Pennsylvania Department of Banking
Glossary of Common Terms
The Common Terms and definitions in this Glossary have been provided as a reference guide for interpreters and do not constitute a legal opinion or interpretation by the Department.
Applicable for all hearings
Bureau of Compliance, Investigation and Licensing ("Bureau"): The Bureau within the Department that initiates the administrative actions related to licensees including mortgage related licensees and motor vehicle licensees.
Credit Unions Office: The Office within the Department that initiates the administrative actions related to credit unions.
Department: The Department of Banking of the Commonwealth of Pennsylvania.
Depository Institution: A bank, bank and trust company, savings bank, trust company, savings association or credit union.
Licensee: A corporation, person or any other type of business entity required to be licensed by, registered with or partially exempt from being licensed by the Department of Banking under any law of this Commonwealth administered by the Department of Banking including but not limited to the Mortgage Act, the Motor Vehicle Sales Finance Act, the Check Casher Licensing-Act, the Money Transmitter Act the Pawnbrokers Act and the Consumer Discount Company Act.
PDB: used for marking Department exhibits at a hearing. Example: Exhibit I for the Department would be PDB 1.
Secretary: The Secretary of Banking for the Commonwealth of Pennsylvania.
Branch: A subsidiary office of the credit union which is capable of offering the same or approximately the same level of service to members that can be found at the principal office of the credit union.
Community Credit Union: Credit union field of membership that is made up of persons or organizations within a well-defined local community, neighborhood, or rural district.
Community Development Credit Union: A credit union which is designated as a low-income credit union by the Department of Banking.
Credit Union Code: The Pennsylvania statute that regulates Pennsylvania credit unions. 17 Pa.C.S. § 101 et seq.
Federal Credit Union Act: The federal statute that regulates federal credit unions.
Multiple Common-Bond Credit Union: Credit union field of membership that is made up of more than one group (A) each of which has (within the group) a common bond of occupation or association; and (B) the number of members does not exceed any numerical limitation that may apply.
National Credit Union Administration ("NCUA "): The federal agency that charters and supervises federal credit unions and insures savings in federal and most state-chartered credit unions across the country.
Parity: If a Pennsylvania credit union could engage in certain practices if it was, a Federal credit union, the Pennsylvania credit union may apply to the Department to be allowed to engage in those practices in Pennsylvania.
Select Employer Group: A type of common bond relating to a single employer.
Shares: All savings including regular shares, share drafts, share certificates and other savings.
Single Common-Bond Credit Union: Credit union field of membership that is made up of one group that has a common bond of occupation or association.
Actual Settlement Costs: means reasonable sums paid for:
Any insurance premiums which have been approved by the Insurance Commissioner of the Commonwealth.
Title examination and search, and examination of public records.
The preparation and recording of any or all documents required by law or custom for settlement.
Appraisal and/or survey of property securing the loan.
A single service charge, which shall include any consideration paid by the residential mortgage debtor and received and retained by the residential mortgage lender for or related to the acquisition, making, refinancing or modification of a residential mortgage loan, plus any consideration received by the residential mortgage lender for making a mortgage commitment, whether or not an actual loan follows such commitment.
The service charge shall not exceed one per cent of the original bona fide principal amount of the loan, except that in the case of a construction loan, the service charge shall not exceed two per cent of the original bona fide principal amount of the loan.
Charges and fees necessary for or related to the transfer of the property or the closing of the residential mortgage loan, paid by the residential mortgage debtor. and received by any party other than the residential mortgage lender, whether or not paid by the residential mortgage debtor directly to the third party or to the residential mortgage lender for payment to the third party.
Advance fee: Any funds requested by or to be paid to a person in advance of or during the processing of a mortgage loan application, excluding those fees paid by a consumer directly to a credit agency reporting bureau, title company or real estate appraiser.
Affiliated Business Arrangement: means an arrangement in which (A) a person who is in a position to refer business incident to or a part of a real estate settlement service involving a federally related mortgage loan, or an associate of such person, has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1 percent in a provider of settlement services; and (B) either of such persons directly or indirectly refers such business to that provider or affirmatively influences the selection of that provider.
Balloon Payment: A scheduled loan payment that is more than twice as large as the average of earlier scheduled monthly payments.
Branch: An office or other place of business; other than the principal place of business, located in this Commonwealth or any other state, where a person engages in the mortgage loan business.
Discount Points: means any charges, whether or not actually denominated as "discount points," which are paid by the seller of residential real property to a residential mortgage lender which directly or indirectly affects the ability of the buyer of the real estate to secure a residential mortgage.
Finance Charge: means the total cost of a loan or charge for the use of money, including any extensions or grant of credit regardless of the characterization of the same and includes any interest, time price differential, points, premiums, finder’s fees, and other charges levied by the residential mortgage lender directly or indirectly against the person obtaining the loan or against the seller, lender, mortgagee or any other party to the transaction except any actual settlement costs. The finance charges plus the actual settlement costs charged by the residential mortgage lender shall include all charges made by the residential mortgage lender to the residential mortgage debtor other than the principal of the loan. In computing finance charge on any mortgage which does not require the full amount of the first year’s interest to be paid during the first year and on a variable interest rate mortgage interest shall be calculated at the rate applicable to the first year of the loan.
Finder’s fee or referral fee: Any payment of money or other consideration for the referral of a mortgage loan to a licensee, except for consideration paid for goods or facilities actually furnished or services actually performed.
First Mortgage Loan: A loan which is secured in whole or in part by a first lien upon any interest in real property created by a security agreement, including a mortgage, indenture, deed of trust or any other similar instrument or document, which real property is used as a one-family to four-family dwelling, a portion of which may be used for nonresidential purposes.
First Mortgage Loan Business: The mortgage loan business as applied to first mortgage loans.
Good Faith Estimate (GFE"): Mortgage related document that clearly discloses key loan terms and closing costs. Providing a GFE is a RESPA requirement.
HUD--1 Settlement Sheet: A RESPA mortgage form used by the settlement (closing) agent to itemize all charges imposed on the borrower and seller giving them a complete list of all charges (including fees paid prior to the closing) that will be imposed as a result of the real estate transaction.
Loan Yield: means the annual rate of return obtained by a residential mortgage lender from a residential mortgage debtor over the term of the loan and shall be determined in accordance with regulations issued by the Secretary of Banking. Such regulations shall establish the method for calculating such rate of return and shall provide that the finance charge be amortized over the contract term of the loan. In computing loan yield on any mortgage which does not require the full amount of the first year’s interest to be paid during the first year and on a variable interest rate mortgage interest shall be calculated at the rate applicable to the first year of the mortgage.
Lock-in Agreement: An agreement between a mortgage lender and a consumer whereby the mortgage lender guarantees, until a specified date, the availability of a specified rate of interest or specified formula by which the rate of interest and a specific number of discount points will be determined, if the mortgage loan is approved and closed by the specified date. If a specified date is not determinable, the mortgage lender may fulfill the requirement of this definition by setting forth with specificity the method by which the duration of the lock-in period will be determined.
Material Disclosures: means the disclosure of the annual percentage rate, the method of determining the finance charge and the balance upon which a finance charge will be imposed, the amount of the finance charge, the amount to be financed, the total of payments, the number of and amount of payments, the due dates or periods of payments scheduled to repay the indebtedness, and other RESPA disclosures.
Mortgage: A mortgage is a lien on a property/ house that secures a loan and is paid in installments over a set period of time.
Mortgage Act: The statute that regulates the first and secondary mortgage loan business in Pennsylvania. 7 Pa.C.S. § 6101 et seq.
Mortgage Bankers and Brokers and Consumer Equity Protection Act ("MBBCEPA’’): The MBBCEPA related to the first mortgage loan business in Pennsylvania. 63 P.S. § 456.101 et seq. Chapter 3 (licensing) of the MBBCEPA was repealed on November 5, 2008 and replaced by the Mortgage Act. Chapter 5 (home equity protection) of the MBBCEPA is still in effect.
Mortgage Broker: A person who engages in the mortgage loan business by directly or indirectly negotiating or placing mortgage loans for others in the primary market for consideration.
Mortgage Commitment: means a legally binding obligation to lend money on the security of a residential mortgage.
Mortgage Lender: A person who engages in the mortgage loan business by directly or indirectly originating and closing mortgage loans with its own funds in the primary market for consideration.
Mortgage Loan: first or secondary mortgage loan, or both, as the context may require.
Mortgage Loan Business: The business of advertising, causing to be advertised, soliciting, negotiating or arranging in the ordinary course of business or offering to make or making mortgage loans.
Mortgage Loan Correspondent: A person who engages in the mortgage loan business by directly or indirectly originating and closing mortgage loans in his or her own name utilizing funds provided by: a wholesale table funder or other funding sources as provided in the Mortgage Act and simultaneously assigning the mortgage loans to the wholesale table funder.
Mortgage Note ("Note’): a promissory note associated with specified mortgage loan.
Mortgage Originator: An individual not licensed as a mortgage lender, mortgage broker or loan correspondent under this chapter who solicits, accepts or offers to accept mortgage loan applications, or negotiates mortgage loan tern’s, in other than a clerical or ministerial capacity and who is personally in direct contact, in writing, including electronic messaging, or by voice communication, with consumers with regard to the solicitations, acceptances, offers or negotiations. The term does not include directors, partners or ultimate equitable owners of 10% or more of a licensee.
Origination Fee: the fee or fees paid by the borrower to the mortgage broker, which may include a portion paid in commission by the lender.
Primary Market: The market wherein mortgage loans are originated between a lender and a consumer.
Principal Place of Business: The primary office of a person located in this Commonwealth which is staffed on a full-time basis and at which the person’s books, records, accounts and documents are maintained.
Real Estate Settlement and Procedures Act ("RESPA’): A Federal Department of Housing and Urban Development ("HUD") regulated law that provides consumers of residential real property greater and more timely information on the nature and costs of the settlement process and protects those consumers from unnecessarily high settlement charges. 12 U.S.C. § 2601 et seq.
Regulation X ("Reg X’) : Regulation of HUD that implements RESPA to regulate and require certain disclosures and information be provided to individuals during the real estate settlement (closing) process. 24 CFR 3500.1 et seq.
Regulation Z ("Reg Z"): A regulation of the Board of Governors of the Federal Reserve System that implements TILA to promote the informed use of consumer credit by requiring disclosures about its terms and cost. 12 CFR 226.1 et seq.
Residential Mortgage: means an obligation to pay a sum of money in an original bona fide principal amount of the base figure or less, evidenced by a security document and secured by a lien upon real property located within this Commonwealth containing two or fewer residential units or on which two or fewer residential units are to be constructed and shall include such an obligation on a residential condominium unit.
Residential Mortgage Debtor: means a non-corporate borrower who is obligated to a residential mortgage lender to repay in whole or in part a residential mortgage and a successor record owner of the property, if any, who ’gives notice thereof to the residential mortgage lender.
Residential Mortgage Intermediary: means a real estate broker, mortgage broker or other person receiving directly or indirectly from a residential mortgage lender a finder’s fee, commission, placement fee, service charge or other similar compensation other than actual settlement costs in conjunction with the issuance of a residential mortgage or mortgage commitment. Residential mortgage intermediary shall not mean an employee of a residential mortgage lender.
Residential Mortgage Lender: means any person who lends money or extends or grants credit and obtains a residential mortgage to assure payment of the debt. The term shall also include the holder at any time of a residential mortgage obligation.
Residential Real Property: means real property located within this Commonwealth containing not more than two residential units or on which not more than two residential units are to be constructed and includes a residential condominium unit.
Reverse Mortgage Transaction: means a nonrecourse transaction in which a mortgage, deed of trust, or equivalent consensual security interest is created against the consumer’s principal dwelling-
securing one or more advances; and
with respect to which the payment of any principal, interest, and shared appreciation or equity is due and payable (other than in the case of default) only after
the transfer of the dwelling;
the consumer ceases to occupy the dwelling as a principal dwelling; or
the death of the consumer.
Secondary Mortgage Loan: A loan which is secured in whole or in part by a lien upon any interest in real property created by a security agreement, including a mortgage, indenture, deed of trust or any other similar instrument or document, which real property is subject to a prior lien and which is used as a one-family to four-family dwelling, a portion of which may be used for nonresidential purposes.
Secondary Mortgage Loan Act ("SMLA’ ): The SMLA related to the secondary mortgage loan business in Pennsylvania. 7 P.S. § 6601 et seq. The SMLA was repealed on November 5, 2008 and replaced by the Mortgage Act.
Secondary Mortgage Loan Business: The mortgage loan business as applied to secondary mortgage loans.
Security Document: means a mortgage, deed of trust, real estate sales contract or other document creating upon recordation a lien upon real estate.
Settlement Services: includes any service provided in connection with a real estate settlement including, but not limited to, the following: title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or broker, the origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of loans), and the handling of the processing, and closing of settlement.
TILA Disclosure Statement: TILA mortgage form that provides meaningful disclosure of credit terms.
Title Company: means any institution which is qualified to issue title insurance, directly or through its agents, and also refers to any duly authorized agent of a title company.
Truth-in-Lending Act ("T.-LA "): A Federal statute designed to provide consumers with a meaningful disclosure of credit teuuns. 15 U.S.C. § 1601 et seq.
Uniform Residential Loan Application ("100.3’): A RESPA mortgage form used by mortgage brokers and mortgage lenders to record relevant financial information about an applicant who applies for a conventional one- to four-family mortgage.
Wholesale Table Funder: A licensed mortgage lender or person exempt under certain provisions of the Mortgage Act who, in the regular course of business, provides the funding for the closing of mortgage loans through mortgage loan correspondents and who by assignment obtains title to the mortgage loans.
Cash Price: shall mean the price measured in dollars at which the seller would in good faith sell to the buyer or to any other buyer under like circumstances, and the buyer would in good faith buy from the seller, the motor vehicle which is the subject matter of the installment sale contract, if such sale were a sale for cash instead of an installment sale.
Collector-Repossessor: shall mean a person who collects payments or installment sale contracts or repossesses motor vehicles, which are the subject of installment sale contracts, as an independent contractor and not as a regular employe of a seller or sales finance company, excluding duly constituted public officials or attorneys-at-law when acting in an official capacity, and excluding a licensed seller or licensed sales finance company making collections or repossessions on installment sale contracts wherein such seller or sales finance company was previously a "holder," or wherein such seller or sales finance company, not having previously been a "holder," occasionally makes collections or repossessions for other licensed sellers or sales finance companies. The term shall include any combination of the above activities.
Debt Cancellation Agreement: shall mean a loan term or contractual arrangement modifying loan terms linked to a holder’s extension of credit under which the holder agrees to cancel all or part of a buyer’s obligation to repay an extension of credit from that holder upon the occurrence of a specified event.
Debt Suspension Agreement: shall mean a loan term or contractual arrangement modifying loan terms linked to a holder’s extension of credit under which the holder agrees to suspend all or part of a buyer’s obligation to repay an extension of credit from that holder upon the occurrence of a specified event.
Down Payment: shall mean all partial payments whether made in cash, or otherwise, received by or for the benefit of the seller prior to or substantially contemporaneous with either the execution of the installment sale contract or the delivery of the goods sold thereunder, whichever occurs later.
Finance Charge: shall mean the amount of the consideration in excess of the cash price which the buyer is required to pay to the seller for the privilege of purchasing a motor vehicle under an installment sale contract, or for the credit extended by the seller to the buyer in conjunction with the sale of a motor vehicle under an installment sale contract, or it shall mean the differential between the cash sale price of the motor vehicle and the installment sale price, exclusive of charges for insurance and other charges necessary or incidental to an installment sale and any default charges, which are specifically authorized by this act to be included in an installment sale contract.
Installment Buyer or Buyer: shall mean the person who buys, hires or leases a motor vehicle under any installment sale contract or any legal successor in interest to such person, and shall continue ’to designate such person notwithstanding he may have entered into one or more extensions, deferments, renewals or other revisions of the original contract, and includes any person who as surety, endorser, guarantor, or otherwise, is liable on the obligation created by the buyer under an installment sale contract.
Installment Sale Contract Or Contract: shall mean any contract for the retail sale of a motor vehicle, or which has a similar purpose or effect under which part or all of the price is payable in two or more scheduled payments subsequent to the making of such contract, or as to which the obligor undertakes to make two or more scheduled payments or deposits that can be used to pay part or all of the purchase price, whether or not the seller has retained a security interest in such motor vehicle or has taken collateral security for the buyer’ s obligation, and shall include any loan, any mortgage, any conditional sale contract, any purchase-money chattel mortgage, any hire-purchase agreement or any contract for the bailment or leasing of a motor vehicle under which the hire-purchaser, the bailee or lessee contracts to pay as compensation a sum substantially equivalent to or in excess of the value of the motor vehicle and any other form of contract which has a similar purpose or effect: Provided, however, That the terms shall not include any sale or contract for sale upon an open book account, wherein the seller has not retained or taken any security interest in the motor vehicle sold or any collateral security for the buyer’s obligation, and wherein the buyer is not required to pay any sum other than the cash price of the motor vehicle sold in connection with such sale or extension of credit, and wherein the buyer is obligated to pay for the motor vehicle in full within ninety (90) days from the time the sale or contract for sale was made: Provided, also, That the terms shall not include a right to acquire possession of goods pursuant to a lease unless the lease constitutes a security interest as defined in 13 Pa.C.S. § 1201 (relating to general definitions) and is subject to 13 Pa.C.S. Div. 9 (relating to secured transactions). These terms shall also mean and apply to any extension, deferment, renewal or other revision of such installment sale contract.
Installment Seller or Seller: shall mean a person engaged in the business of selling, hiring or leasing motor vehicles under installment sale contracts or any legal successor in interest to such person.
Motor Vehicle: shall mean any self-propelled device in which, upon which, or by which any person or property is or may be transported or drawn upon a public highway, excepting tractors, power shovels, road machinery, agricultural machinery and other machinery not designed primarily for highway transportation, but which may incidentally transport persons or property on a public highway, and excepting such devices which move upon or are guided by a track or travel through the air and shall include trailers and semi-trailers.
Motor Vehicle Sales Finance Act ("MVSFA"): The MVSFA regulates the sale and financing of motor vehicles in Pennsylvania. 69 P.S. § 601 et seq.
Principal Amount Financed: shall mean the unpaid cash price balance after deducting the down payment, adding the charges for any insurance required or obtained as security for or by reason of the sale of a motor vehicle under an installment sale contract, and adding other costs or charges necessary or incidental to the sale of the motor vehicle under an installment sale contract and amounts representing payment of a prior credit or lease balance to discharge a security interest, lien or lease interest on a motor vehicle or other property traded or returned.
Sales Finance Company: shall mean a person engaged as principal, agent or broker in the business of financing or soliciting the financing of installment sale contracts made between other parties, including but not thereby limiting the generality of the foregoing, the business of acquiring, investing in or lending money or credit on the security of such contracts or any interest therein whether by discount, purchase or assignment thereof, or otherwise: Provided, That the term shall not include any person to the extent that he makes bona fide commercial loans to sellers or sales finance companies and takes assignments of, or an interest in, an aggregation of installment sale contracts only as security for such commercial loans under which, in the absence of default or other bona fide breach of the loan contract, ownership of such contracts remains vested in the assignor and collection of payments on such contracts is made by the assignor. The term shall include any seller, whether or not licensed under this act, as a seller who finances installment sale contracts for other sellers or sales finance companies.
Time Balance: shall mean the sum of the principal amount financed and the finance charge.