Recent developments relating to mortgage laws are going to make Pennsylvania homebuyers happy. In the online version of the Philadelphia Inquirer, an important news article was published on July 8, 2008 regarding five bills that were signed by Governor Rendell. These bills are intended to provide added layers of protection for Pennsylvania homebuyers with their mortgages as well as to keep a tight rein on the state's mortgage industry.

Foreclosure: an essential element in mortgage laws

The term "mortgage" encompasses a whole gamut of other concepts such as "default" and "foreclosure." In light of the present economic situation and sub-prime mortgages causing people to lose their homes, it is good to be aware of what the law provides in case of a foreclosure in Pennsylvania.

First, let's tackle foreclosure. Pennsylvania laws stipulate that uncontested foreclosures take 120 days or longer before they can take effect. To execute on a foreclosure, lenders go to court and have what is called a judicial foreclosure. The court that decides the foreclosure case is called a Court of Common Pleas. After deliberations, the property is then sold.

Note, however, that when a homeowner defaults on a loan, foreclosure is not automatic. Generally, it is when a homeowner misses a payment for two consecutive months that lenders take action. Lenders will issue a lis pendens - a written and registered document that issues a public notice that the property is being foreclosed upon.

Mortgage laws require that there be two pre-foreclosure notices. The first falls under Act 6 which is a notification of the intention to foreclose. This is sent to the homeowner within 60 days of defaulting. The second one is under Act 91 wherein the homeowner is advised that he or she may qualify for financial assistance under the HEMAP - homeowners emergency mortgage assistance program.

Five bills signed by Governor Rendell

On July 8, 2008, Governor Rendell signed five bills that were drafted to protect homebuyers and to eliminate any risks for improper activity and behavior on the part of mortgage lenders and brokers.

Generally, these bills provide that:

people who sell mortgage loans must now be licensed by the state. Not only a background check is required, but also proof that the mortgage loan seller has completed training and is certified by the Department of Banking of Pennsylvania. prepayment penalties be strictly regulated real estate appraisers be penalized for misconduct require mortgage companies to provide state notification when they intend to foreclose on a property the state will make public enforcement activities against mortgage companies

Pennsylvania's Department of Banking's HB 2179 oversees the licensing and training of individuals who sell mortgage loans. They must demonstrate competence in the mortgage loan industry and must undergo certification.

As for prepayment penalties, the new mortgage laws provide that homeowners don't end up having to pay for expensive and rising mortgage rates because of some prepayment penalty provisions. This bill will apply to mortgage amounts of $217,873,000 or less.

Senate Bill 484 (SB 484) on the other hand makes provisions for homebuyers to gain access to additional information about potential mortgage companies or sales people, while Senate Bill 485 was drawn up in order for homebuyers to have more confidence that the appraised value of a property is sound and reflects current market values.

Misconduct on the part of an appraiser is subject to a penalty of $10K per violation.

It used to be that when a foreclosure notice is issued, it is sent only to the homeowner and then filed in the borrower's home county. Senate Bill 486 has changed that. It now requires every foreclosure notice to be sent to the Penssylvania Housing Finance Agency so that the foreclosure can be monitored in real time. In this manner, the state can spot potential trouble areas enabling it to intervene in a timely manner.

People who have mortgages will also be delighted about the two new loan programs launched by the Governor: Refinance to an Affordable Loan program (REAL) and Homeowner Equity Recovery Opportunity (HERO) which was put in place to help homeowners facing foreclosure.

In fact, in a separate online article, Governor Rendell was saying that all homeowners in Pennsylvania who have any concerns about meeting their mortgage obligations should call the state for assistance immediately .

These bills - or reforms as viewed by many - arose from a 2005 report released by Pennsylvania's Department of Banking. The report was entitled Losing the American Dream: A Report on Residential Mortgage Foreclosures and Abusive Lending Practices in Pennsylvania.

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About Author: Brian Jenkins is a freelance writer who writes about topics pertaining to the mortgage industry such as a Pennsylvania Mortgage