PRINTER'S NO. 455
No. 432 Session of 1997
INTRODUCED BY GREENLEAF, COSTA, AFFLERBACH, O'PAKE, BELL, EARLL,
KASUNIC, MUSTO AND TOMLINSON, FEBRUARY 11, 1997
REFERRED TO BANKING AND INSURANCE, FEBRUARY 11, 1997
AN ACT
1 Requiring residential mortgage lenders to give mortgage debtors
2 credit for discounts received for early payment of certain
3 taxes; and imposing a penalty.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Definitions.
7 The following words and phrases when used in this act shall
8 have the meanings given to them in this section unless the
9 context clearly indicates otherwise:
10 "Person." An individual, corporation, business trust, estate
11 trust, partnership or association or any other legal entity.
12 "Residential mortgage." An obligation to pay a sum of money,
13 evidenced by a security document and secured by a lien upon real
14 property located within this Commonwealth containing two or
15 fewer residential units or on which two or fewer residential
16 units are to be constructed. The term includes such an
17 obligation on a residential condominium unit.
18 "Residential mortgage debtor." A noncorporate borrower who
1 is obligated to a residential mortgage lender to repay in whole
2 or in part a residential mortgage and a successor record owner
3 of the property, if any, who gives notice thereof to the
4 residential mortgage lender.
5 "Residential mortgage lender." A person who lends money or
6 extends or grants credit and obtains a residential mortgage to
7 assure payment of the debt. The term also includes the holder at
8 any time of a residential mortgage obligation.
9 "Security document." A mortgage, deed of trust, real estate
10 sales contract or other document creating, upon recordation, a
11 lien upon real estate.
12 Section 2. Credit for discount on taxes.
13 A residential mortgage lender who requires the establishment
14 of an escrow account for the payment of municipal and school
15 taxes and who, on behalf of a residential mortgage debtor, makes
16 payment of the municipal and school taxes sufficiently in
17 advance of the date when the taxes are finally due to receive a
18 discount for early payment shall insure that the residential
19 mortgage debtor's escrow account reflects the full amount of the
20 discount.
21 Section 3. Notice.
22 If the residential mortgage lender does not credit the
23 residential mortgage debtor's escrow account with the full
24 amount of the discount, the mortgage debtor shall make a written
25 request to the residential mortgage lender to comply with this
26 act by crediting the residential mortgage debtor's escrow
27 account with the full amount of the discount. Within 30 days of
28 receiving the written request from the residential mortgage
29 debtor, the residential mortgage lender shall comply with this
30 act by crediting the residential mortgage debtor's escrow
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1 account with the full amount of the discount and the residential
2 mortgage lender shall provide the residential mortgage debtor
3 with a statement of the escrow account which shall show that the
4 full amount of the discount has been credited to the account. A
5 residential mortgage lender who fails to comply with this act
6 after receiving a written request from a residential mortgage
7 debtor shall be subject to the penalty under section 4.
8 Section 4. Penalty.
9 A residential mortgage lender who fails to comply with this
10 act shall be liable for a civil penalty in the amount of twice
11 the amount of the discount for early payment under section 2.
12 Section 5. Effective date.
13 This act shall take effect in 60 days.
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