- October 01, 2003
- All Issuing Offices in New Jersey
- Predatory Lending
The New Jersey Home Ownership Security Act, N.J.S.A. 46:10B-22 et seq., was signed by the Governor on May 1, 2003. Most provisions will take effect on November 28, 2003. While the majority of the legislation will not affect the way you handle your files, there are a few provisions of which you should be aware.
By definition, a Covered Home Loan is a home loan in which the total points and fees payable, excluding either a conventional prepayment penalty or up to 2 bona fide discount points, exceeds 4% of the total loan amount for loans over $40,000 or 4.5% for loans which are $40,000 or less, and 4.5% if the loan is insured by FHA or VA. Additionally, a loan may fit the definition of a High-Cost Home Loan. If the loan fits either of these definitions, the lender must be sure that the closing cost for the loan, together with the points and other fees, do not exceed the maximums set in the statute.
The other area of which you should be aware is the prohibition against flipping which is placed on mortgage lenders. This may have an affect on your title practice. If the borrower has purchased or refinanced within the past five years, the lender must meet certain criteria before a new loan can be made. The practical result of this statutory provision is that lenders may be asking you to report mortgages for a five year period, whether or not they were discharged.
Please call the state office if you have any questions.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.