STACK APPLAUDS PASSAGE OF MORTGAGE FORECLOSURE PROTECTION BILLS

            HARRISBURG, March 11: State Sen. Mike Stack said that today’s Senate passage of a package of mortgage foreclosure protection bills is a good start to ensuring that Pennsylvania has a fair mortgage industry.

The measures (Senate Bills 483, 484, 485, 486, 487 and 488) increase penalties, give the Pennsylvania Department of Banking new enforcement powers to get predatory lenders out of the mortgage industry, and create licensure for mortgage originators.

The legislation would protect consumers and help strengthen the mortgage industry, which has been reeling from the effects of an economic slowdown and bad loans, said Stack, who is the Democratic chairman of the Senate Banking and Insurance Committee.

            “As Pennsylvania prepares for more difficult economic times, it is imperative that we craft proactive solutions to safeguard our housing industry,” Stack said. “After all, the housing industry is not only important to consumers and the American Dream, it is an important part of our overall economy.”

According to RealtyTrac, the leading on-line marketplace for foreclosure properties, in 2007 there were more than 2.2 million foreclosure filings on nearly 1.3 million properties across the United States. It also found that more than 1 percent of all U.S. households were in some stage of foreclosure in 2007 — an increase from .58 percent the previous year.

RealtyTrac also reported that in 2007 Pennsylvania ranked 34^th of all states in mortgage foreclosures down 11.07 percent since 2006.

However, according to a PHFA Housing Study, Pennsylvania had a 12^th highest prime foreclosure rate in the United States; the subprime foreclosure rate was 15^th highest in the United States. For 2005, Pennsylvania’s prime foreclosure rate was ninth highest in the nation; the subprime foreclosure rate was fourth highest.

“In addition to preventing foreclosures and protecting our economy, we want to make sure that no one takes advantage of homeowners who are facing foreclosure, as well as future homebuyers,” Stack said. “The people who help us with the biggest financial purchase in our lifetime are not required to have a license under current Pennsylvania law. This package addresses that need.”

The measures now move to the House for consideration.

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            The mortgage foreclosure package includes these bills:

·                    Senate Bill 483 adds interest-rate protections for consumers by increasing the maximum interest cap from $50,000 to $200,000 for residential mortgage loans. The cap is adjusted annually for inflation.  The bill also clarifies that certain loans are exempted from the rate cap limit, including loans of more than $200,000 and any mortgage loans for a business.

·                    Senate Bill 484 permits the Department of Banking to release information on pending enforcement actions and fines against non-depository licensees.  The bill also requires licensees to use a national electronic licensing system and obtain criminal history checks.

·                    Senate Bill 485 improves and strengthens enforcement actions against real estate appraisers who perform fraudulent work.  The measure also expands the state Board of Certified Real Estate Appraisers from seven members to 11.  It also establishes three classes of real estate appraisers: Certified Real Estate Appraisers, Certified General Appraisers and Appraiser Trainee License.

·                    Senate Bill 486 improves mortgage oversight and gives PHFA more flexibility to accept late payments, make compromise mortgage payoffs and set interest rates on loans.  The bill also changes the assistance interest rate from 9% to a mortgage interest rate established under the Usury Law.

·                    Senate Bill 487 creates a new licensure category for mortgage originators who deal directly with the consumer so that their actions can be better accounted for in real estate transactions.  A licensed bank, banker or broker must supervise these originators.

The bill also requires licensees to complete continuing education.