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Pou, Cruz-Perez Bill to Revise ‘New Jersey Residential Mortgage Lending Act’ Signed into Law

Senator Nellie Pou, D-Passaic and Bergen, asks a question during a Senate Budget and Appropriations Committee hearing on the Governor’s proposed FY 2012 Budget.

TRENTON – A bill sponsored by Senate Commerce Chairwoman Nellie Pou that would revise the “New Jersey Residential Mortgage Lending Act” was signed by the governor on Friday.

“It is our job in the Legislature to continually review past legislative and regulatory actions,” said Senator Pou (D-Passaic/Bergen). “This is particularly important with regard to mortgage lending. Homeownership is the cornerstone of the American Dream and consumers expect the lending process to be transparent, honest and fair.”

The new law (S-709) revises the fees lenders and brokers can charge and update standards for licensing the businesses and individuals that originate loans.

It also establishes requirements for exempt companies: an individual must be in the business of mortgage loan origination solely by virtue of its performance of loan processing or underwriting functions. An exempt company would be required to:

  • register with the commissioner of the Department of Banking and Insurance (DOBI)

and with the Nationwide Mortgage Licensing System and Registry

  • respond in a timely manner to any request from the commissioner for the production of and access to books, records, accounts and documents relative to its operation
  • submit to the Nationwide Mortgage Licensing System and Registry a mortgage call report of conditions when required
  • provide in writing notice to the commissioner with 10 days of an occurrence that would cause the exempt company to no longer qualify for such status
  • employ at least one person who is licensed as a mortgage loan originator who would not engage in the origination of mortgage loans and would be assigned supervision and assignment duties with respect to loan processors or loan underwriters

The law establishes additional requirements for business licensees for lenders and brokers and provides additional authority to DOBI with respect to certain aspects of business licensees.

Additionally, it allows mortgage loan originators to hold a transitional license, which would allow them to practice for a period of no more than 90 days pending the completion of the loan requirements for licensure as a New Jersey mortgage loan originator. It would also provide that a felony conviction that is expunged would not be considered disqualifying information for obtaining an individual license.

A person seeking an individual license who has unresolved credit issues but demonstrates to the satisfaction of the commissioner a good faith effort to achieve the level of financial responsibility required, could obtain “approved conditional status” and act as a loan originator, broker or lender.

Continuing education requirements will be revised to include fair lending issues and two hours of instruction related to New Jersey laws and regulations on residential mortgage lending.

The law also revises the types of fees that a residential mortgage lender has the right to charge. The lender would no longer be allowed to expressly charge a credit report fee and an appraisal fee.