DeAngelo/Schaer/Wisniewski/McKeon/Bill To Reform Lending Activities Becomes Law

DeANGELO/SCHAER/WISNIEWSKI/McKEON BILL TO REFORM LENDING ACTIVITIES BECOMES LAW

New Law Will Revise Mortgage & Consumer Loan Practices

(TRENTON) - Legislation sponsored by Assemblymen Wayne P. DeAngelo (D-Mercer/Middlesex), Gary S. Schaer (D-Passaic), John S. Wisniewski (D-Middlesex) and John F. McKeon (D-Essex) to reform mortgage and consumer loan lending activities was signed into law today by Governor Jon S. Corzine.

"The ongoing mortgage foreclosure crisis has showed our oversight laws desperately need reform," DeAngelo said. "The current system isn't working and change is needed. This new law will strengthen our ability to ensure mortgage lenders are accountable and help keep people in their homes."

The new law (A-3816) is largely focused on mortgage activities and undertaken in response to new federal requirements that mandate new state licensing standards, business practices and oversight for individuals acting as mortgage loan originators.

"Licensing standards, businesses practices and oversight for mortgage lenders should be consistent and airtight," Schaer said. "We've learned in the last few months that this hasn't always been the case. This law will change those practices and protect the dream of homeownership for many families."

The law will completely revise and supplement the lenders act, creating two separate regulatory schemes, with one part dedicated to mortgage activities and the other reorganizing those remaining provisions that concern non-mortgage lending activities.

"This is a sensible approach that will bring separate and reformed regulations for mortgage activities and other lending practices," Wisniewski said. "These are two different kinds of transactions and should operate under different regulations to provide the best protections for homeowners and consumers alike."

The law addresses licensing standards, business practices and oversight for the newly designated residential mortgage lenders, residential mortgage brokers and mortgage loan originators. 

Under existing "New Jersey Licensed Lenders Act," these businesses and individuals are licensed as mortgage bankers, correspondent mortgage bankers, mortgage brokers and secondary lenders or registered as mortgage loan solicitors.

To continue to engage in their respective business practices, they must qualify for licensure under the new licensing scheme.

For the licensing of residential mortgage lenders and brokers, as business licensees, the law will require, among other things:
· A completed application accompanied by appropriate supporting evidence.
· The submission of information for a criminal history record background check to be performed on any officer, director, partner or owner of a controlling - 25 percent or more - interest of the business.
·  A general finding of responsibility and fitness worthy of licensure.
·  Appropriate coverage of the business, its qualified individual licensee, mortgage loan originators, other employees and agents by a surety bond.
·  A demonstration of the business' minimum tangible net worth.

"We are boosting protections for homeowners, but also lenders who have operated honestly and straightforwardly," McKeon said. "These new regulations are designed to ensure those who haven't used the best business practices shape up."
  
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