Bill Text: NJ A1428 | 2010-2011 | Regular Session | Introduced
Bill Title: Provides limits for late charge and returned check fee payments for certain loans.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-01-12 - Introduced, Referred to Assembly Financial Institutions and Insurance Committee [A1428 Detail]
Download: New_Jersey-2010-A1428-Introduced.html
STATE OF NEW JERSEY
214th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2010 SESSION
Sponsored by:
Assemblyman VINCENT PRIETO
District 32 (Bergen and Hudson)
SYNOPSIS
Provides limits for late charge and returned check fee payments for certain loans.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act concerning collection of late charges and returned check fees by certain licensed lenders and amending P.L.1996, c.157.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 23 of P.L.1996, c.157 (C.17:11C-23) is amended to read as follows:
23. a. Notwithstanding the provisions of any other law, a person licensed as a mortgage banker or correspondent mortgage banker, incidental to the origination, processing and closing of a mortgage loan transaction, shall have the right to charge only the following fees: (1) credit report fee; (2) appraisal fee; (3) application fee; (4) commitment fee; (5) warehouse fee; (6) fees necessary to reimburse the mortgage banker for charges imposed by third parties; and (7) discount points.
b. Notwithstanding the provisions of any other law, and in addition to the fees permitted under subsection a. of this section, a person licensed as a mortgage banker or correspondent mortgage banker shall have the authority to charge and collect a returned check fee in an amount not to exceed $20, which the mortgage banker or correspondent mortgage banker may charge the borrower if a check of the borrower is returned to the mortgage banker or correspondent mortgage banker uncollected due to insufficient funds in the borrower's account. A person licensed as a mortgage banker or correspondent mortgage banker shall also have the authority to charge and collect a late charge in any amount as may be provided in the note or loan agreement, but no late charge shall exceed 5% of the amount of payment in default. Not more than one late charge shall be assessed on any one payment in arrears.
c. Notwithstanding the provisions of any other law, a person licensed as a mortgage broker, incidental to the brokering of a first mortgage loan transaction, shall have the right to charge only the following fees: (1) application fee; and (2) discount points.
[c.] d. No person licensed as a mortgage banker, correspondent mortgage banker or mortgage broker may charge any fee either not expressly authorized by this section or authorized by the commissioner by regulation.
(cf: P.L.1999, c.250, s.3)
2. Section 33 of P.L.1996, c.157 (C.17:11C-33) is amended to read as follows:
33. a. In addition to the interest herein provided for on a consumer loan, no further or other charge, or amount whatsoever for any examination, service, brokerage, commission, expense, fee, or bonus or other thing or otherwise shall be directly or indirectly charged, contracted for, or received, except for any amount actually paid by a licensee to a public official for the recording of a security interest in connection with security given for the loan and (1) amounts for insurance obtained or provided by the licensee in accordance with the provisions of this act; (2) on actual sale of the security in foreclosure proceedings or upon the entry of judgment; (3) a returned check fee in an amount not to exceed $20, which the licensee may charge the borrower if a check of the borrower is returned to the licensee uncollected due to insufficient funds in the borrower's account; [and] (4) an annual fee on open-end accounts which may not exceed an amount equal to one percent of the line of credit or $50, whichever is less; and (5) a late charge in any amount as may be provided in the note or consumer loan agreement, but no late charge shall exceed 5% of the amount of payment in default. No more than one late charge shall be assessed on any one payment in arrears.
b. A consumer lender who violates or participates in the violation of any provision of section 3, 19, 20, 21 34, 35 or 36 or subsection a., b., or c. of section 32, or subsection a. of this section, or subsection e. or f. of section 41 of this act, shall be guilty of a crime of the fourth degree. A contract of loan not invalid for any other reason, in the making or collection of which any act shall have been done which constitutes a crime of the fourth degree under this section, shall be void and the lender shall have no right to collect or receive any principal, interest or charges unless the act was the result of a good faith error, including a good faith error made as a result of a licensee's acting in conformity with a rule or regulation of the commissioner which is later held to be invalid or in violation of any provision of this act by a judgment of a court of competent jurisdiction, and the licensee notifies the borrower of the error within 90 days after discovering it and makes adjustments in the account necessary to assure that the borrower will not be required to pay any interest, costs, or other charges which aggregate in excess of the charges permitted under this act. If any interest, consideration or charges in excess of those permitted are charged, contracted for or received, except as the result of a good faith error, the consumer lender may collect only the principal amount of the loan, and may not collect interest, costs or other charges with respect to the loan. In addition, a consumer lender who knowingly and willfully violates any provision of this act shall also forfeit to the borrower three times any amount of the interest, costs or other charges collected in excess of that authorized by law.
c. A consumer lender shall have no liability on a consumer loan for an unintentional error if within 90 days after discovering an error the licensee notifies the borrower of the error and makes adjustments in the account as necessary to assure that the borrower will not be required to pay any interest, costs or other charges which aggregate in excess of the charges permitted under this act for consumer loans. The discovery of an unintentional error within the meaning of this section shall include an entry of a judgment by a court of competent jurisdiction holding that a rule or regulation with which the consumer lender acted in conformity was invalid or in violation of this act, and a consumer lender shall have no liability for such unintentional error if the consumer lender takes the actions required by this section upon discovery of such an error within the time stated therein following entry of such a judgment.
(cf: P.L.1996, c.157, s.33)
3. This act shall take effect immediately.
STATEMENT
This bill permits mortgage bankers and correspondent mortgage bankers to collect returned check fees and late charges in connection with first mortgage loans, to the same extent that other licensed lenders in this State are currently allowed to collect these fees and charges. The returned check fee, which may be collected if a borrower's check is returned for insufficient funds, cannot exceed $20. The late charge cannot exceed 5% of the amount of payment in default, and only one late charge may be assessed on any one payment in arrears.
The bill permits consumer lenders to collect a late charge in connection with consumer loans to the same extent that secondary mortgage lenders in this State, and consumer lenders in other states, are currently allowed to collect this charge. The late charge cannot exceed 5% of the amount of payment in default, and only one late charge may be assessed on any one payment in arrears.
