Inside Harrisburg

by state Rep. Dan Frankel

Governor signs into law Frankel bill to reduce mortgage insurance costs

Other new mortgage laws also strengthen Pa. consumer protections

A new law I authored should save money for many current and future homeowners on their mortgage insurance bills.

In July, Gov. Rendell signed my legislation, H.B. 2428, into law as Act 51 of 2008. It will block mortgage lenders from requiring home buyers or current homeowners to obtain property insurance coverage that exceeds the replacement value of the home, buildings and structures for which the loan has been secured. Additionally, lenders will not be able to require borrowers to insure the value of the land. The law will apply only to owner-occupied residences.

I introduced this legislation because some lenders have expected borrowers to insure the property for the full loan value, which can be higher than the replacement value of the dwelling and other buildings on the property. This new law will help to protect homeowners from paying for more insurance than they actually need.

To provide additional protections for homeowners and home buyers, I also supported other new laws passed by the General Assembly and signed by the governor this summer:

• H.B. 2179 (Act 56 of 2008) requires mortgage originators, who are the main contact for borrowers, to be licensed and complete continuing education programs. Brokers and bankers are already licensed.

• S.B. 483 (Act 57) excludes pre-payment penalties on residential mortgage loans of less than $217,873. This new figure is the result of an inflation analysis conducted by the Department of Banking.

• S.B. 484 (Act 58) permits the Banking Department to release information publicly after fines or actions are levied against mortgage lenders. It also requires criminal background checks on all mortgage originators.

• S.B. 485 (Act 59) reforms the State Board of Certified Real Estate Appraisers to intensify checks against fraudulent appraisals and increase penalties for professional misconduct.

• S.B. 486 (Act 60) requires lenders to send copies of foreclosure notices to the Pennsylvania Housing Finance Agency so that mortgage foreclosures can be monitored on a statewide basis. This law also will reduce the interest rate on Homeowners’ Emergency Mortgage Assistance Program loans from 9 percent to a floating rate indexed to current market conditions.

Homeowners having difficulty making mortgage payments should be aware that the state offers several forms of assistance to those who qualify – including HEMAP and refinancing options through the Pennsylvania Housing Finance Agency. For more information, please visit my Web site – www.pahouse.com/Frankel -- or visit my office at 4225 Murray Ave.; phone 412-422-1774.

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