DEPARTMENT OF BANKING
[10 PA. CODE CH. 44]
Mortgage Bankers and Brokers; Continuing Education
[31 Pa.B. 1236]
The Department of Banking (Department), under the authority contained in sections 4(e) and 10(a) of the Mortgage Bankers and Brokers Act (MBBA) (63 P. S. §§ 456.4(e) and 456.10(a)), proposes to amend Chapter 44 (relating to Mortgage Bankers and Brokers Act).
The proposal will be effective upon publication of the final-form regulations in the Pennsylvania Bulletin.
The regulations are expressly mandated by section 4(e) of the MBBA and are promulgated under that section and section 10(a) of the MBBA.
Background and Purpose
The proposal implements a regulatory framework for the oversight of continuing education for licensees under the MBBA, as mandated by the new section 4(e) of the MBBA which was contained in the act of December 21, 1998 (P. L. 987, No. 131). The new section 4(e) of the MBBA was the result of the mortgage industry seeking continuing education for the first mortgage industry in this Commonwealth. The mortgage industry also sought to have continuing education regulated by the Department by requiring the Department to promulgate appropriate regulations to govern the continuing education programs.
Explanation of Regulatory Requirements
The proposal requires mortgage bankers, mortgage brokers and loan correspondents, as those terms are defined in section 2 of the MBBA (63 P. S. § 456.2), to complete 6 hours of continuing education per annual renewal period, and requires limited mortgage brokers, as that term is defined in section 2 of the MBBA to complete 2 hours of continuing education per annual renewal period. Licensees are required to submit proof of compliance with these requirements annually to the Department to renew a license.
The proposal will affect the approximately 2,967 licensees under the MBBA.
Fiscal Impact and Paperwork Requirements
It is expected that the approximately 2,967 licensees under the MBBA will be required to pay tuition costs to continuing education providers, the approximate monetary amount of which is unclear at this time, in addition to travel and travel-related expenses associated with attending continuing education programs. MBBA licensees that fail to comply with the requirements of the proposal may be subject to a fine of up to $2,000 for each offense or suspension, revocation or nonrenewal of their license. There will be no savings to the regulated community associated with the implementation of this proposal.
Promulgation of the proposal will change existing reporting, recordkeeping and other paperwork requirements for the industry as well as the Department. Section 4(e) of the MBBA requires licensees to demonstrate to the satisfaction of the Department that at least one person from each licensed office has attended a required minimum number of hours of continuing education annually. Licensees will need to maintain records indicating what continuing education programs have been attended, by whom, when and where. Demonstration of attendance will be submitted to the Department at the time of license renewal as a requirement of renewal. Licensees and employes will be required to maintain attendance records for the 3 most recent annual renewal periods. This will assist licensees, their employes and the Department in determining whether continuing education requirements have been met, especially in cases where licensee employes have changed employers or employment status, or both. It is noted that fulfillment of the education requirement causes the employes's current licensee employer to be in compliance with the proposal. The Department will retain the information provided by the industry long enough to ensure ongoing compliance with the regulation by licensees and their employes.
The Department may review and approve continuing education programs to satisfy the continuing education requirement. The Department will review information on renewal application forms that the Department will revise to require licensees to indicate whether and how they have complied with the continuing education requirement.
Forms or reports, or both, have not been developed at this time.
The Department continuously monitors the cost effectiveness of its regulations. Therefore, no sunset date has been assigned.
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on February 1, 2001, the Department submitted a copy of this proposed rulemaking to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the House Committee for Business and Economic Development and the Senate Committee on Banking and Insurance. In addition to submitting the proposal, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, if IRRC has objections to any portion of the proposal, it will notify the Department within 10 days of the close of the Committees' review period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for review and comments including objections to the proposal by IRRC the General Assembly and the Office of Attorney General, prior to final publication and approval of the proposal.
Interested persons are invited to submit their written comments, if any, within 30 days from the date of this publication, to Carter D. Frantz, Staff Counsel, Department of Banking, 333 Market Street, 16th Floor, Harrisburg, PA 17101-2290, (717)787-1471.
JAMES B. KAUFFMAN, Jr.,
Fiscal Note: 3-40. (1) Banking Department Fund; (2) Implementing Year 2000-01 is $53,400; (3) 1st Succeeding Year 2001-02 is $55,000; 2nd Succeeding Year 2002-03 is $56,400; 3rd Succeeding Year 2003-04 is $57,000; 4th Succeeding Year 2004-05 is $59,500; 5th Succeeding Year 2005-06 is $61,000; (4) No history. New program. (8) recommends adoption.
TITLE 10. BANKS AND BANKING
PART IV. BUREAU OF CONSUMER CREDIT AGENCIES
CHAPTER 43. MORTGAGE BANKERS AND BROKERS ACT
44.1. Definitions. 44.2. Requirements. 44.3. Reporting, verification and recordkeeping. 44.4. Review and approval. 44.5. Penalties.
§ 44.1. Definitions.
The following words and terms, when used in this chapter, have the following meanings unless the context clearly indicates otherwise:
Act--The Mortgage Bankers and Brokers Act (63 P. S. §§ 456.1--456.19).
Annual renewal date--July 1 of each calendar year.
Annual renewal period--The licensing term commencing July 1 of one calendar year and ending on June 30 of the following calendar year.
Continuing education program--An educational program as required by section 4(e) of the act (63 P. S. § 456.4(e)) which contributes directly to the enhancement of the professional competence of a mortgage professional to engage in the first mortgage loan business. A continuing education program does not include programs which instruct in matters such as office or business management, personnel management or similar subjects not directly related to the first mortgage loan business.
Continuing education provider--A provider of a continuing education program that has been approved by the Department.
Credit hour--Sixty minutes of classroom instruction or the equivalent as determined by the Department.
Department--The Department of Banking of the Commonwealth.
First mortgage loan business--The first mortgage loan business as defined in section 2 of the act (63 P. S. § 456.2).
Instructor--An individual responsible for teaching a continuing education program.
Licensee--A person licensed under the act.
Limited mortgage broker--A limited mortgage broker as defined in section 2 of the act.
Loan correspondent--A loan correspondent as defined in section 2 of the act.
Mortgage banker--A mortgage banker as defined in section 2 of the act.
Mortgage broker--A mortgage broker as defined in section 2 of the act.
(i) A manager of each licensed office maintained by a licensee; any owner, director, officer or W-2 employe of a licensee who has the authority to underwrite or approve loans, either individually or in combination with other individuals as members of a committee; or any owner, director, officer or W-2 employe of a licensee who, as part of his official duties, directly contacts borrowers to present, negotiate or advise regarding loan terms.
(ii) The term does not include any individual who engages solely in processing loan applications or other administrative or clerical functions, or both.
Person--A person as defined in section 2 of the act.
§ 44.2. Requirements.
(a) Except as provided in subsection (b) to renew a license, a licensee shall demonstrate to the satisfaction of the Department that:
(1) In the case of a mortgage banker, mortgage broker or loan correspondent, the licensee maintains at least one separate mortgage professional at each licensed office who has successfully completed during the annual renewal period at least 6 credit hours of continuing education programs which shall include 1 credit hour of Pennsylvania residential mortgage law, including the act and the Loan Interest and Protection Law (41 P. S. §§ 101--605), 1 credit hour of business ethics and 4 credit hours from among one or more of the following subject areas:
(i) Federal residential mortgage law, including the Real Estate Settlement Procedures Act (12 U.S.C.A. §§ 2601--2617), the Truth in Lending Act (15 U.S.C.A. §§ 1601--1667e) and the Equal Credit Opportunity Act (15 U.S.C.A. §§ 1691--1691f).
(ii) The first mortgage loan business.
(2) In the case of a limited mortgage broker, the licensed individual has successfully completed during the annual renewal period at least 2 credit hours of continuing education programs which shall include 1 credit hour of Pennsylvania residential mortgage law, including the act and the Loan Interest and Protection Law and 1 credit hour from among one or more of the following subject areas:
(i) Business ethics.
(ii) Federal residential mortgage law, including the Real Estate Settlement Procedures Act, the Truth in Lending Act and the Equal Credit Opportunity Act.
(iii) The first mortgage loan business.
(b) The continuing education requirements imposed by this chapter apply to all renewals of licenses by licensees except when an initial licensee has been licensed by the Department for less than 6 months prior to its first annual renewal date, in which case the licensee shall be in compliance with this chapter within 6 months after its first annual renewal date.
(c) The Department may require an applicant for a new license to meet the applicable continuing education requirement imposed by this chapter if it appears to the Department that the continuing education requirement is being improperly avoided through restructuring of the business or otherwise.
(d) A mortgage professional who acts as an instructor shall be credited with 2 credit hours of continuing education for every 1 credit hour taught per annual renewal period.
(e) Continuing education program credit hours earned in excess of the minimum requirement established by this section during any annual renewal period may not be carried over to a successive annual renewal period.
§ 44.3. Reporting, verification and recordkeeping.
(a) Except as provided in § 44.2(b) (relating to requirements), a licensee, when applying for a license renewal, shall include as part of its renewal application a statement that the requirements of this chapter have been satisfactorily completed by at least one separate mortgage professional at each licensed office, or in the case of a limited mortgage broker, by the licensed individual. The statement shall include a list of continuing education programs completed by the designated mortgage professional for each licensed office or the individual limited mortgage broker licensee. The list shall include:
(1) The name of continuing education providers.
(2) The name of continuing education programs.
(3) The number of credit hours attended by the mortgage professional.
(4) The locations and the dates attended.
(b) The Department may verify, on a random or other basis, by methods including examination of the licensee and satisfactory completion of the requirements of this chapter. The Department may assess licensees examination costs for the examinations consistent with section 8(a)(4) of the act (63 P. S. § 456.8(a)(4)).
(c) A licensee shall retain all original documents relating to the completion of each continuing education program by each mortgage professional for at least 3 annual renewal periods.
§ 44.4. Review and approval.
The Department may review and approve continuing education programs to satisfy the continuing education requirement.
§ 44.5. Penalties.
The Department may levy a fine of up to $2,000 for each offense under section 14(c) of the act (63 P. S. § 456.14(c)) and may suspend, revoke or refuse to renew a license under section 13(a) of the act (63 P. S. § 456.13(a)) if a licensee fails to comply with this chapter.
[Pa.B. Doc. No. 01-349. Filed for public inspection March 2, 2001, 9:00 a.m.]
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