Amendments to Pennsylvania’s mortgage licensing act that go into effect this August include some new exceptions, requirements and clarifications, according to a report Monday by ReedSmith’s financial industry group.
New restrictions for mortgage loan originators in the amendments include the “100 mile rule” which governs “how far a mortgage originator may live from his or her assigned office.”
Mortgage originators in the state must now “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.”
ReedSmith said in its report that “while some of the amendments will be viewed positively by the mortgage industry, the restriction on how far mortgage originators may live from their assigned offices could have a major impact on how licensees conduct business.”
The legal changes take effect Aug. 31.
Also as part of the amendments, the maximum origination level allowed with licensing is being raised to less than four times in a calendar year unless otherwise determined to be engaged in the mortgage loan business by the department.
There also is an expansion of the exception for “bona fide nonprofit organizations” and their employees applying now to “include entities that promote affordable housing, homeownership education, or other similar service.”
“The bona fide nonprofit organization must still meet the recordkeeping and bond requirements of the [Mortgage Licensing Act] and be subject to examination and possible fines,” according to ReedSmith, which notes that a list of organizations that qualify will be listed online.
Originators physically located in Pennsylvania but who do not originate loans that are not made to Pennsylvania consumers and do not involve Pennsylvania dwellings or real estate will be exempt.
Those modifying existing loans “held or serviced by that person or that person’s employer who does not otherwise engage in the mortgage loan business are now exempt.”
Originators must now “only be engaged in the mortgage loan business on behalf of a single employer (whether it be a broker, lender, loan correspondent, or exempted entity).”
In addition, the amendments now clarify that “the continuing education requirement is an annual requirement that is applicable to all branch managers, loan originators and qualifying individuals” with a “qualifying individual” defined “as an employee of a mortgage broker, lender or loan correspondent, as well as a management-level officer assigned to the principal place of business.
“Mortgage lenders and brokers will be required to designate a qualifying individual’ for the licensee’s principal place of business and separate individuals as branch managers for each branch location for purposes of the education requirements,” according to ReedSmith.
