Opinion ID: 517606
Heading Depth: 3
Heading Rank: 1

Heading: Trade or Commerce.

Text: 21 Before determining whether the conduct here is unfair or deceptive, we must determine whether that conduct occurs within the context of a trade or commerce covered by the UDAP. The first issue is, therefore, whether a mortgage transaction constitutes trade or commerce within the scope of the UDAP. If it does not, that ends our inquiry. 22 Statutes prohibiting unfair trade practices and acts have routinely been interpreted to be flexible and adaptable to respond to human inventiveness. In construing section 5 of the Federal Trade Commission Act relating to unfair trade practices, for example, 5 the Supreme Court determined that the Act was to be both broad in sweep and flexible in application. The Court's conclusion rested primarily upon the House Conference report which admonished that: 23 It is impossible to frame definitions which embrace all unfair practices. There is no limit to human inventiveness in this field. Even if all known unfair practices were specifically defined and prohibited, it would be at once necessary to begin over again. If Congress were to adopt the method of definition, it would undertake an endless task. 24 FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 240, 92 S.Ct. 898, 903, 31 L.Ed.2d 170 (1972) (quoting H.R.Conf.Rep. No. 1142, 63d Cong., 2d Sess. 19 (1914)). 25 Courts generally have adopted a similar broad and flexible approach with respect to the UDAP. See, e.g., In re Jungkurth, 74 B.R. 323, 324 (Bankr.E.D.Pa.1987); In re Russell, 72 B.R. 855, 871 (Bankr.E.D.Pa.1987); Monumental Properties, 459 Pa. at 465-66, 329 A.2d at 819-20. Noting that not only did the legislature fail to define unfair or deceptive by reference to specific practices or acts but that it also specifically excluded particular acts and practices from the Act's scope, the courts understandably have been reluctant to expand the scope of exclusions absent express congressional authorization. Instead, relying upon the all-inclusive language of the UDAP, the courts have applied the proscriptions of the UDAP to a variety of acts and practices. See, e.g., Culbreth v. Lawrence J. Miller, Inc., 328 Pa.Super. 374, 392, 477 A.2d 491, 501 (1984) (insurance agreements); Pennsylvania Retailers' Ass'n v. Lazin, 57 Pa.Cmwlth. 232, 426 A.2d 712, 718 (1981) (debt collection); Monumental Properties, 459 Pa. at 466, 329 A.2d at 820 (leasing of residences). 26 Moreover, the practice of mortgages and mortgage financing has not escaped application of the UDAP. See Andrews, 78 B.R. at 82; Jungkurth, 74 B.R. at 335; Russell, 72 B.R. at 872. As the court in Andrews concluded,  'the business of mortgage lenders is the sale of a service' within the scope of the UDAP. 78 B.R. at 82. Certainly, the mortgage transaction has all the ear-markings of a sale of a service within the scope of the UDAP: 27 The relationship of borrower and mortgage broker involves such [sales] activities. The broker is manifestly engaged in the business of selling his services in procuring a loan which is most favorable to the needs and resources of the potential borrower who, in turn, has sought to obtain a broker who can best represent his interests in securing proper financing. While no tangible property of any kind moves through commerce because of this relationship, an exchange of value does occur as the result of this process of securing a broker as the representative of the potential borrower. 28 Johnson v. Phoenix Mutual Life Insurance, 300 N.C. 247, 266 S.E.2d 610, 620 (1980) (interpreting language similar to the UDAP). 29 Notably the Office of Attorney General, Bureau of Consumer Protection, pursuant to rulemaking authority under section 3.1 of the UDAP, has recently promulgated regulations of Loan Broker Trade Practices, 37 Pa.Code Ch. 305. These regulations recognize that the activities of the residential mortgage industry constitute a trade within the meaning of the UDAP and that certain acts or practices by loan brokers require regulation to provide adequate protection to borrowers. 30