Update to Pennsylvania's Mortgage Licensing Act: Three Mortgages Per Year or Less Excepted

Posted on December 19, 2011 by Sarah Yocum Rider
As described in the July 2011 Construction Law Brief, the Pennsylvania legislature passed amendments to the Mortgage Licensing Act (the “MLA”) which prohibits individuals and entities from engaging in the residential mortgage loan business (except to immediate family members) without being licensed under the MLA. The amendments to the MLA were made in response to, and to remain compliant with, the federal SAFE Mortgage Licensing Act (the “SAFE Act”). The SAFE Act establishes minimum standards for mortgage licenses that apply to all states. 
 
Since the amendments to the MLA have been enacted, the Pennsylvania real estate community responded to the MLA with major opposition and has been working to restore seller financing in limited situations. 
 
In August 2011, the United States Department of Housing and Urban Development (“HUD”) issued a final regulation related to the SAFE Act that was inconsistent with Pennsylvania’s prohibition on individuals and entities engaging in the residential mortgage loan business without a license (the “HUD Regulation”). The HUD Regulation, in part, prohibits an individual from engaging in the mortgage loan business if the individual, in a commercial context, habitually and repeatedly takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan for compensation or gain, or represents to the public that such individual can or will perform these activities. The MLA, as currently enacted, contains no similar qualification.
 
On October 6, 2011, the Pennsylvania Department of Banking (the “Department”) issued a letter discussing the Department’s position with regard to the MLA in light of the HUD Regulation. The letter states that the Department will be seeking amendment to the MLA in order to implement the HUD Regulation as soon as possible, thereby making the MLA consistent with the HUD Regulation. 
 
The Department’s letter, however, stated that “the Department will not take exception to an individual making or brokering three (3) or less mortgage loans in a calendar year without being licensed as a mortgagor originator.” Accordingly, the Department apparently will not enforce the MLA against a residential seller who finances a portion of the purchase price and takes back a residential mortgage on property that it is selling, even if the mortgage is not from an immediate family member, provided that the seller take back three or less mortgages in a calendar year. 
 
This is welcome news for the Pennsylvania real estate community. However, it is important to proceed with caution, since a letter from the Department of Banking is not the law. We expect amendments to the MLA implementing the Department’s position in the near future. 
 
In addition to clarifying its position regarding private residential mortgages, the Department’s letter also announced that the Department reversed its original position that installment sales agreements are not a form of selling financing subject to the mortgage licensing requirements. The Department explained that installment sales agreements create an “equivalent consensual security interest on a dwelling or on residential real estate.” Accordingly, sellers of residential real estate, by means of installment sales agreements, are essentially treated as mortgagees for purposes of the MLA and the same licensing requirements apply. 
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OFCCP Proposes Rule Targeting Hiring of Disabled

Posted on December 9, 2011 by Jennifer Craighead

The Department of Labor, Office of Federal Contract Compliance Programs (OFCCP), proposed a new rule on Thursday, December 8, 2011, that would require federal contractors and subcontractors to set a hiring goal of having 7 percent of their workforces made up of disabled people. The rule amends Section 503 of the Rehabilitation Act of 1973 which obligates federal contractors and subcontractors to ensure equal employment opportunities for qualified workers with disabilities.

Under the proposed rule, contractors would be required to do the following:

  • For the first time, set a goal of having 7 percent of their employees be workers with disabilities in each job group of the contractors’ workforce.
  • Request that applicants voluntarily self identify at the pre-offer stage as an “individual with a disability”. Applicants would also be asked to voluntarily self identify at the post-offer stage, and annually contractors would be required to survey all employees in order to invite them to self identify in an anonymous manner.
  • Maintain records of all individuals with disabilities applying for positions and the number of individuals with disabilities hired.
  • Engage in a minimum of three specific types of outreach and recruitment efforts to recruit individuals with disabilities.
  • List job openings with One-Stop Career Centers and other appropriate employment delivery services.

The proposed rule would apply to contractors with 50 or more employees and contracts worth $50,000 or more. The rule is open for public comment for 60 days after publication.

We will continue to keep our contractor clients apprised of the status of this proposed rule.

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