PA Acting Banking Secretary Reider Urges Lawmakers to Act Swiftly on Mortgage Reform
To improve accountability in the mortgage industry and keep hard-working families from losing their homes, acting Banking Secretary Victoria A. Reider today urged swift action on legislation to stop abusive lending practices blamed for many foreclosures.
The committee is planning two more hearings, in the Poconos and Philadelphia, on abusive lending and mortgage foreclosures.
Legislation was introduced in the House (HB 1079-1084) and Senate (SB 483- 488) earlier this year to stop abusive lending practices. The six bills are the result of a 2005 Department of Banking report on foreclosures, which cited abusive lending practices as a significant contributing factor to Pennsylvania’s above-average foreclosure rate.
The bills would amend state laws to require individual licenses for mortgage professionals. Currently, the department has the authority to license mortgage companies but not the employees who work there.
The bills would also protect more borrowers under the state interest law, allow the Banking Department to notify the public sooner about fines and other actions against companies, enhance the collection of foreclosure data at the Pennsylvania Housing Finance Agency and improve oversight of real estate appraisers by the state’s Appraiser Board.
In addition to supporting legislative reform, the department plans to propose regulations that require crucial loan information to be disclosed to borrowers and require mortgage companies to evaluate a borrower’s ability to repay the loan given all of its terms, not just the low “introductory” payment.
Late last year, the department issued a statement of policy to mortgage companies to clarify what constitutes improper conduct under existing laws.
The department has also implemented a number of internal changes, including adding staff to focus on mortgage companies and handle consumer complaints, creating an investigative unit and implementing more extensive background checks on license applicants.