HOUSE AMENDED
PRIOR PRINTER'S NOS. 31, 1155, 1341 PRINTER'S NO. 1771
No. 31 Session of 1989
INTRODUCED BY HOLL, JANUARY 23, 1989
AS RE-REPORTED FROM COMMITTEE ON BUSINESS AND COMMERCE, HOUSE
OF REPRESENTATIVES, AS AMENDED, DECEMBER 5, 1989
AN ACT
1 Providing for the regulation and licensing of mortgage bankers
2 and mortgage brokers; imposing additional powers and duties
3 on the Department of Banking AND THE STATE REAL ESTATE <--
4 COMMISSION; and providing penalties.
5 TABLE OF CONTENTS
6 Section 1. Short title.
7 Section 2. Definitions.
8 Section 3. License requirements and exemptions.
9 Section 4. Application for license.
10 Section 5. Annual license fee.
11 Section 6. Issuance of license.
12 Section 7. License duration.
13 Section 8. Licensee requirements.
14 Section 9. Licensee limitations.
15 Section 10. Authority of department OR COMMISSION. <--
16 Section 11. Surrender of license. <--
17 Section 12. Suspension, revocation or refusal.
1 Section 13. Penalties.
2 Section 14. Scope of act.
3 Section 15. Effective date.
4 SECTION 11. FEES. <--
5 SECTION 12. SURRENDER OF LICENSE.
6 SECTION 13. SUSPENSION, REVOCATION OR REFUSAL.
7 SECTION 14. PENALTIES.
8 SECTION 15. REPORT.
9 SECTION 16. REFERRAL FEES.
10 SECTION 17. REAL ESTATE RECOVERY FUND.
11 SECTION 18. SCOPE OF ACT.
12 SECTION 19. EFFECTIVE DATE.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. Short title.
16 This act shall be known and may be cited as the Mortgage
17 Bankers and Brokers Act.
18 Section 2. Definitions.
19 The following words and phrases when used in this act shall
20 have the meanings given to them in this section unless the
21 context clearly indicates otherwise:
22 "Advance fee." Any funds requested by or to be paid to a
23 mortgage broker in advance of or during the processing of a
24 mortgage loan application, excluding those fees paid by an
25 applicant borrower directly to a credit agency reporting bureau,
26 title company or real estate appraiser.
27 "COMMISSION." THE STATE REAL ESTATE COMMISSION. <--
28 "Department." The Department of Banking of the Commonwealth.
29 "FINDERS FEE" OR "REFERRAL FEE." ANY PAYMENT OF MONEY OR <--
30 OTHER CONSIDERATION FOR THE REFERRAL OF A MORTGAGE LOAN TO A
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1 LENDER, BUT SHALL NOT INCLUDE CONSIDERATION PAID FOR GOODS OR
2 FACILITIES ACTUALLY FURNISHED OR SERVICES ACTUALLY PERFORMED.
3 "Licensee." A person who is licensed under this act.
4 "Mortgage banker." A person who directly or indirectly
5 originates and closes mortgage loans with its own funds in the
6 primary market FOR CONSIDERATION. <--
7 "Mortgage broker." A person who directly or indirectly
8 negotiates or places mortgage loans for others in the primary
9 market FOR CONSIDERATION. <--
10 "Mortgage loan." A loan which is secured by a first mortgage
11 or other similar instrument or document which creates a first
12 lien on real property, which real property is used as a one-
13 family to four-family dwelling, a portion of which may be used
14 for nonresidential purposes.
15 "Person." An individual, association, joint venture or
16 joint-stock company, partnership, limited partnership, limited
17 partnership association, business corporation, nonprofit
18 corporation, or any other group of individuals, however
19 organized.
20 "Primary market." The market wherein mortgage loans are
21 originated between a lender and a borrower.
22 Section 3. License requirements and exemptions.
23 (a) License required.--On and after the effective date of
24 this act, no person shall act as a mortgage banker or mortgage
25 broker in this Commonwealth without a license as provided for in
26 this act, provided, however, that any person licensed as a
27 mortgage banker may also act as a mortgage broker without a
28 separate license. A person licensed as a mortgage broker may
29 only perform the services of a mortgage broker as defined in
30 section 2.
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1 (b) Exceptions.--The following persons shall not be required
2 to be licensed under this act in order to conduct the activities
3 of a mortgage banker or mortgage broker but shall be subject to
4 the provisions of section 9(a)(4) and, in addition, any other <--
5 THOSE provisions of this act as specifically provided in this <--
6 section:
7 (1) A State-chartered bank, bank and trust company,
8 savings bank, private bank or national bank, a State or
9 federally chartered savings and loan association, a federally
10 chartered savings bank or a State or federally chartered
11 credit union.
12 (2) An attorney authorized to practice law in this
13 Commonwealth, who acts as a mortgage broker in negotiating or
14 placing a mortgage loan in the normal course of legal
15 practice.
16 (3) A person licensed pursuant to the provisions of the
17 act of February 19, 1980 (P.L.15, No.9), known as the Real
18 Estate Licensing and Registration Act, who is principally
19 engaged in a third-party real estate brokerage business, but
20 only to the extent that he provides information, verbal or
21 written, to or negotiates or places a mortgage loan for a
22 buyer of real estate and is not compensated by the buyer or
23 any other person for providing such information or
24 negotiating or placing such mortgage loan. If he is
25 compensated for providing such information or negotiating or
26 placing such mortgage loan, he shall be subject to the
27 provisions of sections 8, 10 and 13(b) , 11 AND 14(B), <--
28 excluding section 8(a)(1).
29 (4) A seller of a dwelling, if he has resided in the
30 dwelling at least one year and as part of the purchase price
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1 receives a first mortgage executed by the purchaser.
2 (5) A person who either originates or negotiates less
3 than 12 mortgage loans in a calendar year in this
4 Commonwealth.
5 (6) Builders, when obtaining mortgages for their own
6 construction or for the sale of their own construction.
7 (7) Any agency or instrumentality of the Federal
8 Government or a corporation otherwise created by an act of
9 the United States Congress, including, but not limited to,
10 the Federal National Mortgage Association, the Government
11 National Mortgage Association, the Veterans' Administration,
12 the Federal Home Loan Mortgage Corporation and the Federal
13 Housing Administration.
14 (8) The Pennsylvania Housing Finance Agency.
15 (9) A licensee under the act of April 8, l937 (P.L.262,
16 No.66), known as the Consumer Discount Company Act, except
17 that any such licensee who makes a mortgage loan other than
18 under the provisions of that act shall be subject to the
19 provisions of sections 4(b)(2) and (3), 8, 10 and 13(b) 14(B) <--
20 of this act, excluding section 8(a)(1).
21 (10) Except for licensees described in paragraph (9),
22 subsidiaries and affiliates of the following institutions:
23 Pennsylvania State-chartered banks, bank and trust companies,
24 savings banks, private banks, savings and loan associations
25 and credit unions or national banks, federally chartered
26 savings and loan associations, federally chartered savings
27 banks and federally chartered credit unions, provided such <--
28 institutions are located in Pennsylvania, except that all <--
29 SUCH subsidiaries and affiliates of institutions enumerated <--
30 in this paragraph shall:
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1 (i) be subject to the provisions of sections 8,
2 9(a)(3), 10 and 13(b) 14(B) of this act excluding section <--
3 8(a)(1); and
4 (ii) deliver to the department annually copies of
5 financial reports made to all supervisory agencies.
6 (11) Employees of a licensee or excepted persons acting
7 for their employers.
8 (12) An insurance company, association or exchange
9 authorized to transact business in this Commonwealth under
10 the act of May 17, 1921 (P.L.682, No.284), known as The
11 Insurance Company Law of 1921, and any subsidiaries and
12 affiliates thereof, except that such subsidiaries and
13 affiliates shall:
14 (i) be subject to the provisions of sections 8,
15 9(a)(3), 10 and 13(b) 14(B) of this act excluding section <--
16 8(a)(1); and
17 (ii) deliver to the department annually copies of
18 financial reports made to all supervisory agencies.
19 (c) Loans for business or commercial purposes.--This act
20 shall not apply to mortgage loans made for business or
21 commercial purposes.
22 Section 4. Application for license.
23 (a) Contents.--An application for a license to act as a
24 mortgage banker or mortgage broker shall be on such forms as may
25 be prescribed and provided by the department. Each application
26 shall include the address or addresses where business is to be
27 conducted, the full name, official title and business address of
28 each director and principal officer of the business and any
29 other information that may be required by the department.
30 (b) Mortgage banker's license.--The department shall issue a
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1 mortgage banker's license applied for pursuant to this act if
2 the applicant establishes that he has met the following
3 conditions:
4 (1) That he is approved by or meets the current criteria
5 for approval of at least one of the following:
6 (i) Federal National Mortgage Association.
7 (ii) Federal Home Loan Mortgage Corporation.
8 (iii) Federal Housing Administration.
9 (2) That he maintains or is approved for, and will
10 continue to maintain as a licensee, a line of credit or
11 equivalent mortgage funding capability of not less than
12 $1,000,000.
13 (3) That he has a minimum tangible net worth of $250,000
14 at the time of application and will, at all times thereafter,
15 maintain such minimum net worth, provided, however, that
16 those applicants who were in business prior to January 1,
17 1987, may be licensed with a minimum tangible net worth of
18 $100,000 if, in the opinion of the department, the applicant
19 has established that it has an otherwise adequate financial
20 structure and operating history.
21 (4) That he will maintain fidelity bond coverage in
22 accordance with the guidelines established by the Federal
23 National Mortgage Association or the Federal Home Loan
24 Mortgage Corporation.
25 (c) Mortgage broker's license.--The department shall issue a
26 mortgage broker's license applied for pursuant to this act if
27 the applicant establishes that he has met the following
28 conditions:
29 (1) That he is eligible to and will obtain a bond in the
30 amount of $100,000, in a form prescribed by the regulations
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1 of the department, prior to the issuance of the license, from
2 a surety company authorized to do business in this
3 Commonwealth, which bond shall run to the Commonwealth for
4 the benefit of any person injured by the wrongful act,
5 default or misrepresentation of the mortgage broker. No bond
6 shall comply with the requirements of this section unless it
7 contains a provision that it shall not be canceled for any
8 cause unless notice of intention to cancel is given to the
9 department at least 30 days before the day upon which
10 cancellation shall take effect.
11 (2) In lieu of the bond required by subsection (c)(1),
12 the applicant may deposit, with the department or with the
13 State Treasurer, bonds, notes, debentures or other
14 obligations of the United States or any agency or
15 instrumentality thereof if guaranteed by the United States,
16 or such bonds, notes, debentures or other obligations of the
17 Commonwealth or of a political subdivision thereof having a
18 market value of at least $100,000; and it shall be the
19 obligation of the licensee to see to it that the securities
20 on deposit shall have a market value of at least $100,000 at
21 all times. The depositor shall be entitled to receive all
22 interest and dividends thereon, and shall have the right,
23 with the approval of the department, to substitute other
24 securities for those deposited. Should the securities on
25 deposit at any time have a market value of less than
26 $100,000, the department may revoke the license as
27 hereinafter provided. All securities deposited shall be held
28 under the same conditions and subject to the same right of
29 execution as the bond provided for in subsection (c)(1).
30 (3) Mortgage brokers who can demonstrate to the
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1 satisfaction of the department that they do not accept
2 advance fees shall be exempt from the requirement of this
3 subsection.
4 (d) Foreign corporation.--If the applicant is a foreign
5 corporation, that corporation shall be authorized to do business
6 in this Commonwealth in accordance with the law of this
7 Commonwealth regulating corporations and shall maintain at least
8 one office in this Commonwealth which is the office that shall
9 be licensed as the principal place of business for the purposes
10 of this act. The corporation shall file with the application an
11 irrevocable consent, duly acknowledged, that suits and actions
12 may be commenced against that licensee in the courts of this
13 Commonwealth by the service of process of any pleading upon the
14 department in the usual manner provided for service of process
15 and pleadings by the statutes and court rules of this
16 Commonwealth. The consent shall provide that this service shall
17 be as valid and binding as if service had been made personally
18 upon the licensee in this Commonwealth. In all cases where
19 process or pleadings are served upon the department pursuant to
20 the provisions of this section, such process or pleadings shall
21 be served in triplicate; one copy shall be filed in the Office
22 of the Secretary of Banking and the others shall be forwarded by
23 the department, by certified or registered mail, return receipt
24 requested, to the last known principal place of business in the
25 Commonwealth and to the corporation's principal place of
26 business.
27 Section 5. Annual license fee.
28 An applicant shall pay to the department at the time an
29 application is filed an initial license fee of $500 for the
30 principal place of business and an additional license fee of $50
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1 for each branch office in this Commonwealth. On or before July 1
2 of each year and thereafter, a licensee shall pay a license
3 renewal fee of $200 for the principal place of business and an
4 additional license renewal fee of $25 for each branch office in
5 this Commonwealth. No abatement of any license fee shall be made
6 if the license is issued for a period of less than one year. The
7 department shall be entitled to recover any cost of
8 investigation in excess of license or renewal fees from the
9 licensee or from any person who is not licensed under this act
10 but who is presumed to be engaged in business contemplated by
11 this act.
12 Section 6. Issuance of license.
13 (a) Time limit.--Within 60 days after an application is
14 received, the department shall either issue a license or, for
15 any reason for which the department may suspend, revoke or
16 refuse to renew a license as provided for by section 12 13, <--
17 refuse to issue a license.
18 (b) Appeal of denial.--If the department refuses to issue a
19 license, it shall notify the applicant, in writing, of the
20 denial and the reason therefor and of the applicant's right to
21 appeal from such action to the Commonwealth Court. An appeal
22 from the department's refusal to approve an application for a
23 license shall be filed by the applicant within 30 days of notice
24 thereof.
25 (c) Contents of license.--Each license issued by the
26 department shall specify:
27 (1) The name and address of the licensee, the address so
28 specified to be that of the licensee's principal place of
29 business within this Commonwealth.
30 (2) The licensee's reference number, which may remain
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1 the same from year to year despite variations in annual
2 license numbers which may result from the renewal of licenses
3 by mechanical techniques.
4 (3) Such other information as the department shall
5 require to carry out the purposes of this act.
6 Section 7. License duration.
7 A license issued by the department shall:
8 (1) Be renewed on July 1 of each year upon payment of
9 the annual renewal fee and after a determination that the
10 licensee is conducting business in accordance with the
11 provisions of this act is made by the department. No refund
12 of any portion of the license fee shall be made if the
13 license is voluntarily surrendered to the department or
14 suspended or revoked by the department prior to its
15 expiration date.
16 (2) Be invalid if the mortgage banker's corporate
17 charter is voided in accordance with the provisions of any
18 law of this Commonwealth or any other state.
19 (3) Not be assignable by operation of law or otherwise
20 without the written consent of the department.
21 Section 8. Licensee requirements.
22 (a) Requirements on licensee.--A licensee shall:
23 (1) Conspicuously display its license at each licensed
24 place of business.
25 (2) Maintain, at its principal place of business within
26 this Commonwealth, or at such place within or outside this
27 Commonwealth, if agreed to by the Secretary of Banking OR THE <--
28 COMMISSION, either the original or a copy of such books,
29 accounts, records and documents, or electronic or other
30 similar access thereto, of the business conducted under the
19890S0031B1771 - 11 -
1 license as may be prescribed by the department to enable it <--
2 OR COMMISSION TO ENABLE THEM to determine whether the <--
3 business of the licensee is being conducted in accordance
4 with the provisions of this act and the orders, rules and
5 regulations issued under this act.
6 (3) Annually, before May 1, file a report with the
7 department OR COMMISSION which shall set forth such <--
8 information as the department OR COMMISSION shall require <--
9 concerning the business conducted as a licensee during the
10 preceding calendar year. The report shall be in writing,
11 under oath, and on a form provided by the department.
12 (4) Be subject to examination by the department OR <--
13 COMMISSION at the discretion of the department OR COMMISSION <--
14 at which time the department OR COMMISSION shall have free <--
15 access, during regular business hours, to the licensee's
16 place or places of business in this Commonwealth and to all
17 instruments, documents, accounts, books and records which
18 pertain to a licensee's mortgage loan business. The
19 department OR COMMISSION may examine a licensee at any time <--
20 if the department OR COMMISSION deems such examination to be <--
21 necessary or desirable. The cost of any such examination
22 shall be borne by the licensee.
23 (5) Comply with all provisions of the act of January 30,
24 1974 (P.L.13, No.6), referred to as the Loan Interest and
25 Protection Law, provided, however, that this shall not be
26 deemed an override of section 501 of the Depository
27 Institutions Deregulation and Monetary Control Act of 1980
28 (94 Stat. 161, 12 U.S.C. § 1735f-7 note).
29 (6) Comply with the provisions of the act of December
30 23, 1983 (P.L.385, No.91), entitled "An act amending the act
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1 of December 3, 1959 (P.L.1688, No.621), entitled, as amended,
2 'An act to promote the health, safety and welfare of the
3 people of the Commonwealth by broadening the market for
4 housing for persons and families of low and moderate income
5 and alleviating shortages thereof, and by assisting in the
6 provision of housing for elderly persons through the creation
7 of the Pennsylvania Housing Finance Agency as a public
8 corporation and government instrumentality; providing for the
9 organization, membership and administration of the agency,
10 prescribing its general powers and duties and the manner in
11 which its funds are kept and audited, empowering the agency
12 to make housing loans to qualified mortgagors upon the
13 security of insured and uninsured mortgages, defining
14 qualified mortgagors and providing for priorities among
15 tenants in certain instances, prescribing interest rates and
16 other terms of housing loans, permitting the agency to
17 acquire real or personal property, permitting the agency to
18 make agreements with financial institutions and Federal
19 agencies, providing for the purchase by persons of low and
20 moderate income of housing units, and approving the sale of
21 housing units, permitting the agency to sell housing loans,
22 providing for the promulgation of regulations and forms by
23 the agency, prescribing penalties for furnishing false
24 information, empowering the agency to borrow money upon its
25 own credit by the issuance and sale of bonds and notes and by
26 giving security therefor, permitting the refunding,
27 redemption and purchase of such obligations by the agency,
28 prescribing remedies of holders of such bonds and notes,
29 exempting bonds and notes of the agency, the income
30 therefrom, and the income and revenues of the agency from
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1 taxation, except transfer, death and gift taxes; making such
2 bonds and notes legal investments for certain purposes; and
3 indicating how the act shall become effective,' providing for
4 homeowner's emergency assistance."
5 (7) Provide for periodic accounting of any escrow
6 accounts held by the licensee to the borrowers not less than
7 annually, showing the amounts received from the borrower and
8 the amounts disbursed.
9 (8) Refund all fees, other than those fees paid by the
10 licensee to a third party, paid by an applicant borrower when
11 a mortgage loan is not produced within the time specified by
12 the mortgage banker or mortgage broker at the rate, term and
13 overall cost agreed to by the borrower, provided, however,
14 that this provision shall not apply when the failure to
15 produce a loan is due solely to the borrower's negligence,
16 his refusal to accept and close on a loan commitment or his
17 refusal or inability to provide information necessary for
18 processing, including, but not limited to, employment
19 verifications and verifications of deposits. The licensee
20 shall disclose to the borrower, in writing, at the time of a
21 loan application which fees paid or to be paid are
22 nonrefundable.
23 (b) Accounting records.--After the effective date of this
24 act, the licensee's accounting records must be constructed and
25 maintained in compliance with generally accepted accounting
26 principles IF THE LICENSEE IS A MORTGAGE BANKER OR IN SUCH <--
27 MANNER AS MAY BE PROVIDED BY REGULATION FOR ALL OTHER LICENSEES,
28 and all of the aforementioned instruments, documents, accounts,
29 books and records shall be kept separate and apart from the
30 records of any other business conducted by the licensee and
19890S0031B1771 - 14 -
1 shall be preserved and kept available for investigation or
2 examination by the department OR COMMISSION for at least two <--
3 years after a mortgage loan has been paid in full. The
4 provisions of this subsection shall not apply to any instrument,
5 document, account, book or record that is assigned, sold or
6 transferred to another person, nor shall the two-year
7 requirement apply to an instrument or document which must be
8 returned to a borrower at the time a mortgage loan is paid in
9 full.
10 (c) Copies.--If copies of instruments, documents, accounts,
11 books or records are maintained under subsection (a)(2), they
12 may be photostatic, microfilm or electronic copies or copies
13 provided in some other manner approved by the Secretary of
14 Banking OR THE COMMISSION, as long as access to information <--
15 required by the secretary OR COMMISSION exists electronically at <--
16 all times within this Commonwealth.
17 (D) LIMITED POWERS.--THE POWERS CONFERRED UPON THE <--
18 COMMISSION BY THIS SECTION, EXCLUDING SUBSECTION (A)(1), SHALL
19 ONLY BE EXERCISED BY THE COMMISSION IN RELATION TO PERSONS
20 LICENSED PURSUANT TO THE PROVISIONS OF THE ACT OF FEBRUARY 19,
21 1980 (P.L.15, NO.9), KNOWN AS THE REAL ESTATE LICENSING AND
22 REGISTRATION ACT, WHO ARE SUBJECT TO THIS SECTION UNDER SECTION
23 3(B)(3) AND THE EXERCISE OF SUCH POWER BY THE COMMISSION IN
24 RELATION TO SUCH PERSONS SHALL BE EXCLUSIVE.
25 Section 9. Licensee limitations.
26 (a) Prohibitions.--A licensee shall not:
27 (1) Transact any business subject to the provisions of
28 this act under any other name except those designated in its
29 license. A licensee that changes its name or place or places
30 of business shall immediately notify the department, which
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1 shall issue a certificate, if appropriate, to the licensee
2 which shall specify the licensee's new name or address.
3 (2) Conduct any business other than any business
4 regulated by the department in any place of business licensed
5 pursuant to this act without at least 90 days prior written
6 notification to the department.
7 (3) Disburse the proceeds of a mortgage loan in any form
8 other than cash, electronic fund transfer, certified check or
9 cashier's check.
10 (4) Pay a finder's fee, service fee or any other <--
11 compensation to any person in connection with any transaction
12 if that person is receiving compensation from any other
13 person for any services in connection with the same
14 transaction or the real estate transfer leading to such
15 transaction.
16 (b) Authority to close loans in attorneys' and title
17 insurance companies or agencies' offices.--Nothing contained in
18 this act shall prohibit any licensee or person exempt from
19 licensure hereunder from closing any loans made under the
20 provisions of this act in the offices of attorneys-at-law
21 licensed by and located in this Commonwealth and title insurance
22 companies or agencies licensed by and located in this
23 Commonwealth.
24 Section 10. Authority of department OR COMMISSION. <--
25 The department shall have the authority to: <--
26 (1) Issue rules and regulations and orders as may be
27 necessary for the proper conduct of the business of a
28 mortgage banker or a mortgage broker and for the enforcement
29 of this act.
30 (A) DEPARTMENT REGULATIONS.--EXCEPT AS PROVIDED IN <--
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1 SUBSECTION (B), THE DEPARTMENT SHALL, WITHIN 180 DAYS AFTER
2 FINAL ENACTMENT OF THIS ACT, ISSUE RULES AND REGULATIONS AND
3 ORDERS NECESSARY TO CARRY OUT THE PURPOSES OF THIS ACT.
4 (B) JOINT REGULATIONS.--WITHIN 180 DAYS AFTER FINAL
5 ENACTMENT OF THIS ACT, THE DEPARTMENT AND THE COMMISSION SHALL
6 JOINTLY ISSUE RULES AND REGULATIONS NECESSARY TO CARRY OUT THE
7 PURPOSES OF SECTIONS 8, 10 AND 13(B), EXCLUDING SECTION 8(A)(1).
8 (A) DEPARTMENT REGULATIONS.--EXCEPT AS PROVIDED IN <--
9 SUBSECTION (B), THE DEPARTMENT SHALL HAVE THE AUTHORITY TO ISSUE
10 RULES AND REGULATIONS AND ORDERS AS MAY BE NECESSARY FOR THE
11 PROPER CONDUCT OF THE BUSINESS OF A MORTGAGE BANKER OR A
12 MORTGAGE BROKER AND FOR THE ENFORCEMENT OF THIS ACT. INITIAL
13 RULES AND REGULATIONS SHALL BE ISSUED BY THE DEPARTMENT WITHIN
14 180 DAYS AFTER THE EFFECTIVE DATE OF THIS SUBSECTION.
15 (B) JOINT REGULATIONS.--THE DEPARTMENT AND THE COMMISSION
16 SHALL HAVE THE AUTHORITY TO JOINTLY ISSUE RULES AND REGULATIONS
17 AS MAY BE NECESSARY TO CARRY OUT THE PURPOSES OF SECTIONS 8, 10
18 AND 14(B), EXCLUDING SECTION 8(A)(1). INITIAL RULES AND
19 REGULATIONS SHALL BE JOINTLY ISSUED BY THE DEPARTMENT AND THE
20 COMMISSION WITHIN 180 DAYS AFTER THE EFFECTIVE DATE OF THIS
21 SUBSECTION.
22 (C) POWERS.--THE DEPARTMENT AND THE COMMISSION SHALL HAVE
23 THE AUTHORITY TO:
24 (2) (1) Examine any instrument, document, account, book, <--
25 record or file of a licensee or any other person, or make
26 such other investigation as may be necessary to administer
27 the provisions of this act.
28 (3) (2) Conduct administrative hearings on any matter <--
29 pertaining to this act, issue subpoenas to compel the
30 attendance of witnesses and the production of instruments,
19890S0031B1771 - 17 -
1 documents, accounts, books and records at any such hearing,
2 which may be retained by the department OR COMMISSION until <--
3 the completion of all proceedings in connection with which
4 they were produced, and administer oaths and affirmations to
5 any person whose testimony is required. In the event a person
6 fails to comply with a subpoena issued by the department OR <--
7 COMMISSION or to testify on any matter concerning which he
8 may be lawfully interrogated, on application by the
9 department OR COMMISSION, the Commonwealth Court may issue an <--
10 order requiring the attendance of such person, the production
11 of instruments, documents, accounts, books or records or the
12 giving of testimony.
13 (D) LIMITED POWERS.--THE POWERS CONFERRED UPON THE <--
14 COMMISSION BY SUBSECTION (C) SHALL ONLY BE EXERCISED BY THE
15 COMMISSION IN RELATION TO PERSONS LICENSED PURSUANT TO THE
16 PROVISIONS OF THE ACT OF FEBRUARY 19, 1980 (P.L.15, NO.9), KNOWN
17 AS THE REAL ESTATE LICENSING AND REGISTRATION ACT, WHO ARE
18 SUBJECT TO SUBSECTION (C) UNDER SECTION 3(B)(3) AND THE EXERCISE
19 OF SUCH POWER BY THE COMMISSION IN RELATION TO SUCH PERSONS
20 SHALL BE EXCLUSIVE.
21 SECTION 11. FEES.
22 (A) CERTAIN FEES PROHIBITED.--NO REAL ESTATE BROKER OR
23 SALESPERSON WHO HAS RECEIVED A FEE, COMMISSION OR OTHER VALUABLE
24 CONSIDERATION IN CONNECTION WITH THE SALE OR TRANSFER OF REAL
25 ESTATE SHALL BE PAID OR RECEIVE A FEE OR OTHER COMPENSATION,
26 DIRECTLY OR INDIRECTLY, FOR PROVIDING MORTGAGE BROKERING
27 SERVICES IN CONNECTION WITH THE ORIGINATION OF A MORTGAGE LOAN
28 RELATIVE TO SUCH SALE OR TRANSFER OF REAL ESTATE, BUT SUCH
29 BROKER OR SALESPERSON MAY RECEIVE A FEE IN CONNECTION WITH SUCH
30 MORTGAGE LOAN TRANSACTION WHICH SHALL NOT EXCEED AN AMOUNT AS
19890S0031B1771 - 18 -
1 ESTABLISHED BY THE COMMISSION PURSUANT TO THIS SECTION.
2 (B) REGULATIONS.--THE COMMISSION SHALL, WITHIN 180 DAYS OF
3 THE EFFECTIVE DATE OF THIS SUBSECTION, PROMULGATE RULES AND
4 REGULATIONS ESTABLISHING THE MAXIMUM FEES WHICH A REAL ESTATE
5 BROKER OR SALESPERSON MAY CHARGE FOR SERVICES RENDERED IN
6 CONNECTION WITH MORTGAGE BROKERING SERVICES. SAID FEES SHALL:
7 (1) BE FOR ACTUAL SERVICES RENDERED IN CONNECTION WITH
8 THE ORIGINATION OF A MORTGAGE LOAN.
9 (2) BE EXPRESSED IN TERMS OF DOLLARS OR AS A PERCENTAGE
10 OF THE MORTGAGE LOAN BEING CREATED.
11 (C) FORMULATION PROCEDURE.--PRIOR TO THE PUBLICATION OF ANY
12 NOTICE OF PROPOSED RULEMAKING UNDER THIS SECTION, THE COMMISSION
13 SHALL HOLD PUBLIC HEARINGS TO AFFORD ANY INTERESTED PARTY,
14 INCLUDING THE DEPARTMENT, FULL OPPORTUNITY TO PRESENT TESTIMONY,
15 COMMENT THEREON AND MAKE RECOMMENDATIONS REGARDING THE
16 FORMULATION OF SUCH RULES AND REGULATIONS. THE DEPARTMENT SHALL
17 ALSO HAVE 30 DAYS FOLLOWING THE CLOSE OF THE HEARINGS TO SUBMIT
18 FURTHER COMMENTS AND RECOMMENDATIONS TO THE COMMISSION. THE
19 PROCEDURE CONTAINED IN THIS SECTION SHALL BE IN ADDITION TO THE
20 REQUIREMENTS CONTAINED IN THE ACT OF JUNE 25, 1982 (P.L.633,
21 NO.181), KNOWN AS THE REGULATORY REVIEW ACT, AND SHALL NOT
22 AFFECT ANY RIGHT THE DEPARTMENT MAY HAVE TO PARTICIPATE IN THE
23 RULEMAKING PROCESS FOLLOWING THE COMMISSION'S PUBLICATION OF
24 PROPOSED RULES AND REGULATIONS AS PERMITTED BY THAT ACT. IN
25 ESTABLISHING THE MAXIMUM FEES ALLOWABLE, THE COMMISSION SHALL
26 CONSIDER THE NATURE OF THE SERVICES PERFORMED BY THE REAL ESTATE
27 BROKER OR SALESPERSON AND THE TIME REQUIRED FOR THE PERFORMANCE
28 THEREOF.
29 (D) LICENSING OPTION.--A REAL ESTATE BROKER OR SALESPERSON
30 WHO IS ALSO A BONA FIDE MORTGAGE BROKER WHO HOLDS HIMSELF OUT
19890S0031B1771 - 19 -
1 PUBLICLY AS SUCH SHALL HAVE THE OPTION OF BEING LICENSED AND
2 REGULATED BY THE DEPARTMENT, IN WHICH CASE HE SHALL NOT BE
3 SUBJECT TO THE FEE LIMITATIONS PROVIDED FOR IN THIS SECTION OR
4 THE RULES AND REGULATIONS PROMULGATED BY THE COMMISSION
5 HEREUNDER.
6 (E) DISCLOSURE.--NO REAL ESTATE BROKER OR SALESPERSON SHALL
7 RECEIVE A FEE, COMMISSION OR OTHER VALUABLE CONSIDERATION
8 PURSUANT TO THIS SECTION AND THE REGULATIONS PROMULGATED
9 HEREUNDER UNLESS HE MAKES THE FOLLOWING WRITTEN DISCLOSURE TO
10 THE BUYER IN AT LEAST 10 POINT BOLD FACE CAPITAL LETTERS.
11 THE REAL ESTATE BROKER IN THIS TRANSACTION, WHO HAS
12 OFFERED TO ASSIST ME IN OBTAINING A MORTGAGE LOAN HAS
13 ADVISED ME OF THE FOLLOWING:
14 (1) HE DOES NOT REPRESENT ANY PARTICULAR MORTGAGE
15 LENDER; OR THE NAME OF THE MORTGAGE LENDER HE REPRESENTS
16 IS.........................
17 (2) I AM NOT REQUIRED TO OBTAIN THE MORTGAGE FOR THE
18 PURCHASE OF THE REAL ESTATE FROM THE MORTGAGE BANKER WHOM
19 THE BROKER REPRESENTS.
20 (3) THE REAL ESTATE BROKER HAS A FIDUCIARY
21 OBLIGATION TO THE SELLER, FROM WHOM HE WILL RECEIVE A
22 COMMISSION.
23 (4) SHOULD THE REAL ESTATE BROKER VIOLATE ANY OF THE
24 PROVISIONS OF THE REAL ESTATE LICENSING AND REGISTRATION
25 ACT OR THE MORTGAGE BANKERS AND BROKERS ACT I MAY FILE A
26 COMPLAINT WITH THE PENNSYLVANIA REAL ESTATE COMMISSION.
27 Section 11 12. Surrender of license. <--
28 Upon satisfying the department that all creditors have been
29 paid or that other arrangements satisfactory to the creditors
30 and the department have been made, a licensee shall surrender
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1 its license to the department by delivering its license to the
2 department with written notice that the license is being
3 voluntarily surrendered, but such an action by a licensee shall
4 not affect the licensee's civil or criminal liability for acts
5 committed.
6 Section 12 13. Suspension, revocation or refusal. <--
7 (a) Departmental action.--The department may suspend, revoke
8 or refuse to renew any license issued pursuant to this act after
9 giving 30 days' written notice forwarded to the licensee's
10 principal place of business, by registered or certified mail,
11 return receipt requested, stating the contemplated action and
12 the reason therefor, if the department shall find, after the
13 licensee has had an opportunity to be heard, that the licensee
14 has:
15 (1) Made any material misstatement in his application.
16 (2) Failed to comply with or violated any provision of
17 this act or any rule, regulation or order promulgated by the
18 department pursuant to this act.
19 (3) If licensed under section 4(c)(3), accepts an
20 advance fee.
21 The hearing and notice provisions of this section shall not
22 apply if the licensee's corporate charter is voided in
23 accordance with the provisions of any law of this or any other
24 state, in which event the department may suspend or revoke the
25 license.
26 (b) Reinstatement.--The department may subsequently
27 reinstate a license which has been suspended or revoked or renew
28 a license which had previously been refused for renewal if the
29 condition which warranted the original action has been corrected
30 and the department has reason to believe that such condition is
19890S0031B1771 - 21 -
1 not likely to occur again and the licensee satisfies the
2 requirements of this act.
3 Section 13 14. Penalties. <--
4 (a) Nonlicensees.--Any person who is not licensed by the
5 department or is not exempted from the licensing requirements in
6 accordance with the provisions of this act and who engages in
7 the business of a mortgage banker or mortgage broker commits a
8 felony of the third degree.
9 (b) Nonlicensees subject to the provisions of this act.--Any
10 person who is subject to the provisions of this act, even though
11 not licensed hereunder, who violates any of the provisions to
12 which it is subject shall be subject to a fine levied by the
13 department OR COMMISSION of up to $2,000 for each offense. Any <--
14 such nonlicensed person who commits three or more offenses may,
15 at the discretion of the department OR COMMISSION, be prohibited <--
16 from engaging in the business of a mortgage broker or mortgage
17 banker unless licensed under this act.
18 (c) Violations by licensees.--Any person licensed under the
19 provisions of this act or any director, officer, employee or
20 agent of a licensee who shall violate the provisions of this act
21 or shall direct or consent to such violations shall be subject
22 to a fine levied by the department of up to $2,000 for each
23 offense.
24 (D) LIMITED POWERS.--THE POWERS CONFERRED UPON THE <--
25 COMMISSION BY SUBSECTION (B) SHALL ONLY BE EXERCISED BY THE
26 COMMISSION IN RELATION TO PERSONS LICENSED PURSUANT TO THE
27 PROVISIONS OF THE ACT OF FEBRUARY 19, 1980 (P.L.15, NO.9), KNOWN
28 AS THE REAL ESTATE LICENSING AND REGISTRATION ACT, WHO ARE
29 SUBJECT TO SUBSECTION (B) UNDER SECTION 3(B)(3) AND THE EXERCISE
30 OF SUCH POWER BY THE COMMISSION IN RELATION TO SUCH PERSONS
19890S0031B1771 - 22 -
1 SHALL BE EXCLUSIVE.
2 SECTION 15. REPORT. <--
3 AT LEAST ANNUALLY, THE DEPARTMENT AND THE COMMISSION SHALL
4 SEPARATELY PROVIDE A WRITTEN REPORT TO THE GENERAL ASSEMBLY
5 LISTING THE COMPLAINTS RECEIVED CONCERNING MORTGAGE BROKERAGE
6 ACTIVITIES AND ADVISING AS TO THE MANNER IN WHICH EACH COMPLAINT
7 WAS DISPOSED OF. THE DEPARTMENT AND COMMISSION SHALL ALSO SET
8 FORTH ALL ENFORCEMENT ACTIONS RELATING TO MORTGAGE BROKERAGE
9 ACTIVITIES UNDER THIS ACT AND THE REGULATIONS PROMULGATED
10 THEREUNDER.
11 SECTION 16. REFERRAL FEES.
12 NOTHING IN THIS ACT SHALL PERMIT A REAL ESTATE BROKER OR
13 SALESPERSON, WHO RECEIVES A FEE, COMMISSION OR OTHER VALUABLE
14 CONSIDERATION RELATING TO THE SALE OF RESIDENTIAL REAL PROPERTY,
15 TO BE PAID OR RECEIVED A FINDERS FEE OR A REFERRAL FEE FOR THE
16 REFERRAL OF A MORTGAGE LOAN TO A LENDER IN CONNECTION WITH THAT
17 SALE, WHETHER OR NOT THE REAL ESTATE BROKER OR SALESPERSON IS
18 LICENSED AND REGULATED BY THE DEPARTMENT.
19 SECTION 17. REAL ESTATE RECOVERY FUND.
20 ANY PERSON INJURED BY THE WRONGFUL ACT, DEFAULT OR
21 MISREPRESENTATION OF A PERSON ENGAGED IN THE ACTIVITIES OF A
22 MORTGAGE BROKER WHO IS EXEMPT FROM LICENSURE UNDER THIS ACT BY
23 VIRTUE OF BEING LICENSED PURSUANT TO THE ACT OF FEBRUARY 19,
24 1980 (P.L.15, NO.9), KNOWN AS THE REAL ESTATE LICENSING AND
25 REGISTRATION ACT SHALL BE ENTITLED TO SEEK RECOVERY FROM THE
26 REAL ESTATE RECOVERY FUND ESTABLISHED BY THE REAL ESTATE
27 LICENSING AND REGISTRATION ACT NOTWITHSTANDING THE FACT THAT
28 SUCH WRONGFUL ACT, DEFAULT OR MISREPRESENTATION OCCURRED IN
29 CONJUNCTION WITH MORTGAGE BROKERING ACTIVITIES SUBJECT, HOWEVER,
30 TO ALL OTHER TERMS AND CONDITIONS OF THE REAL ESTATE LICENSING
19890S0031B1771 - 23 -
1 AND REGISTRATION ACT REGARDING RECOVERY FROM THAT FUND.
2 Section 14 18. Scope of act. <--
3 The provisions of this act shall apply to any mortgage loan
4 which is:
5 (1) negotiated, offered or otherwise transacted within
6 this Commonwealth, in whole or in part, whether by the
7 ultimate lender or any other person;
8 (2) made or executed within this Commonwealth; or
9 (3) notwithstanding the place of execution, secured by
10 real property located in this Commonwealth.
11 Section 15 19. Effective date. <--
12 This act shall take effect in 180 days. <--
13 THIS ACT SHALL TAKE EFFECT AS FOLLOWS: <--
14 (1) SECTIONS 10(A) AND (B), 11(B) AND (C) SHALL TAKE
15 EFFECT IMMEDIATELY.
16 (2) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT IN 180
17 DAYS.
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