HARRISBURG – The House Commerce Committee today passed legislation authored by Rep. Mario Scavello (R-Monroe) that would change state law to reflect current federal regulatory guidance concerning limiting exceptions for owner financing.
“The intent of my legislation, House Bill 1931, is to restore a person’s ability to originate, offer, negotiate or service less than four mortgage loans in a calendar year,” said Scavello. “This legislation will allow for greater flexibility in financing options for Pennsylvania taxpayers and homeowners.”
In 2009, Act 31 removed the ability of a person to originate, negotiate or service any mortgage in a calendar year, unless it was to an immediate family member, without having to obtain a license. This action was taken in response to the requirements in the 2008 federal Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act).
In June 2011, the U.S. Department of Housing and Urban Development released the final rules and regulations for the federal act. The rule interprets the SAFE Act and provides a distinction between individuals who may meet the definition of loan originator. Because of the activities they carry out, versus those individuals who engage in the business of a loan originator, means not every individual is necessarily subject to the SAFE Act.
The state Secretary of Banking in October 2011 issued a letter to all persons potentially engaged in the mortgage loan business in Pennsylvania or with Pennsylvania residents to provide temporary guidance regarding the Department of Housing and Urban Development’s regulation.
The Banking Department stated that it will not take exception to an individual making or brokering three or less mortgage loans in a calendar year without being licensed as a mortgage originator, provided that the individual is not employed by any state-licensed entity or advertising that the individual is able to engage in the mortgage loan business and such loans are made in compliance with all other applicable federal and state laws.
Provisions in House Bill 1931, however, would allow an individual to make or broker three or less mortgage loans in a calendar year without being licensed as a mortgage originator.
This legislation now heads to the full House for consideration.