Mortgage Licensing Bills Signed into Law

Under new morgage licensing laws, mortgage brokers must be licensed by the state and undergo training on mortgage laws. The five bills Gov. Ed Rendell signed into law Tuesday will:

● Require anyone selling mortgages to pass a state background check and be licensed. Previously, mortgage companies, rather than individuals, had to be licensed.
● Forbid mortgage companies from imposing prepayment penalties on mortgages up to $217,000, when a borrower tries to refinance with another company.
● Impose fines up to $10,000 on appraisers who inflate home values to get buyers to borrow more money than the house is worth.
● Require mortgage lenders to report foreclosures to the state Housing Finance Agency, which will track them and recommend changes, publish a list of approved credit counseling agencies and notify borrowers threatened with foreclosure of counseling options.
● Require the state Banking Department to make public all enforcement action against mortgage brokers, pawnshops, money transfer agents, even repossession firms -but not depository institutions such as banks.

Homebuyers will be able to view Pennsylvania Banking Department records to see a history of enforcement actions, such as fines and penalties, against mortgage bankers and brokers. Previously, that information was barred from release.

Senator Mike Stack,Democratic Chairman of the Senate Banking & Insurance Committee, says the new laws are needed to protect homeowners from unscrupulous mortgage lenders.

"Home ownership is the American Dream, but for many it's become a nightmare," Stack says. "As Pennsylvania tries to work through these difficult economic times, it's imperative that the Legislature come up with proactive solutions to safeguard our housing industry."

"Folks that are nervous about losing their homes -- I think a lot of those folks can feel more at ease (now that)the name of the game for the Pennsylvania Legislature and the governor is to help folks hold on to their homes," Stack says.