New Jersey Issues Guidance Bulletin and Checklists for New Mortgage Servicer License
The New Jersey Department of Banking and Insurance recently issued a guidance bulletin regarding its new mortgage servicer licensing requirements (originally imposed by Assembly Bill A-4997, effective on July 28, 2019), which require application submissions starting in January 2020.
As of January 13, 2020, all entities subject to these new licensing requirements under the New Jersey Mortgage Servicers Licensing Act are required to submit Mortgage Servicer License applications through the NMLS. The bulletin summarizes that mortgage servicer licensure in the state authorizes the licensee to engage in first mortgage servicing, third party servicing, subordinate lien servicing, reverse mortgage servicing, and mortgage loan modifications, clarifying that the license applies to all holders of mortgage servicing rights, including holders of master servicing rights. Entities applying for the new license generally must satisfy certain requirements to qualify for the license (e.g., surety and fidelity bonds, errors and omissions insurance coverage, audited financial statements, business plan with certain minimum elements, qualified individual for the main office, a branch manager for each branch office where business is conducted, etc.). For mortgage servicers that are not exempt from these license requirements and that are currently conducting mortgage servicing business in the state, applications for the license must be submitted by the close of business on April 13, 2020. The Department has stated that it anticipates beginning to issue Mortgage Servicer Licenses for timely and eligible applications on or after April 13, 2020. Entities currently operating as mortgage servicers in New Jersey that submit their applications before close of business on April 13, 2020, may continue to operate as mortgage servicers pending the Department’s approval. Those that do not currently operate as mortgage servicers in the state, have been denied licensure by the Department, or do not timely submit applications and are not otherwise exempt from this licensure may not act as mortgage servicers in New Jersey until they have been issued a Mortgage Servicer License by the Department.
Once the Department issues the Mortgage Servicer Licenses, all initial licenses will expire at the close of business on December 31 of the year in which the initial license was approved, with one exception: any initial license approved between November 1 and December 31 will expire at the close of business on December 31 of the year following the initial license approval year.
Notably, the Mortgage Servicer License is not required for any business entity actively licensed as a Residential Mortgage Lender or Correspondent Residential Mortgage Lender, pursuant to the New Jersey Residential Mortgage Lending Act, acting as a mortgage servicer (though this license exemption does not extend to those whose license has been surrendered, suspended, or revoked). Also starting on January 13, 2020, these exempt residential mortgage lenders must apply for the New Jersey RMLA-Licensed Mortgage Servicer Registration, which imposes certain requirements, such as supplemental mortgage servicer surety bond, fidelity bond, and errors and omissions coverage requirements, and must register each office where mortgage servicing business is conducted. For such entities currently conducting mortgage servicing business in the state, this registration application also must be submitted by April 13, 2020.
WBK’s article on the amendments to the Mortgage Servicers Licensing Act can be found here.
The recently released NMLS checklists for the New Jersey Mortgage Servicer License and the New Jersey RMLA-Licensed Mortgage Servicer Registration, as well as related branch applications, can be found here.