New Jersey Governor Phil Murphy recently signed into law a bill, Assembly Bill A-4997 (A-4997), which amends the Mortgage Servicers Licensing Act (the Act). This bill, among other things, imposes a license requirement on mortgage servicers (although certain entities, such as persons licensed as residential mortgage lenders in New Jersey, are exempt from this license requirement). The bill will become effective on July 28, 2019.
Some of the other key provisions of A-4997 include the following:
- Generally, to qualify for a license under the Act, an applicant must demonstrate to the Commissioner of Banking and Insurance that it, as well as branch managers, possess the financial responsibility, character and general fitness to warrant a determination that the applicant will operate the business honestly, fairly and efficiently within the purposes of the Act.
- It requires that mortgage servicers, including exempt persons acting as mortgage servicers in the state, maintain record-keeping requirements, late fee restrictions, and required disclosures.
- Licensees must notify the Department of Banking and Insurance, in writing, within five business days after the licensee has reason to know of the occurrence of a significant adverse event, such as: (i) a material change in the licensee’s financial condition, a bankruptcy filing, or the consummation of a corporate restructuring; (ii) the filing of criminal charges against applicant, or any of its officers, directors, members, partners or other significant individuals; and (iii) notification of a license denial, suspension or revocation, or other regulatory enforcement action.
- The license fee set forth in the Act is $1,000 for an initial license and $3,000 for a renewal license.
- Mortgage servicers are prohibited from engaging in activities such as: (i) unfair or deceptive practices towards any person or misrepresenting or omitting any material information in connection with the servicing; (ii) knowingly misapplying or recklessly applying loan payments to the outstanding balance of a residential mortgage loan or to an escrow account; and (iii) force-placing hazard or flood insurance on a property when the servicer knows or has reason to know that the mortgagor has an effective policy in place.