New Jersey Enacts Provisions Regarding Mortgage Servicers Licensing Act
The state of New Jersey has recently enacted provisions relating to its Mortgage Servicers Licensing Act which include initial licensing and surety bond notification, reporting, and renewal requirements. These provisions are effective on July 29, 2019.
The New Jersey Mortgage Servicers Licensing Act requires mortgage servicers to obtain a license from the Commissioner of Banking and Insurance. Licenses must be obtained for the main office and each branch where business is conducted, unless one of the exemptions listed in the bill applies.
The bill defines “mortgage servicer” as “any person, wherever located, who, for the person or on behalf of the holder of a residential mortgage loan, receives payments of principal and interest in connection with a residential mortgage loan, records the payments on the person’s books and records and performs the other administrative functions as may be necessary to properly carry out the mortgage holder’s obligations under the mortgage agreement including, when applicable, the receipt of funds from the mortgagor to be held in escrow for payment of real estate taxes and insurance premiums and the distribution of the funds to the taxing authority and insurance company; and includes a person who makes payments to borrowers pursuant to the terms of a home equity conversion mortgage or reverse mortgage.”
The bill provides that both mortgage servicers and persons exempt from licensure are required to maintain adequate records of each residential mortgage loan transaction, and are required to produce the records upon request of the commissioner. Upon assigning the servicing rights on a residential mortgage loan, the servicer must make certain disclosures to the mortgagor, which are set forth in the bill. A mortgage servicer must also maintain a schedule of fees charged to mortgagors.
The bill requires mortgage servicers to file certain information annually with the Commissioner regarding the mortgages that it services in the state. In addition, mortgage servicers must file with the Commissioner a surety bond, fidelity bond, and evidence of coverage that meets certain standards set forth in the bill.
The bill provides that the Commissioner must issue a mortgage servicer license to an applicant if the Commissioner makes certain findings, including that the applicant has met certain financial and character and fitness requirements. However, the Commissioner also has the authority to conduct investigations and examinations of mortgage servicers and may suspend, revoke, or refuse to renew a mortgage servicer license for certain reasons set out in the bill.
Zachary Pearlstein, JD, is a Regulatory Compliance Director with CLA's Mortgage Advisory Division. He joined CLA on January 1, 2014, as part of its acquisition of Bankers Advisory, Inc. Zachary oversees Mortgage Advisory's regulatory compliance team, which focuses on federal and state compliance, fair lending, and the Home Mortgage Disclosure Act (HMDA). He is a graduate of Brandeis University and earned his juris doctor at Suffolk University Law School. He is admitted to the Massachusetts Bar.
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