JUL 9, 2013
What We're Hearing

When Your Mileage May Not Vary

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WE’RE HEARING from law firm ReedSmith that the upcoming 100-mile Pennsylvania restriction on how far a mortgage originator may live from his or her office raises some questions.

Part of a package of amendments to the state’s mortgage licensing act, the restriction that becomes effective Aug. 31 “requires mortgage originators to be assigned to work out of a licensed location that is either the originator’s residence or a licensed location of the licensee that is not more than 100 miles from the originator’s residence,” according a report by Lauren Abbott, an associate in ReedSmith’s financial industry group.

“It will be interesting to see how strictly the Department enforces this new provision,” she tells us in the report. “For instance, what if a loan originator lives 101 miles away from his or her assigned office? What about loan originators who accepted positions more than 100 miles from their office prior to the amendment of this law? If the purpose of this provision is to ensure that loan originators do in fact work from the assigned office, will licensees be provided the opportunity to demonstrate that the loan originator does in fact work from the assigned office?

“While 100 miles may seem like a long way to travel for work, the distance from Philadelphia to Harrisburg is approximately 107 miles; not a completely unheard-of commute.”

The move appears to be unprecedented, at least within the context of the state. “No other licensing statute regulated by the Department dictates how far an employee may live from his or her assigned office,” according to ReedSmith.

Although mortgage lenders have been known at times to favor some restrictions outside of regulation on the geographic area in which one works, as some appraisal management companies well know, it does appear that there could be some questions in the industry that arise because of this move.

In other state legal news investors should be aware of, we are also hearing from law firm Potestivo & Associates PC that Michigan has extended sections of its nonjudicial foreclosure statute to Jan. 9 of next year. These include a mandatory 90-day hold requiring loan modification mediations to occur “prior to the commencement of nonjudicial foreclosure actions of homestead properties where mortgagors ‘opt-in.’

“The requirements set forth…will have to be complied with through June 30, 2014, in regard to any nonjudicial foreclosures for which the notice was published prior to Jan. 10, 2014,” according to the law firm.

Also in Michigan, the law firm noted that effective Jan. 10, 2014, “If the servicer has signed a consent judgment in United States of America et al. v. Bank of America Corp. et al., then that servicer will be required to send notice (similar to Michigan’s current preforeclosure mediation notice to the mortgagor, allowing the mortgagor the opportunity to ‘opt-in’ to a loan workout meeting” before foreclosure proceedings start.

“Servicers that are not parties to the consent judgment will no longer be required to postpone commencement of nonjudicial foreclosures to allow for mediations to occur on homestead properties where mortgagors ‘opt-in,’” according to Potestivo & Associates.

In addition, Michigan is adding effective Jan. 10, 2014 a provision granting to the foreclosure sale purchaser “the right to inspect the exterior and the interior of the structures after the foreclosure sale as well as periodically during the redemption period.

“If inspection is unreasonably refused or property damage has occurred or is believed to be imminent, the purchaser may immediately commence summary proceedings to obtain possession of the property,” the law firm said in its report, noting that the statute provides example of what constitutes “damage.”

Bonnie Sinnock is managing editor of National Mortgage News and editor of Origination News. She has been covering the mortgage industry since 1995.

Comments (3)
WOW! Back in he day, thrifts had a requirement of Normal lending Territroy and Regular Lending Area which place radius restrictions on how far away from a home or branch office these banks could lend. These restrictions went away with aggressive bank mergers and branching expansions in the 70s.
Posted by Ron Timms | Wednesday, July 10 2013 at 9:44AM ET
Interesting, thanks for mentioning.
Posted by Bonnie Sinnock | Wednesday, July 10 2013 at 10:38AM ET
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