,
        amount paid and, upon request of the consumer, the unpaid
        balance of the account prior to and after the cash payment.
            (7)  Upon written request from the consumer, give or
        forward to the consumer within ten days from the date of
        receipt of the request a written statement of the consumer's
        account which shall show the dates and amounts of all
        installment payments credited to the consumer's account, the
        dates, amounts and an explanation of all other charges or
        credits to the account and the unpaid balance of the account.
        A licensee shall not be required to furnish more than two
        statements in any 12-month period.
            (8)  If a mortgage loan is paid in full and, in the case
        of an open-end loan, the mortgage lender is no longer
        obligated to make future advances to the consumer, the
        mortgage lender shall do all of the following:
                (i)  Cancel any insurance provided by the licensee in
            connection with the mortgage loan and refund to the
            consumer, in accordance with regulations promulgated by
            the Insurance Department, any unearned portion of the
            premium for the insurance.
                (ii)  Stamp or write on the face of the mortgage loan
            agreement or promissory note evidencing the mortgage loan
            "Paid in Full" or "Canceled," the date paid and, within
            60 days, return the mortgage loan agreement or promissory
            note to the consumer.
                (iii)  Release any lien on real property and cancel
            the same of record and, at the time the mortgage loan
            agreement or promissory note evidencing the mortgage loan
            is returned, deliver to the consumer good and sufficient
            assignments, releases or any other certificate,
            instrument or document as may be necessary to evidence
            the release.
            (9)  Provide for periodic accounting of any escrow
        accounts held by the mortgage lender to the consumer not less
        than annually, showing the amounts received from the consumer
        and the amounts disbursed from the accounts.
            (10)  Refund all fees, other than those fees paid by the
        licensee to a third party, paid by a consumer when a mortgage
        loan is not produced within the time specified by the
        mortgage broker, mortgage lender or mortgage loan
        correspondent at the rate, term and overall cost agreed to by
        the consumer. This paragraph shall not apply if the failure
        to produce a mortgage loan is due solely to the consumer's
        negligence, his or her refusal to accept and close on a loan
        commitment or his or her refusal or inability to provide
        information necessary for processing, including employment
        verifications and verifications of deposits. The licensee
        shall disclose to the consumer, in writing, at the time of a
        loan application which fees paid or to be paid are
        nonrefundable.
            (11)  Ensure that all lock-in agreements shall be in
        writing and shall contain at least the following provisions:
                (i)  The expiration date of the lock-in, if any.
                (ii)  The interest rate locked in, if any.
                (iii)  The discount points locked in, if any.
                (iv)  The fee locked in, if any.
                (v)  The lock-in fee, if any.
            (12)  Upon written request from the consumer or a person
        authorized by the consumer, provide, within ten days from the
        date of receipt of the request, a written statement regarding
        the unpaid balance of a consumer's mortgage loan or account.
        The statement shall contain the total amount required to pay
        off a mortgage loan and a specific expiration date for the
        payoff information. A licensee shall not be required to
        furnish more than two statements in any 12-month period.
            (13) In the case of a mortgage broker, mortgage lender or
        mortgage loan correspondent, do all of the following:
                (i)  Maintain supervision and control of and
            responsibility for the acts and omissions of all mortgage
            originators employed by the licensee.
                (ii)  Maintain a list of all current and former
            mortgage originators employed by the licensee and the
            dates of the employment.
                (iii)  In the event that a licensee believes that a
            mortgage originator employed by the licensee has engaged
            in any activity that is illegal or in violation of this
            chapter or any regulation or statement of policy
            promulgated under this chapter, the licensee shall
            provide the department with written notification of the
            belief and the licensee's proposed corrective measures
            within 30 days. A licensee shall not be liable to a
            mortgage originator in connection with the notification.
      § 6122.  Powers conferred on certain licensees engaged in the
                mortgage loan business.
        (a)  Mortgage lenders.--If they are in compliance with the
     provisions of this chapter, mortgage lenders shall have the
     power and authority:
            (1)  To make first and secondary mortgage loans and,
        subject to the limitations of this chapter, to charge and
        collect application fees for the loans.
            (2)  To collect fees or premiums for title examination,
        abstract of title, title insurance, credit reports, surveys,
        appraisals, notaries, postage, including messenger and
        express carrier, tax service or other costs or fees actually
        related to the processing of a mortgage loan application or
        making of a mortgage loan, when the fees are actually paid or
        incurred by the licensee and to collect fees or charges
        prescribed by law which actually are or will be paid to
        public officials for determining the existence of or for
        perfecting or releasing or satisfying any security related to
        the mortgage loan and include these in the principal of the
        mortgage loan.
            (3)  To provide access to credit life, credit disability,
        credit accident and health and credit unemployment insurance.
        A consumer shall not be compelled to purchase credit life,
        credit disability, credit accident and health or credit
        unemployment insurance as a condition of the making of a
        mortgage loan, and all contracts utilized shall reflect a
        clear disclosure that the purchase of credit life, credit
        disability, credit accident and health or credit unemployment
        insurance is not a prerequisite to obtaining a mortgage loan.
        If, however, the consumer elects to obtain credit life,
        credit disability, credit accident and health or credit
        unemployment insurance through the licensee, the consumer
        shall consent thereto in writing. If consumers desire joint-
        life or joint accident and health insurance, all consumers
        shall consent thereto in writing. The insurance shall be
        obtained from an insurance company authorized by the laws of
        this Commonwealth to conduct business in this Commonwealth.
        Any benefit or return to the licensee from the sale or
        provision of the insurance shall not be included in the
        computation of the maximum charge authorized for mortgage
        loans under this chapter and shall not be deemed a violation
        of this chapter when the insurance is written pursuant to the
        laws of this Commonwealth governing insurance.
            (4)  To require property insurance on security against
        reasonable risks of loss, damage and destruction and to
        provide access to the insurance to the consumer. The amount
        and term of the insurance shall be reasonable in relation to
        the amount and term of the mortgage loan contract and the
        value of the security. This requirement shall be satisfied if
        the consumer demonstrates at the time the mortgage loan is
        made that the consumer has valid and collectible insurance
        covering the property to be insured and has furnished the
        licensee with a loss payable endorsement sufficient for the
        protection of the licensee. If the consumer elects to obtain
        property insurance through the licensee, the consumer shall
        consent thereto in writing, and the insurance shall be
        obtained from an insurance company authorized by the laws of
        this Commonwealth to conduct business in this Commonwealth.
        Any benefit or return to the licensee from the sale or
        provision of property insurance shall not be included in the
        computation of the maximum charge authorized for mortgage
        loans under this chapter and shall not be deemed a violation
        of this chapter when the insurance is written pursuant to the
        laws of this Commonwealth governing insurance. The premium
        for any property insurance may be included in the principal
        amount of the mortgage loan requested by the consumer.
        However, the premium shall be disclosed as a separate item on
        the face of the principal contract document and the
        licensee's individual consumer ledger records.
            (5)  To collect a fee for a subsequent dishonored check
        or instrument taken in payment, not to exceed the service
        charge permitted to be imposed under 18 Pa.C.S. § 4105
        (relating to bad checks).
        (b)  Mortgage brokers and loan correspondents.--Provided they
     are in compliance with the provisions of this chapter, mortgage
     brokers and mortgage loan correspondents shall have the power
     and authority:
            (1)  To collect title examination, credit report and
        appraisal fees actually related to the making of a mortgage
        loan when the fees are actually paid or incurred by the
        licensee and to include the fees in the principal of the
        mortgage loan which is being negotiated or arranged.
            (2)  To charge a broker's fee if the fee is disclosed to
        the consumer for whom the loan is being negotiated or
        arranged.
            (3)  To accept from a licensee a fee or premium for
        brokering or cobrokering a mortgage loan, provided that the
        payment and acceptance of the fee or premium is in compliance
        with Federal law, including the Real Estate Settlement
        Procedures Act of 1974 (Public Law 93-533, 88 Stat. 1724).
      § 6123.  Mortgage loan business prohibitions.
        A licensee engaging in the mortgage loan business shall not:
            (1)  Charge, contract for, collect or receive charges,
        fees, premiums, commissions or other considerations in excess
        of the limitations of those contained in this chapter.
            (2)  Disburse the proceeds of a mortgage loan in any form
        other than cash, electronic funds transfer, certified check
        or cashier's check where the proceeds are disbursed by the
        licensee to a closing agent. This paragraph shall not be
        construed as requiring a lender to utilize a closing agent
        and shall not apply to disbursements by check directly from
        the licensee's account payable to the consumer, consumer
        designees or other parties due funds from the closing.
            (3)  Advertise, cause to be advertised or otherwise
        solicit whether orally, in writing, by telecast, by broadcast
        or in any other manner any statement or representation which
        is false, misleading or deceptive.
            (4)  Require a consumer to pay, to the licensee or any
        other person, a broker's fee, finder's fee, commission,
        premium or any other charges for obtaining, procuring or
        placing of a mortgage loan, except as provided under this
        chapter. This restriction shall not prohibit a mortgage
        lender from paying a fee to a mortgage broker in connection
        with the placement or procurement of a mortgage loan nor
        prohibit a consumer from requesting or directing a mortgage
        lender licensee to pay a fee from the proceeds of a mortgage
        loan or include it in the amount to be financed.
            (5)  Make any mortgage loan on the condition, agreement
        or understanding that the consumer contract with any specific
        person or organization for insurance services as agent,
        broker or underwriter.
            (6)  In the case of a mortgage loan correspondent,
        service mortgage loans or close mortgage loans utilizing
        funding other than a wholesale table funder, except in an
        emergency circumstance where wholesale table funding is not
        available.
            (7)  In the case of a mortgage broker or mortgage
        originator, commit to close or close mortgage loans in its
        own name, service mortgage loans, enter into lock-in
        agreements or collect lock-in fees, provided, however, that a
        mortgage broker or mortgage originator can provide a lender's
        lock-in agreement to a consumer on behalf of that lender and
        collect lock-in fees payable to that lender on the lender's
        behalf.
            (8)  In the case of a mortgage originator, accept any
        fees from consumers in the mortgage originator's own name. A
        mortgage originator may accept fees payable to the mortgage
        originator's employer licensee and fees payable to third-
        party entities on behalf of the mortgage originator's
        employer licensee. A mortgage originator may not accept
        advance fees payable to the mortgage originator's employer
        licensee unless the licensee is authorized to collect advance
        fees under this chapter.
      § 6124.  Prohibited clauses in mortgage loan documents.
        No writing of any kind executed in connection with a mortgage
     loan shall contain:
            (1)  An agreement whereby the consumer waives any rights
        accruing to the consumer under the provisions of this
        chapter.
            (2)  An irrevocable wage assignment of, or order for the
        payment of, any salary, wages, commissions or any other
        compensation for services, or any part thereof, earned or to
        be earned.
            (3)  An agreement to pay any amount other than the unpaid
        balance of the mortgage loan agreement or promissory note or
        any other charge authorized by this chapter.
      § 6125.  Mortgage lending authority.
        (a)  First mortgage loans.--Mortgage lenders engaged in the
     first mortgage loan business may make first mortgage loans
     pursuant to:
            (1)  the act of January 30, 1974 (P.L.13, No.6), referred
        to as the Loan Interest and Protection Law; or
            (2)  if the licensee is qualified, applicable Federal
        law, including the Alternative Mortgage Transaction Parity
        Act of 1982 (96 Stat. 1545, 12 U.S.C. § 3801 et seq.) and
        section 501 of the Depository Institution Deregulation and
        Monetary Control Act of 1980 (94 Stat. 161, 12 U.S.C. §
        1735f-7a).
        (b)  Secondary mortgage loans.--Mortgage lenders engaged in
     the secondary mortgage loan business may:
            (1)  if the licensee is qualified, make secondary
        mortgage loans on terms as are permissible under applicable
        Federal law, including the Alternative Mortgage Transaction
        Parity Act of 1982; or
            (2)  (i)  make secondary mortgage loans repayable in
            installments and charge, contract for and receive thereon
            interest at a rate not exceeding 1.85% per month. No
            interest shall be paid, deducted or received in advance,
            except that interest from the date of disbursement of
            funds to the consumer to the first day of the following
            month shall be permitted in the event the first
            installment payment is more than 30 days after the date
            of disbursement. Interest shall not be compounded and
            shall be computed only on unpaid principal balances.
            However, the inclusion of earned interest in a new note
            shall not be considered compounding. For the purpose of
            computing interest, a month shall be any period of 30
            consecutive days;
                (ii)  charge and collect an application fee not
            exceeding 3% of the original principal amount of the
            secondary mortgage loan. The fee shall be fully earned at
            the time the secondary mortgage loan is made and may be
            added to the principal amount of the secondary mortgage
            loan. No application fee may be collected on subsequent
            advances made pursuant to an open-end loan if the full
            fee of 3% of the credit limit was collected at the time
            the open-end loan was made; or
                (iii)  charge and collect a delinquency charge of $20
            or 10% of each payment, whichever is greater, for a
            payment which is more than 15 days late.
      § 6126.  Requirements as to open-end loans.
        The following shall apply:
            (1)  A mortgage lender may make open-end loans and may
        contract for and receive thereon interest and charges as set
        forth under this chapter.
            (2)  A mortgage lender shall not compound interest by
        adding any unpaid interest authorized by this section to the
        unpaid principal balance of the consumer's account, provided,
        however, that the unpaid principal balance may include the
        additional charges authorized by this subchapter.
            (3) Interest authorized by this section shall be deemed
        not to exceed the maximum interest permitted by this
        subchapter if the interest is computed in each billing cycle
        by any of the following methods:
                (i)  by converting the monthly rate to a daily rate
            and multiplying the daily rate by the applicable portion
            of the daily unpaid principal balance of the account, in
            which case the daily rate shall be 1/30 of the monthly
            rate;
                (ii)  by multiplying the monthly rate by the
            applicable portion of the average monthly unpaid
            principal balance of the account in the billing cycle, in
            which case the average daily unpaid principal balance is
            the sum of the amount unpaid each day during the cycle
            divided by the number of days in the cycle; or
                (iii)  by converting the monthly rate to a daily rate
            and multiplying the daily rate by the average daily
            unpaid principal balance of the account in the billing
            cycle, in which case the daily rate shall be 1/30 of the
            monthly rate.
            (4)  For all of the methods of computation in paragraph
        (3)(i), (ii) and (iii), the billing cycle shall be monthly,
        and the unpaid principal balance on any day shall be
        determined by adding to any balance unpaid as of the
        beginning of that day all advances and other permissible
        amounts charged to the consumer and deducting all payments
        and other credits made or received that day.
            (5)  The consumer may at any time pay all or any part of
        the unpaid balance in the consumer's account without
        prepayment penalty or, if the account is not in default, the
        consumer may pay the unpaid principal balance in monthly
        installments. Minimum monthly payment requirements shall be
        determined by the licensee and set forth in the agreement
        evidencing the open-end loan.
            (6)  A mortgage lender may contract for and receive the
        fees, costs and expenses permitted by this subchapter on
        other first or secondary mortgage loans, subject to all the
        conditions and restrictions set forth in this subchapter,
        with the following variations:
                (i)  If credit life or disability insurance is
            provided and if the insured dies or becomes disabled when
            there is an outstanding open-end loan indebtedness, the
            insurance shall be sufficient to pay the total balance of
            the loan due on the date of the consumer's death in the
            case of credit life insurance or all minimum payments
            which become due on the loan during the covered period of
            disability in the case of credit disability insurance.
            The additional charge for credit life insurance or credit
            disability insurance shall be calculated in each billing
            cycle by applying the current monthly premium rate for
            insurance, as the rate may be determined by the Insurance
            Commissioner, to the unpaid balances in the consumer's
            account, using any of the methods specified in paragraph
            (3) for the calculation of loan charges.
                (ii)  No credit life or disability insurance written
            in connection with an open-end loan shall be canceled by
            the licensee because of delinquency of the consumer in
            the making of the required minimum payments on the loan
            unless one or more of the payments is past due for a
            period of 90 days or more, and the licensee shall advance
            to the insurer the amounts required to keep the insurance
            in force during the period, which amounts may be debited
            to the consumer's account.
                (iii)  The amount, terms and conditions of any
            insurance against loss or damage to property must be
            reasonable in relation to character and value of the
            property insured and the maximum anticipated amount of
            credit to be extended.
            (7)  Notwithstanding any other provisions in this chapter
        to the contrary, a mortgage lender may retain any security
        interest in real or personal property until the open-end loan
        is terminated, provided that, if there is no outstanding
        balance in the account and there is no commitment by the
        licensee to make advances, the mortgage lender shall, within
        ten days following written demand by the consumer, deliver to
        the consumer a release of the mortgage, indenture, deed of
        trust or any other similar instrument or document on any real
        property taken as security for the open-end loan. The
        mortgage lender shall include on all billing statements
        provided in connection with an open-end loan a statement that
        the licensee retains a security interest in the consumer's
        real property whenever the security interest has not been
        released.
            (8)  A mortgage lender may charge, contract for, receive
        or collect on any open-end loan account an annual fee not to
        exceed $50 per year.
                               SUBCHAPTER D
                 ADMINISTRATIVE AND LICENSURE PROVISIONS
     Sec.
     6131.  Application for license.
     6132.  License fees.
     6133.  Issuance of license.
     6134.  License duration.
     6135.  Licensee requirements.
     6136.  Licensee limitations.
     6137.  Surrender of license.
     6138.  Authority of department.
     6139.  Suspension, revocation or refusal.
     6140.  Penalties.
      § 6131.  Application for license.
        (a)  Contents.--An application for a license under this
     chapter shall be on a form prescribed and provided by the
     department.
            (1)  In the case of a mortgage broker, mortgage lender or
        mortgage loan correspondent, the application shall include
        the following:
                (i)  The name of the applicant.
                (ii)  The address of the principal place of business
            of the applicant and the address or addresses where the
            applicant's mortgage loan business is to be conducted.
                (iii)  The full name, official title and business
            address of each director and principal officer of the
            mortgage loan business.
                (iv)  Any other information that may be required by
            the department.
            (2)  In the case of a mortgage originator, the
        application shall include the following:
                (i)  The name of the applicant.
                (ii)  The name of the employer licensee of the
            applicant and location of the employer licensee to which
            the applicant is assigned.
                (iii)  Any other information that may be required by
            the department.
            (3)  An applicant shall demonstrate to the department
        that policies and procedures have been developed to receive
        and process consumer inquiries and grievances promptly and
        fairly.
        (b)  Duty to update.--All applicants and licensees shall be
     required to provide the department with written notice of the
     change in any information contained in an application for a
     license or for any renewal of a license within ten days of an
     applicant or licensee becoming aware of the change.
        (c)  Mortgage lender license.--The department shall issue a
     mortgage lender license applied for under this chapter if the
     applicant has:
            (1)  Been approved by or meets the current criteria for
        approval of at least one of the following:
                (i)  Federal National Mortgage Association.
                (ii)  Federal Home Loan Mortgage Corporation.
                (iii)  Federal Housing Administration.
            (2)  Been approved for and will continue to maintain as a
        licensee a line of credit, repurchase agreement or equivalent
        mortgage-funding capability of not less than $1,000,000.
            (3)  Established a minimum tangible net worth of $250,000
        at the time of application and will, at all times thereafter,
        maintain the minimum tangible net worth.
            (4)  Been approved for and will continue to maintain as a
        licensee fidelity bond coverage in accordance with the
        guidelines established by the Federal National Mortgage
        Association or the Federal Home Loan Mortgage Corporation.
        (d)  Mortgage loan correspondent license.--The department
     shall issue a loan correspondent's license applied for under
     this chapter if the applicant:
            (1)  Obtains and will maintain a bond in the amount of
        $100,000, in a form acceptable to the department, prior to
        the issuance of the license, from a surety company authorized
        to do business in this Commonwealth. The bond shall run to
        the Commonwealth and shall be for the use of the Commonwealth
        and any person or persons who obtain a judgment against the
        mortgage loan correspondent for failure to carry out the
        terms of any provision for which advance fees are paid. No
        bond shall comply with the requirements of this section
        unless it contains a provision that it shall not be canceled
        for any cause unless notice of intention to cancel is given
        to the department at least 30 days before the day upon which
        cancellation shall take effect.
            (2)  Establishes a minimum tangible net worth of $100,000
        at the time of application and will, at all times thereafter,
        maintain the minimum tangible net worth.
        (e)  Mortgage broker license.--
            (1)  The department shall issue a mortgage broker license
        applied for under this chapter if the applicant obtains and
        will maintain a bond in the amount of $100,000, in a form
        acceptable to the department, prior to the issuance of the
        license, from a surety company authorized to do business in
        this Commonwealth. The bond shall be a penal bond conditioned
        on compliance with this chapter and subject to forfeiture by
        the department and shall run to the Commonwealth for its use.
        The bond shall also be for the use of any person against the
        mortgage broker for failure to carry out the terms of any
        provision for which advance fees are paid. If the person is
        aggrieved, the person may, with the written consent of the
        department, recover advance fees and costs from the bond by
        filing a claim with the surety company or maintaining an
        action on the bond. In the alternative, an aggrieved person
        may recover advance fees and costs by filing a formal
        complaint against the mortgage broker with the department
        which shall adjudicate the matter. The adjudication shall be
        binding upon the surety company and enforceable by the
        department in Commonwealth Court and by an aggrieved person
        in any court. Any aggrieved person seeking to recover advance
        fees and costs from a bond that has already been forfeited by
        the department or which the department is in the process of
        forfeiting may recover payment on the bond if, after filing a
        petition with the department, the department consents to the
        aggrieved person's requested payment or portion thereof. The
        department may pay the aggrieved person from the bond
        proceeds it recovers. Nothing in this section shall be
        construed as limiting the ability of any court or magisterial
        district judge to award to any aggrieved person other
        damages, court costs and attorney fees as permitted by law,
        but those claims that are not advance fees or related costs
        may not be recovered from the bond. The department, in its
        discretion, may consent to or order pro rata or other
        recovery on the bond for any aggrieved person if claims
        against the bond may or do exceed its full monetary amount.
        No bond shall comply with the requirements of this section
        unless it contains a provision that it shall not be canceled
        for any cause unless notice of intention to cancel is given
        to the department at least 30 days before the day upon which
        cancellation shall take effect. Cancellation of the bond
        shall not invalidate the bond regarding the period of time it
        was in effect.
            (2)  Mortgage brokers who can demonstrate to the
        satisfaction of the department that they do not and will not
        accept advance fees shall be exempt from the bond requirement
        of this subsection.
        (f)  Mortgage originator license.--A mortgage originator
     shall be an employee of a single mortgage broker, mortgage
     lender or mortgage loan correspondent licensed under this
     chapter, which licensee shall directly supervise, control and
     maintain responsibility for the acts and omissions of the
     mortgage originator. A mortgage originator shall be assigned to
     and work out of a licensed location of the employer licensee.
        (g)  Education.--
            (1)  In order to obtain a license under this chapter, an
        applicant shall submit to the department with its application
        evidence that the applicant, in the case of a mortgage
        originator applicant, or a director, partner or ultimate
        equitable owner of at least 10% of a licensee, in the case of
        any other license applicant, has successfully completed a
        minimum of 12 hours of instruction and a testing program
        regarding the first and secondary mortgage loan businesses
        and the provisions of this chapter, the act of January 30,
        1974 (P.L.13, No.6), referred to as the Loan Interest and
        Protection Law (Usury Law) and relevant Federal law including
        the Real Estate Settlement Procedures Act of 1974 (88 Stat.
        1724, 12 U.S.C. § 2601 et seq.), Truth in Lending provisions
        of Title I of the Consumer Credit Protection Act (Public Law
        90-321, 15 U.S.C. § 1601 et seq.) and the Equal Credit
        Opportunity Act (Public Law 93-495, 15 U.S.C. § 1691 et
        seq.).
            (2)  In order to maintain a license:
                (i)  A mortgage broker, mortgage lender or mortgage
            loan correspondent shall demonstrate to the satisfaction
            of the department that at least one individual from each
            licensed office that is not a mortgage originator, and
            all mortgage originators employed by the licensee, have
            attended a minimum of six hours of continuing education
            each year.
                (ii)  A mortgage originator licensee shall
            demonstrate to the satisfaction of the department that
            the licensee has attended a minimum of six hours of
            continuing education each year.
            (3)  The department shall delineate the requirements for
        prequalification education and testing and continuing
        education by regulation. The department may review and
        approve education programs and providers to satisfy the
        education requirements. Providers of prequalification
        education and testing and continuing education programs may
        include the licensee or a subsidiary or affiliate of the
        licensee. The department may charge providers of education
        programs a fee, to be determined by the department, for
        department review of education programs and providers.
        (h)  License renewals.--Licenses shall be issued for terms of
     12 months and may be renewed by the department each year on a
     schedule set by the department upon application by the licensee
     and the payment of any and all applicable renewal fees. The
     licensee shall demonstrate to the department that it is
     conducting the mortgage loan business in accordance with the
     requirements of this chapter and that the directors, officers,
     partners, employees, agents and ultimate equitable owners of 10%
     or more of the licensee continue to meet all of the initial
     requirements for licensure required by this chapter unless
     otherwise determined by the department.
        (i)  Out-of-State applicants.--
            (1)  If an applicant is not a resident of this
        Commonwealth, as a condition to receiving a license under
        this chapter, the applicant shall be authorized to do
        business in this Commonwealth in accordance with the laws of
        this Commonwealth regulating corporations and other entities
        conducting business in this Commonwealth and shall maintain
        at least one office in this Commonwealth which is the office
        that shall be licensed as the principal place of business for
        the purposes of this chapter. Wholesale table funders shall
        be exempt from the requirement to maintain at least one
        office in this Commonwealth.
            (2)  Out-of-State applicants shall file with the license
        application an irrevocable consent, duly acknowledged, that
        suits and actions may be commenced against that person in the
        courts of this Commonwealth by the service of process of any
        pleading upon the department in the usual manner provided for
        service of process and pleadings by the laws and court rules
        of this Commonwealth. The consent shall provide that this
        service shall be as valid and binding as if service had been
        made personally upon the person in this Commonwealth. In all
        cases where process or pleadings are served upon the
        department under the provisions of this section, the process
        or pleadings shall be served in triplicate; one copy shall be
        filed in the department's offices and the others shall be
        forwarded by the department, by certified or registered mail,
        return receipt requested, to the last known principal place
        of business of the person.
      § 6132.  License fees.
        (a)  Initial application fees.--An applicant shall pay to the
     department at the time an application is filed an initial
     nonrefundable application fee as set forth under this
     subsection.
            (1)  For mortgage lenders and mortgage loan
        correspondents, $1,500 for the principal place of business in
        this Commonwealth and an additional fee of $1,500 for each
        branch office.
            (2)  For mortgage brokers, $1,000 for the principal place
        of business in this Commonwealth and an additional fee of
        $250 for each branch office.
            (3)  For mortgage originators, $200.
        (b)  Renewal fees.--Prior to each annual renewal of a
     license, a licensee shall pay to the department a nonrefundable
     license renewal fee as set forth under this subsection.
            (1)  For mortgage lenders and mortgage loan
        correspondents, $750 for the principal place of business in
        this Commonwealth and an additional fee of $750 for each
        branch office.
            (2)  For mortgage brokers, $500 for the principal place
        of business in this Commonwealth and an additional fee of
        $250 for each branch office.
            (3)  For mortgage originators, $100.
        (c)  No abatement of fee.--No abatement of a licensee fee
     shall be made if the license is issued for a period of less than
     one year.
      § 6133.  Issuance of license.
        (a)  Time limit.--Within 60 days after a completed
     application is received, the department shall either issue a
     license or, for any reason which the department may refuse to
     issue a license under this section or for which the department
     may suspend, revoke or refuse to renew a license under section
     6139 (relating to suspension, revocation or refusal), refuse to
     issue a license. The 60-day time limit specified in this
     subsection may be extended by the department for an additional
     30 days if the department determines that the extension is
     necessary. The department shall provide written notification to
     any applicant whose application review has been extended and
     include the final date by which a decision shall be rendered
     regarding the application.
        (a.1)  Investigations.--Upon receipt of an application for a
     license, the department may conduct an investigation of the
     applicant or a director, officer, partner, employee, agent or
     ultimate equitable owner of 10% or more of the applicant as it
     deems necessary.
        (b)  Appeal of denial.--If the department refuses to issue a
     license, it shall notify the applicant in writing of the denial,
     the reason for the denial and the applicant's right to appeal
     the denial to the Secretary of Banking. An appeal from the
     department's refusal to approve an application for a license
     must be filed by the applicant within 30 days of notice of
     refusal.
        (c)  Contents of license.--Each license issued by the
     department shall specify:
            (1)  The name and address of the licensee and the address
        or addresses covered by the license, the address so specified
        to be that of the licensee's principal place of business
        within this Commonwealth or for a licensee acting only in the
        capacity of a wholesale table funder, either in or outside of
        this Commonwealth.
            (2)  The licensee's reference number.
            (3)  Any other information the department shall require
        to carry out the purposes of this chapter.
        (d)  Denial of license due to conviction.--
            (1)  The department may deny a license if it finds that
        the applicant or a director, officer, partner, employee,
        agent or ultimate equitable owner of 10% or more of the
        applicant has been convicted of a crime of moral turpitude or
        felony in any jurisdiction or of a crime which, if committed
        in this Commonwealth, would constitute a crime of moral
        turpitude or felony. For the purposes of this subsection, a
        person shall be deemed to have been convicted of a crime if
        the person:
                (i)  pleads guilty or nolo contendere to a criminal
            charge before a court or Federal magistrate; or
                (ii)  is found guilty by the decision or judgment of
            a court or Federal magistrate or by the verdict of a
            jury, irrespective of the pronouncement of sentence or
            the suspension thereof, unless the plea of guilty or nolo
            contendere or the decision, judgment or verdict is set
            aside, vacated, reversed or otherwise abrogated by lawful
            judicial process.
            (2)  A license under this chapter shall be deemed to be a
        covered license within the meaning of section 405 of the act
        of May 15, 1933 (P.L.565, No.111), known as the Department of
        Banking Code. The department shall notify a licensee if a
        covered individual within the meaning of section 405 of the
        Department of Banking Code that is or will be employed or
        contracted by the licensee has a criminal background that
        renders the employee unfit for employment in the mortgage
        loan business.
        (e)  Denial of license for other reason.--The department may
     deny a license or otherwise restrict a license if it finds that
     the applicant or a director, officer, partner, employee, agent
     or ultimate equitable owner of 10% or more of the applicant:
            (1)  has had a license application or license issued by
        the department denied, not renewed, suspended or revoked;
            (2) is the subject of an order of the department;
            (3)  has violated or failed to comply with any provision
        of this chapter or any regulation, statement of policy or
        order of the department;
            (4)  does not possess the financial responsibility,
        character, reputation, integrity and general fitness to
        command the confidence of the public and to warrant the
        belief that the mortgage loan business will be operated
        lawfully, honestly, fairly and within the legislative intent
        of this chapter and in accordance with the general laws of
        this Commonwealth; or
            (5)  has an outstanding debt to the Commonwealth or any
        Commonwealth agency.
        (f)  Conditional licenses.--The department may impose
     conditions on the issuance of any license under this chapter. If
     the department determines that conditions imposed upon a
     licensee have not been fulfilled, the department may take any
     action authorized under this chapter against the licensee that
     the department deems necessary. In the case of mortgage
     originator applicants, the department may issue mortgage
     originator licenses effective immediately upon receipt of an
     application, which licenses shall be conditional licenses issued
     under this subsection.
      § 6134.  License duration.
        A license issued by the department shall be subject to all of
     the following limitations:
            (1)  Be renewed on the licensee's renewal date each year
        upon completion of the requirements of section 6131(h)
        (relating to application for license). No refund of any
        portion of the license fee shall be made if the license is
        voluntarily surrendered to the department or suspended or
        revoked by the department prior to its expiration date.
            (2)  Be invalid if the licensee's authority to conduct
        business is voided under any law of this Commonwealth or any
        other state, unless the licensee demonstrates to the
        satisfaction of the department that the applicable court or
        governmental entity was clearly erroneous in voiding the
        licensee's authority to conduct business.
            (3)  Not be assignable or transferable by operation of
        law or otherwise.
      § 6135.  Licensee requirements.
        (a)  Requirements of licensee.--
            (1)  A licensee who is a mortgage broker, mortgage lender
        or mortgage loan correspondent shall conspicuously display,
        at each licensed place of business, its license and copies of
        the licenses of all mortgage originators assigned to that
        location. A licensee who is a mortgage originator shall keep
        the license in the immediate possession of the licensee
        whenever the licensee is engaged in the mortgage loan
        business.
            (2)  Each licensee shall maintain at its principal place
        of business within this Commonwealth, or at such place within
        or outside this Commonwealth if agreed to by the department,
        the original or a copy of any books, accounts, records and
        documents, or electronic or similar access thereto, of the
        business conducted under the license as prescribed by the
        department to enable the department to determine whether the
        business of the licensee is being conducted in accordance
        with the provisions of this chapter and the regulations,
        statements of policy or orders issued under this chapter. The
        department shall have free access to and authorization to
        examine records maintained within or outside this
        Commonwealth by the licensee. The costs of the examination,
        including travel costs, shall be borne by the licensee. The
        department may deny or revoke the authority to maintain
        records within or outside this Commonwealth for good cause in
        the interest of protection for Commonwealth consumers,
        including for the licensee's failure to provide books,
        accounts, records or documents to the department upon
        request.
            (3)  A mortgage broker, mortgage lender or mortgage loan
        correspondent, on a date determined by the department, shall
        file annually a report with the department setting forth such
        information as the department shall require concerning the
        first or secondary mortgage loan business conducted by the
        licensee during the preceding calendar year. The report shall
        be on a form provided by the department. Licensees who fail
        to file the required report at the date required by the
        department may be subject to a penalty of $100 for each day
        after the due date until the report is filed.
            (4)  Each licensee shall be subject to examination by the
        department at its discretion, at which time the department
        shall have free access, during regular business hours, to the
        licensee's place or places of business in this Commonwealth
        and to all instruments, documents, accounts, books and
        records which pertain to a licensee's first or secondary
        mortgage loan business, whether maintained in or outside this
        Commonwealth. The department may examine a licensee at any
        time if the department deems the examination to be necessary
        or desirable. The cost of any such examination shall be borne
        by the licensee.
            (5)  Each licensee shall include in all advertisements
        language indicating that the licensee is licensed by the
        department. In the case of a mortgage originator, all
        advertising shall include the name of the mortgage
        originator's employer.
        (b)  Accounting records.--The licensee's accounting records
     must be constructed and maintained in compliance with generally
     accepted accounting principles or as provided by department
     regulation. All instruments, documents, accounts, books and
     records relating to the mortgage loan business shall be kept
     separate and apart from the records of any other business
     conducted by the licensee. Records of first and secondary
     mortgage loans shall be easily distinguishable and easily
     separated. All records shall be preserved and kept available for
     investigation or examination by the department for a period
     determined by the department.
        (c)  Copies.--If copies of instruments, documents, accounts,
     books or records are maintained under subsection (a)(2), they
     may be photostatic, microfilm or electronic copies or copies
     provided in some other manner approved by the department.
      § 6136.  Licensee limitations.
        (a)  Name and changes to name.--A licensee cannot transact
     any business under this chapter under any other name or names
     except those names designated in its license. A mortgage
     originator may not use any other name other than the mortgage
     originator's personal legal name. A licensee that changes its
     name or place or places of business shall notify the department
     within ten days of the change, and the department shall issue a
     certificate to the licensee, if appropriate, which shall specify
     the licensee's new name or address.
        (b)  Other businesses.--A licensee cannot conduct a business
     other than the mortgage loan business licensed by the department
     under this chapter without at least 30 days' prior written
     notification to the department.
      § 6137.  Surrender of license.
        Upon satisfying the department that all creditors of a
     licensee have been paid or that other arrangements satisfactory
     to the creditors and the department have been made, a licensee
     may voluntarily surrender its license to the department by
     delivering its license to the department with written notice
     that the license is being voluntarily surrendered, but an action
     by a licensee shall not affect the licensee's civil or criminal
     liability for acts committed.
      § 6138.  Authority of department.
        (a)  General authority.--The department shall have the
     authority to:
            (1)  Examine any instrument, document, account, book,
        record or file of a licensee or any person having a
        connection to the licensee or make other investigation as may
        be necessary to administer the provisions of this chapter.
        Pursuant to this authority, the department may remove any
        instrument, document, account, book, record or file of a
        licensee to a location outside of the licensee's office
        location. The costs of the examination shall be borne by the
        licensee or the entity subject to the examination.
            (2)  Conduct administrative hearings on any matter
        pertaining to this chapter, issue subpoenas to compel the
        attendance of witnesses and the production of instruments,
        documents, accounts, books and records at any hearing. The
        instruments, documents, accounts, books and records may be
        retained by the department until the completion of all
        proceedings in connection with which the materials were
        produced. A department official may administer oaths and
        affirmations to a person whose testimony is required. In the
        event a person fails to comply with a subpoena issued by the
        department or to testify on a matter concerning which he may
        be lawfully interrogated, on application by the department,
        the Commonwealth Court may issue an order requiring the
        attendance of the person, the production of instruments,
        documents, accounts, books and records and the giving of
        testimony.
            (3)  Request and receive information or records of any
        kind, including reports of criminal history record
        information from any Federal, State, local or foreign
        government entity regarding an applicant for a license,
        licensee or person related in any way to the business of the
        applicant or licensee, at a cost to be paid by the applicant
        or licensee.
            (4)  Issue regulations, statements of policy or orders as
        may be necessary for the proper conduct of the mortgage loan
        business by licensees, the issuance and renewal of licenses
        and the enforcement of this chapter.
            (5)  Prohibit or permanently remove a person or licensee
        responsible for a violation of this chapter from working in
        the present capacity or in any other capacity of the person
        or licensee related to activities regulated by the
        department.
            (6)  Order a person or licensee to make restitution for
        actual damages to consumers caused by any violation of this
        chapter.
            (7)  Issue cease and desist orders that are effective
        immediately, subject to a hearing as specified in subsection
        (b) within 14 days of the issuance of the order.
            (8)  Impose such other conditions as the department deems
        appropriate.
        (b)  Hearings.--A person aggrieved by a decision of the
     department may appeal the decision of the department to the
     Secretary of Banking. The appeal shall be conducted under 2
     Pa.C.S. Ch. 5 Subch. A (relating to practice and procedure of
     Commonwealth agencies).
        (c)  Injunctions.--The department may maintain an action for
     an injunction or other process against a person to restrain and
     prevent the person from engaging in an activity violating this
     chapter.
        (d)  Final orders.--A decision of the Secretary of Banking
     shall be a final order of the department and shall be
     enforceable in a court of competent jurisdiction. The department
     may publish final adjudications issued under this section,
     subject to redaction or modification to preserve
     confidentiality.
        (e)  Appeals.--A person aggrieved by a decision of the
     Secretary of Banking may appeal the decision under 2 Pa.C.S. Ch.
     7 Subch A. (relating to judicial review of Commonwealth agency
     action).
        (f) Orders affecting mortgage originators.--An order issued
     against a licensee is applicable to the mortgage originators
     employed by the licensee.
      § 6139.  Suspension, revocation or refusal.
        (a)  Departmental action.--The department may suspend, revoke
     or refuse to renew a license issued under this chapter if any
     fact or condition exists or is discovered which, if it had
     existed or had been discovered at the time of filing of the
     application for the license, would have warranted the department
     in refusing to issue the license or if a licensee or director,
     officer, partner, employee or owner of a licensee has:
            (1)  Made a material misstatement in an application or
        any report or submission required by this chapter or any
        department regulation, statement of policy or order.
            (2)  Failed to comply with or violated any provision of
        this chapter or any regulation or order promulgated or issued
        by the department under this chapter.
            (3)  Engaged in dishonest, fraudulent or illegal
        practices or conduct in a business or unfair or unethical
        practices or conduct in connection with the mortgage loan
        business.
            (4)  Been convicted of or pleaded guilty or nolo
        contendere to a crime of moral turpitude or felony.
            (5)  Permanently or temporarily been enjoined by a court
        of competent jurisdiction from engaging in or continuing
        conduct or a practice involving an aspect of the mortgage
        loan business.
            (6)  Become the subject of an order of the department
        denying, suspending or revoking a license applied for or
        issued under this chapter.
            (7)  Become the subject of a United States Postal Service
        fraud order.
            (8)  Failed to comply with the requirements of this
        chapter to make and keep records prescribed by regulation,
        statement of policy or order of the department, to produce
        records required by the department or to file financial
        reports or other information that the department by
        regulation, statement of policy or order may require.
            (9)  Become the subject of an order of the department
        denying, suspending or revoking a license under the
        provisions of any other law administered by the department.
            (10)  Demonstrated negligence or incompetence in
        performing an act for which the licensee is required to hold
        a license under this chapter.
            (11)  Accepted an advance fee without having obtained the
        bond required by section 6131(d)(1) or (e)(1) (relating to
        application for license).
            (12)  Become insolvent, meaning that the liabilities of
        the applicant or licensee exceed the assets of the applicant
        or licensee or that the applicant or licensee cannot meet the
        obligations of the applicant or licensee as they mature or is
        in such financial condition that the applicant or licensee
        cannot continue in business with safety to the customers of
        the applicant or licensee.
            (13)  Failed to complete the qualifying or continuing
        education as required by section 6131(g).
            (14)  In the case of a mortgage broker, mortgage lender
        or mortgage loan correspondent, conducted the mortgage loan
        business through an unlicensed mortgage originator.
            (15)  Failed to comply with the terms of any agreement
        under which the department authorizes a licensee to maintain
        records at a place other than the licensee's principal place
        of business.
        (b)  Reinstatement.--The department may reinstate a license
     which was previously revoked or denied renewal if all of the
     following exist:
            (1)  The condition which warranted the original action
        has been corrected to the department's satisfaction.
            (2)  The department has reason to believe that the
        condition is not likely to occur again.
            (3)  The licensee satisfies all other requirements of
        this chapter.
      § 6140. Penalties.
        (a)  Persons operating without licenses.-A person subject to
     the provisions of this chapter and not licensed by the
     department who violates any provision of this chapter or who
     commits any action which would subject a license to suspension,
     revocation or nonrenewal under section 6139 (relating to
     suspension, revocation or refusal) may be fined by the
     department up to $10,000 for each offense.
        (b)  Violation by licensee.--A person licensed under this
     chapter or director, officer, owner, partner, employee or agent
     of a licensee who violates a provision of this chapter or who
     commits any action which would subject the licensee to
     suspension, revocation or nonrenewal under section 6139 may be
     fined by the department up to $10,000 for each offense.
                               SUBCHAPTER E
                         MISCELLANEOUS PROVISIONS
     Sec.
     6151.  Applicability.
     6152.  Relationship to other laws.
     6153.  Preservation of existing contracts.
      § 6151.  Applicability.
        The provisions of this chapter shall apply to:
            (1)  Any mortgage loan which is:
                (i)  negotiated, offered or otherwise transacted
            within this Commonwealth, in whole or in part, whether by
            the ultimate lender or any other person;
                (ii)  made or executed within this Commonwealth; or
                (iii)  notwithstanding the place of execution,
            secured by real property located in this Commonwealth.
            (2)  Any person who engages in the mortgage loan business
        in this Commonwealth.
      § 6152.  Relationship to other laws.
        The following apply:
            (1)  A political subdivision may not enact or enforce any
        ordinance, resolution or regulation pertaining to the
        financial or lending activities of a person that:
                (i)  is subject to the jurisdiction of the
            department, including activities subject to this chapter;
                (ii)  is subject to the jurisdiction or regulatory
            supervision of the Board of Governors of the Federal
            Reserve System, the Office of the Comptroller of the
            Currency, the Office of Thrift Supervision, the National
            Credit Union Administration, the Federal Deposit
            Insurance Corporation, the Federal Trade Commission or
            the United States Department of Housing and Urban
            Development; or
                (iii)  originates, purchases, sells, assigns,
            securitizes or services any property interest or
            obligation created by a financial transaction or loan
            made, executed or originated by a person referred to in
            subparagraph (i) or (ii) or assists or facilitates such a
            transaction or loan.
            (2)  This section applies to any ordinance, resolution or
        regulation pertaining to financial or lending activity,
        including any ordinance, resolution or regulation:
                (i)  disqualifying a person from doing business with
            a political subdivision based upon financial or lending
            activity; or
                (ii)  imposing reporting requirements or any other
            obligations upon a person regarding financial or lending
            activity.
      § 6153.  Preservation of existing contracts.
        Nothing contained in this chapter shall be construed to
     impair or affect first or secondary mortgage loans executed
     prior to the effective date of this chapter.
        Section 2.  Title 18 is amended by adding a section to read:
      § 7331.  Unlicensed mortgage loan business.
        A person that operates without a license in violation of 7
     Pa.C.S. § 6111 (relating to license requirements) commits a
     felony of the third degree.
        Section 3.  Repeals.
        (a) Intent.--The General Assembly declares that the repeals
     under subsection (b) are necessary to effectuate the provisions
     of 7 Pa.C.S. Ch. 61.
        (b) Provision.--The following acts and parts of acts are
     repealed:
            (1)  Chapter 3 of the act of December 22, 1989 (P.L.687,
        No.90), known as the Mortgage Bankers and Brokers and
        Consumer Equity Protection Act.
            (2)  The act of December 12, 1980 (P.L.1179, No.219),
        known as the Secondary Mortgage Loan Act.
        Section 4.  This act shall take effect in 120 days.

     APPROVED--The 8th day of July, A. D. 2008.

     EDWARD G. RENDELL