Banking Secretary Nominee Confirmed

Committee receives testimony on mortgage reform legislation

The Senate Banking and Insurance Committee today recommended confirmation of the nomination of Steven Kaplan to serve as Secretary of Banking, according to Senator Don White, R-41st District and Committee Chairman. Kaplan was later confirmed by the Senate.

The Committee also held a public hearing on four mortgage reform bills (Senate Bills 483, 484, 487 and 488) introduced by Senator Pat Browne, R-16th District.

Kaplan, 55, was previously chief of staff for Mellon Financial Corporation's Mid-Atlantic Region and chairman of the Mid-Atlantic Charitable Trusts. Kaplan was born and raised in Philadelphia and attended the city's public schools. He earned a B.A. in English from Temple University and then a J.D. from the University's law school in 1977

During the committee meeting, Chairman White urged Kaplan to support Pennsylvania's small community banks and to "keep an open mind" regarding the issue of payday lending institutions in Pennsylvania.

Senators Jake Corman, R-34th District, and John Rafferty, R-44th District, stressed the need for the Banking Department to work toward making the mortgage process easier for consumers by reducing paperwork and making the language easier to read.

"In light of recent problems with mortgages and people misunderstanding their mortgages, are we looking to make the language clearer in these documents?" Senator Rafferty asked. "Is there something we can do to help the public understand what they are signing, what the consequences are of a flexible interest rate and what the consumer is going to be paying?"

Kaplan said the department is looking at making the process more consumer friendly, such as requiring the basic provisions of a mortgage be spelled out in simple language as a one-page cover sheet to be included with every mortgage package.

"As someone who just took out a home equity loan, less, not more, paperwork would be better. If you are talking about a one-pager (disclosure statement) on the front that really lays it out, that would be welcomed. You do sign an inordinate amount of paperwork to go through all that," Senator Corman said. "We have a tendency in government to add more, more, more. I'm not looking for more. We are looking for less, something (that is) more clear."

Following the Committee's unanimous endorsement of Kaplan's nomination, he was the first person to testify at the public hearing on Senator Browne's mortgage reform bills. The bills were developed by the Department of Banking after a study of residential lending, trends in foreclosures, and document lending practices in Pennsylvania that are harmful to consumers.

Senate Bill 483 would amend the Loan Interest and Protection Law of 1974 (Act 6 1974) to increase the monetary cap in the Act from $50,000 to $197,000.

Senate Bill 484 would permit the Department to publicly release information on pending enforcement actions and fines levied against non-depository licensees.

Senate Bill 487 would amend the Mortgage Bankers and Brokers and Consumer Equity Protection Act to create a new licensing category for individual mortgage originators who deal directly with the consumer by soliciting, accepting, or offering to accept mortgage loan applications, or negotiating mortgage loan terms.

Senate Bill 488 would amend the Secondary Mortgage Loan Act to create a new licensing category for individual mortgage originators who deal directly with the consumer by soliciting, accepting, or offering to accept secondary mortgage loan (home equity) applications or negotiating secondary mortgage loan terms.

Senator Browne told the Committee that Pennsylvania has seen a record increase in home ownership and a corresponding increase in mortgage foreclosures, both due in part to a proliferation of "lending products" available to consumers.

"Some would say that getting into a mortgage transaction is the responsibility of the consumer so they should be the ones who ultimately determine what type of mortgage plan to accept," Senator Browne said. "Others would say that those who sell the 'American Dream' have a fiduciary responsibility not only to sell the products, but to act as advocates for those they are selling the products to. That's the balance this legislation looks to strike and hopefully, with these hearings and other discussions, we will be able to strike a balance that will be best for the Commonwealth."

Chairman White said the souring of the mortgage market has created a ripple effect that is reaching many other aspects of the economy.

"Obviously, housing is most often the largest single purchase made by a family and it almost always necessitates the borrowing of money. Therefore, we must ensure that there is a level and equitable playing field in the mortgage market – one that respects the rights of borrowers as well as those of reputable lenders," Chairman White said. "Those are the benchmarks that I believe we must use as we consider Pennsylvania's mortgage laws and these proposed reforms."

Contact:

Joe Pittman
(717) 787-8724