Bulletin: NJ000077

Dear Associates:

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.