New Jersey Administrative Code › Title 3 - BANKING › Chapter 30 - PREDATORY LENDING › Subchapter 1 - GENERAL PROVISIONS › Section 3:30-1.3 - Definitions

Current through Register Vol. 56, No. 14, July 15, 2024
The following words and terms, when used in this chapter,
				  shall have the following meanings, unless the context clearly indicates
				  otherwise.
"Affiliate" means any company that controls, is controlled
				  by, or is under the common control with any company, as set forth in
				  12
				  U.S.C. §§
										1841 et seq.
"Banking day" means the part of a day on which a depository
				  institution is open to the public for carrying on substantially all of its
				  banking functions.
"Bona fide discount points" means loan discount points that:
1. Are knowingly paid by the
				borrower;
2. Are paid for the
				express purpose of reducing, and which result in a reduction of, the interest
				rate or time-price differential applicable to the loan;
3. Reduce the interest rate or time-price
				differential applicable to the loan from an interest rate that does not exceed
				the conventional mortgage rate for a home loan secured by a first lien, by more
				than two percentage points, or for a home loan secured by a junior lien by more
				than three and one half percentage points; and
4. Are recouped within the first five years
				of the scheduled loan payments. Loan discount points will be considered to be
				recouped within the first five 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 five
				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.
"Business day" means any day on which the office or offices
				  of the creditor are open to the public to provide financial services.
"Business hours" means the hours during which a creditor,
				  agent or servicer processes payments of the type received from the
				  borrower.
"Commissioner" means the Commissioner of the New Jersey
				  Department of Banking and Insurance.
"Construction loan" means a loan to a natural person having a
				  term of two years or less, that is used to finance the construction of
				  buildings or other structures and that does not automatically convert to
				  permanent financing.
"Consumer credit" means a home loan to a borrower.
"Conventional mortgage rate" means the most recently
				  published annual yield on conventional mortgages published by the Board of
				  Governors of the Federal Reserve System, as published in Statistical Release
				  H.15 or any publication that may supersede it, as of the applicable time set
				  forth in
				  12 C.F.R.
				  1026.32(a)(1)(i).
"Conventional prepayment penalty" means any prepayment
				  penalty or fee that may be collected or charged in a home loan, and that is
				  authorized by law other than by
				  46:10B-22 et seq., provided the
				  home loan:
1. Does not have
				an annual percentage rate that exceeds the conventional mortgage rate by more
				than two percentage points; and
2.
				Does not permit any prepayment fees or penalties that exceed two percent of the
				amount prepaid.
"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. 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 that 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 to the
				  borrower or a person or entity holding an individual or organization insurance
				  producer license in the line of title insurance or a title insurance company,
				  as defined by
				  17:46B-1, or any officer, director
				  or employee thereof, providing services in the closing of a home loan who is
				  not also funding the home loan and is not an affiliate of the creditor or an
				  assignee that is subject to the provisions of
				  46:10B-27.
"Department" means the New Jersey Department of Banking and
				  Insurance.
"Depository institution" means any bank, savings bank,
				  savings and loan association or credit union chartered by this or another
				  state, the Federal government or a foreign jurisdiction.
"Escrow" means monies deposited by the borrower for payment
				  of real estate taxes and homeowner's insurance expenses in conjunction with a
				  home loan. Escrow monies shall be passed through dollar for dollar to the tax
				  collector or insurance company or agent and are not a point or fee for the
				  purpose of calculating the total points and fees threshold.
"Escrow charge" means a reasonable fee for maintaining or
				  managing an escrow 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
				  that meets the conditions set forth in
				  12 CFR
				  1026.4(c)(7) and
				  1026.4(d)(2).
"High-cost home loan" means a home loan for which the
				  principal amount of the loan did not exceed $ 350,000, in the first year
				  following enactment of the Act, which amount was, pursuant to
				  46:10B-24, adjusted effective
				  January 1, 2005 and shall thereafter 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
				  chapter.
"Home improvements" means the remodeling, altering, painting,
				  repairing, or modernizing of a principal dwelling or the making of additions
				  thereto, and includes, but is not limited to, the construction, installation,
				  replacement, improvement, or repair of driveways, sidewalks, swimming pools,
				  terraces, patios, landscaping, fences, porches, windows, doors, cabinets,
				  kitchens, bathrooms, garages, basements and basement waterproofing, fire
				  protection devices, security protection devices, central heating and air
				  conditioning equipment, water softeners, heaters, and purifiers, solar heating
				  or water systems, insulation installation, aluminum siding, wall-to-wall
				  carpeting or attached or inlaid floor coverings, and other changes, repairs, or
				  improvements made in or on, attached to or forming a part of the principal
				  dwelling.
"Home loan" means an extension of credit primarily for
				  personal, family or household purposes, and includes an open-end credit plan,
				  but shall not include a reverse mortgage transaction or a construction loan, 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.
"Manufactured home" means a structure, transportable in one
				  or more sections, that in the traveling mode is eight body feet or more in
				  width or 40 body feet or more in length or, when erected on site is 320 or more
				  square feet and which is built on a permanent chassis and designed to be used
				  as a dwelling with a permanent foundation when erected on land, secured in
				  conjunction with the real property on which the manufactured home is located
				  and connected to the required utilities and includes the plumbing, heating,
				  air-conditioning and electrical systems contained therein; except that such
				  term shall include any structure which meets all the requirements of this
				  paragraph except the size requirements and with respect to which the
				  manufacturer voluntarily files a certification required by the Secretary of the
				  United States Department of Housing and Urban Development and complies with the
				  standards established under the Federal National Manufactured Housing
				  Construction and Safety Standards Act of 1974,
				  42 U.S.C. §§
											5401 et seq. Such term does not include
				  rental property or second homes or manufactured homes when not secured in
				  conjunction with the real property on which the manufactured home is
				  located.
"Mortgage insurance premiums" or "private mortgage insurance"
				  mean premiums for insurance protecting the lender against the borrower's
				  default or other credit loss.
"Points and fees" means:
1. All items listed in
				15 U.S.C. §§
										1605(a)(1) through (4),
				except interest or the time-price differential;
2. All charges listed in
				15 U.S.C. §
										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;
6. All prepayment fees or
				penalties that are incurred by the borrower if the loan refinances a previous
				loan made or currently held by the same creditor or an affiliate of the
				creditor, except that this paragraph shall not apply to a loan which refinances
				a previous loan made by the same broker and funded by another creditor;
				and
7. For open-end loans, the
				points and fees are calculated by adding the total points and fees known at or
				before closing, including the maximum prepayment penalties which may be charged
				or collected under the terms of the loan documents if prepayment penalties are
				authorized by law other than by
				46:10B-22 et seq., plus the
				minimum additional fees the borrower would be required to pay to draw down an
				amount equal to the total credit line.
"Points and fees" shall not include the following items:
				  title insurance premiums and fees, charges and premiums paid to a person or
				  entity holding an individual or organization insurance producer license in the
				  line of title insurance or a title insurance company, as defined by N.J.S.A.
				  17:46B-1; 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 reasonable 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,
				  provided that the conditions in
				  12 C.F.R.
				  1026.4(c)(7) are met; 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; fire and flood insurance
				  premiums, provided that the conditions in
				  12 C.F.R.
				  1026.4(d)(2) are met.
"Rate" means that annual percentage rate for the loan
				  calculated based on the points and fees set forth in this chapter and according
				  to the provisions at
				  15 U.S.C. §
											1602(bb) and the regulations
				  promulgated thereunder by the Consumer Financial Protection Bureau, including
				  12 CFR
				  1026.32(a)(3).
"Received" means the actual receipt at any office designated
				  by the creditor as a place to which the payments may be submitted or by a
				  person designated by the creditor as a person to whom the payments may be
				  submitted or, if no such place or person is so designated, at the creditor's
				  principal office or any of its branch offices.
"Seller" means a seller as defined in the Federal Trade
				  Commission (FTC) Holder Rule at
				  16
				  C.F.R. 433.1(J),
				  incorporated herein by reference, and includes sellers, as defined therein, of
				  manufactured homes and home improvements.
"Threshold" means any one of the following two 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" pursuant to section
				152 of the Federal Home Ownership and Equity Protection Act of 1994,
				P.L.
				103-325 (15 U.S.C. §
										1602(bb)) , and the
				regulations promulgated by the Consumer Financial Protection Bureau, including
				12 CFR
				1026.32, without regard to whether the loan
				transaction is, or may be, a "residential mortgage transaction," as defined at
				12 CFR
				1026.2(a)(24). The
				description of "points and fees" at
				15 U.S.C. §
										1605 shall be used for this
				determination.
2. "Total points and
				fees threshold" means that the total points and fees payable by the borrower at
				or before the loan closing, excluding either a conventional prepayment penalty
				or up to two bona fide discount points, exceed:
i. Four and one half percent of the total
				loan amount if the total loan amount is $ 40,000 or more; or
ii. The lesser of six percent of the total
				loan amount or $ 1,000, if the total loan amount is less than $ 20,000, and six
				percent if the total loan amount is $ 20,000 or more but less than $ 40,000.
"Total amount paid by the borrower in connection with the
				  transaction" means all amounts paid by the borrower to the original creditor,
				  including principal and interest, and all amounts paid to subsequent holders.
				  Payments made to a seller who is not also the original creditor, such as a down
				  payment or trade-in, are not part of the credit transaction and as such are not
				  considered to be part of the "total amount paid in connection with the
				  transaction." Where the seller also acts as the original creditor, down
				  payments, deposits, periodic payments, late fees, and other payments to the
				  seller are included in the calculation of the maximum amount a borrower may
				  recover through a claim brought pursuant to
				  46:10B-27.a.
"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 loan amount shall
				  be calculated using the total line of credit allowed under the home
				  loan.