17:11C-80 Prohibited actions relative to secondary mortgage loan; exceptions.

30. a. A licensee acting as a residential mortgage lender shall not contract for, charge, receive or collect directly or indirectly, any of the following in connection with a secondary mortgage loan: a broker's or finder's fee; commission; expense; fine; penalty; premium; or any other thing of value other than the charges authorized by this act; except the expenses incurred on actual sale of the real property in foreclosure proceedings or upon the entry of judgment, which are otherwise authorized by law; except that:

(1) The licensee may charge and receive no more than three discount points computed as a percentage of the principal amount of the secondary mortgage loan and may add these discount points to the principal balance of the loan, which discount points shall be fully earned when the loan is made. The annual percentage rate charged to the borrower, including the discount points, if any, shall be subject to N.J.S.2C:21-19. As used in this paragraph, "discount point" means one percent of the principal amount of the loan, and "principal amount of the loan" means the total amount of credit extended, including all loan closing fees, expenses or costs that are financed, but excluding the discount points; and

(2) The licensee may require a borrower to pay a reasonable legal fee at the time of the execution of the secondary mortgage loan, provided that any legal fee shall represent a charge actually incurred in connection with the secondary mortgage loan and shall not be paid to any person other than an attorney authorized to practice law in this State; provided further that the legal fee shall be evidenced by a statement issued to the licensee from the attorney.

b. The licensee shall have authority to collect fees for title examination, abstract of title, survey, title insurance, credit reports, appraisals, and recording fees when those fees are actually paid by the licensee to a third party for those services or purposes, and to include those fees in the amount of the loan principal.

c. The licensee shall also have the authority to charge and collect a returned check fee in an amount not to exceed $20 which the licensee may charge the borrower if a check of the borrower for a secondary mortgage loan is returned to the licensee uncollected due to insufficient funds in the borrower's account. The licensee shall also have the authority to charge and collect a late charge in any amount as may be provided in the promissory note or loan agreement, but no late charge shall exceed 5% of the amount of payment in default. Not more than one late charge shall be assessed on any one payment in arrears.

d. The licensee shall not make any other charge or accept an advance deposit prior to the time a secondary mortgage loan is closed, except that the licensee may charge:

(1) An application fee for the secondary mortgage loan at closing; and

(2) On an open-end loan, an annual fee of $50 or 1% of the line of credit, whichever is less.

e. A promissory note or loan agreement by the licensee may provide for the payment of attorney fees in the event it becomes necessary to refer the promissory note or loan agreement to an attorney for collection; provided, however, that any attorney fees provision shall be void and unenforceable unless:

(1) The promissory note or loan agreement is referred to an attorney authorized to practice law in this State;

(2) The attorney to whom the promissory note or loan agreement is referred is not an officer, director, partner, owner, or employee, whether salaried or commissioned, of the licensee; and

(3) Suit is actually filed by the attorney to whom the promissory note or loan agreement is referred and subsequently decided in favor of the licensee, in which event the attorney fees shall not exceed 15% of the first $500, 10% of the next $500, and 5% of any excess amount due and owing under the promissory note or loan agreement, and provided further that at least 15 days prior to the commencement of the suit, the licensee or his attorney shall send to the borrower, by certified or registered mail, return receipt requested, at the borrower's last known address, a statement of the licensee's intention to sue, which statement shall also specify the amount of principal, interest and any other charge due and owing to the licensee.

L.2009, c.53, s.30.