Senate News Update
From Senator Jane Earll
September 8, 2008

Mortgage Reform

Few things are as fundamental to the American dream as a house. It's a home, an investment, the setting for life's memories, and more.

The shakeup in the U.S. mortgage industry this year has left many homeowners worried that their most important investment – one that they planned on bequeathing to their children some day -- is in jeopardy.

While Pennsylvania has fared better than most states, I am pleased that the state Legislature recently passed several new laws to strengthen oversight of the mortgage industry and end lending practices that leave homeowners vulnerable to foreclosure.

• Act 2008-56 requires sellers of mortgages to show they've passed a background check, completed training specific to state and federal mortgage laws, passed a test to prove their knowledge and are licensed by the Department of Banking.  Previously, only mortgage companies had to be licensed in Pennsylvania, not their employees.
• Act 2008-57 prohibits the kind of prepayment penalties that have been used by some unscrupulous lenders to trap families in escalating, unaffordable mortgages.  The law bans licensees from including prepayment penalties on mortgages of $217,873 or less.  (That figure that will be adjusted for inflation every year.)
• Act 2008-59 aims to eliminate the pressure on appraisers to make certain types of mortgages more attractive, making it possible for buyers to borrow more than the home was actually worth.  The new law extends the consumer protection and lending expertise of the State Board of Certified Real Estate Appraisers by adding the Attorney General and the Secretary of Banking to its membership.  It also increases the maximum penalty for appraiser misconduct to $10,000 per violation.
• Act 2008-60 provides the state with information to more quickly respond to troubling housing trends. Currently, foreclosure notices are sent only to the homeowner and filed in the borrower's home county. The new law requires that a copy of every foreclosure notice be sent to the Pennsylvania Housing Finance Agency so that foreclosure activity can be monitored in real time, making it possible to intervene and offer help.
• Act 2008-58 is a law I co-sponsored to add Pennsylvania to the Nationwide Mortgage License System.  The national system is an online registry of mortgage companies and professionals licensed in participating states.  It strengthens consumer protection by preventing bad actors from moving undetected from state to state.

These new laws will help prevent some unscrupulous professionals from turning the American dream into a nightmare.  If you need help with a mortgage matter, contact the Pennsylvania Housing Finance Agency at www.phfa.org or 800-635-4747 to find a list of organizations across the state that have specially trained professionals available to help with mortgage and foreclosure issues.

As always, if you have questions on this or any state government matter, please do not hesitate to call my office at 814-453-2515.