Bills plus for financial freedom

Gov. Tom Wolf and I would like to congratulate the members of our Pennsylvania House of Representatives for their bi-partisan actions on two pieces of legislation designed to help Pennsylvania consumers achieve and maintain lifelong financial independence.

House Bill 780, sponsored by Rep. Ryan Mackenzie, promises to extend the network of legal protections for Pennsylvania homeowners by filling a vacuum in the commonwealth’s regulatory authority in the mortgage marketplace.

The House passed this bill on April 24 by a vote of 184-7.

Currently, Pennsylvania is in a distinct minority of states that does not grant its financial services regulator authority over companies that collect mortgage, tax, and insurance escrow payments from homeowners.

“Mortgage servicing,” as the business is called, is a critically important presence in a homeowner’s life, especially since the consumer often has no choice in which company will service his or her mortgage.

Over the years, news reports about mortgage servicing have painted a picture of the industry where too often homeowners are harmed by companies whose systems have failed, resulting in payment errors and even wrongful foreclosures.

Last week, for example, more than 20 state regulators filed enforcement orders against a mortgage servicer named Ocwen for a range of system failures.

Ocwen is one of the nation’s largest non-bank mortgage servicers, conducting mortgage loan servicing for approximately 1.4 million consumers, including more than 53,000 homeowners in Pennsylvania.

Pennsylvania was not among those 20 states because Pennsylvania does not regulate mortgage servicing.

Mackenzie’s bill will grant the Department of Banking and Securities the authority to license mortgage servicers and examine their operations and books to ensure that their systems are working and their practices are not harming consumers.

House Bill 1039, sponsored by Rep. Rosemary Brown, allows banks and credit unions to create incentives for their account holders to save money, whether to be able to meet unexpected financial emergencies or for retirement. The House passed this bill on April 24 by a vote of 192-0.

According to the Center for Retirement Research, one in three American households has no savings account, and nearly 44 percent of American households do not have enough money saved to cover expenses if they lose a job or face a medical emergency.

At the same time, according to the National Institute on Retirement Security, 45 percent of Americans having nothing saved for retirement, the median retirement account for all working-age households is only $2,500, and median savings for those nearing retirement is only $14,500.

I agree with Brown, who stated that “we need to help families to start building a financial reserve.

For many families who experience an unexpected financial emergency, having a financial cushion of three months’ worth of expenses can mean the difference between falling into escalating financial distress or not.”

Other states have begun to address this challenge. Michigan launched the first savings promotion raffle program in 2009. Data from 2013 show that financially vulnerable participants increased their savings by 30 percent over a 12-month period.

Based on that success, 10 other states have since enacted similar legislation.

Brown’s bill is one positive step that provides a piece to the savings puzzle. House Bill 1039 for the first time legally authorizes banks and credit unions to conduct savings promotion raffles in which the winner of the contest can have money deposited into a qualified account/savings program.

As these bills come up for consideration in the Pennsylvania Senate, Wolf and I call upon our state senators to give these bills their support.

Both bills provide bi-partisan wins for members of the General Assembly as well as positive outcomes for Pennsylvanians working to secure the financial future for themselves and their families.

Robin L. Wiessmann is the Pennsylvania secretary of banking and securities.