PRINTER'S NO. 785
No. 721 Session of 1999
INTRODUCED BY GREENLEAF, HART, O'PAKE, BOSCOLA, EARLL, KASUNIC, MUSTO, THOMPSON, TOMLINSON AND WAGNER, APRIL 9, 1999
REFERRED TO BANKING AND INSURANCE, APRIL 9, 1999
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 19990S0721B0785 - 2 -
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. C4L07SFL/19990S0721B0785 - 3 -