17:11C-53 Definitions relative to certain licensed lending activities.

3. As used in this act:

"Approved conditional status" means the status of the license of an individual who has satisfied all conditions for licensure as a mortgage loan originator or qualified individual licensee except a satisfactory demonstration of his or her financial responsibility but who is making a good faith effort to achieve the level of financial responsibility required for such licensure.

"Approved inactive status" means the status of the license of an individual applicant who has satisfied all conditions for licensure except sponsorship by a licensed business entity or the status of a licensed individual who is no longer so sponsored.

"Bona fide not for profit entity" means an organization that:

a. maintains tax exempt status under section 501(c)(3) of the Internal Revenue Code of 1986, 26 U.S.C. s.501(c)(3);

b. promotes low to moderate income housing or provides homeownership education, or similar services;

c. conducts its activities in a manner that serves public or charitable purposes;

d. receives funding and revenue and charges fees in a manner that does not incentivize the organization or its employees to act other than in the best interests of its clients;

e. compensates employees in a manner that does not incentivize employees to act other than in the best interests of its clients;

f. provides to or identifies for the borrower residential mortgage loans with terms that are favorable to the borrower and comparable to mortgage loans and housing assistance provided under government housing assistance programs; and

g. meets such other standards as may be prescribed by the commissioner through rulemaking.

"Borrower" means any individual applying for a loan from a licensee licensed under this act, whether or not the loan is granted, and any individual who has actually obtained a loan.

"Branch manager" means an employee of a licensed business entity with management responsibilities over a branch and who is identified as such with the Nationwide Mortgage Licensing System and Registry.

"Business licensee" means a corporation, association, joint venture, partnership, limited liability company, limited liability partnership, sole proprietorship, or any other legal entity, however organized, permitted under the laws of this State, that is licensed as a residential mortgage lender or residential mortgage broker, or that should be so licensed.

"Clerical or support duties" means and includes: (1) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; or (2) communicating with a borrower to obtain the information necessary for the processing or underwriting of a residential mortgage loan, to the extent that the communication does not include offering or negotiating loan rates or terms, or counseling borrowers about loan rates or terms. However, the term "clerical or support duties" does not include making representations to the public, through advertising or other means of communicating or providing information, such as through the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, indicating that the person assigned to perform clerical or support duties can or will perform any of the activities of a licensee under this act or of a person exempt from licensure pursuant to section 5 of this act.

"Closed-end loan" with respect to a secondary mortgage loan means a mortgage loan pursuant to which the business licensee advances a specified amount of money and the borrower agrees to repay the principal and interest in substantially equal installments over a stated period of time, except that: (1) the amount of the final installment payment may be substantially greater than the previous installments if the term of the loan is at least 36 months, or under 36 months if the remaining term of the first residential mortgage loan is under 36 months; or (2) the amount of the installment payments may vary as a result of the change in the interest rate as permitted by this act.

"Commissioner" means the Commissioner of Banking and Insurance.

"Controlling interest" means ownership, control or interest of 25% or more of the business licensee or applicant.

"Correspondent mortgage lender" means a residential mortgage lender who: (1) in the regular course of business, does not hold any mortgage loans in its portfolio, or service mortgage loans, for more than 90 days; and (2) has shown to the department's satisfaction an ability to fund mortgage loans through warehouse agreements, table funding agreements or otherwise.

"Department" means the Department of Banking and Insurance.

"Depository institution" means "depository institution" as defined in section 3 of the "Federal Deposit Insurance Act," Pub.L.81-797 (12 U.S.C. s.1813), and also means any credit union.

"Exempt company" means a person other than a bona fide not for profit entity that is not subject to licensure as a residential mortgage lender or a residential mortgage broker under P.L.2009, c.53 (C.17:11C-51 et seq.) that is registered pursuant to subsection d. of section 4 of P.L.2009, c.53 (C.17:11C-54), and that employs, or will employ one or more licensed mortgage loan originators.

"Expungement" means, with respect to a record of criminal conviction entered in this State, an order issued pursuant to N.J.S. 2C:52-1 et seq. With respect to criminal convictions entered in another state, that other state's definition of expungement or the functional equivalent of expungement will apply.

"Federal banking agency" means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the National Credit Union Administration, or the Federal Deposit Insurance Corporation, or any of their successor agencies.

"Immediate family member" means a spouse, domestic partner as defined in section 3 of P.L.2003, c.246 (C.26:8A-3), partner in a civil union couple as defined in section 2 of P.L.2006, c.103 (C.37:1-29), parent, stepparent, grandparent, sibling, stepsibling, child, stepchild, and grandchild, as related by blood or by law.

"Individual" means a natural person.

"Individual licensee" means a natural person licensed as a qualified individual licensee for a residential mortgage lender or residential mortgage broker, or a mortgage loan originator.

"Insurer" means an entity authorized to transact the business of insurance in this State pursuant to subtitle 3 of Title 17 of the Revised Statutes or subtitle 3 of Title 17B of the New Jersey Statutes.

"Licensee" means a legal entity or natural person who is licensed under this act, or who should be so licensed.

"Loan processor" or "loan underwriter" means an individual who performs clerical or support duties as an employee, at the direction of and subject to the supervision and instruction of a licensee under this act.

"Mortgage loan originator" means any individual, not exempt under section 5 of this act and licensed pursuant to the provisions of this act, and any individual who should be licensed pursuant to the provisions of this act, who for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly takes a residential mortgage loan application, or offers or negotiates terms of a residential mortgage loan. However, the term "mortgage loan originator" does not mean an individual:

a. who is a qualified individual licensee for a residential mortgage lender or residential mortgage broker;

b. engaged solely as a loan processor or underwriter, except as provided in section 4 of this act;

c. engaged solely in extensions of credit relating to timeshare plans, as defined in section 101(53D) of title 11, United States Code (11 U.S.C. s.101(53D)); or

d. (1) employed by a federal, state, or local government agency or a housing finance agency and who acts as a mortgage loan originator only pursuant to his or her official duties as an employee of the federal, state, or local government agency, or of a housing finance agency. The agency itself is not considered a mortgage loan originator under the provisions of P.L.2009, c.53 (C.17:11C-51 et seq.).

(2) For the purposes of subsection d. of this section:

(a) "Employee" means an individual whose manner and means of performance of work are subject to the right of control of, or are controlled by, a person and whose compensation for federal income tax purposes is reported or required to be reported on a W-2 form issued by the controlling person;

(b) "Housing finance agency" means any organization that is:

(i) Chartered by a state to help meet the affordable housing needs of the residents of the state;

(ii) Supervised, directly or indirectly, by the state government;

(iii) Subject to audit and review by the state in which it operates; and

(iv) Whose activities make it eligible to be a member of the National Council of State Housing Agencies.

"Nationwide Mortgage Licensing System and Registry" means the mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, or their successors, and utilized for licensing and registering residential mortgage lenders and residential mortgage brokers as business licensees in accordance with this act, and residential mortgage lenders and brokers as qualified individual licensees and mortgage loan originators as required pursuant to the federal "Secure and Fair Enforcement for Mortgage Licensing Act of 2008," title V of Pub.L.110-289 (12 U.S.C. s.5101 et seq.).

"Nontraditional mortgage product" means any mortgage product other than a 30-year fixed rate residential mortgage loan.

"Open-end loan" means a secondary mortgage loan made by a residential mortgage lender pursuant to a written agreement with the borrower whereby:

(1) The lender may permit the borrower to obtain advances of money from the lender from time to time or the lender may advance money on behalf of the borrower from time to time as directed by the borrower;

(2) The amount of each advance and permitted interest and charges are debited to the borrower's account and payments and other credits are credited to the same account;

(3) Interest is computed on the unpaid principal balance or balances of the account from time to time; and

(4) The borrower has the privilege of paying the account in full at any time or, if the account is not in default, in monthly installments of fixed or determinable amounts as provided in the agreement.

"Out-of-State mortgage loan originator" means an individual who maintains a unique identifier through the Nationwide Mortgage Licensing System and Registry and currently holds a valid mortgage loan originator license issued pursuant to the law of any state or other jurisdiction within the United States.

"Person" means an individual, sole proprietor, association, joint venture, partnership, limited partnership association, limited liability company, corporation, trust, or any other group of individuals however organized.

"Primary market" means the market wherein residential mortgage loans are originated between a residential mortgage lender and a borrower, whether or not through a residential mortgage broker or other conduit, and shall not include the sale or acquisition of a residential mortgage loan after the mortgage loan is closed.

"Qualified individual licensee" means an individual who is required to be licensed under this act as a condition for a person to be issued or hold a license as a business licensee, whereby the individual: (1) meets, at a minimum, the licensing criteria applicable to a mortgage loan originator; and (2) is an officer, director, partner, owner, or principal of the business licensee.

"Registered mortgage loan originator" means any individual who:

(1) is a mortgage loan originator and an employee of:

(a) a depository institution;

(b) a subsidiary that is (i) owned and controlled by a depository institution and (ii) regulated by a federal banking agency; or

(c) an institution regulated by the Farm Credit Administration established by section 5.7 of the "Farm Credit Act of 1971," Pub.L.92-181 (12 U.S.C. s.2241), or its successor; and

(2) is registered with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry and was validly registered as a mortgage loan originator with a depository institution employer for at least the one-year period prior to applying for licensure under the "New Jersey Residential Mortgage Lending Act," P.L.2009, c.53 (C.17:11C-51 et seq.).

"Residential mortgage broker" means any person, not exempt under section 5 of this act and licensed pursuant to the provisions of this act, and any person who should be licensed pursuant to the provisions of this act, who for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly takes a residential mortgage loan application for others, or negotiates, places or sells for others, or offers to take an application for, negotiate, place or sell, residential mortgage loans in the primary market for others.

"Residential mortgage lender" means any person, not exempt under section 5 of this act and licensed pursuant to the provisions of this act, and any person who should be licensed pursuant to the provisions of this act, who for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly takes a residential mortgage loan application, or offers, negotiates, originates, or acquires residential mortgage loans in the primary market. The term "residential mortgage lender" also means, with respect to a business licensee, a correspondent mortgage lender, unless the provisions of this act clearly indicate otherwise.

"Residential mortgage loan" means any loan primarily for personal, family, or household purposes that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling, as defined in section 103(w) of the Truth in Lending Act, Pub.L.90-321 (15 U.S.C. s.1602(w)), or residential real estate upon which is constructed or intended to be constructed a dwelling.

"Residential real estate" means any real property located in this State, upon which is constructed or intended to be constructed a dwelling as defined in section 103(w) of the Truth in Lending Act, Pub.L.90-321 (15 U.S.C. s.1602(w)).

"Secondary mortgage loan" means a loan made to an individual, association, joint venture, partnership, limited partnership association, limited liability company, trust, or any other group of individuals, however organized, except a corporation, which is secured in whole or in part by a lien upon any interest in real property, including but not limited to shares of stock in a cooperative corporation, created by a security agreement, including a mortgage, indenture, or any other similar instrument or document, which real property is subject to one or more prior mortgage liens and on which there is erected a structure containing a one, two, three, or four family dwelling, as defined in section 103(w) of the Truth in Lending Act, Pub.L.90-321 (15 U.S.C. s.1602(w)), a portion of which structure may be used for nonresidential purposes.

"Sponsor" means a business licensee that employs a qualified individual licensee, a mortgage loan originator, or an applicant for a transitional mortgage loan originator license.

"State" means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands unless the context clearly indicates otherwise.

"Transitional mortgage loan originator license" or "transitional license" means a license, issued to an out-of-State mortgage loan originator or registered mortgage loan originator that provides temporary authority to engage in the business of mortgage loan origination in this State pending the completion by the transitionally licensed individual of the requirements for licensure as a New Jersey mortgage loan originator as set forth in section 7 of P.L.2009, c.53 (C.17:11C-57). A transitional mortgage loan originator license shall be valid for a term of no longer than 120 days.

"Unique identifier" means a number or other identifier for a mortgage loan originator or a qualified individual licensee as a residential mortgage lender or residential mortgage broker, assigned by protocols established by the Nationwide Mortgage Licensing System and Registry.

L.2009, c.53, s.3; amended 2018, c.108, s.1.