PRINTER'S NO. 1797
No. 1417 Session of 2007
INTRODUCED BY SCAVELLO, CALTAGIRONE, COHEN, CREIGHTON, CRUZ, DeLUCA, EVERETT, FABRIZIO, FRANKEL, GEIST, GOODMAN, HENNESSEY, JAMES, KOTIK, O'NEILL, ROEBUCK, SIPTROTH AND WALKO, JUNE 5, 2007
REFERRED TO COMMITTEE ON COMMERCE, JUNE 5, 2007
AN ACT 1 Amending the act of December 22, 1989 (P.L.687, No.90), entitled 2 "An act providing for the regulation and licensing of 3 mortgage bankers and mortgage brokers; imposing additional 4 powers and duties on the Department of Banking and the State 5 Real Estate Commission; and providing penalties," further 6 providing, in licensing, for definitions, for requirements 7 and exemptions, for applications, for fees, for issuance, for 8 duration, for licensee requirements, for licensee 9 limitations, for administration, for rates, for sanctions and 10 denials for penalties, for referral fees and for the Real 11 Estate Recovery Fund. 12 The General Assembly of the Commonwealth of Pennsylvania 13 hereby enacts as follows: 14 Section 1. The title of the act of December 22, 1989 15 (P.L.687, No.90), known as the Mortgage Bankers and Brokers and 16 Consumer Equity Protection Act, is amended to read: 17 AN ACT 18 Providing for the regulation and licensing of mortgage bankers 19 and mortgage brokers; imposing additional powers and duties 20 on the Department of Banking [and the State Real Estate 21 Commission]; and providing penalties.
1 Section 2. The definitions of "commission," "finder's fee" 2 or "referral fee," "limited mortgage broker," "nonpurchase money 3 mortgage loan," "person" and "wholesale table funder," in 4 section 302 of the act, renumbered and amended June 25, 2001 5 (P.L.621, No.55), are amended and the section is amended by 6 adding definitions to read: 7 Section 302. Definitions. 8 The following words and phrases when used in this chapter 9 shall have the meanings given to them in this section unless the 10 context clearly indicates otherwise: 11 * * * 12 "Applicant." A person that applies for license under this 13 chapter. 14 * * * 15 ["Commission." The State Real Estate Commission. 16 "Finder's fee" or "referral fee." Any payment of money or 17 other consideration for the referral of a mortgage loan to a 18 lender, but shall not include consideration paid for goods or 19 facilities actually furnished or services actually performed.] 20 * * * 21 ["Limited mortgage broker." An individual who directly or 22 indirectly negotiates or places nonpurchase money mortgage loans 23 for others in the primary market for consideration.] 24 * * * 25 "Mortgage originator." An individual not licensed under this 26 chapter who, in other than a clerical or ministerial capacity: 27 (1) solicits, accepts or offers to accept a mortgage loan 28 application; or 29 (2) negotiates mortgage loan terms. 30 The term does not include a director, partner or ultimate 20070H1417B1797 - 2 -
1 equitable owner of at least 10% of a licensee. 2 ["Nonpurchase money mortgage loan." A mortgage loan the 3 proceeds of which are not used to finance the purchase of the 4 real property securing the mortgage loan.] 5 "Person." An individual, association, limited liability 6 company, joint venture or joint-stock company, partnership, 7 limited partnership, limited partnership association, business 8 corporation, nonprofit corporation, or any other group of 9 individuals, however organized. 10 * * * 11 "Wholesale table funder." A licensed mortgage banker or [an 12 entity] a person exempt pursuant to section 303(b)(1)[, or (12)] 13 or (10) who, in the regular course of business, provides the 14 funding for the closing of mortgage loans through loan 15 correspondents and who by assignment obtains title to such 16 mortgage loans. 17 Section 3. Section 303 of the act, renumbered and amended 18 June 25, 2001 (P.L.621, No.55), is amended to read: 19 Section 303. License requirements and exemptions. 20 (a) License required.--On and after the effective date of 21 this act, no person [shall act as a mortgage banker, loan 22 correspondent, mortgage broker or limited mortgage broker] may 23 engage in the first mortgage loan business in this Commonwealth 24 without a license as provided for in this chapter.[, provided, 25 however, that any person licensed as a mortgage banker may also 26 act as a loan correspondent or mortgage broker and any person 27 licensed as a loan correspondent may also act as a mortgage 28 broker without a separate license. A person licensed as a 29 mortgage broker may only perform the services of a mortgage 30 broker.] A mortgage originator may not engage in the first 20070H1417B1797 - 3 -
1 mortgage loan business unless the mortgage originator is 2 employed and supervised by a licensed mortgage banker, mortgage 3 broker or loan correspondent. 4 (a.1) Licensed activity exceptions.-- 5 (1) A mortgage banker may act as a mortgage broker or 6 loan correspondent without a separate mortgage broker or loan 7 correspondent license, and, if licensed as an individual, may 8 perform the services of a mortgage originator without a 9 separate mortgage originator license. 10 (2) A loan correspondent may act as a mortgage broker 11 without a separate mortgage broker license, and, if licensed 12 as an individual, may perform the services of a mortgage 13 originator without a separate mortgage originator license. 14 (3) A person licensed as a mortgage broker may only 15 perform the services of a mortgage broker. If a mortgage 16 broker is licensed as an individual, a mortgage broker may 17 perform the services of a mortgage originator without a 18 separate mortgage originator license. 19 (b) Exceptions.--The following persons shall not be required 20 to be licensed under this chapter in order to conduct the first 21 mortgage loan business but shall be subject to those provisions 22 of this chapter as specifically provided in this section: 23 (1) A State-chartered bank, bank and trust company, 24 savings bank, private bank or national bank, a State or 25 federally chartered savings and loan association, a federally 26 chartered savings bank or a State or federally chartered 27 credit union. 28 (2) An attorney authorized to practice law in this 29 Commonwealth, who acts as a mortgage broker in negotiating or 30 placing a mortgage loan in the normal course of legal 20070H1417B1797 - 4 -
1 practice. 2 [(3) A person licensed pursuant to the provisions of the 3 act of February 19, 1980 (P.L.15, No.9), known as the Real 4 Estate Licensing and Registration Act, who is principally 5 engaged in a third-party real estate brokerage business, but 6 only to the extent that he provides information, verbal or 7 written, to or negotiates or places a mortgage loan for a 8 buyer of real estate and is not compensated by the buyer or 9 any other person for providing such information or 10 negotiating or placing such mortgage loan. If he is 11 compensated for providing such information or negotiating or 12 placing such mortgage loan, he shall be subject to the 13 provisions of sections 308, 310, 311 and 314(b), excluding 14 section 308(a)(1). 15 (4) A seller of a dwelling, if he has resided in the 16 dwelling at least one year and as part of the purchase price 17 receives a first mortgage executed by the purchaser.] 18 (5) A person who either originates or negotiates less 19 than three mortgage loans in a calendar year in this 20 Commonwealth unless he is otherwise deemed to be engaged in 21 the first mortgage loan business. 22 [(6) Builders, when obtaining mortgages for their own 23 construction or for the sale of their own construction.] 24 (7) Any agency or instrumentality of the Federal 25 Government or a corporation otherwise created by an act of 26 the United States Congress, including, but not limited to, 27 the Federal National Mortgage Association, the Government 28 National Mortgage Association, the Veterans' Administration, 29 the Federal Home Loan Mortgage Corporation and the Federal 30 Housing Administration. 20070H1417B1797 - 5 -
1 (8) [The] An agency or instrumentality of a state or 2 local government, of the District of Columbia or of a 3 territory of the United States. This paragraph includes the 4 Pennsylvania Housing Finance Agency and any other government 5 housing finance agency. 6 (9) A licensee under the act of April 8, 1937 (P.L.262, 7 No.66), known as the Consumer Discount Company Act, except 8 that any such licensee who makes a mortgage loan other than 9 under the provisions of that act shall be subject to the 10 provisions of sections 304(b)(2) and (3), 308, 310 and 11 314(b), excluding section 308(a)(1). Employees of licensees 12 under the Consumer Discount Company Act that act as mortgage 13 originators shall be subject to the licensing requirements of 14 this chapter. Consumer discount companies that employ 15 mortgage originators shall be subject to the same 16 requirements as mortgage bankers in regard to the employment 17 and supervision of mortgage originators. 18 (10) Except [for licensees described] as set forth in 19 paragraph (9), subsidiaries and affiliates of the following 20 institutions: State-chartered banks, bank and trust 21 companies, savings banks, private banks, savings and loan 22 associations and credit unions or national banks, federally 23 chartered savings and loan associations, federally chartered 24 savings banks and federally chartered credit unions[, except 25 that such subsidiaries]. Subsidiaries and affiliates of 26 institutions enumerated in this paragraph shall: 27 (i) be subject to the provisions of sections 308, 28 309(a)(3), 310 and 314(b), excluding section 308(a)(1); 29 (ii) deliver as required to the department annually 30 copies of financial reports made to all supervisory 20070H1417B1797 - 6 -
1 agencies; and 2 (iii) be registered with the department. 3 (11) Employees of a mortgage banker, mortgage broker and 4 loan correspondent licensee [or excepted persons acting for 5 their employers], to the extent that the employees are not 6 otherwise required to be licensed as mortgage originators. 7 [(12) An insurance company, association or exchange 8 authorized to transact business in this Commonwealth under 9 the act of May 17, 1921 (P.L.682, No.284), known as The 10 Insurance Company Law of 1921, and any subsidiaries and 11 affiliates thereof, except that such subsidiaries and 12 affiliates shall: 13 (i) be subject to the provisions of sections 308, 14 309(a)(3), 310 and 314(b), excluding section 308(a)(1); 15 (ii) deliver as required to the department annually 16 copies of financial reports made to all supervisory 17 agencies; and 18 (iii) be registered with the department.] 19 (13) Any person who makes a mortgage loan to an employee 20 of that person as an employment benefit, given that person 21 does not hold himself out to the public as a first mortgage 22 lender. 23 (14) Nonprofit corporations making mortgage loans to 24 promote home ownership or improvements for the disadvantaged, 25 given that the corporation does not hold itself out to the 26 public as a first mortgage lender. 27 (15) A nonprofit corporation making not more than 12 28 mortgage loans a calendar year with its own funds, that shall 29 not include funds borrowed through warehouse lines of credit 30 or other sources for the purpose of making mortgage loans, 20070H1417B1797 - 7 -
1 which loans are retained in the corporation's own portfolios 2 and not regularly sold to others and are made to promote and 3 advance the cultural traditions and lifestyles of bona fide 4 religious organizations provided that the corporation does 5 not hold itself out to the public as a first mortgage lender. 6 (16) Employees of persons excepted in this subsection, 7 unless otherwise provided in the applicable paragraph. 8 (c) Loans for business or commercial purposes.--This chapter 9 shall not apply to mortgage loans made for business or 10 commercial purposes. 11 Section 4. Section 304(a), (b), (c.1), (d) and (e) of the 12 act, renumbered and amended June 25, 2001 (P.L.621, No.55), are 13 amended and the section is amended by adding subsections to 14 read: 15 Section 304. Application for license. 16 (a) Contents.-- 17 (1) An application for a license to act as a mortgage 18 banker, loan correspondent, mortgage broker or [limited 19 mortgage broker shall] mortgage originator must be on [such 20 forms as may be] a form prescribed and provided by the 21 department. [Each application shall] 22 (2) An application for a license to act as a mortgage 23 banker, loan correspondent or mortgage broker, must include 24 [the] each address [or addresses] where business is to be 25 conducted[,]; the full name, official title and business 26 address of each director and principal officer of the 27 business; and any other information [that may be] required by 28 the department. 29 (3) An application for a license to act as a mortgage 30 originator must include the name of the applicant, the name 20070H1417B1797 - 8 -
1 of the employer licensee of the applicant, the location of 2 the employer licensee to which the applicant is assigned and 3 any other information required by the department. 4 (4) An applicant [shall] must demonstrate to the 5 department that policies and procedures have been developed 6 to receive and process customer inquiries and grievances 7 promptly and fairly. 8 (b) Mortgage banker's license.--The department shall issue a 9 mortgage banker's license applied for pursuant to this chapter 10 if the applicant establishes that he has met the following 11 conditions: 12 (1) That he is approved by or meets the current criteria 13 for approval of at least one of the following: 14 (i) Federal National Mortgage Association. 15 (ii) Federal Home Loan Mortgage Corporation. 16 (iii) Federal Housing Administration. 17 (2) That he maintains or is approved for, and will 18 continue to maintain as a licensee, a line of credit, 19 repurchase agreement or equivalent mortgage-funding 20 capability of not less than $1,000,000. 21 (3) That he has a minimum tangible net worth of $250,000 22 at the time of application and will, at all times thereafter, 23 maintain such minimum net worth, provided, however, that 24 those applicants who were in business prior to June 20, 1990, 25 may be licensed with a minimum tangible net worth of $100,000 26 if, in the opinion of the department, the applicant has 27 established that it has an otherwise adequate financial 28 structure and operating history. 29 (4) That he will maintain fidelity bond coverage in 30 accordance with the guidelines established by the Federal 20070H1417B1797 - 9 -
1 National Mortgage Association or the Federal Home Loan 2 Mortgage Corporation. 3 * * * 4 [(c.1) Limited mortgage broker's license.--The department 5 shall issue a limited mortgage broker's license applied for 6 pursuant to this chapter if the applicant establishes that he is 7 an individual who operates from one location and maintains no 8 branch offices and can demonstrate to the satisfaction of the 9 department that he accepts or collects no advance fees.] 10 (c.2) Mortgage originator license.--A mortgage originator 11 must be an employee of a license that is a single mortgage 12 banker, mortgage broker or loan correspondent. The licensee 13 shall directly supervise, control and maintain responsibility 14 for the acts and omissions of the mortgage originator. A 15 mortgage originator shall be assigned to a licensed location of 16 the employer licensee. 17 (d) [Foreign corporation] Out-of-State applicants.-- 18 (1) Qualification and location of business. If the 19 applicant is [a foreign corporation, that corporation shall] 20 not a resident of this Commonwealth, the applicant must be 21 authorized to do business in this Commonwealth in accordance 22 with the law of this Commonwealth regulating corporations and 23 other entities conducting business in this Commonwealth and 24 [shall] must maintain at least one office in this 25 Commonwealth which is the office that [shall be] is licensed 26 as the principal place of business for the purposes of this 27 chapter. A [foreign corporation which will act only in the 28 capacity of a] wholesale table funder shall be exempt from 29 the requirement that it maintain at least one office in this 30 Commonwealth. [The corporation shall] 20070H1417B1797 - 10 -
1 (2) Consent to service of process. An applicant must 2 file with the application an irrevocable consent, duly 3 acknowledged, that suits and actions may be commenced against 4 that [licensee] person in the courts of this Commonwealth by 5 the service of process of any pleading upon the department in 6 the usual manner provided for service of process and 7 pleadings by the statutes and court rules of this 8 Commonwealth. The consent [shall] must provide that this 9 service shall be as valid and binding as if service had been 10 made personally upon the [licensee] person in this 11 Commonwealth. In all cases where process or pleadings are 12 served upon the department pursuant to the provisions of this 13 section, such process or pleadings shall be served in 14 triplicate; one copy shall be filed in the [Office of the 15 Secretary of Banking] department and the others shall be 16 forwarded by the department, by certified or registered mail, 17 return receipt requested, to the last known principal place 18 of business in the Commonwealth and to the [corporation's] 19 person's principal place of business. 20 (e) Education.--[To maintain a mortgage banker's, a loan 21 correspondent's or a mortgage broker's license, the applicant or 22 licensee shall demonstrate to the satisfaction of the secretary 23 that at least one individual from each licensed office has 24 attended a minimum of six hours of such continuing education 25 each year. To maintain a limited mortgage broker's license, the 26 licensee shall demonstrate to the satisfaction of the secretary 27 that he has attended at least two hours of continuing education 28 each year. The secretary shall delineate the requirements for 29 such continuing education by regulation within three years of 30 the effective date of this act. The secretary may review and 20070H1417B1797 - 11 -
1 approve continuing education programs and providers to satisfy 2 the continuing education requirement. The secretary may charge 3 providers of continuing education programs a fee, to be 4 determined by the secretary, for department review of continuing 5 education programs and providers.] 6 (1) In order to obtain a license under this chapter, an 7 applicant must submit to the department with its application 8 evidence that the applicant or an officer of the applicant 9 has successfully completed a minimum of 12 hours of 10 instruction and a testing program regarding the first 11 mortgage loan business; this chapter; the act of January 30, 12 1974 (P.L.13, No.6), referred to as the Loan Interest and 13 Protection Law; and relevant Federal law, including the Real 14 Estate Settlement Procedures Act of 1974 (Public Law 93-533, 15 88 Stat. 1724), the Truth in Lending Act (Public Law 90-321, 16 15 U.S.C. § 1601 et seq.), and the Equal Credit Opportunity 17 Act (Public Law 93-495, 15 U.S.C. § 1691 et seq.). 18 (2) In order to maintain a license, the following apply: 19 (i) A mortgage banker, mortgage broker or loan 20 correspondent must demonstrate to the satisfaction of the 21 department that at least one individual from each 22 licensed office who is not a mortgage originator and all 23 mortgage originators employed by the licensee have 24 attended a minimum of six hours of continuing education 25 each year. 26 (ii) A mortgage originator licensee must demonstrate 27 to the satisfaction of the department that the licensee 28 has attended a minimum of six hours of continuing 29 education each year. 30 (3) The department shall delineate the requirements for 20070H1417B1797 - 12 -
1 prequalification education and testing and continuing 2 education by regulation, including permitting in-house 3 prequalification education and testing and continuing 4 education. The department may review and approve education 5 programs and providers to satisfy the education requirements. 6 The department may charge providers of education programs a 7 fee, to be determined by the department, for department 8 review of education programs and providers. 9 (f) Duty to update.--All applicants and licensees shall 10 provide the department with written notice of the change in any 11 information contained in an application for a license or for any 12 renewal of a license within ten days of an applicant or licensee 13 becoming aware of the change. 14 (g) License renewals.--Licenses shall be issued for terms of 15 12 months and may be renewed by the department each year on a 16 schedule set by the department upon application by the licensee 17 and the payment of applicable renewal fees. The licensee must 18 demonstrate to the department that it is conducting the first 19 mortgage loan business in accordance with the requirements of 20 this chapter and that the directors, officers, partners, 21 employees, agents and ultimate equitable owners of 10% or more 22 of the licensee continue to meet all of the initial requirements 23 for licensure required by this chapter unless otherwise 24 determined by the department. 25 Section 5. Sections 305, 306, 307, 308, 309 and 310 of the 26 act, renumbered and amended June 25, 2001 (P.L.621, No.55), are 27 amended to read: 28 Section 305. Annual license fee. 29 [(a) General rule.--A mortgage banker, mortgage broker or 30 applicant shall pay to the department at the time an application 20070H1417B1797 - 13 -
1 is filed an initial license fee for the principal place of 2 business and an additional license fee for each branch office as 3 provided for in section 603-A of the act of April 9, 1929 4 (P.L.177, No.175), known as The Administrative Code of 1929. On 5 or before July 1 of each year and thereafter, a licensee shall 6 pay a license renewal fee for the principal place of business 7 and an additional license renewal fee for each branch office as 8 provided for in section 603-A of The Administrative Code of 9 1929. An applicant for a license to operate as a loan 10 correspondent shall pay the department the same fee for the 11 initial license for principal place of business, each branch 12 office and annual license renewal as provided for mortgage 13 bankers licensed under section 603-A of The Administrative Code 14 of 1929. An applicant for a license to operate as a limited 15 mortgage broker shall pay to the department at the time an 16 application is filed an initial license fee of $250. On or 17 before July 1 of each year thereafter, a limited mortgage broker 18 licensee shall pay a renewal fee of $200. 19 (b) Recovery of costs.--No abatement of any license fee 20 shall be made if the license is issued for a period of less than 21 one year. The department shall be entitled to recover any cost 22 of investigation in excess of license or renewal fees from the 23 licensee or from any person who is not licensed under this 24 chapter but who is presumed to be engaged in business 25 contemplated by this chapter.] 26 (a) Initial application fees.--Except as set forth in 27 subsection (c), an applicant must pay to the department at the 28 time an application is filed an initial application fee as 29 follows: 30 (1) For mortgage bankers and loan correspondents, $1,500 20070H1417B1797 - 14 -
1 for the principal place of business in this Commonwealth and 2 an additional fee of $1,500 for each branch office. 3 (2) For mortgage brokers, $1,000 for the principal place 4 of business in this Commonwealth and an additional fee of 5 $250 for each branch office. 6 (3) For mortgage originators, $200. 7 (b) Renewal fees.--Except as set forth in subsection (c), 8 prior to each annual renewal of a license, a licensee must pay 9 to the department a license renewal fee as follows: 10 (1) For mortgage bankers and loan correspondents, $750 11 for the principal place of business in this Commonwealth and 12 an additional fee of $750 for each branch office. 13 (2) For mortgage brokers, $500 for the principal place 14 of business in this Commonwealth and an additional fee of 15 $250 for each branch office. 16 (3) For mortgage originators, $200. 17 (c) Exception.--For a licensee that employs at least 50 18 mortgage originators, the initial application fee and license 19 renewal fee shall be $50 per mortgage originator, to a maximum 20 of $10,000 total per year. 21 (d) No abatement of fee.--No abatement of a licensee fee 22 shall be made if the license is issued for a period of less than 23 one year. 24 Section 306. Issuance of license. 25 (a) Time limit.--Within 60 days after a complete application 26 is received, the department shall either issue a license or, for 27 any reason for which the department may suspend, revoke or 28 refuse to renew a license as provided for by section 313, refuse 29 to issue a license. Upon receipt of an application for license, 30 the department shall conduct such investigation of the applicant 20070H1417B1797 - 15 -
1 or of any director, officer, partner, employee, agent or 2 ultimate equitable owner of at least 10% of the applicant as it 3 deems necessary [to determine that the applicant and its 4 officers, directors and principals are of good character and 5 ethical reputation]. The 60-day time limit specified in this 6 subsection may be extended by the department for an additional 7 30 days if the department determines that the extension is 8 necessary. The department shall provide written notification to 9 any applicant whose application review has been extended and 10 include the final date by which a decision shall be rendered 11 regarding the application. 12 (b) Appeal of denial.--If the department refuses to issue a 13 license, it shall notify the applicant, in writing, of the 14 denial and the reason therefor and of the applicant's right to 15 appeal from such action to the [Commonwealth Court] secretary. 16 An appeal from the department's refusal to approve an 17 application for a license shall be filed by the applicant within 18 30 days of notice thereof. 19 (c) Contents of license.--Each license issued by the 20 department shall specify: 21 (1) The name and address of the licensee, the address so 22 specified to be that of the licensee's principal place of 23 business within this Commonwealth or, for a licensee acting 24 only in the capacity of a wholesale table funder, either in 25 or outside of this Commonwealth. 26 (2) The licensee's reference number, which may remain 27 the same from year to year despite variations in annual 28 license numbers which may result from the renewal of licenses 29 by mechanical techniques. 30 (3) Such other information as the department shall 20070H1417B1797 - 16 -
1 require to carry out the purposes of this chapter. 2 (d) Denial of license due to conviction.-- 3 (1) The department may deny a license if it finds that 4 the applicant or any person who is a director, officer, 5 partner, agent, employee or ultimate equitable owner of 10% 6 or more of the applicant has been convicted [of a misdemeanor 7 or felony] in any jurisdiction [or] of [a crime which, if 8 convicted]: 9 (i) an offense involving moral turpitude; 10 (ii) a felony; or 11 (iii) an offense which, if committed in this 12 Commonwealth, would constitute a [misdemeanor or] felony 13 under the laws of this Commonwealth. 14 (2) A license under this chapter shall be subject to 15 section 405 of the act of May 15, 1933 (P.L. 565, No.111), 16 known as the Department of Banking Code. The department shall 17 notify a licensee if a "covered individual" within the 18 meaning of section 405 of the Department of Banking Code who 19 is or will be employed or contracted by the licensee has a 20 criminal background which renders the employee unfit for 21 employment in the first mortgage loan business. 22 (3) For the purposes of this [chapter,] subsection, the 23 following apply: 24 (i) Except as set forth in subparagraph (ii), a 25 person shall be deemed to have been convicted of [a 26 crime] an offense if the person [shall have] has: 27 (A) pleaded guilty or nolo contendere to [a 28 charge thereof] the offense before a court or Federal 29 magistrate [or shall have]; or 30 (B) been found guilty [thereof] of the offense 20070H1417B1797 - 17 -
1 by the decision or judgment of a court or Federal 2 magistrate or by the verdict of a jury, irrespective 3 of the pronouncement of sentence or the suspension 4 [thereof, unless] of sentence. 5 (ii) Subparagraph (i) does not apply if the pleas of 6 guilty or nolo contendere or the decision, judgment or 7 verdict [shall have been] is set aside, vacated, reversed 8 or otherwise abrogated by lawful judicial process. 9 (e) Denial of license for other reason.--The department may 10 deny a license or otherwise restrict a license if it finds 11 that[, within two years prior to or from the date of the 12 application,] the applicant or any person who is a director, 13 officer, partner, agent, employee or ultimate equitable owner of 14 10% or more of the applicant: 15 (1) has had a license application or license issued by 16 the department denied, suspended or revoked; 17 (2) is the subject of an order of the department; 18 [denying, suspending or revoking a license as a mortgage 19 banker, loan correspondent, mortgage broker or limited 20 mortgage broker; or] 21 (3) has violated or failed to comply with any provision 22 of this chapter or any [rule] regulation, statement of policy 23 or order of the department[.]; 24 (4) does not possess the financial responsibility, 25 character, reputation, integrity and general fitness to 26 command the confidence of the public and to warrant the 27 belief that the first mortgage loan business will be operated 28 lawfully, honestly, fairly and within the legislative intent 29 of this chapter and in accordance with the laws of this 30 Commonwealth; or 20070H1417B1797 - 18 -
1 (5) has an outstanding debt to the Commonwealth or a 2 Commonwealth agency. 3 (f) Conditional licenses.--The department may impose 4 conditions on the issuance of any license under this chapter. If 5 the department determines that conditions imposed upon a 6 licensee have not been fulfilled, the department may take any 7 action authorized under this chapter against the licensee that 8 the department deems necessary. In the case of a mortgage 9 originator applicant, the department may issue a conditional 10 mortgage originator license effective immediately upon receipt 11 of an application. 12 Section 307. License duration. 13 A license issued by the department shall: 14 (1) Be renewed [on July 1 of each year upon payment of 15 the annual renewal fee and after a determination that the 16 licensee is conducting business in accordance with the 17 provisions of this chapter is made by the department] upon 18 completion of the requirements of section 304(g). No refund 19 of any portion of the license fee shall be made if the 20 license is voluntarily surrendered to the department or 21 suspended or revoked by the department prior to its 22 expiration date. 23 (2) Be immediately invalid if: 24 (i) Except as set forth in subparagraph (ii), the 25 [mortgage banker's corporate charter] licensee's 26 authority to conduct business is voided [in accordance 27 with the provisions of] under any law of this 28 Commonwealth or any other state. 29 (ii) Subparagraph (i) does not apply if the licensee 30 demonstrates to the satisfaction of the department that 20070H1417B1797 - 19 -
1 the voiding of authority to conduct business was clearly 2 erroneous. 3 (3) Not be assignable or transferable by operation of 4 law or otherwise [without the written consent of the 5 department]. 6 Section 308. Licensee requirements. 7 (a) Requirements on licensee.--A licensee shall: 8 (1) [Conspicuously] In the case of a mortgage banker, 9 mortgage broker or loan correspondent, conspicuously display 10 [its license], at each licensed place of business[.], its 11 license and copies of the licenses of all mortgage 12 originators assigned to that location. If the licensee is a 13 mortgage originator, the license shall be maintained in the 14 immediate possession of the licensee whenever the licensee is 15 engaged in the mortgage loan business. 16 (2) Maintain, at its principal place of business within 17 this Commonwealth, or at such place within or outside this 18 Commonwealth if agreed to by the [Secretary of Banking or the 19 commission] department, either the original or a copy of such 20 books, accounts, records and documents, or electronic or 21 other similar access thereto, of the business conducted under 22 the license as may be prescribed by the department [or 23 commission] to enable [them] it to determine whether the 24 business of the licensee is being conducted in accordance 25 with the provisions of this chapter and the [orders, rules 26 and] regulations, statements of policy and orders issued 27 under this chapter. The department, at its determination, 28 shall have free access to and authorization to examine 29 records maintained within or outside of this Commonwealth. 30 The costs of the examination, including travel costs, shall 20070H1417B1797 - 20 -
1 be borne by the licensee. The [secretary] department may deny 2 or revoke the authority to maintain records outside of this 3 Commonwealth for good cause in the interest of consumer 4 protection for Commonwealth borrowers, including the 5 licensee's failure to provide, upon request, books, accounts, 6 records or documents. 7 (3) [Annually] If the licensee is a mortgage banker, 8 mortgage broker or loan correspondent, annually, before May 9 1, file a report with the department [or commission] which 10 shall set forth such information as the department [or 11 commission] shall require concerning the business conducted 12 as a licensee during the preceding calendar year. The report 13 shall be in writing, under oath, and on a form provided by 14 the department. A licensee that fails to comply with this 15 paragraph shall be subject to an administrative penalty of 16 $100 for each day after May 1 until the date of compliance. 17 (4) Be subject to examination by the department [or 18 commission] at the discretion of the department [or 19 commission], at which time the department [or commission] 20 shall have free access, during regular business hours, to the 21 licensee's place or places of business in this Commonwealth 22 and to all instruments, documents, accounts, books and 23 records which pertain to a licensee's first mortgage loan 24 business, whether maintained in or outside of this 25 Commonwealth. The department [or commission] may examine a 26 licensee at any time if the department or commission deems 27 such examination to be necessary or desirable. The cost of 28 any such examination shall be borne by the licensee. 29 (5) Comply with all provisions of the act of January 30, 30 1974 (P.L.13, No.6), referred to as the Loan Interest and 20070H1417B1797 - 21 -
1 Protection Law, provided, however, that this shall not be 2 deemed an override of section 501 of the Depository 3 Institutions Deregulation and Monetary Control Act of 1980 4 (94 Stat. 161, 12 U.S.C. § 1735f-7a) or the Alternative 5 Mortgage Transaction Parity Act of 1982 (Public Law 97-320, 6 12 U.S.C. § 3801 et seq.). 7 (6) Comply with the provisions of the act of December 8 23, 1983 (P.L.385, No.91), entitled "An act amending the act 9 of December 3, 1959 (P.L.1688, No.621), entitled, as amended, 10 'An act to promote the health, safety and welfare of the 11 people of the Commonwealth by broadening the market for 12 housing for persons and families of low and moderate income 13 and alleviating shortages thereof, and by assisting in the 14 provision of housing for elderly persons through the creation 15 of the Pennsylvania Housing Finance Agency as a public 16 corporation and government instrumentality; providing for the 17 organization, membership and administration of the agency, 18 prescribing its general powers and duties and the manner in 19 which its funds are kept and audited, empowering the agency 20 to make housing loans to qualified mortgagors upon the 21 security of insured and uninsured mortgages, defining 22 qualified mortgagors and providing for priorities among 23 tenants in certain instances, prescribing interest rates and 24 other terms of housing loans, permitting the agency to 25 acquire real or personal property, permitting the agency to 26 make agreements with financial institutions and Federal 27 agencies, providing for the purchase by persons of low and 28 moderate income of housing units, and approving the sale of 29 housing units, permitting the agency to sell housing loans, 30 providing for the promulgation of regulations and forms by 20070H1417B1797 - 22 -
1 the agency, prescribing penalties for furnishing false
2 information, empowering the agency to borrow money upon its
3 own credit by the issuance and sale of bonds and notes and by
4 giving security therefor, permitting the refunding,
5 redemption and purchase of such obligations by the agency,
6 prescribing remedies of holders of such bonds and notes,
7 exempting bonds and notes of the agency, the income
8 therefrom, and the income and revenues of the agency from
9 taxation, except transfer, death and gift taxes; making such
10 bonds and notes legal investments for certain purposes; and
11 indicating how the act shall become effective,' providing for
12 homeowner's emergency assistance."
13 (7) Provide for periodic accounting of any escrow
14 accounts held by the licensee to the borrowers not less than
15 annually, showing the amounts received from the borrower and
16 the amounts disbursed.
17 (8) Refund all fees, other than those fees paid by the
18 licensee to a third party, paid by an applicant borrower when
19 a mortgage loan is not produced within the time specified by
20 the mortgage banker, loan correspondent[,] or mortgage broker
21 [or limited mortgage broker] at the rate, term and overall
22 cost agreed to by the borrower, provided, however, that this
23 provision shall not apply when the failure to produce a loan
24 is due solely to the borrower's negligence, his refusal to
25 accept and close on a loan commitment or his refusal or
26 inability to provide information necessary for processing,
27 including, but not limited to, employment verifications and
28 verifications of deposits. The licensee shall disclose to the
29 borrower, in writing, at the time of a loan application which
30 fees paid or to be paid are nonrefundable.
20070H1417B1797 - 23 -
1 (9) Ensure that all lock-in agreements shall be in 2 writing and shall contain at least the following provisions: 3 (i) The expiration date of the lock-in, if any. 4 (ii) The interest rate locked in, if any. 5 (iii) The discount points locked in, if any. 6 (iv) The [commitment] fee locked in, if any. 7 (v) The lock-in fee, if any. 8 (10) Include in all advertisements: 9 (i) language indicating that the licensee is 10 licensed by the department[.]; and 11 (ii) if the licensee is a mortgage originator, the 12 name of the mortgage originator's employer. 13 (11) Allow for the evidence of any insurance required in 14 connection with a loan by a policy or binder or a copy of 15 either. 16 (12) In the case of a mortgage broker, mortgage lender or 17 mortgage loan correspondent: 18 (i) maintain supervision and control of, and 19 responsibility for, the acts and omissions of all 20 mortgage originators employed by the licensee; 21 (ii) maintain a list of all current and former 22 mortgage originators employed by the licensee and the 23 dates of such employment; and 24 (iii) if a licensee has evidence that a mortgage 25 originator employed by the licensee has engaged in 26 activity which is illegal or in violation of this chapter 27 or a regulation or statement of policy promulgated under 28 this chapter, the licensee shall provide the department 29 with written notification of the evidence and the 30 licensee's proposed corrective measures within 30 days. A 20070H1417B1797 - 24 -
1 licensee shall not be liable to a mortgage originator in 2 connection with the notification. 3 (b) Accounting records.--[After the effective date of this 4 act, the] The licensee's accounting records must be constructed 5 and maintained in compliance with generally accepted accounting 6 principles [if the licensee is a mortgage banker] or [in such 7 manner] as may be provided by regulation [for all other 8 licensees, and all of the aforementioned instruments]. 9 Instruments, documents, accounts, books and records shall be 10 kept separate and apart from the records of any other business 11 conducted by the licensee and shall be preserved and kept 12 available for investigation or examination by the department [or 13 commission] for at least two years after a mortgage loan has 14 been paid in full. The provisions of this subsection shall not 15 apply to any instrument, document, account, book or record that 16 is assigned, sold or transferred to another person, nor shall 17 the two-year requirement apply to an instrument or document 18 which must be returned to a borrower at the time a mortgage loan 19 is paid in full. 20 (c) Copies.--If copies of instruments, documents, accounts, 21 books or records are maintained under subsection (a)(2), they 22 may be photostatic, microfilm or electronic copies or copies 23 provided in some other manner approved by the [Secretary of 24 Banking or the commission] department, as long as access to 25 information required by the [secretary or commission] department 26 exists electronically at all times within this Commonwealth. 27 [(d) Limited powers.--The powers conferred upon the 28 commission by this section, excluding subsection (a)(1), shall 29 only be exercised by the commission in relation to persons 30 licensed pursuant to the provisions of the act of February 19, 20070H1417B1797 - 25 -
1 1980 (P.L.15, No.9), known as the Real Estate Licensing and 2 Registration Act, who are subject to this section under section 3 303(b)(3), and the exercise of such power by the commission in 4 relation to such persons shall be exclusive.] 5 Section 309. Licensee limitations. 6 (a) Prohibitions.--A licensee shall not: 7 (1) Transact any business subject to the provisions of 8 this chapter under any other name except those designated in 9 its license[.] or those registered or otherwise qualified as 10 fictitious business names. A mortgage originator shall not 11 use any name other than the mortgage originator's personal 12 legal name. A licensee that changes its name or place or 13 places of business shall [immediately] notify the department, 14 [which] within ten days of the change; and the department 15 shall issue a certificate, if appropriate, to the licensee 16 which shall specify the licensee's new name or address. 17 (2) Conduct any business other than any business 18 regulated by the department in any place of business licensed 19 pursuant to this chapter without at least 90 days' prior 20 written notification to the department. 21 (3) Disburse the proceeds of a mortgage loan in any form 22 other than cash, electronic fund transfer, certified check or 23 cashier's check where such proceeds are disbursed by the 24 licensee to a closing agent. This paragraph shall not be 25 construed as requiring a lender to utilize a closing agent 26 and shall not apply to disbursements by check directly from 27 the licensee's account payable to the borrower, borrower 28 designees or other parties due funds from the closing. 29 (4) In the case of a loan correspondent, service 30 mortgage loans. 20070H1417B1797 - 26 -
1 (5) In the case of a mortgage broker or [limited] 2 mortgage [broker] originator, commit to close or close 3 mortgage loans in its own name, service mortgage loans, enter 4 into lock-in agreements or collect lock-in fees, provided, 5 however, that a mortgage broker or [limited] mortgage 6 [broker] originator can provide a lender's lock-in agreement 7 to a borrower on behalf of that lender and collect lock-in 8 fees on the lender's behalf payable to that lender. 9 (6) In the case of a mortgage originator, accept any 10 fees from consumers in the mortgage originator's own name. A 11 mortgage originator may accept fees payable to the licensee 12 that is the mortgage originator's employer and fees payable 13 to third-party entities on behalf of that licensee. A 14 mortgage originator may not accept advance fees payable to 15 the licensee that is the mortgage originator's employer 16 unless that licensee is authorized to collect advance fees 17 under this chapter. 18 (b) Authority to close loans in attorneys' and title 19 insurance companies or agencies' offices.--Nothing contained in 20 this chapter shall prohibit any licensee or person exempt from 21 licensure hereunder from closing any loans made under the 22 provisions of this chapter in the offices of attorneys-at-law 23 licensed by and located in this Commonwealth and title insurance 24 companies or agencies licensed by and located in this 25 Commonwealth. 26 Section 310. Authority of department [or commission]. 27 [(a) Department regulations.--Except as provided in 28 subsection (b), the department shall have the authority to issue 29 rules and regulations and orders as may be necessary for the 30 proper conduct of the business of a mortgage banker, loan 20070H1417B1797 - 27 -
1 correspondent, a mortgage broker or limited mortgage broker and 2 for the enforcement of this chapter, including, but not limited 3 to, cease and desist orders, notices of fines and such other 4 orders as the department in its discretion may issue. 5 (b) Joint regulations.--The department and the commission 6 shall have the authority to jointly issue rules and regulations 7 as may be necessary to carry out the purposes of sections 308, 8 310 and 314(b), excluding section 308(a)(1). Initial rules and 9 regulations shall be jointly issued by the department and the 10 commission within 180 days after the effective date of this 11 subsection. 12 (c) Powers.--The department and the commission shall have 13 the authority to: 14 (1) Examine any instrument, document, account, book, 15 record or file of a licensee or any other person, or make 16 such other investigation as may be necessary to administer 17 the provisions of this chapter. 18 (2) Conduct administrative hearings on any matter 19 pertaining to this chapter, issue subpoenas to compel the 20 attendance of witnesses and the production of instruments, 21 documents, accounts, books and records at any such hearing, 22 which may be retained by the department or commission until 23 the completion of all proceedings in connection with which 24 they were produced, and administer oaths and affirmations to 25 any person whose testimony is required. In the event a person 26 fails to comply with a subpoena issued by the department or 27 commission or to testify on any matter concerning which he 28 may be lawfully interrogated, on application by the 29 department or commission, the Commonwealth Court may issue an 30 order requiring the attendance of such person, the production 20070H1417B1797 - 28 -
1 of instruments, documents, accounts, books or records or the 2 giving of testimony. 3 (3) Request and receive any information or records of 4 any kind, including a report of criminal history record 5 information, from any Federal, State, local or foreign 6 government entity, regarding any applicant for a license, 7 licensee or any person related in any way to the business of 8 such applicant or licensee, at a cost to be paid by the 9 applicant or licensee. 10 (d) Limited powers.--The powers conferred upon the 11 commission by subsection (c) shall only be exercised by the 12 commission in relation to persons licensed pursuant to the 13 provisions of the act of February 19, 1980 (P.L.15, No.9), known 14 as the Real Estate Licensing and Registration Act, who are 15 subject to subsection (c) under section 303(b)(3) and the 16 exercise of such power by the commission in relation to such 17 persons shall be exclusive.] 18 (a) General authority.--The department has the authority to 19 do all of the following: 20 (1) Examine any instrument, document, account, book, 21 record or file of a licensee or any person having a 22 connection to the licensee or make such other investigation 23 as necessary to administer this chapter. Under this 24 paragraph, the department may remove any instrument, 25 document, account, book, record or file of a licensee to a 26 location outside of the licensee's office location. The costs 27 of the examination shall be borne by the licensee or the 28 entity subject to the examination. 29 (2) Conduct administrative hearings on any matter 30 pertaining to this chapter and issue subpoenas to compel the 20070H1417B1797 - 29 -
1 attendance of witnesses and the production of instruments, 2 documents, accounts, books and records at a hearing. The 3 instruments, documents, accounts, books and records may be 4 retained by the department until the completion of all 5 proceedings in connection with which the materials were 6 produced. A department official may administer oaths and 7 affirmations to a person whose testimony is required. If a 8 person fails to comply with a subpoena issued by the 9 department or to testify on a matter concerning which the 10 person may be lawfully interrogated, on application by the 11 department, the Commonwealth Court may issue an order 12 requiring the attendance of the person; the production of 13 instruments, documents, accounts, books and records; and the 14 giving of testimony. 15 (3) Request and receive information or records of any 16 kind, including reports of criminal history record 17 information from any Federal, state, local or foreign 18 government entity regarding an applicant for a license, a 19 licensee or a person related in any way to the business of 20 the applicant or licensee, at a cost to be paid by the 21 applicant or licensee. 22 (4) Require a licensee or nonlicensee to pay the 23 department's costs incurred while conducting an investigation 24 of the licensee or nonlicensee for purposes of issuance or 25 renewal of a license or for any violation of this chapter, 26 regardless of whether costs are in excess of the license or 27 renewal fees paid by a licensee. 28 (5) Issue regulations, statements of policy or orders as 29 necessary for the proper conduct of the first mortgage loan 30 business by licensees, the issuance and renewal of licenses 20070H1417B1797 - 30 -
1 and the enforcement of this chapter. 2 (6) Prohibit or permanently remove an individual 3 responsible for a violation of this chapter from working in 4 his present capacity or in any other capacity related to 5 activities regulated by the department. 6 (7) Order a person to make restitution for actual 7 damages to consumers caused by any violation of this chapter. 8 (8) Issue cease and desist orders which are effective 9 immediately, subject to a hearing as specified in subsection 10 (b) within 14 days of the issuance of the order. 11 (9) Impose such other conditions as the department deems 12 appropriate. 13 (b) Hearings.--A person aggrieved by a decision of the 14 department may appeal the decision of the department to the 15 secretary. The appeal shall be conducted under 2 Pa.C.S. Ch. 5 16 Subch. A (relating to practice and procedure of Commonwealth 17 agencies). 18 (c) Injunctions.--The department may maintain an action for 19 an injunction or other process against a person to restrain and 20 prevent the person from engaging in an activity violating this 21 chapter. 22 (d) Final orders.--A decision of the secretary shall be a 23 final order of the department and shall be enforceable in a 24 court of competent jurisdiction. The department may publish 25 final adjudications issued under this section, subject to 26 redaction or modification to preserve confidentiality. 27 (e) Appeals.--A person aggrieved by a decision of the 28 secretary may appeal the decision under 2 Pa.C.S. Ch. 7 Subch. A 29 (relating to judicial review of Commonwealth agency action). 30 (f) Orders affecting mortgage originators.--An order issued 20070H1417B1797 - 31 -
1 against a licensee is applicable to the mortgage originators 2 employed by the licensee. 3 Section 6. Section 311 act, renumbered June 25, 2001 4 (P.L.621, No.55), is amended to read: 5 [Section 311. Fees. 6 (a) Certain fees prohibited.--No real estate broker or 7 salesperson who has received a fee, commission or other valuable 8 consideration in connection with the sale or transfer of real 9 estate shall be paid or receive a fee or other compensation, 10 directly or indirectly, for providing mortgage brokering 11 services in connection with the origination of a mortgage loan 12 relative to such sale or transfer of real estate, but such 13 broker or salesperson may receive a fee in connection with such 14 mortgage loan transaction which shall not exceed an amount as 15 established by the commission pursuant to this section. 16 (b) Regulations.--The commission shall, within 180 days of 17 the effective date of this subsection, promulgate rules and 18 regulations establishing the maximum fees which a real estate 19 broker or salesperson may charge for services rendered in 20 connection with mortgage brokering services. Said fees shall: 21 (1) Be for actual services rendered in connection with 22 the origination of a mortgage loan. 23 (2) Be expressed in terms of dollars or as a percentage 24 of the mortgage loan being created. 25 (c) Formulation procedure.--Prior to the publication of any 26 notice of proposed rulemaking under this section, the commission 27 shall hold public hearings to afford any interested party, 28 including the department, full opportunity to present testimony, 29 comment thereon and make recommendations regarding the 30 formulation of such rules and regulations. The department shall 20070H1417B1797 - 32 -
1 also have 30 days following the close of the hearings to submit 2 further comments and recommendations to the commission. The 3 procedure contained in this section shall be in addition to the 4 requirements contained in the act of June 25, 1982 (P.L.633, 5 No.181), known as the Regulatory Review Act, and shall not 6 affect any right the department may have to participate in the 7 rulemaking process following the commission's publication of 8 proposed rules and regulations as permitted by that act. In 9 establishing the maximum fees allowable, the commission shall 10 consider the nature of the services performed by the real estate 11 broker or salesperson and the time required for the performance 12 thereof. 13 (d) Licensing option.--A real estate broker or salesperson 14 who is also a bona fide mortgage broker, mortgage banker or loan 15 correspondent who holds himself out publicly as such shall have 16 the option of being licensed and regulated by the department, in 17 which case he shall not be subject to the fee limitations 18 provided for in this section or the rules and regulations 19 promulgated by the commission hereunder. 20 (e) Disclosure.--No real estate broker or salesperson shall 21 receive a fee, commission or other valuable consideration 22 pursuant to this section and the regulations promulgated 23 hereunder unless he makes the following written disclosure to 24 the buyer in at least ten-point boldface capital letters. 25 The real estate broker in this transaction who has 26 offered to assist me in obtaining a mortgage loan has 27 advised me of the following: 28 (1) He does not represent any particular mortgage 29 lender; or the name of the mortgage lender he represents 30 is......................... 20070H1417B1797 - 33 -
1 (2) I am not required to obtain the mortgage for the 2 purchase of the real estate from the mortgage banker whom 3 the broker represents. 4 (3) The real estate broker has a fiduciary 5 obligation to the seller, from whom he will receive a 6 commission. 7 (4) Should the real estate broker violate any of the 8 provisions of the Real Estate Licensing and Registration 9 Act or the Mortgage Bankers and Brokers Act I may file a 10 complaint with the Pennsylvania Real Estate Commission.] 11 Section 7. Sections 313 and 314 of the act, renumbered and 12 amended June 25, 2001 (P.L.621, No.55), are amended to read: 13 Section 313. Suspension, revocation or refusal. 14 (a) Departmental action.--The department may suspend, revoke 15 or refuse to renew any license issued pursuant to this chapter 16 [after giving 30 days' written notice forwarded to the 17 licensee's principal place of business, by registered or 18 certified mail, return receipt requested, stating the 19 contemplated action and the reason therefor, if the department 20 shall find, after the licensee has had an opportunity to be 21 heard, that] if any fact or condition exists or is discovered 22 which, if it had existed or been discovered at the time of 23 filing the application for the license, would have warranted the 24 department in refusing to issue the license or if the licensee 25 or any director, officer, partner, employee or owner of the 26 licensee has: 27 (1) Made any false or material misstatement in [his] an 28 application or in a report or submission required by this 29 chapter or by a department regulation, statement of policy or 30 order. 20070H1417B1797 - 34 -
1 (2) Failed to comply with or violated any provision of 2 this chapter or any [rule,] regulation, statement of policy 3 or order promulgated or issued by the department pursuant to 4 this chapter. 5 (3) If licensed under section [304(c)] 304(b.1) or (c), 6 accepted an advance fee without having obtained the bond 7 required by section 304(b.1)(1)(i) or (c)(1). 8 (4) Become insolvent, meaning that the liabilities of 9 the applicant or licensee exceed the assets of the applicant 10 or licensee or that the applicant or licensee cannot meet the 11 obligations of the applicant or licensee as they mature, or 12 is in such financial condition that the applicant or licensee 13 cannot continue in business with safety to the customers of 14 the applicant or licensee. 15 (5) Engaged in dishonest, fraudulent or illegal 16 practices or conduct in any business or unfair or unethical 17 practices or conduct in connection with the mortgage 18 business. 19 (6) Been convicted of [a misdemeanor or of], or entered 20 a plea of guilty or no contest to, an offense involving moral 21 turpitude or a felony. 22 [(7) Filed an application for a license which, as of the 23 date the license was issued or as of the date of an order 24 denying, suspending or revoking a license, was incomplete in 25 any material respect or contained any statement that was, in 26 light of the circumstances under which it was made, false or 27 misleading with respect to any material fact.] 28 (8) Permanently or temporarily been enjoined by a court 29 of competent jurisdiction from engaging in or continuing any 30 conduct or practice involving any aspect of the mortgage 20070H1417B1797 - 35 -
1 business. 2 (9) Become the subject of an order of the department 3 denying, suspending or revoking a license [as a mortgage 4 banker, mortgage broker, limited mortgage broker or loan 5 correspondent] under this chapter. 6 (10) Become the subject of a United States Postal 7 Service fraud order [that is currently effective and was 8 issued within the last five years]. 9 (11) Failed to comply with the requirements of this 10 chapter to make and keep records prescribed by [rule] 11 regulation, statement of policy or order of the department, 12 to produce such records required by the department or to file 13 any financial reports or other information the department by 14 [rule] regulation, statement of policy or order may require. 15 (12) Become the subject of an order of the department 16 denying, suspending or revoking a license under the 17 provisions of any other law administered by the department. 18 [(13) Failed to comply with a cease and desist order 19 entered after notice and opportunity for hearing and issued 20 by the department within the last five years.] 21 (14) Demonstrated negligence or incompetence in 22 performing any act for which the licensee is required to hold 23 a license under this chapter. 24 [(15) In the case of a limited mortgage broker, 25 negotiated or placed, either directly or indirectly, a 26 mortgage loan other than a nonpurchase money mortgage loan as 27 defined in this chapter. 28 The hearing and notice provisions of this section shall not 29 apply if the licensee's corporate charter is voided in 30 accordance with the provisions of any law of this or any other 20070H1417B1797 - 36 -
1 state, in which event the department may suspend or revoke the 2 license.] 3 (16) Failed to complete the qualifying or continuing 4 education as required by section 304(e). 5 (17) In the case of a mortgage banker, loan 6 correspondent, or mortgage broker, conducted the first 7 mortgage loan business through an unlicensed mortgage 8 originator. 9 (18) Failed to comply with the terms of any agreement 10 under which the department authorizes a licensee to maintain 11 records at a place other than the licensee's principal place 12 of business. 13 (b) Reinstatement.--The department may subsequently 14 reinstate a license which has been suspended or revoked or renew 15 a license which had previously been refused for renewal if the 16 condition which warranted the original action has been corrected 17 and the department has reason to believe that such condition is 18 not likely to occur again and the licensee satisfies the 19 requirements of this chapter. 20 Section 314. Penalties. 21 (a) Nonlicensees.--Any person who is not licensed by the 22 department or is not exempted from the licensing requirements in 23 accordance with the provisions of this chapter and who engages 24 in the first mortgage loan business [of a mortgage banker, loan 25 correspondent, mortgage broker or limited mortgage broker] 26 commits a felony of the third degree. 27 (b) Nonlicensees subject to the provisions of this 28 chapter.--Any person who is subject to the provisions of this 29 chapter, even though not licensed hereunder, or any person who 30 is not licensed by the department or is not exempt from the 20070H1417B1797 - 37 -
1 licensing requirements, who violates any of the provisions to 2 which it is subject shall be subject to a fine levied by the 3 department or commission of up to [$2,000] $10,000 for each 4 offense. [Any such nonlicensed person who commits three or more 5 offenses may, at the discretion of the department or commission, 6 be prohibited from engaging in the first mortgage loan business 7 unless licensed under this chapter.] 8 (c) Violations by licensees.--Any person licensed under the 9 provisions of this chapter or any director, officer, employee or 10 agent of a licensee who shall violate the provisions of this 11 chapter or shall direct or consent to such violations shall be 12 subject to a fine levied by the department of up to [$2,000] 13 $10,000 for each offense. 14 [(d) Limited powers.--The powers conferred upon the 15 commission by subsection (b) shall only be exercised by the 16 commission in relation to persons licensed pursuant to the 17 provisions of the act of February 19, 1980 (P.L.15, No.9), known 18 as the Real Estate Licensing and Registration Act, who are 19 subject to subsection (b) under section 303(b)(3) and the 20 exercise of such power by the commission in relation to such 21 persons shall be exclusive.] 22 Section 8. Sections 316 and 317 of the act, renumbered and 23 amended June 25, 2001 (P.L.621, No.55), are repealed: 24 [Section 316. Referral fees. 25 Nothing in this chapter shall permit a real estate broker or 26 salesperson, who receives a fee, commission or other valuable 27 consideration relating to the sale of residential real property, 28 to be paid or receive a finder's fee or a referral fee for the 29 referral of a mortgage loan to a lender in connection with that 30 sale, whether or not the real estate broker or salesperson is 20070H1417B1797 - 38 -
1 licensed and regulated by the department. 2 Section 317. Real Estate Recovery Fund. 3 Any person injured by the wrongful act, default or 4 misrepresentation of a person engaged in the activities of a 5 mortgage broker who is exempt from licensure under this chapter 6 by virtue of being licensed pursuant to the act of February 19, 7 1980 (P.L.15, No.9), known as the Real Estate Licensing and 8 Registration Act, shall be entitled to seek recovery from the 9 Real Estate Recovery Fund established by the Real Estate 10 Licensing and Registration Act notwithstanding the fact that 11 such wrongful act, default or misrepresentation occurred in 12 conjunction with mortgage-brokering activities subject, however, 13 to all other terms and conditions of the Real Estate Licensing 14 and Registration Act regarding recovery from that fund.] 15 Section 9. This act shall take effect in 60 days. D10L07VDL/20070H1417B1797 - 39 -