Regulatory Alerts1999-10-20
Added · Updated
Prohibition on Refusing to Fund Closed Mortgage Loans Under the Mortgage Bankers and Brokers Act and Secondary Mortgage Loan Act
The Pennsylvania Department of Banking issued a directive stating that licensed lenders under the Mortgage Bankers and Brokers Act and Secondary Mortgage Loan Act are prohibited from refusing to fund closed mortgage loans after the borrower has signed the promissory note and mortgage. The Department determined that such nonfunding, except in cases of borrower rescission under Regulation Z, constitutes unfair and unethical business practices that are not legally authorized by the relevant statutes. Lenders are ordered to cease this practice immediately and face potential enforcement actions, including license suspension, revocation, and fines for noncompliance.