HARRISBURG, PA – Nov. 29, 2007 — Secretary of Banking Steve Kaplan says Pennsylvania lawmakers need to pass stronger laws to protect home borrowers from abusive lending practices that are causing families to lose their homes to foreclosure and threatening the economy.
“The mortgage industry has changed in several important and troubling ways,” said Kaplan. “Too many people are getting, and at times being lured into, loans they simply cannot afford to repay. I urge the General Assembly to give the banking department the tools it needs to bring transparency back to the mortgage business.”
Kaplan testified today at a House Intergovernmental Affairs hearing on House Resolution 415, which would call on Congress to “freeze” all existing home mortgages and declare a moratorium on foreclosures. Kaplan warned that any federal action should not preclude Pennsylvania from taking stronger steps of its own.
“We want to make sure that the federal standards are minimum standards so that states still have the authority to add protections that we believe are necessary to safeguard consumers in Pennsylvania,” said Kaplan.
The Department of Banking is pressing for legislation that would strengthen licensing and education requirements for mortgage lenders and brokers; allow the department to more quickly notify the public about fines and other actions against companies; and protect more borrowers under the state interest law. The department also is backing legislation to improve oversight of real estate appraisers and to require mortgage companies to notify the state when they intend to foreclose on a property.
The six bills (Senate bills 483, 484, 485, 486, 487, 488 and House bills 1079, 1080, 1081, 1082, 1083, 1084) were introduced earlier this year and key components are currently under consideration in the Senate Banking and Insurance and House Commerce committees.
Kaplan noted that the banking department is also pursuing a new regulation to require mortgage companies to more clearly disclose certain loan features such as prepayment penalties, variable interest rates or balloon payments and to better verify a mortgage applicant’s ability to repay the loan, given all of its terms and conditions. The regulation is currently under review by the state’s Independent Regulatory Review Commission.