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​INTERPRETIVE LETTERS - SECONDARY MORTGAGE LOAN ACT

 

The Department of Banking and Securities uses interpretive letters to provide guidance and clarification of its position on an issue at the time. You should contact your attorney for legal advice regard the Secondary Mortgage Loan Act.

10/20/99
Refusing to Fund Closed Mortgage Loans
Letter to licensees regarding refusing to fund closed mortgage loans after loan documents have been signed by loan customer is not permissible under the Mortgage Bankers and Brokers.


Section 2 - Definitions

01/11/06
SMLA License
SMLA License required to broker “piggyback” secondary mortgage loans

12/08/05
Internet Lead Generators
Letter addresses licensing requirements for internet lead generators

06/01/05
Lines of Credit as an Investment
Letter discusses licensing requirements for an entity that is purchasing first and secondary home equity lines of credit as an investment

12/15/03
Prepayment Penalty
Letter states that, notwithstanding prior interpretations, a prepayment penalty may not be charged on a residential first or secondary mortgage loan in an original principal amount of $50,000 or less

10/21/03
Licensee Outsourcing of Certain Mortgage Processing Functions
A lender licensee under both the MBBCEPA and SMLA may contract with a company, which will also be a lender licensee under the MBBCEPA and SMLA, to have the company perform certain back-office mortgage processing functions for the lender licensee

6/31/01
Credit Services Organization
It is the Department position that a licensed first mortgage broker or secondary mortgage loan broker may provide the services of a "credit services organization" as an incidental function to soliciting, negotiating, and arranging a mortgage loan under the MBBA or SMLA, notwithstanding the "credit services organization" provisions in the CSA, provided the mortgage broker does not charge or accept a separate fee for such services AND accepts not more than the consideration or fee permitted by the MBBA or SMLA for brokering a mortgage loan.  The Department further finds that (i) improving a buyer's credit record, history or rating; (ii) obtaining an extension of credit for a buyer; or (iii) providing advice or assistance to a buyer with regard to (i) or (ii) are activities that may be included in the ordinary course of business of a licensed first mortgage broker or licensed secondary mortgage loan broker


Section 3 - License Requirements and Exemptions

01/11/06
SMLA License
SMLA License required to broker “piggyback” secondary mortgage loans

12/08/05
Internet Lead Generators
Letter addresses licensing requirements for Internet lead generators

11/05/02
Private Label Service Activities of Internet Service Provider
Proposed "private label" service activities of Internet service provider would require licensure under the MBBCEPA and SMLA

01/17/02
Wholesale Account Representatives
Letter addresses soliciting of loans from mortgage brokers to be placed with mortgage lender

12/27/01
Out-of-State State-Chartered Bank Originating Residential Mortgage Loans in Pennsylvania
Letter addresses out-of-state state-chartered bank originating residential mortgage loans in Pennsylvania

08/01/01
Licensing Requirements for Insurance Agents, as 1099 Independent Contractors
It is the Department position that only W-2 employees of excepted entities are exempt from licensure pursuant to the SMLA.  Based upon the foregoing, the Insurance Agents, as 1099 independent contractors, will each be required to obtain a license pursuant to the SMLA in order to broker or originate more than two secondary mortgage loans in a calendar year in Pennsylvania

06/13/01
Credit Services Organization
It is the Department position that a licensed first mortgage broker or secondary mortgage loan broker may provide the services of a "credit services organization" as an incidental function to soliciting, negotiating, and arranging a mortgage loan under the MBBA or SMLA, notwithstanding the "credit services organization" provisions in the CSA, provided the mortgage broker does not charge or accept a separate fee for such services AND accepts not more than the consideration or fee permitted by the MBBA or SMLA for brokering a mortgage loan.  The Department further finds that (i) improving a buyer's credit record, history or rating; (ii) obtaining an extension of credit for a buyer; or (iii) providing advice or assistance to a buyer with regard to (i) or (ii) are activities that may be included in the ordinary course of business of a licensed first mortgage broker or licensed secondary mortgage loan broker

09/29/98
Licensing Requirements for Loans Originated Under the SMLA
The Pennsylvania General Assembly intended to subject the servicing of secondary mortgage loans to the regulation and supervision of the Department


Section 11 - Licensee Limitations

10/21/03
Licensee Outsourcing of Certain Mortgage Processing Functions
A lender licensee under both the MBBCEPA and SMLA may contract with a company, which will also be a lender licensee under the MBBCEPA and SMLA, to have the company perform certain back-office mortgage processing functions for the lender licensee

11/05/02
Private Label Service Activities of Internet Service Provider
Proposed "private label" service activities of internet service provider would require licensure under the MBBCEPA and SMLA

09/29/98
Licensing Requirements for Loans Originated Under the SMLA
The Pennsylvania General Assembly intended to subject the servicing of secondary mortgage loans to the regulation and supervision of the Department

09/17/98
Single Premium Term Life Insurance
Department gave approval for a Licensee to sell single premium term life insurance ("SPT life insurance") at the Licensee's places of business licensed by the Department on a conditional basis for all proposed sales to both MBBA and SMLA customers: Pursuant to 7 P.S. ' 6611(5) and 63 P.S. ' 456.09(a)(2)


Section 12 - Prepayment

12/15/03
Prepayment Penalty
Letter states that, notwithstanding prior interpretations, a prepayment penalty may not be charged on a residential first or secondary mortgage loan in an original principal amount of $50,000 or less


Section 16 - Authority of the Secretary of Banking

06/13/01
Credit Services Organization
It is the Department position that a licensed first mortgage broker or secondary mortgage loan broker may provide the services of a "credit services organization" as an incidental function to soliciting, negotiating, and arranging a mortgage loan under the MBBA or SMLA, notwithstanding the "credit services organization" provisions in the CSA, provided the mortgage broker does not charge or accept a separate fee for such services AND accepts not more than the consideration or fee permitted by the MBBA or SMLA for brokering a mortgage loan.  The Department further finds that (i) improving a buyer's credit record, history or rating; (ii) obtaining an extension of credit for a buyer; or (iii) providing advice or assistance to a buyer with regard to (i) or (ii) are activities that may be included in the ordinary course of business of a licensed first mortgage broker or licensed secondary mortgage loan broker


Section 20 - Scope of Act

10/21/03
Back-Office Mortgage Processing Functions
Letter addresses in-state office requirements and office staffing requirements under the MBBCEPA and SMLA

12/27/01
Out-of-State State-Chartered Bank Originating Residential Mortgage Loans in Pennsylvania
Letter addresses out-of-state state-chartered bank originating residential mortgage loans in Pennsylvania


Section 23 - Preservation of Existing Powers

12/27/01
Out-of-State State-Chartered Bank Originating Residential Mortgage Loans in Pennsylvania
Letter addresses out-of-state state-chartered bank originating residential mortgage loans in Pennsylvania