New Jersey Statutes 46:10B-38. Definitions relative to certain residential mortgages
Terms Used In New Jersey Statutes 46:10B-38
- Fixed Rate: Having a "fixed" rate means that the APR doesn't change based on fluctuations of some external rate (such as the "Prime Rate"). In other words, a fixed rate is a rate that is not a variable rate. A fixed APR can change over time, in several circumstances:
- You are late making a payment or commit some other default, triggering an increase to a penalty rate
- The bank changes the terms of your account and you do not reject the change.
- The rate expires (if the rate was fixed for only a certain period of time).
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- person: includes corporations, companies, associations, societies, firms, partnerships and joint stock companies as well as individuals, unless restricted by the context to an individual as distinguished from a corporate entity or specifically restricted to one or some of the above enumerated synonyms and, when used to designate the owner of property which may be the subject of an offense, includes this State, the United States, any other State of the United States as defined infra and any foreign country or government lawfully owning or possessing property within this State. See New Jersey Statutes 1:1-2
- State: extends to and includes any State, territory or possession of the United States, the District of Columbia and the Canal Zone. See New Jersey Statutes 1:1-2
- Variable Rate: Having a "variable" rate means that the APR changes from time to time based on fluctuations in an external rate, normally the Prime Rate. This external rate is known as the "index." If the index changes, the variable rate normally changes. Also see Fixed Rate.
“Creditor” means a State chartered bank, savings bank, savings and loan association or credit union, any person required to be licensed under the provisions of the “New Jersey Residential Mortgage Lending Act,” sections 1 through 39 of P.L.2009, c.53 (C. 17:11C-51 et seq.), and any entity acting on behalf of the creditor named in the debt obligation including, but not limited to, servicers.
“Eligible borrower” means a borrower who is obligated to repay a loan secured by an introductory rate mortgage.
“Eligible foreclosed borrower” means a borrower who is obligated to repay a loan secured by an introductory rate mortgage and who receives a notice of intention to foreclose that mortgage pursuant to the “Fair Foreclosure Act,” P.L.1995, c.244 (C. 2A:50-53 et al.), except that an “eligible foreclosed borrower” shall not include an eligible borrower who has previously exercised the right to obtain a three-year period of extension pursuant to section 5 of this act.
“Full repayment” means the full repayment of the amounts due under the introductory rate mortgage, including, without limitation, upon the maturity date, a refinancing, or a sale of or other transfer of title to the property.
“Fully indexed rate” means the sum of the current value of the index used for the adjustable rate mortgage and the margin disclosed in the loan agreement.
“Introductory rate mortgage” means a consumer credit transaction in which the loan is secured by a mortgage on real estate in this State upon which there is located a one to four family dwelling which is occupied by the borrower as the borrower’s principal residence, and which provides for: (1) an introductory payment rate option that is set at least 3 percent below the fully indexed rate at the time the loan was originated and payments may adjust by more than 3 percent at the reset date regardless of whether the variable rate index has increased; or (2) an interest rate that may adjust by more than 2 percent at the end of the initial fixed rate period of the loan and which, notwithstanding the payment rate in effect, had an interest rate at origination of more than 200 basis points over the Freddie Mac 30-year conventional interest rate and which provides for an introductory rate that is set below the fully indexed rate at the time the loan was originated and may adjust at the reset date regardless of whether the variable rate index has increased. “Introductory rate mortgage” shall not include: (1) a loan that provides for a fixed rate of interest for the first five years or longer; or (2) a loan that provides for an introductory rate that is set below the fully indexed rate at the time the loan was originated only as a result of the borrower’s payment of bona fide discount points.
L.2008, c.86, s.3; amended 2009, c.53, s.69