PRINTER'S NO. 916
No. 825 Session of 1979
INTRODUCED BY MESSINGER, KUSSE, SCHAEFER, SCANLON, LYNCH,
ANDREWS, HANKINS, ROMANELLI AND FUMO, JUNE 18, 1979
REFERRED TO BUSINESS AND COMMERCE, JUNE 18, 1979
AN ACT
1 Amending the act of December 14, 1967 (P.L.746, No.345),
2 entitled "An act relating to and regulating the business of
3 savings associations heretofore designated under other acts
4 and special charters variously as building and loan
5 associations and savings and loan associations; defining the
6 rights, powers, duties, liabilities, and immunities of such
7 associations; affecting persons engaged in the business of
8 savings associations; affecting the members, account holders
9 and borrowers of such associations; affecting Federal savings
10 and loan associations whose principal office is located in
11 the Commonwealth; prohibiting the transaction of business in
12 this Commonwealth by foreign savings associations; conferring
13 powers and imposing duties on certain departments and
14 officers of the Commonwealth and on the courts, recorders of
15 deeds; creating a Savings Association Board and defining its
16 powers and duties; prohibiting certain actions and imposing
17 penalties, and repealing certain acts," further providing for
18 change of interest on loans for property repair, alteration
19 and improvement and loans secured by chattel paper; providing
20 that delinquency charges be increased, that the charge on
21 inactive accounts be increased, that the percentage of assets
22 which may be invested in housing for the aging be increased,
23 and providing for further delegation of powers by directors.
24 The General Assembly of the Commonwealth of Pennsylvania
25 hereby enacts as follows:
26 Section 1. Section 504, act of December 14, 1967 (P.L.746,
27 No.345), known as the "Savings Association Code of 1967," is
28 amended by adding a subsection to read:
1 Section 504. Method of Action by Board of Directors,
2 Executive or Other Committee.--* * *
3 (e) The board of directors may by resolution adopted by a
4 majority of the whole board designate two or more officers or
5 personnel of the association to approve mortgages as to amount,
6 type of property, and other requirements, as shall be
7 established in the resolution authorizing the approval of said
8 loans.
9 Section 2. Sections 819 and 909 of the act are amended to
10 read:
11 Section 819. Service Charge.--An association may make a
12 service charge of not more than [one dollar ($1)] five dollars
13 ($5) in any calendar year against any savings account if at the
14 time any such charge is made:
15 (a) The association is not required to distribute earnings
16 to such account,
17 (b) No payment has been made and no earnings have been
18 distributed on such account for a period of at least thirty-six
19 months next preceding the date on which such charge is made, and
20 (c) Thirty days prior to making the first service charge the
21 association has mailed to the holder of such account at his last
22 known address a notice that service charges will be made in
23 accordance with this section.
24 Section 909. Loans for Housing for the Aging.--An
25 association may grant mortgage loans in an amount not exceeding
26 at any time [five] ten percent of its assets in loans or
27 participating interests therein to provide housing facilities
28 for the aging which facilities are existing or are to be
29 constructed for such purpose or altered for such purpose. No
30 such loans shall exceed ninety percent of the fair market value
19790S0825B0916 - 2 -
1 of the improved real estate given as security therefor.
2 Section 3. Subsection (b) of section 917, subsection (b) of
3 section 918 and section 919 of the act, amended December 27,
4 1974 (P.L.1012, No.329), are amended to read:
5 Section 917. Right to Make, Purchase, Sell and Participate
6 in Mortgages.--* * *
7 (b) In addition to the authority set forth in sections 901
8 and 910 of this article, an association shall have the right to
9 make and purchase mortgages or participations in mortgages
10 secured by property outside its regular lending area, subject to
11 the following conditions:
12 (3) No mortgage shall be made nor shall a mortgage or
13 participation interest in a mortgage be purchased unless the
14 mortgage is one that the association could make under the
15 provisions of this act if the security property were within its
16 regular lending area, provided, however, that if the mortgage
17 which is being purchased or in which a participation is being
18 purchased is in a state other than the Commonwealth of
19 Pennsylvania and mortgage guarantee insurance is required, the
20 insurer shall be a company that is authorized to do business in
21 the state in which the real property which is security for the
22 mortgage loan is situated.
23 (4) The dollar amount that an association may have invested
24 in mortgages and participation loans outside its regular lending
25 area shall at no time exceed fifty percent of the assets of the
26 association. This limitation shall not apply to loans insured or
27 guaranteed in whole or in part by the United States or any
28 instrumentality thereof or if there is a commitment to so insure
29 or guarantee.
30 (5) Such further conditions as the department may prescribe
19790S0825B0916 - 3 -
1 by regulation, giving primary consideration to the Declaration
2 of Purposes as provided under section 103 of this act.
3 Section 918. Loans for Property Repair, Alteration and
4 Improvement.--* * *
5 (b) When any such loan is not insured under Title I of the
6 National Housing Act the principal amount thereof shall not
7 exceed [ten thousand dollars ($10,000)] fifteen thousand dollars
8 ($15,000) and the loan shall be evidenced by a judgment note or
9 other written evidence of debt requiring repayment in regular
10 monthly installments over a period not exceeding fifteen years
11 and thirty-two days with interest at a rate not exceeding [six
12 percent per annum] the authorized interest rate for loans
13 insured under Title I of the National Housing Act on the
14 declining balance except that loans over five thousand dollars
15 ($5,000) shall be recorded or filed so as to create a lien
16 position in the county in which the real estate is located.
17 [Such loans may be made with or without charging the borrower a
18 premium. The premium shall be paid by the borrower in
19 installments and shall not exceed one percent per annum of the
20 unpaid balance of the principal amount of the loan and shall be
21 payable in monthly installments extending over the period of the
22 loan which installments shall be payable upon the same day as
23 the monthly payment of principal and interest is due upon said
24 loan.] A loan is authorized under this section only if the
25 association prepares and retains in its files written evidence
26 that the loan is of the type that would be insurable under Title
27 I of the National Housing Code. Such written evidence shall be
28 retained in the files of the association while the loan is
29 outstanding and for a period of one year thereafter. The note or
30 other written evidence of debt shall contain a provision that if
19790S0825B0916 - 4 -
1 the borrower shall sell the premises or assign his leasehold
2 interest therein or remove therefrom any improvements described
3 in the security agreement the entire balance remaining due on
4 the loan shall immediately become due and payable. In addition
5 to the interest herein authorized an association may make the
6 following charges in connection with said loan:
7 (1) Premiums for insurance obtained in connection with the
8 loan,
9 (2) A single delinquency charge for each installment in
10 arrears for a period of more than fifteen days other than by
11 reason of acceleration or by reason of a delinquency on a prior
12 installment in an amount not to exceed the lesser of [two
13 dollars and fifty cents ($2.50)] five dollars ($5.00) or five
14 percent of the amount of the installment,
15 (3) A charge for an extension in an amount not to exceed two
16 percent of the unpaid balance of the loan. Said charge may be
17 imposed only one time during the life of the loan,
18 (4) Fees paid for filing documents in public offices in
19 connection with said loan,
20 (5) Actual expenditures including reasonable attorneys' fees
21 for proceedings to collect the loan.
22 * * *
23 Section 919. Loans Secured by Chattel Paper.--(a) When an
24 association holds a mortgage on real estate or on a leasehold
25 interest therein it may also grant a loan secured by chattel
26 paper to the mortgagor of the real estate or a leasehold
27 interest to assist him in the purchase of consumers' durable
28 goods, which shall be used in connection with said mortgaged
29 premises, for the equipping of residential property provided:
30 (1) Any such loan shall conform to the requirements of
19790S0825B0916 - 5 -
1 Article 9 of the Uniform Commercial Code approved April 6, 1953
2 (P.L.3, No.1), its amendments and supplements. No examination of
3 public records shall be required in connection with the loan
4 secured by chattel paper if the borrower is newly acquiring
5 title to all of the chattels described in the security agreement
6 and the seller of the chattels furnishes to the association a
7 receipted bill for the same,
8 (2) No such loan shall exceed ten thousand dollars ($10,000)
9 in amount, nor shall its term exceed fifteen years and thirty-
10 two days,
11 (3) No such loan may be granted unless it constitutes a
12 first lien on the chattels described therein,
13 (4) In addition to obtaining a security agreement for such
14 loans, the association shall secure a promissory note evidencing
15 the borrower's agreement to repay said loan in regular monthly
16 installments over a period not exceeding five years with
17 interest at a rate not exceeding [six percent per annum] that
18 herein authorized under section 918 for loans for property
19 repair, alteration and improvement on the declining balance. The
20 note shall contain a provision that if the obligor shall sell
21 the mortgaged real estate or assign his leasehold interest
22 therein or remove therefrom any chattels described in the
23 security agreement the entire balance remaining due on the loan
24 shall immediately become due and payable,
25 (5) An association may make the following charges in
26 connection with said loan:
27 (i) Premiums for insurance obtained in connection with the
28 loan,
29 (ii) A single delinquency charge for each installment in
30 arrears for a period of more than fifteen days other than by
19790S0825B0916 - 6 -
1 reason of acceleration or by reason of a delinquency on a prior
2 installment, in an amount not to exceed the lesser of two
3 dollars and fifty cents ($2.50) or five percent of the amount of
4 the installment,
5 (iii) A charge for an extension in an amount not to exceed
6 two percent of the unpaid balance of the loan, said charge may
7 be imposed only one time during the life of the loan,
8 (iv) Fees paid for filing documents in public offices in
9 connection with said loan,
10 (v) Actual expenditures, including reasonable attorneys'
11 fees for proceedings to collect the loan,
12 [(vi) Such loans may be made with or without charging the
13 borrower a premium. The premium shall be paid by the borrower in
14 installments and shall not exceed one percent per annum of the
15 unpaid balance of the principal amount of the loan and shall be
16 payable in monthly installments extending over the period of the
17 loan which installments shall be payable upon the same day as
18 the monthly payment of principal and interest is due upon said
19 loan.]
20 Section 4. This act shall take effect immediately.
F5L7RLC/19790S0825B0916 - 7 -