Gov. Edward G. Rendell, D-Pa., has signed five bills designed to protect homebuyers, strengthen oversight of the mortgage industry and end key lending practices that leave homeowners vulnerable to foreclosure.
H.B.2179 assures homebuyers that the persons selling mortgages have successfully 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. In the past, only mortgage companies had to be licensed in Pennsylvania – not their employees, the governor's office notes.
S.B.483 makes sure that Pennsylvanians who buy typical family homes cannot be trapped in unaffordable mortgages by certain prepayment penalty provisions. This law bans licensees from including prepayment penalties on mortgages of $217,873 or less, a figure that will now be adjusted for inflation every year.
S.B.484 gives homebuyers more information to evaluate potential mortgage companies or salespeople. Until now, Pennsylvania law has prohibited the Banking Department from telling the public about enforcement actions, fines and penalties against licensees such as mortgage bankers and brokers, according to the governor's office. This new law allows the Banking Department to release more information more quickly.
The governor's office says that S.B.485 increases homebuyers' confidence that the appraised value of the home is sound. In the run-up to the housing boom, there was significant pressure on appraisers to set values to make certain types of mortgages more attractive and attainable, making it possible for buyers to borrow more than the home was actually worth. This new law extends the consumer protection and lending expertise of the state's appraisers' board 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.
Finally, S.B.486 puts individual homeowners' struggles into a statewide context. 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. With this data, state government will be able to identify potentially troubling trends, making it possible to intervene more quickly and strategically to help save people's homes.
Source: Office of Gov. Edward G. Rendell