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Enforcement of New Jersey's Mortgage Servicing Licensing Act

February 6, 2020 BY MQMR Blogger

Question:

As a residential mortgage servicer in New Jersey, what do I need to know about the Mortgage Servicing Licensing Act?

 

Answer:

In a recent bulletin, the New Jersey Department of Banking and Insurance (the “Department”) provided guidance on the Mortgage Servicers Licensing Act (the “Act”), which became effective on July 28, 2019.  The Act requires non-bank mortgage companies servicing residential mortgage loans secured by property in New Jersey to become licensed as mortgage servicers unless exempt.   Notably, the Act exempts companies licensed as Residential Mortgage Lenders or Correspondent Residential Mortgage Lenders under the New Jersey Residential Mortgage Lending Act.  However, such entities must maintain the supplemental surety bond, fidelity bond and errors & omissions insurance coverage applicable to mortgage servicing. Calculations for required insurance policy amounts are based on the dollar volume of New Jersey residential mortgages serviced.

 

The bulletin indicated that beginning January 13, 2020, mortgage servicers must submit license applications through the Nationwide Multistate Licensing System & Registry (“NMLS”). The Department plans to begin issuing mortgage servicer licenses on or after April 13, 2020. Entities currently conducting business as mortgage servicers in New Jersey will be permitted to continue to do so provided they submit a Mortgage Servicer License application by April 13th.  Entities that are not currently operating as mortgage servicers in New Jersey, that have been denied licensure by the Department, or that fail to submit an application between January 13 and April 13, 2020 and are not otherwise exempt from licensure will be prohibited from acting as a mortgage servicer in New Jersey until the Department issues a Mortgage Servicer License to them. 

 

Violators of the law will be subject to civil penalties of up to $25,000 and can be charged with a third-degree crime.