Pennsylvania Statutes Title 7 P.S. Banks and Banking § 6020-155. Terms of mortgage

(a) If a direct reduction loan is to finance new construction the first monthly payment may be postponed to a date not later than twenty-four months after the date of the first advance made on the loan.  Notwithstanding the foregoing the department may by regulations extend the first monthly payment date on construction loans to a period later than twenty-four months if the construction loan meets the requirements of the regulations of the department.

(b) If the term of the loan is for a period not exceeding ten years and if the loan together with all other loans held by the association on the security of the same property does not exceed sixty-six and two-thirds percent of the fair market value of such property the loan may be made without provision for monthly amortization provided, however, that the security documents require the payment of interest not less frequently than semi-annually.

(c) If the loan is made for the purpose of financing new construction of a one to four family residential property and is in an amount not to exceed eighty percent of the fair market value thereof it may be made for a term not exceeding twenty-four months without requiring amortization during said twenty-four months.  Interest shall be payable not less frequently than semi-annually.  If the loan is for the purpose of financing construction of residential property designed for use by more than four families and in an amount not exceeding seventy-five percent of the fair market value it may be made for a period not exceeding twenty-four months without amortization but interest shall be payable not less frequently than semi-annually.  Notwithstanding the foregoing the department may by regulations extend the first monthly payment date on construction loans to a period later than twenty-four months if the construction loan meets the requirements of the regulations of the department.

(d) If the loan is made for the purpose of facilitating the trade-in or exchange of residential real property a substantial portion of which is used as a dwelling for not more than four families and does not exceed ninety percent of the fair market value of the property it may be made for a term not exceeding eighteen months without amortization but interest shall be payable not less frequently than semi-annually.

(e) Any development loan under section 908   1 shall be repayable within eight years and the interest on any such loan shall be payable at least semi-annually.

(f) None of the limitations as to terms of repayment or term of mortgage shall be construed to apply to a purchase money mortgage taken by an association on real property or leasehold interest in real property owned by it and sold to the borrower.

(g) Interest;  premiums and charges:

(h) Mortgages may be written to permit the nonpayment of one month's principal and interest payment not more frequently than one time in a calendar year and not in total more than five times.  Any obligation not met by such skip payments shall remain mortgagor's obligation.

(i) Any mortgage authorized by this act and required to be repaid on a direct reduction loan basis may be written on a monthly payment basis with reduced monthly payments during the first twenty-five percent of the total number of years for which the mortgage is written.  Thereafter the mortgage shall be paid on a direct reduction basis.

(j) Mortgages may be written providing for advances of the principal periodically over a period of years.  Interest shall be payable at the date of said periodic payments.  Repayment of the mortgage shall be made on a not longer than ten year direct reduction basis commencing not later than three months after the date of the last payout of principal.  The total of all advances under the mortgage shall constitute a lien on the real estate described in the mortgage from the date of the recording of the mortgage.

(k) Except in the case of a due-on-sale clause or except in the case of a default and in accordance with the act of January 30, 1974 (P.L. 13, No. 6), referred to as the Loan Interest and Protection Law, no loan for financing the purchase of an owner occupied one or two family residential property shall contain a provision that the loan may be accelerated at the lender's option.  Balloon loans are prohibited for financing the purchase of an owner occupied one or two family residential property.  This restriction shall apply to all commitments for mortgage loans granted subsequent to the effective date of this subsection.

(l) Whenever a renegotiable or adjustable rate mortgage loan is to be made under the authority of this act, the initial or base value of the reference index to be utilized shall be committed to the borrower at the same time that the initial contract interest rate is committed to the borrower and shall be entered in the loan documents as a contractual provision of the loan.