PA Staffs Up to Police Mortgage Brokers

The Pennsylvania Department of Banking’s quest for “increasing enforcement capabilities” to police the growing number of licensed, but “largely unregulated” mortgage brokers and other non-banking institutions in the financial services industry has led to the formation of an investigations unit, according to department spokeswoman Carol Gifford.

In addition to the new unit, the state agency has doubled staff in its licensing, examinations and consumer services divisions, Gifford said.

Apart from the consumer complaints it receives against mortgage companies, “there is concern because of the high level of foreclosures in Pennsylvania,” Gifford said.

Gifford did not disclose statewide foreclosure data as the department is in the process of completing an analysis of such activity. Last August, however, the agency announced that a study of foreclosure “hot spot” Monroe County showed that growth in foreclosure filings outpaced housing development in the county and also the rate of foreclosures across the state.

From 2000 to 2003, 2,745 families faced foreclosure filings and an estimated 42 percent ended in foreclosure. The number of foreclosures increased by 34 percent since 2000 and by 242 percent since 1995. Data reportedly showed foreclosures were on homes with frequently inflated sales prices, were more frequently on loans from subprime lenders, and typically occurred within three years of the loan’s origination.

Recently, the regulating agency appointed David Bleicken as Director of the Bureau of Licensing, Investigation and Consumer Services, putting him in charge of enhancing consumer protection by “implementing a more rigorous licensing process…and a new investigations unit,” according to a Feb. 8 announcement.

So far, the investigations division has hired five employees, but expects to increase this number to a total of 11 investigative and enforcement officers and intelligence analysts in the next year or so, Gifford said.

While the search for experienced white-collar crime investigators continues, the department has added two investigators and two analysts in its licensing division to provide more comprehensive background checks on initial and renewal applications. It has grown the number of examinators to 21 from 11 to perform more compliance check visits. And, it increased consumer services division staff to 7 from 3.

The department is headed by Secretary of Banking William Schenck, who prior to assuming his position in early 2003, served executive roles at Fleet Mortgage Group Inc., Great Western Financial Corp. and PNC Bank.