Pennsylvania Modifies Mortgage and Conveyancing Provisions
by: Lee Greenberg
Provisions Regarding Mortgage Loans
The state of Pennsylvania recently modified several provisions regarding mortgage loans in House Bill 1124. The legislation becomes effective on August 31, 2013.
House Bill 1124 provides new definitions for the following terms:
- Administrative or clerical tasks; application; bona fide nonprofit organization; branch; branch manager; commercial context; commission; employee; habitually and repeatedly; installment sales contract; lease-purchase agreement; mortgage loan; mortgage loan modification; mortgage originator; non-originating person; offer or negotiate terms of a mortgage loan for compensation or gain; qualifying individual; and take a mortgage loan application.
The legislation provides new mortgage loan license requirements. Under the law, a person may not engage in the mortgage loan business in Pennsylvania without being licensed as a mortgage broker, mortgage lender, mortgage loan correspondent or mortgage originator. A mortgage originator may not engage in the mortgage loan business unless he or she is sponsored in the Nationwide Mortgage Licensing System and Registry (NMLS) by a licensed mortgage broker, mortgage lender or mortgage loan correspondent, or excepted person and under the supervision and control of the sponsoring licensee or excepted person.
The new law added the following persons to the existing law as persons not required to obtain licenses in order to conduct mortgage loan business:
- A banking institution or federally chartered or State-chartered credit union, if the primary regulator of the banking institution or credit union supervises the banking institution or credit union. A banking institution or credit union may register with the department for the purpose of having individuals under its direct supervision and control licensed as mortgage originators.
- A person who originates or negotiates less than four mortgage loans in a calendar year, unless determined by the department to be engaged in the mortgage loan business.
- Any agency of the Federal Government or a corporation otherwise created by an act of the United States Congress, including employees thereof acting within the scope of their employment.
- Any agency of a state or local government, the District of Colombia or any territory of the United States, including employees thereof acting within the scope of their employment.
- Employees or individuals under the direct supervision and control of a mortgage broker, mortgage lender or mortgage loan correspondent, or a person excepted from licensure, who engage solely in loan processor or underwriter activities, and do not represent to the public that they can or will perform any of the activities of a mortgage originator.
- A bona fide nonprofit organization and employees of the organization acting within the scope of their employment, unless determined by the department to be engaged in the mortgage loan business.
- A non-originating person, unless determined by the department to be engaged in the mortgage loan business.
- A mortgage originator licensed by one or more other states and physically located in Pennsylvania that does not engage in any transactions involving Pennsylvania consumers, dwelling or residential real estate.
- A person who engages in mortgage loan modifications for existing mortgage loans held or serviced by that person or that person’s employer and who does not otherwise engage in the mortgage loan business.
The new law requires licensees to comply with all applicable State laws including the provisions of the Housing Finance Agency Law and the Mortgage Satisfaction Act.
In addition, licensees are required to maintain all instruments, documents, accounts, books and records relating to the mortgage loan business separate and apart from the records of any other business conducted by the licensee. Records of first and secondary mortgage loans must be easily distinguishable and separated. All records must be preserved and kept available for investigation or examination by the department for four years, unless otherwise determined by the department.
The law requires all applicants for license and all licensees to establish and maintain a separate license for the principal place of business and each branch. Licenses are issued for terms not to exceed 14 months and may be renewed by the department each year on a schedule set by the department upon application by the licensee and the payment of any and all applicable renewal fees. Upon satisfying the department that all creditors of a licensee have been paid, a licensee may voluntarily surrender its license to the department by providing the department or the NMLS, as determined by the department, written notice that the license is being voluntarily surrendered, but such an action by a licensee shall not affect the licensee’s civil or criminal liability for acts committed.
Lastly, the new law prohibits mortgage loan originators from engaging in the mortgage loan business other than on behalf of a single mortgage broker, mortgage lender or mortgage loan correspondent or a person excepted from the law or from licensure that sponsors the mortgage originator.
Provisions Regarding Validation of Conveyances
Pennsylvania amended a provision in Senate Bill 419 by extending the date for validation of certain conveyances and other instruments from the year 2005 to the year 2013. The amendment pertains to grants, bargains and sale, deeds of conveyance, releases, assignments, mortgages or other assurance of lands, tenements and hereditaments. Senate Bill 419 becomes effective on January 1, 2014.
About the Author:
Lee Greenberg, Esq. is Vice President and Senior Counsel at Bankers Advisory, Inc. He serves as Client Relationship Manager and Director of Compliance Training. Lee is a graduate of the University of Colorado at Boulder and earned his J.D. at the New England School of Law. He is admitted to the bar in Massachusetts. He can be reached at lee@bankersadvisory.com
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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