2010 Pennsylvania Code
Title 7 - BANKS AND BANKING
Chapter 61 - Mortgage Loan Industry Licensing and Consumer Protection
6126 - Requirements as to open-end loans.

     § 6126.  Requirements as to open-end loans.
        The following shall apply:
            (1)  A mortgage lender may make open-end loans and may
        contract for and receive thereon interest and charges as set
        forth under this chapter.
            (2)  A mortgage lender shall not compound interest by
        adding any unpaid interest authorized by this section to the
        unpaid principal balance of the consumer's account, provided,
        however, that the unpaid principal balance may include the
        additional charges authorized by this subchapter.
            (3) Interest authorized by this section shall be deemed
        not to exceed the maximum interest permitted by this
        subchapter if the interest is computed in each billing cycle
        by any of the following methods:
                (i)  by converting the monthly rate to a daily rate
            and multiplying the daily rate by the applicable portion
            of the daily unpaid principal balance of the account, in
            which case the daily rate shall be 1/30 of the monthly
            rate;
                (ii)  by multiplying the monthly rate by the
            applicable portion of the average monthly unpaid
            principal balance of the account in the billing cycle, in
            which case the average daily unpaid principal balance is
            the sum of the amount unpaid each day during the cycle
            divided by the number of days in the cycle; or
                (iii)  by converting the monthly rate to a daily rate
            and multiplying the daily rate by the average daily
            unpaid principal balance of the account in the billing
            cycle, in which case the daily rate shall be 1/30 of the
            monthly rate.
            (4)  For all of the methods of computation in paragraph
        (3)(i), (ii) and (iii), the billing cycle shall be monthly,
        and the unpaid principal balance on any day shall be
        determined by adding to any balance unpaid as of the
        beginning of that day all advances and other permissible
        amounts charged to the consumer and deducting all payments
        and other credits made or received that day.
            (5)  The consumer may at any time pay all or any part of
        the unpaid balance in the consumer's account without
        prepayment penalty or, if the account is not in default, the
        consumer may pay the unpaid principal balance in monthly
        installments. Minimum monthly payment requirements shall be
        determined by the licensee and set forth in the agreement
        evidencing the open-end loan.
            (6)  A mortgage lender may contract for and receive the
        fees, costs and expenses permitted by this subchapter on
        other first or secondary mortgage loans, subject to all the
        conditions and restrictions set forth in this subchapter,
        with the following variations:
                (i)  If credit life or disability insurance is
            provided and if the insured dies or becomes disabled when
            there is an outstanding open-end loan indebtedness, the
            insurance shall be sufficient to pay the total balance of
            the loan due on the date of the consumer's death in the
            case of credit life insurance or all minimum payments
            which become due on the loan during the covered period of
            disability in the case of credit disability insurance.
            The additional charge for credit life insurance or credit
            disability insurance shall be calculated in each billing
            cycle by applying the current monthly premium rate for
            insurance, as the rate may be determined by the Insurance
            Commissioner, to the unpaid balances in the consumer's
            account, using any of the methods specified in paragraph
            (3) for the calculation of loan charges.
                (ii)  No credit life or disability insurance written
            in connection with an open-end loan shall be canceled by
            the licensee because of delinquency of the consumer in
            the making of the required minimum payments on the loan
            unless one or more of the payments is past due for a
            period of 90 days or more, and the licensee shall advance
            to the insurer the amounts required to keep the insurance
            in force during the period, which amounts may be debited
            to the consumer's account.
                (iii)  The amount, terms and conditions of any
            insurance against loss or damage to property must be
            reasonable in relation to character and value of the
            property insured and the maximum anticipated amount of
            credit to be extended.
            (7)  Notwithstanding any other provisions in this chapter
        to the contrary, a mortgage lender may retain any security
        interest in real or personal property until the open-end loan
        is terminated, provided that, if there is no outstanding
        balance in the account and there is no commitment by the
        licensee to make advances, the mortgage lender shall, within
        ten days following written demand by the consumer, deliver to
        the consumer a release of the mortgage, indenture, deed of
        trust or any other similar instrument or document on any real
        property taken as security for the open-end loan. The
        mortgage lender shall include on all billing statements
        provided in connection with an open-end loan a statement that
        the licensee retains a security interest in the consumer's
        real property whenever the security interest has not been
        released.
            (8)  A mortgage lender may charge, contract for, receive
        or collect on any open-end loan account an annual fee not to
        exceed $50 per year.