PENNSYLVANIA Real estate industry debates law reform

Consumer advocates press for reforms as a result of a rise in home foreclosures.
HARRISBURG, Pa. (AP) -- Buying a home is for many people the biggest, most complicated financial transaction of their lives, but a Pennsylvania state law prevents consumers from finding out whether their mortgage banker or broker has a clean record.
In May and June alone, the state Banking Department issued about $650,000 in fines -- but don't look to the state to tell you whether your prospective lender was one of the violators or what kind of scams were most prevalent.
A law meant to help avoid runs on depository institutions bars the state from disclosing any details of its enforcement actions, said Paul H. Wentzel Jr., a spokesman for the Banking Department.
Wentzel said the restrictions are "a remnant of the past," and the department may try to improve public access to disciplinary records as part of a package of mortgage-lending reforms the Rendell administration expects to propose later this year.
Consumer advocates are pressing for reforms because of a large increase in home foreclosures in Pennsylvania in recent years and its lingering after-effect -- a continuing rise in sheriff's sales of homes in various parts of the state. The advocates blame predatory lending by institutions that get borrowers in over their heads for part of the increase.
State laws
Pennsylvania, which has the sixth-highest foreclosure rate in the nation, lags behind at least two of its neighbors in trying to keep consumers better informed.
In Ohio, also hard-hit by foreclosures, consumers can learn about fines or license suspensions and revocations issued against mortgage brokers by the Department of Commerce by calling the agency's toll-free hot line. And in New York, most enforcement actions against brokers and lenders are posted on a state Web site -- even though there's no legal requirement to do so.
"We do this for two reasons: One is because consumers need to be aware that an action has been taken. And two, to send a message to the industry that we will catch you, and you will be punished," said New York State Banking Department spokeswoman Catie Marshall.
Pennsylvania cannot release details on enforcement to anyone, Wentzel said. The exceptions are the rare cases in which the state suspends or revokes a license, and even that limited disclosure is a relatively recent change in the law. Violations could land a Banking Department employee in jail for up to a year.
Reform skepticism
The Mortgage Bankers Association of Pennsylvania has said it is skeptical about the need for other lending reforms being sought by consumer advocates. But the trade group thinks greater disclosure could improve public confidence in the services they provide, said John Amrhein, the group's president.
"We believe the majority of our members comply with the provisions of the law, and so having the bad actors reported serves to enhance the industry," Amrhein said.
Wentzel said Pennsylvania does not keep a yearly tally of the fines it issues, and he said the agency could not give any kind of breakdown of its enforcement actions, even without naming the violators.
But he said the most common violations tend to involve charging improper fees, not producing money after a loan is closed, taking advance fees without bonding and not giving customers required details about their mortgages.