New Jersey Amends Residential Mortgage Lending Act
New Jersey recently amended numerous provisions of its Residential Mortgage Lending Act (RMLA), including those relating to mortgage loan originator licensing and sponsorship, fees licensed lenders and brokers may charge, branch office supervision, secondary mortgage loans, continuing education requirements, and licensing exemptions and prohibitions. The amendments take effect on November 22, 2018.
MLO licensing and sponsorship. As amended, the RMLA allows out-of-state MLOs to obtain transitional licenses if they: (i) are licensed as a MLO in another state; (ii) are, or become, employed by a New Jersey-licensed mortgage company; and (iii) submit a New Jersey MLO application. MLOs employed by depository institutions may also obtain transitional licenses if they: (i) were registered in NMLS with a depository institution (or a subsidiary thereof) for at least one year immediately preceding submission of their New Jersey MLO license application; (ii) become employed by a New Jersey-licensed mortgage company; and (iii) submit a New Jersey MLO license application. Transitional licenses expire after 120 days.
The amendments also allow MLO license and license renewal applicants, who have unresolved credit issues, to be granted “approved conditional license” status, so long as such persons satisfactorily demonstrate good faith efforts to achieve the level of financial responsibility necessary to become licensed. Persons who have satisfied all licensing requirements, except sponsorship, may obtain an “approved inactive license” status. Additionally, the amendments: (i) allow depository institutions that register with the department, as well as New Jersey-licensed mortgage companies, to sponsor individuals licensed as MLOs, including transitional MLOs; (ii) provide that a determination by NMLS that an individual cheated or attempted to cheat on a MLO licensing exam is evidence that the applicant lacks the requisite character and fitness for licensure; and (iii) allow individuals who have been convicted of, or pled guilty or nolo contendere to, a disqualifying felony to remain eligible for a MLO license if such conviction or plea has been expunged.
Fees licensed lenders and brokers may charge. The amendments revise and clarify the fees that licensed lenders and brokers may charge, stating that: (i) lenders may charge application fees, origination fees, lock-in fees, commitment fees, warehouse fees, and discount points; (ii) brokers may charge application fees and broker fees; and (ii) both lenders and brokers may charge third party fees as the commissioner may expressly permit by regulation. The amendments also define each of these fees.
Branch office supervision. As amended, the RMLA requires branch offices of entities licensed as lenders or brokers to be supervised by a branch manager, who must hold a MLO license or certify that he or she will not engage in any licensable activity.
Secondary mortgage loans. The amendments eliminate exceptions in the RMLA’s definition of “secondary mortgage loan” for loans: (i) to be repaid in 90 days or less; (ii) taken as security for a home repair contract; and (iii) that are the result of the private sale of a dwelling, if certain conditions are met, thereby expanding the types of secondary mortgage loans that are subject to the RMLA.
Continuing education requirements. The amendments add a requirement that, of the 12 hours of continuing education an individual must complete to renew their license, 2 hours must include instruction about New Jersey residential mortgage lending laws and regulations.
Licensing exemptions and prohibitions. The amendments create new exemptions from the RMLA’s licensing requirements, including for: (i) a company engaged in the business of mortgage loan origination solely by virtue of its performance of loan processing or underwriting functions, if the company satisfies certain conditions; (ii) a bona fide not for profit entity and any individuals directly employed thereby, so long as the entity satisfies certain criteria; and (iii) employees of any federal, state or local government agency or a housing finance agency who act as a MLO pursuant to their official duties. The amendments also remove the prohibition on persons licensed as title insurance producers from obtaining a RMLA license.
The amendments also make various technical changes and add several additional new definitions to the RMLA.
