BELLE VERNON, Aug. 29 – – Acting Secretary of Banking Steven Kaplan today told lawmakers in Fayette County that Pennsylvania needs to strengthen its regulation of mortgage companies.
The Department of Banking has proposed regulatory changes that would require mortgage lenders and brokers to clearly disclose key loan features, such as the presence of a prepayment penalty, balloon payment or an adjustable interest rate. It would also require companies to evaluate the borrower’s ability to pay back the loan.
“Too many people have been getting mortgages they simply can’t afford,” said Kaplan during an informational session with lawmakers. “Clearer disclosures and better documentation will help all parties to focus on loans that are safer and more realistic.”
Following the publication last month of proposed regulations, the department received nearly 200 comment letters from the mortgage industry, consumer advocacy groups and citizens. Those comments are now under review by both the department and the commonwealth’s Independent Regulatory Review Commission.
The proposal is part of a broader, ongoing effort by the Department of Banking to protect consumers in the mortgage marketplace. In December, the agency issued a statement of policy to clearly define dishonest, fraudulent, illegal, unfair, unethical, negligent or incompetent conduct for mortgage companies under existing laws. The department is also supporting a package of six bills in the General Assembly that is aimed at curbing abusive lending practices. The bills are likely to be considered during the fall legislative session.
“The proposed legislation will give the Department of Banking the tools it needs to effectively weed out abuses in the residential mortgage marketplace,” said Kaplan.
The Department of Banking encourages prospective homeowners to thoroughly research a company or broker before obtaining a mortgage.
Consumers can search for Pennsylvania-licensed companies at www.banking.state.pa.us. They can also ask questions about mortgage lending or other financial matters by calling 1-800-PA-BANKS or learn more about the financial aspects of homeownership in the “Housing” section of the Pennsylvania Office of Financial Education’s Web site, www.moneysbestfriend.com.
