Bill Text: NJ A4893 | 2024-2025 | Regular Session | Amended
Bill Title: Requires financial institutions to allow mortgagors to make biweekly and semi-monthly payments and payments to mortgage principal.
Spectrum: Partisan Bill (Democrat 16-0)
Status: (Introduced) 2024-12-19 - Substituted by S3525 (2R) [A4893 Detail]
Download: New_Jersey-2024-A4893-Amended.html
ASSEMBLY, No. 4893
STATE OF NEW JERSEY
221st LEGISLATURE
INTRODUCED OCTOBER 17, 2024
Sponsored by:
Assemblywoman TENNILLE R. MCCOY
District 14 (Mercer and Middlesex)
Assemblywoman SHANIQUE SPEIGHT
District 29 (Essex and Hudson)
Assemblyman JOE DANIELSEN
District 17 (Middlesex and Somerset)
Co-Sponsored by:
Assemblywomen Reynolds-Jackson, Carter, Ramirez, Assemblyman Rodriguez, Assemblywoman McCann Stamato, Assemblymen DeAngelo, Egan, Assemblywomen Drulis, Morales, Assemblymen Venezia, Marenco, Atkins and Wimberly
SYNOPSIS
Requires financial institutions to allow mortgagors to make biweekly and semi-monthly payments and payments to mortgage principal.
CURRENT VERSION OF TEXT
As reported by the Assembly Financial Institutions and Insurance Committee on December 9, 2024, with amendments.
An Act concerning financial institutions servicing mortgages and supplementing P.L.2009, c.53 (C.17:11C-51 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1[1. a. A financial institution shall allow mortgagors to:
(1) make biweekly mortgage payments, in which any amount paid in excess of the total annual mortgage payments due shall be applied to the mortgage loan principal;
(2) make bimonthly mortgage payments in the amount of half of the total monthly mortgage payment due; and
(3) pay additional amounts to the mortgage loan principal, without the imposition of any penalty.
b. As used in this section:
"Bimonthly" means occurring twice each month.
"Biweekly" means occurring every two weeks.
"Financial institution" means a State chartered bank, savings bank, savings and loan association, or credit union, licensed lender, or mortgage servicer subject to the laws of this State.
"Mortgage loan" means a loan made to a natural person to whom credit is offered or extended primarily for personal, family or household purposes which is secured by a mortgage constituting a lien on real property located in this State on which there is erected or to be erected a structure containing one, two, three, four, five or six dwelling units, a portion of which structure may be used for nonresidential purposes, in the making of which the financial institution relies primarily upon the value of the property.
"Mortgage servicer" means any person, who, for the person or on behalf of a financial institution, receives payments of principal and interest in connection with a mortgage loan, records the payments on the person's books and records and performs the other administrative functions as may be necessary to properly carry out the mortgage holder's obligations under the mortgage agreement including, when applicable, the receipt of funds from the mortgagor to be held in escrow for payment of real estate taxes and insurance premiums and the distribution of the funds to the taxing authority and insurance company.
"Mortgagor" means a person who borrows money by mortgaging property to a mortgagee as security for a mortgage loan.]1
11. a. A financial institution shall allow mortgagors to:
(1) for mortgagors who are in good standing on the mortgage:
(a) make biweekly mortgage payments, in which any amount paid in excess of the total annual contractual mortgage payments due shall be applied to the mortgage loan principal; and
(b) make semi-monthly mortgage payments in the amount of half of the total monthly contractual mortgage payment due; and
(2) pay additional amounts to the mortgage loan principal, without the imposition of any penalty.
b. If, at the time an escrow analysis is performed, the analysis projects an escrow shortage or otherwise results in an increase to escrow amount payments:
(1) the financial institution shall:
(a) notify the mortgagor of the new contractual mortgage payment pursuant to Regulation E, 12 C.F.R. Part 1005 and Regulation X, 12 C.F.R. Part 1024 and shall adjust the amount of the mortgagor's recurring payment amount, if any, in accordance with the payment change resulting from the escrow analysis; and
(b) apply any additional amounts paid by the mortgagor first to any unsatisfied escrow payments and then to the mortgage loan principal, without the imposition of any penalty; and
(2) the mortgagor may elect to submit a payment or payments to the financial institution to reduce or eliminate any projected escrow shortage. A mortgagor that elects to make additional escrow payments pursuant to this paragraph shall notify the financial institution of their intent to make the payments. The payments shall be treated separately and independent of payments applied to the mortgage loan principal pursuant to this section.
c. As used in this section:
"Biweekly" means occurring every two weeks.
"Contractual mortgage payment" means the total amount of the monthly mortgage loan payment, comprised of the principal payment, interest payment, and any additional amounts being collected and held in an escrow account, including for property taxes and homeowners insurance.
"Escrow amount" means the amount of any additional funds that are collected by a financial institution pursuant to a mortgage loan and set aside in an escrow account to cover future expenses, including property taxes and homeowners insurance.
"Financial institution" means a State chartered bank, savings bank, savings and loan association, or credit union, licensed lender, or mortgage servicer subject to the laws of this State.
"Interest" means the cost to the mortgagor of the mortgage loan, calculated as a percentage of the mortgage loan balance.
"Mortgage loan" means a loan made to a natural person to whom credit is offered or extended primarily for personal, family or household purposes which is secured by a mortgage constituting a lien on real property located in this State on which there is erected or to be erected a structure containing one, two, three, four, five or six dwelling units, a portion of which structure may be used for nonresidential purposes, in the making of which the financial institution relies primarily upon the value of the property.
"Mortgage servicer" means any person, who, for the person or on behalf of a financial institution, receives payments of principal and interest in connection with a mortgage loan, records the payments on the person's books and records and performs the other administrative functions as may be necessary to properly carry out the mortgage holder's obligations under the mortgage agreement including, when applicable, the receipt of funds from the mortgagor to be held in escrow for payment of real estate taxes and insurance premiums and the distribution of the funds to the taxing authority and insurance company.
"Mortgagor" means a person who borrows money by mortgaging property to a mortgagee as security for a mortgage.
"Principal" means the outstanding balance of the original mortgage loan, exclusive of interest.
"Semi-monthly" means occurring twice each month.1
2. This act shall take effect on the first day of the sixth month next following enactment and shall apply to mortgage agreements entered into on or after that date.
