On April 29, New Jersey’s governor signed into law bill A4997, known as the Mortgage Servicers Licensing Act. As the title indicates, the Act creates a licensing regime for servicers of residential mortgage loans secured by real property within New Jersey. As with many state licensing regimes, the Act exempts most banks and credit unions from licensing. It also excludes from licensing certain entities regulated under the New Jersey Residential Mortgage Lending Act. Consequently, the licensing regime principally impacts non-bank servicers who do not lend in New Jersey.
Also like other licensing regimes, the Act requires licensees to maintain and submit evidence of surety and fidelity bonds, designate qualified individuals to serve in various roles, such as “Qualified Individual” and “Branch Manager,” and pay applicable licensing and renewal fees. Additionally, the Act:
- Creates new operational requirements for some servicers;
- Creates a list of prohibited activities for all servicers;
- Provides the New Jersey Department of Banking and Insurance with investigative and examination authority; and
- Provides the Department of Banking with enforcement authority, which includes the power to impose civil penalties of up to $25,000 per violation.
The Act is one of nine bills the governor signed as part of a bipartisan legislative package designed to curb residential foreclosures within the state. Some of the changes covered by the eight other bills include:
- Codifying the state judiciary’s Foreclosure Mediation Program (A664);
- Expanding the information that lenders must include with a notice of intention to the debtor to commence a foreclosure under the Fair Foreclosure Act (S3416);
- Requiring servicers to file a notice of intention to foreclose within 180 days prior to commencing foreclosure (S3411); and
- Placing limits on reinstatements of dismissed mortgage foreclosure actions (S3411).
The Mortgage Servicers Licensing Act becomes effective on July 28, 2019. Servicers should assess whether the Act’s licensing requirement applies to them and determine if the Act’s other requirements will impact their current operations. Similarly, servicers should proactively assess the bills in the legislative package to make sure their current servicing and foreclosure procedures remain in compliance with New Jersey law.