Stack Announces Passage of Mortgage Regulation Bill

HARRISBURG, JULY 29, 2009 — The Pennsylvania Senate today unanimously approved legislation that would put the commonwealth in compliance with federal mortgage regulations, according to state Sen. Mike Stack.

“If we don’t update our laws to match the federal mandate, Pennsylvania could lose the authority to regulate the mortgage industry in our state,” said Stack, who is the Democratic chairman of the Senate Banking and Insurance Committee, which provides oversight to the mortgage industry and the Pennsylvania Department of Banking. “This is necessary legislation that would put us in current compliance with the federal SAFE Act.”

House Bill 1654 would give the Department of Banking, which regulates mortgage lenders and brokers, the authority to deny mortgage broker licenses if the applicant has been convicted of any felony in the past seven years prior to the time of the application.

The department would also be given the authority to issue a permanent licensure ban to anyone convicted of a felony involving an act of fraud, dishonesty, breach of trust or money laundering unless he’s been pardoned for a felony conviction.

The bill also increases pre-licensure and continuing education requirements and would require mortgage lenders to register with a national database, which would prevent unscrupulous lenders from moving from state to state.

Finally, the bill would give the department the authority to require individuals in the mortgage business to purchase surety bonds. The size of the bond would depend on the amount of mortgage business done annually.

“In an era where predatory loans impacted so many people across the country, it’s crucial that we prevent homeowners from drowning in debt,” Stack said. “This bill puts protective measures in place that will reduce the chances of predatory lending practices.”

The bill now goes back to the House for consideration.

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