Harrisburg, March 12, 2008 — A package of bills to protect future mortgage borrowers was sent to the House of Representatives with overwhelming passage in the state Senate.
“This is a badly needed step,” said Senator Michael A. O’Pake, who supported the wide-ranging package. “These bills will protect borrowers from unscrupulous practices in the sub-prime market and like those that victimized Personal Financial Management clients.
“They provide greater direct state oversight of the mortgage origination industry, and give the Department of Banking the increased enforcement authority it needs to protect borrowers.”
More than 800 homeowners in Berks and Lancaster counties discovered they were victims of a ponzi-scheme in the guise of wraparound investment mortgages with the collapse last year of Exeter Township-based Personal Financial Management.
“Instead of increased financial security, Personal Financial Management clients found obligations far beyond what PFM promised them,” said O’Pake. “We are trying to insure that, in the future, borrowers acting responsibly can be secure in their financial plans and commitments.”
Changes under the package include new licensing requirements for mortgage originators, the people who negotiate or place mortgage loans for others, said O’Pake. Continuing education requirements also would be imposed on the industry and fines up to $10,000 could be imposed on each violation.
The package also would offer borrowers facing temporary financial difficulties breathing room from foreclosure if they work with the state Housing Finance Agency; prohibit pre-payment penalties on residential mortgages of $200,000 or less held by companies or banks that are not federally chartered; allow the Department of Banking to refuse to issue, to suspend or to revoke licenses for a list of concerns; and permit it to release information about enforcement actions against license holders.
