New Jersey Statutes 17:16F-34. Exemptions from licensure; required filings
Terms Used In New Jersey Statutes 17:16F-34
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- certified mail: include private express carrier service, provided that the private express carrier service provides confirmation of mailing. See New Jersey Statutes 1:1-2
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Embezzlement: In most states, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets. Embezzlement typically occurs in the employment and corporate settings. Source: OCC
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Forgery: The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgagee: The person to whom property is mortgaged and who has loaned the money.
- Mortgagor: The person who pledges property to a creditor as collateral for a loan and who receives the money.
- 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
(1) a surety bond, written by a surety authorized to write the bonds in this State, covering its main office and any branch office from which it acts as mortgage servicer, in a penal sum of $100,000 per office location in accordance with subsection b. of this section;
(2) a fidelity bond, written by a surety authorized to write the bonds in this State, in accordance with the requirements of subsection c. of this section; and
(3) evidence of errors and omissions coverage, written by an entity authorized to write the coverage in this State, in accordance with the requirements of subsection c. of this section. A mortgage servicer licensee and a person otherwise exempt from mortgage servicer licensure pursuant to paragraph (4) of subsection b. of section 3 of this act shall not act as a mortgage servicer in this State without maintaining the surety bond, fidelity bond and errors and omissions coverage required by this section.
b. The surety bond required by subsection a. of this section shall be:
(1) in a form approved by the Attorney General; and
(2) conditioned upon the mortgage servicer licensee or person exempt from mortgage servicer licensure pursuant to paragraph (4) of subsection b. of section 3 of this act performing any and all written agreements or commitments with or for the benefit of mortgagors and mortgagees, accounting for all funds received from a mortgagor or mortgagee in the person’s capacity as a mortgage servicer, and conducting the mortgage business consistent with the provisions of this act. Any mortgagor damaged by the failure of a mortgage servicer licensee or person exempt from mortgage servicer licensure pursuant to paragraph (4) of subsection b. of section 3 of this act to perform any written agreements or commitments, or by the wrongful conversion of funds paid by a mortgagor to the licensee or person, may proceed on the bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on the bond against the principal or surety on the bond, or both, to collect any appropriate civil penalty. The proceeds of the bond, even if commingled with other assets of the principal, shall be deemed by operation of law to be held in trust for the benefit of claimants against the principal in the event of bankruptcy of the principal and shall be immune from attachment by creditors and judgment creditors. The surety bond shall run concurrently with the period of the license for the main office of the mortgage servicer or residential mortgage lender and the aggregate liability under the bond shall not exceed the penal sum of the bond. The principal shall notify the commissioner of the commencement of an action on the bond. When an action is commenced on a principal’s bond, the commissioner may require the filing of a new bond and immediately on recovery on any action on the bond, the principal shall file a new bond.
c. The fidelity bond and errors and omissions coverage required by subsection a. of this section shall name the Department of Banking and Insurance as an additional loss payee on drafts the surety issues to pay for covered losses directly or indirectly incurred by mortgagors of residential mortgage loans serviced by the mortgage servicer. The fidelity bond shall cover losses arising from dishonest and fraudulent acts, embezzlement, misplacement, forgery and similar events committed by employees of the mortgage servicer. The errors and omissions coverage shall cover losses arising from negligence, errors and omissions by the mortgage servicer with respect to the payment of real estate taxes and special assessments, hazard and flood insurance or the maintenance of mortgage and guaranty insurance. The fidelity bond and errors and omissions coverage shall each be in the following principal amounts based on the mortgage servicer’s volume of servicing activity most recently reported to the department:
(1) If the amount of the residential mortgage loans serviced is $100,000,000 or less, the principal amount shall be $300,000; or
(2) If the amount of the loans exceeds $100,000,000, the principal amount shall be $300,000 plus:
(a) three-twentieths of one percent of the amount of residential mortgage loans serviced greater than $100,000,000 but less than or equal to $500,000,000;
(b) plus one-eighth of one percent of the amount of residential mortgage loans serviced greater than $500,000,000 but less than or equal to $100,000,000,000; and
(c) plus one-tenth of one percent of the amount of residential mortgage loans serviced greater than $100,000,000,000.
The fidelity bond and errors and omissions coverage may provide for a deductible amount not to exceed the greater of $100,000 or five percent of the principal amount.
d. A surety shall have the right to cancel the surety bond, fidelity bond and errors and omissions coverage required by this section at any time by a written notice to the principal stating the date cancellation shall take effect. The notice shall be sent by certified mail to the principal at least 30 days prior to the date of cancellation. A surety bond, fidelity bond or errors and omissions coverage shall not be cancelled unless the surety notifies the commissioner, in writing, not less than 30 days prior to the effective date of cancellation. After receipt of the notification from the surety, the commissioner shall give written notice to the principal of the date the cancellation shall take effect. The commissioner shall suspend the license of a mortgage servicer on that date. A suspension or inactivation shall not occur if, prior to the date that the bond or errors and omissions coverage cancellation shall take effect:
(1) the principal submits a letter of reinstatement of the bond or errors and omissions coverage, or a new bond or errors and omissions policy; or
(2) the mortgage servicer licensee has ceased business in this State and has surrendered all licenses in accordance with section 5 of this act. After a mortgage servicer license has been suspended pursuant to this section, the commissioner shall give the licensee notice of the suspension, pending proceedings for revocation or refusal to renew pursuant to section 14 of this act and an opportunity for a hearing on the action and require the licensee to take or refrain from taking the action as in the opinion of the commissioner will effectuate the purposes of this section. A person licensed as a residential mortgage lender in this State acting as a mortgage servicer from a location licensed as a main office or branch office shall cease to be exempt from mortgage servicer licensing requirements in this State upon cancellation of any surety bond, fidelity bond or errors and omissions coverage required by this section.
e. If the commissioner finds that the financial condition of a mortgage servicer or residential mortgage lender licensee so requires, as evidenced by the reduction of tangible net worth, financial losses or potential losses as a result of a violation of this act, the commissioner may require one or more additional bonds meeting the standards set forth in this section. The licensee shall file any the additional bonds not later than ten days after receipt of the commissioner’s written notice of the requirement. A mortgage servicer or residential mortgage lender licensee shall file, as the commissioner may require, any bond rider or endorsement or addendum, as applicable, to any bond or evidence of errors and omissions coverage on file with the commissioner to reflect any changes necessary to maintain the surety bond, fidelity bond and errors and omissions coverage required by this section.
L.2019, c.65, s.8.