Protecting The Rights Of Homeowners

by Assemblyman John Wisniewski

These days there are many things to worry about financially.  In addition to the stress of making every day ends meet, more and more homeowners are also finding themselves faced with the unthinkable possibility of losing their homes.  Unfixed rates and other inconsistencies in lending practices have left many consumers in the dark and threaten to put many more out on the street if something isn’t done to regulate the way some lenders do business.

The ongoing mortgage foreclosure crisis has made it clear that the current system is not working and is in desperate need of reform and closer regulation.  New legislation sponsored by myself and Assemblymen Wayne P. DeAngelo (D-Mercer/Middlesex), Gary S. Schaer (D-Passaic), and John F. McKeon (D-Essex) will do just that.

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

Mainly this new law will strengthen our ability to hold mortgage lenders accountable and ensure that licensing standards, businesses practices and oversight for mortgage lenders are consistent and airtight.  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. These are two very different kinds of transactions and should operate under different regulations to provide the best protections for both homeowners and other 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.

Making ends meet is hard enough these days without having to scrutinize the fine print and worry about the uncertain future of your mortgage agreement.  This law will ensure that the lenders you are signing with are licensed and follow the proper procedures.

For more information on mortgage or consumer loan reform or any other legislative matter or state program, please contact my legislative office at (732) 316-1885 or visit my web site:

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