INTRODUCED MAY 9, 2002
Assemblyman MATT AHEARN
District 38 (Bergen)
Assemblyman JEFF VAN DREW
District 1 (Cape May, Atlantic and Cumberland)
Assemblyman CRAIG A. STANLEY
District 28 (Essex)
Assemblymen R.Smith, Asselta, Bodine, Chatzidakis, Conaway, Conners, Assemblywoman Greenstein, Assemblymen Gusciora, Johnson, Assemblywomen Perez-Cinciarelli and Watson Coleman
"New Jersey Home Ownership Security Act of 2002."
CURRENT VERSION OF TEXT
As reported by the Assembly Senior Issues Committee on June 6, 2002, with amendments.
(Sponsorship Updated As Of: 6/14/2002)
An Act prohibiting certain abusive lending practices and supplementing Title 46 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "New Jersey Home Ownership Security Act of 2002."
2. The Legislature finds and declares that:
a. Abusive mortgage lending has become an increasing problem in this State, exacerbating the loss of equity in homes and causing an increase in the number of foreclosures in recent years. One of the most common forms of abusive lending is the making of loans that are equity-based, rather than income-based. The financing of points and fees in these loans provides immediate income to the originator and encourages the repeated refinancing of home loans. The lender's ability to sell loans reduces the incentive to ensure that the homeowner can afford the payments of the loan. As long as there is sufficient equity in the home, an abusive lender benefits even if the borrower is unable to make the payments and is forced to refinance. In addition, the financing of high points and fees causes the loss of precious equity in each refinancing and often leads to foreclosure.
b. Abusive lending has threatened the viability of many communities and caused decreases in home ownership. While the marketplace appears to operate effectively for conventional mortgages, too many homeowners find themselves victims of overreaching lenders who provide loans with unnecessarily high costs and terms that are unnecessary to secure repayment of the loan.
c. As competition and self-regulation have not eliminated the abusive terms from loans secured by a consumer's home, the consumer protection provisions of this act are necessary to encourage lending at reasonable rates with reasonable terms.
3. As used in this act:
1 [ "Benchmark rate" is the interest rate which the borrower can reduce by paying bona fide discount points; this rate shall not exceed the weekly average yield of United States Treasury securities having a maturity of five years, on the 15th day of the month immediately preceding the month in which the loan is made, plus four percentage points. ] 1
"Bona fide discount points" means loan discount points which are:
(1) Knowingly paid by the borrower;
(2) Paid for the express purpose of 1 [ lowering the benchmark rate;
(3) In fact ] 1 reducing 1 , and which result in a reduction of, 1 the interest rate or time-price differential applicable to the loan 1 [ from an interest rate which does not exceed the benchmark rate ] 1 ; and
1 [ (4) ] (3) 1 Recouped within the first 1 [ four ] five 1 years of the scheduled loan payments. Loan discount points will be considered to be recouped within the first 1 [ four ] five 1 years of the scheduled loan payments if the reduction in the interest rate that is achieved by the payment of the loan discount points reduces the interest charged on the scheduled payments such that the borrower's dollar amount of savings in interest over the first 1 [ four ] five 1 years is equal to or exceeds the dollar amount of loan discount points paid by the borrower.
"Borrower" means any natural person obligated to repay the loan, including a coborrower, cosigner, or guarantor.
1 "Commissioner" means the Commissioner of Banking and Insurance. 1
"Creditor" means a person who extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments, and to whom the obligation is payable at any time. 1 Creditor shall also mean any person brokering a home loan, which shall include any person who directly or indirectly solicits, processes, places, or negotiates home loans for others or who closes home loans which may be in the person's own name with funds provided by others and which loans are thereafter assigned to the person providing the funding of such loans, provided that creditor shall not include a person who is an attorney providing legal services or an insurance producer with title insurance authority providing services in the closing of a home loan.
"Department" means the Department of Banking and Insurance. 1
"High-cost home loan" means a home loan for which the principal amount of the loan does not exceed $350,000, which amount shall be adjusted annually to include the last published increase of the housing component of the national Consumer Price Index, New York-Northeastern New Jersey Region, in which the terms of the loan meet or exceed one or more of the thresholds as defined in this section.
"Home loan" means a loan, including an open-end credit plan, other than a reverse mortgage transaction, in which the loan is secured by:
(1) A mortgage or deed of trust on real estate in this State upon which there is located or there is to be located a one to six family dwelling which is or will be occupied by a borrower as the borrower's principal dwelling; or
(2) A security interest in a manufactured home which is or will be occupied by a borrower as the borrower's principal dwelling.
"Points and fees" means:
(1) All items listed in 15 U.S.C. s.1605(a)(1) through (4), except interest or the time-price differential;
(2) All charges listed in 15 U.S.C. s.1605(e);
(3) All compensation paid directly or indirectly to a mortgage broker, including a broker that originates a loan in its own name in a table-funded transaction;
(4) The cost of all premiums financed by the creditor, directly or indirectly for any credit life, credit disability, credit unemployment or credit property insurance, or any other life or health insurance, or any payments financed by the creditor directly or indirectly for any debt cancellation or suspension agreement or contract, except that insurance premiums calculated and paid on a monthly basis shall not be considered financed by the creditor;
(5) The maximum prepayment fees and penalties that may be charged or collected under the terms of the loan documents; 1 [ and ] 1
(6) All prepayment fees or penalties that are charged to the borrower if the loan refinances a previous loan made by the same creditor or an affiliate of the creditor 1 [ . ] ; and 1
(7) For open-end loans, the points and fees are calculated by adding the total fees charged at closing plus the maximum additional fees which can be charged pursuant to the loan documents during the term of the loan.
1 "Points and fees" shall not include the following: taxes, filing fees, and recording and other charges and fees paid or to be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest; and fees paid to a person other than a creditor or an affiliate of the creditor or to the mortgage broker or an affiliate of the mortgage broker for the following: fees for tax payment services; fees for flood certification; fees for pest infestation and flood determinations; appraisal fees; fees for inspections performed prior to closing; fees for credit reports; fees for surveys; attorneys' fees; notary fees; escrow charges; title insurance premiums; and fire and flood insurance premiums, provided that the conditions in 12 C.F.R. s.226.4(d)(2) are met . 1
"Rate" means the interest rate charged on the home loan, based on an annual simple interest yield.
"Threshold" means any one of the following three items, as defined:
(1) "Rate threshold" means the annual percentage rate of the loan at the time the loan is consummated such that the loan is considered a "mortgage" under section 152 of the federal "Home Ownership and Equity Protection Act of 1994," Pub.L. 103-325 (15 U.S.C. s.1602(aa)), and the regulations promulgated by the Federal Reserve Board, including 12 C.F.R. s.226.32, without regard to whether the loan transaction is or may be a "residential mortgage transaction," as defined in 12 C.F.R. s.226.2(a)(24).
(2) "Total points and fees threshold" means that the total points and fees payable by the borrower at or before the loan closing , excluding up to two bona fide discount points, exceed :
(a) 5% of the total loan amount if the total loan amount is $20,000 or more; or
(b) the lesser of 8% of the total loan amount or $1,000, if the total loan amount is less than $20,000 1 [ ; provided, the following discount points and prepayment fees shall be excluded from the calculation of the total points and fees payable by the borrower:
(i) Up to and including two bona fide loan discount points payable by the borrower in connection with the loan transaction, but only ] , except that two bona fide discount points shall not be excluded 1 if the interest rate from which the loan's interest rate will be discounted 1 [ does not exceed , by more than one percentage point, the required net yield for a 90-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater;
(ii) Up to and including one bona fide loan discount point payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan's interest rate will be discounted does not exceed, by more than two percentage points, the required net yield for a 90-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater ] exceeds the average weekly yield of United States Treasury securities having a maturity of 10 years, on the 15th day of the month immediately preceding the month in which the loan is made, plus four percentage points 1 .
(3) "Prepayment penalty threshold" means the home loan agreement permits the lender to charge or collect 1 [ payment penalties or ] prepayment 1 penalties more than 30 months after the loan closing or which exceed, in the aggregate, more than 2% of the amount prepaid.
"Total loan amount" means the principal of the loan minus those points and fees as defined in this section that are included in the principal amount of the loan. For open-end loans, the total amount shall be calculated using the total line of credit allowed under the home loan.
4. a. No creditor making a home loan shall finance, directly or indirectly, any credit life, credit disability, credit unemployment or credit property insurance, or any other life or health insurance, or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that insurance premiums or debt cancellation or suspension fees calculated and paid on a monthly basis shall not be considered financed by the creditor.
b. No creditor shall engage in the unfair act or practice of "flipping" a home loan. "Flipping" a loan is the making of a home loan to a borrower that refinances an existing home loan when the new loan does not have reasonable, tangible net benefit to the borrower considering all of the circumstances, including the terms of both the new and refinanced loans, the cost of the new loan, and the borrower's circumstances . 1 The commissioner may promulgate regulations to implement the provisions of this section. 1 In addition, the following home loan refinancings shall be presumed to be flipping if:
(1) The primary tangible benefit to the borrower is an interest rate lower than the interest rate on a debt satisfied or refinanced in connection with the home loan, and it will take more than four years for the borrower to recoup the costs of the points and fees and other closing costs through savings resulting from the lower interest rate; or
(2) The new loan refinances an existing home loan that is a special mortgage originated, subsidized, or guaranteed by or through a state, tribal or local government, or nonprofit organization, which either bears a below-market interest rate at the time the loan was originated, or has nonstandard payment terms beneficial to the borrower, such as payments that vary with income or are limited to a percentage of income, or where no payments are required under specified conditions, and where, as a result of refinancing, the borrower will lose one or more of the benefits of the special mortgage.
c. No creditor shall recommend or encourage default on an existing loan or other debt prior to and in connection with the closing or planned closing of a home loan that refinances all or any portion of that existing loan or debt.
d. No creditor shall charge a late payment fee in relation to a home loan except according to the following rules:
(1) The late payment fee may not be in excess of 1 [ 4% ] 5% 1 of the amount of the payment past due.
(2) The fee may only be assessed by a payment past due for 15 days or more.
(3) The fee may not be charged more than once with respect to a single late payment. If a late payment fee is deducted from a payment made on the loan, and such deduction causes a subsequent default on a subsequent payment, no late payment fee may be imposed for such default. If a late payment fee has been once imposed with respect to a particular late payment, no such fee shall be imposed with respect to any future payment which would have been timely and sufficient, but for the previous default.
(4) No fee shall be charged unless the creditor notifies the borrower within 45 days following the date the payment was due that a late payment fee has been imposed for a particular late payment. No late payment fee may be collected from any borrower if the borrower informs the creditor that nonpayment of an installment is in dispute and presents proof of payment within 45 days of receipt of the creditor's notice of the late fee.
(5) The creditor shall treat each and every payment as posted on the same date as it was received by the creditor, servicer, creditor's agent, or at the address provided to the borrower by the creditor, servicer, or the creditor's agent for making payments.
e. No home loan shall contain a provision that permits the creditor, in its sole discretion, to accelerate the indebtedness. This provision does not prohibit acceleration of the loan in good faith due to the borrower's failure to abide by the material terms of the loan.
f. No creditor shall charge a fee for informing or transmitting to any person the balance due to pay off a home loan or to provide a release upon prepayment. Payoff balances shall be provided within seven business days after the request.
5. A high-cost home loan shall be subject to the following additional limitations and prohibited practices:
a. No high-cost home loan shall contain a scheduled payment that is more than twice as large as the average of earlier scheduled payments. This provision shall not apply when the payment schedule is adjusted to the seasonal or irregular income of the borrower.
b. No high-cost home loan shall include payment terms under which the outstanding principal balance will increase at any time over the course of the loan because the regular periodic payments do not cover the full amount of interest due.
c. No high-cost home loan shall contain a provision that increases the interest rate after default. This provision does not apply to interest rate changes in a variable rate loan otherwise consistent with the provisions of the loan documents, provided the change in the interest rate is not triggered by the event of default or the acceleration of the indebtedness.
d. No high-cost home loan shall include terms under which more than two periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the borrower.
e. No high-cost home loan shall be subject to a mandatory arbitration clause that 1 [ limits in any way the right of the borrower to seek relief through the judicial process for any and all claims and defenses the borrower may have against the creditor, broker, or other party involved in the loan transaction ] is oppressive, unfair, unconscionable, or substantially in derogation of the rights of borrowers. Arbitration clauses that comply with the standards set forth in the Statement of Principles of the National Consumer Dispute Advisory Committee in effect as of the effective date of this act shall be presumed not to violate this subsection. The borrower shall have the exclusive option to require arbitration concerning any claims or defenses relating to high-cost home loans 1 .
f. 1 A creditor shall not make a high-cost home loan unless the creditor has given the following notice, or substantially similar notice, in writing, to the borrower , acknowledged in writing and signed by the borrower not later than the time the notice is required under the notice provision contained in 12 C.F.R. s.226.31(c).
NOTICE TO BORROWER
YOU SHOULD BE AWARE THAT YOU MIGHT BE ABLE TO OBTAIN A LOAN AT A LOWER COST. YOU SHOULD SHOP AROUND AND COMPARE LOAN RATES AND FEES. MORTGAGE LOAN RATES AND CLOSING COSTS AND FEES VARY BASED ON MANY FACTORS, INCLUDING YOUR PARTICULAR CREDIT AND FINANCIAL CIRCUMSTANCES, YOUR EMPLOYMENT HISTORY, THE LOAN-TO-VALUE REQUESTED AND THE TYPE OF PROPERTY THAT WILL SECURE YOUR LOAN. THE LOAN RATE AND FEES COULD ALSO VARY BASED ON WHICH CREDITOR OR BROKER YOU SELECT.
IF YOU ACCEPT THE TERMS OF THIS LOAN, THE CREDITOR WILL HAVE A MORTGAGE LIEN ON YOUR HOME. YOU COULD LOSE YOUR HOME AND ANY MONEY YOU PUT INTO IT IF YOU DO NOT MEET YOUR PAYMENT OBLIGATIONS UNDER THE LOAN.
YOU SHOULD CONSULT AN ATTORNEY-AT-LAW AND A QUALIFIED INDEPENDENT CREDIT COUNSELOR OR OTHER EXPERIENCED FINANCIAL ADVISOR REGARDING THE RATE, FEES AND PROVISIONS OF THIS MORTGAGE LOAN BEFORE YOU PROCEED. A LIST OF QUALIFIED COUNSELORS IS AVAILABLE BY CONTACTING THE NEW JERSEY DEPARTMENT OF BANKING AND INSURANCE.
YOU ARE NOT REQUIRED TO COMPLETE THIS LOAN AGREEMENT MERELY BECAUSE YOU HAVE RECEIVED THIS DISCLOSURE OR HAVE SIGNED A LOAN APPLICATION.
REMEMBER, PROPERTY TAXES AND HOMEOWNER'S INSURANCE ARE YOUR RESPONSIBILITY. NOT ALL CREDITORS PROVIDE ESCROW SERVICES FOR THESE PAYMENTS. YOU SHOULD ASK YOUR CREDITOR ABOUT THESE SERVICES.
ALSO, YOUR PAYMENTS ON EXISTING DEBTS CONTRIBUTE TO YOUR CREDIT RATINGS. YOU SHOULD NOT ACCEPT ANY ADVICE TO IGNORE YOUR REGULAR PAYMENTS TO YOUR EXISTING CREDITORS.
g. 1 A creditor shall not make a high-cost home loan 1 to a borrower who finances points and fees in connection with a high-cost home loan 1 without first receiving certification from a 1 third-party nonprofit credit 1 counselor, approved by the United States Department of Housing and Urban Development 1 and the Department of Banking and Insurance 1 , that the borrower has received counseling on the advisability of the loan transaction.
1 [ g. ] h. 1 A creditor shall not make a high-cost home loan without due regard to repayment ability. A creditor shall not make a high-cost home loan unless the creditor reasonably believes at the time the loan is consummated that one or more of the borrowers, when considered individually or collectively, will be able to make the scheduled payments to repay the obligation, based upon a consideration of their current and expected income, current obligations, employment status and other financial resources, other than the borrower's equity in the dwelling which secures repayment of the loan. A borrower shall be presumed to be able to make the scheduled payments to repay the obligation if, at the time the loan is consummated, the borrower's total monthly debts, including amounts owed under the loan, do not exceed 50% of the borrower's monthly gross income as verified by the credit application, the borrower's financial statement, a credit report, financial information provided to the creditor by or on behalf of the borrower, or any other reasonable means. Notwithstanding the foregoing, no presumption of inability to make the scheduled payments to repay the obligation shall arise solely from the fact that, at the time the loan is consummated, the borrower's total monthly debts, including amounts owed under the loan, exceed 50% of the borrower's monthly gross income. 1 [ A creditor who follows the residual income guidelines established in 38 C.F.R. s.36.4337(e) and VA Form 26-6393 shall benefit from a rebuttable presumption that the creditor made the loan with due regard to repayment ability. ] 1
1 [ h. ] i. 1 A creditor shall not pay a contractor under a home-improvement contract from the proceeds of a high-cost home loan, unless the instrument is payable to the borrower or jointly to the borrower and the contractor, or, at the election of the borrower, through a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the creditor, and the contractor prior to the disbursement.
1 [ i. ] j. 1 A creditor shall not charge a borrower any fees or other charges to modify, renew, extend, or amend a high-cost home loan or to defer any payment due under the terms of a high-cost home loan.
1 [ j. ] k. 1 A creditor shall not charge a borrower points and fees in connection with a high-cost home loan if the proceeds of the high-cost home loan are used to refinance an existing high-cost home loan held by the same creditor as note holder.
1 [ k. ] l. 1 Notwithstanding any other law to the contrary, a creditor making a high-cost home loan that has the legal right to foreclose shall use the judicial foreclosure procedures of this State so long as the property securing the loan is located in this State. 1 [ Notwithstanding any other law to the contrary, the borrower shall have the right to assert in that proceeding the nonexistence of a default and any other claim or defense to acceleration and foreclosure, including any based on any violations of this act, though those claims or defenses shall not be deemed compulsory counterclaims. ]
m. No creditor making a high-cost home loan shall directly or indirectly finance points and fees in excess of 2% of the total loan amount. 1
6. a. Notwithstanding any other law to the contrary, if a home loan was made, arranged, or assigned by a person selling either a manufactured home, or home improvements to the dwelling of a borrower, the borrower may assert all affirmative claims and any defenses that the borrower may have against the seller or home-improvement contractor against the creditor, any assignee, holder, or servicer, in any capacity.
b. 1 [ Notwithstanding any other law to the contrary, the remedies provided by this act apply to the creditor, any director, officer, employee, or controlling stockholder of, or agent for, a creditor who personally participated in the making or approving of a high-cost home loan, and any other persons to whom this act applies and who violated the requirements of this act. ] 1 Any person who purchases or is otherwise assigned a high-cost home loan shall be subject to all affirmative claims and any defenses with respect to the loan that the borrower could assert against the original creditor or broker of the loan.
c. Notwithstanding any other law to the contrary, a borrower in default more than 60 days or in foreclosure may assert a violation of this act by way of offset:
(1) As an original action;
(2) As a defense or counterclaim to an action to collect amounts owed; or
(3) To obtain possession of the home secured by the home loan.
d. 1 Notwithstanding any other law to the contrary, the borrower shall have the right to assert in a foreclosure proceeding the nonexistence of a default and any other claim or defense to acceleration and foreclosure, including any claim based on any violations of this act, though those claims or defenses shall not be deemed compulsory counterclaims.
e. 1 It is a violation of this act for any person, in bad faith, to attempt to avoid the application of this act by:
(1) Dividing any loan transaction into separate parts; or
(2) Any other such subterfuge, with the intent of evading the provisions of this act.
1 7. a. The department shall conduct examinations and investigations and issue subpoenas and orders to enforce the provisions of this act with respect to a person licensed or subject to the provision of the "New Jersey Licensed Lenders Act , " P.L.1996, c.157 (C.17:11C-1 et seq.).
b. The department shall examine any instrument, document, account, book, record, or file of a person originating or brokering a high-cost home loan under this act. The department shall recover the cost of examinations from the person. A person originating or brokering high-cost home loans shall maintain its records in a manner that will facilitate the department in determining whether the person is complying with the provisions of this act and the regulations promulgated thereunder. The department shall require the submission of reports by persons originating or brokering high-cost home loans which shall set forth such information as the department shall require by regulation.
c. In the event that a person fails to comply with a subpoena for documents or testimony issued by the department, the department may request an order from a court of competent jurisdiction requiring the person to produce the requested information.
d. If the department determines that a person has violated the provisions of this act, the department may do any combination of the following that it deems appropriate:
(1) Impose a civil penalty of up to $10,000 for each offense , 40% of which penalty shall be dedicated for and used by the department for consumer education through nonprofit organizations which can establish to the satisfaction of the department that they have sufficient experience in credit counseling and financial education. In determining the penalty to be assessed, the commissioner shall consider the following criteria: whether the violation was willful; whether the violation was part of a pattern and practice; the amount of the loan; the points and fees charged; the financial condition of the violator; and other relevant factors . The department may require the person to pay investigative costs, if any.
(2) Suspend, revoke, or refuse to renew any license issued by the department.
(3) Prohibit or permanently remove an individual responsible for a violation of this act from working in his present capacity or in any other capacity related to activities regulated by the department.
(4) Order a person to cease and desist any violation of this act and to make restitution for actual damages to borrowers.
(5) Pending completion of an investigation or any formal proceeding instituted pursuant to this act, if the commissioner finds that the interests of the public require immediate action to prevent undue harm to borrowers, the commissioner may enter an appropriate temporary order to be effective immediately and until entry of a final order. The temporary emergent order may include: a temporary suspension of the creditor's authority to make high-cost home loans under this act; a temporary cease and desist order; a temporary prohibition against a creditor transacting high-cost home loan business in this State, or such other order relating to high-cost home loans as the commissioner may deem necessary to prevent undue harm to borrowers pending completion of an investigation or formal proceeding. Orders issued pursuant to this section shall be subject to an application to vacate upon two days' notice, and a preliminary hearing on the temporary emergent order shall be held, in any event, within five days after it is issued, in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
(6) Impose such other conditions as the department deems appropriate.
e. Any person aggrieved by a decision of the department and who has a direct interest in the decision may appeal the decision of the department to the commissioner. The appeal shall be conducted in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
f. The department may maintain an action for an injunction or other process against any person to restrain and prevent the person from engaging in any activity violating this act.
g. A decision of the commissioner shall be a final order of the department and shall be enforceable in a court of competent jurisdiction. The department shall publish the final adjudication issued in accordance with this section, subject to redaction or modification to preserve confidentiality.
h. The provisions of this section shall not limit the authority of the Attorney General or the Public Advocate as established pursuant to P.L. , c. (C. ) (now before the Legislature as Assembly Committee Substitute for Assembly, Nos. 345 and 2341) from instituting or maintaining any action within the scope of their respective authority with respect to the practices prohibited under this act. 1
1 [ 7. ] 8. 1 a. Any violation of this act constitutes an unlawful practice under P.L.1960, c.39 (C.56:8-1 et seq.).
b. In addition to penalties under that law, including 1 , but not limited to, 1 any moneys or property ordered to be paid pursuant to section 2 of P.L.1966, c.39 (C.56:8-14) or section 3 of P.L.1971, c.247 (C.56:8-15):
(1) Any person found by a preponderance of the evidence to have violated this act shall be liable to the borrower for the following:
(a) Statutory damages equal to the finance charges agreed to in the home loan agreement, plus 10% of the amount financed 1 [ . ] ; 1
(b) Punitive damages, when the violation was malicious or reckless; and
(c) Costs and reasonable attorneys' fees.
(2) A borrower may be granted injunctive, declaratory, and such other equitable relief as the court deems appropriate in an action to enforce compliance with this act.
(3) 1 [ The intentional violation of this act, or regulation hereunder, renders the home loan agreement void, and the creditor shall have no right to collect, receive, or retain any principal, interest, or other charges whatsoever with respect to the loan, and the borrower may recover any payments made under the agreement.
(4) ] 1 The right of rescission granted under 15 U.S.C. s.1601 et seq. for violations of that law and all other remedies provided hereunder shall be available to a borrower by way of recoupment against a party foreclosing on the home loan or collecting on the loan, at any time during the term of the loan.
1 [ (5) ] ( 4) 1 The remedies provided in this section are not intended to be the exclusive remedies available to a borrower, nor must the borrower exhaust any administrative remedies provided under this act or any other applicable law before proceeding under this section.
c. Any person, including members, officers, and directors of the creditor, who knowingly violates this act is guilty of a disorderly persons offense and, on conviction, is subject to a fine not exceeding $1,000, or to imprisonment not exceeding six months, or both.
d. A creditor in a home loan who, when acting in good faith, fails to comply with the provisions of this act, will not be deemed to have violated this section if the creditor establishes that either:
(1) Within 1 [ 30 ] 45 1 days of the loan closing, and prior to receiving any notice from the borrower of the compliance failure, the creditor has made appropriate restitution to the borrower, and appropriate adjustments are made to the loan; or
(2) Within 1 [ 60 ] 90 1 days of the loan closing and prior to receiving any notice from the borrower of the compliance failure, and the compliance failure was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid such errors, the borrower is notified of the compliance failure, appropriate restitution is made to the borrower, and appropriate adjustments are made to the loan.
Examples of bona fide errors include clerical, calculation, computer malfunction and programming, and printing errors. An error of legal judgment with respect to a person's obligations under this section is not a bona fide error.
e. 1 Notwithstanding any provision of this act to the contrary, a broker, who is a creditor, shall be liable for any violation of this act by any party involved in a home loan transaction that he brokered.
f. 1 The remedies provided in this section are cumulative.
1 [ 8. The rights conferred by this act are independent of and in addition to any other rights under other laws. ]
9. The rights, remedies, and prohibitions accorded by the provisions of this act are hereby declared to be in addition to and cumulative of any other right, remedy, or prohibition accorded by the common law or statutes of this State, and nothing herein shall be construed to deny, abrogate, or impair any such common law or statutory right, remedy, or prohibition. 1
1 [ 9. ] 10. 1 The law of the state in which the property is located shall be applied to all transactions governed by this act regardless of where those transactions originated. This act shall apply to all loans made or entered into after the effective date of this act.
1 [ 10. ] 11. 1 The Director of the Division of Banking in the Department of Banking and Insurance, in consultation with the Director of the Division of Consumer Affairs in the Department of Law and Public Safety, shall develop and implement a program of consumer counseling and awareness designed to inform the public about the methods by which predatory lenders impose unconscionable and noncompetitive fees and charges as part of complex home mortgage transactions, to protect the public from incurring those fees and charges, and otherwise to encourage the informed and responsible use of credit.
1 [ 11. ] 12. 1 The Commissioner of Banking and Insurance shall promulgate regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) necessary to effectuate the provisions of this act 1 except that prior to the effective date of this act the commissioner may take those actions and promulgate those regulations necessary to implement the provisions of this act 1 .
1 [ 12. ] 13. 1 This act shall take effect on the 90th day following enactment.