New Jersey Admin. Code Title 3 | New Jersey Administrative Code, Title 3 — Banking

Chapter 11 INVESTMENTS

N.J. Admin. Code Tit. 3, ch. 11, subch. 2 RESERVED

Chapter 23 FEES, LICENSE TERMS AND ANNUAL REPORTS FOR LICENSEES

N.J. Admin. Code Tit. 3, ch. 23, subch. 3 RESERVED

Chapter 1 GENERAL PROVISIONS

Subchapter 1 INTEREST AND USURY

N.J. Admin. Code § 3:1-1.1 Interest rates

(a) The maximum rate of interest to be charged, or taken or received upon a loan of any money, wares, merchandise, goods and chattels shall be six percent per annum, or shall be 16 percent per annum when there is a written contract specifying a rate of interest, except as herein or otherwise provided by law. Such interest shall be calculated in accordance with N.J.S.A. 31:1-1, as amended.

(b) The maximum rate of interest to be charged on loans secured by a first lien on real property on which there is erected or to be erected a structure containing one, two, three, four, five or six dwelling units, a portion of which structure may be used for nonresidential purposes, shall be at least six percent per annum but not more than the Monthly Index of Long Term United States Government Bond Yields, compiled by the Board of Governors of the Federal Reserve System and as published by said Board of Governors in the monthly Federal Reserve Bulletin, for the second preceding calendar month plus an additional 3.5 percent per annum rounded off to the nearest quarter of one percent per annum. Such interest shall be calculated in accordance with N.J.S.A. 31:1-1, as amended.

(c) Contracts for the following classes or types of loans may lawfully provide for any rate of interest which the parties agree upon, and interest at any such rate may lawfully be taken:

Loans in the amounts of $50,000 or more, except loans where the security given is a first lien on real property on which there is erected or to be erected a structure containing one, two, three, four, five or six dwelling units, a portion of which structure may be used for nonresidential purposes. The rate of interest stated in such contract upon the origination of such loans may be taken notwithstanding that payments thereon reduce the amount outstanding to less than $50,000;
Loans or advances of credit made by savings and loans associations, banking institutions or any Department of Housing and Urban Affairs or Federal Housing Administration approved mortgagees which are subsequently purchased, in whole or in part, by the Federal Housing Administration, Veterans Administration, Farmers Home Administration, Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Mortgage Corporation, and any successor thereof or by any organization authorized by the Emergency Home Finance Act of 1970 to purchase such loans or by any State or Federal governmental or quasi-governmental organizations.
If such loan is not purchased within 395 days from the date the loan instruments are executed, the maximum rate of interest which may be charged on such loan shall not be in excess of that authorized by the commissioner under the provisions of this section and such rate of interest, if in excess of that rate, shall be reduced to the rate in effect at the date of the execution of the loan instruments. No such reduction shall change the maturity date of the loan without the written consent of the borrower nor shall such reduction affect the lien of the mortgage which secures the loan.

History

As amended, R.1973 d.191, eff. 7/16/1973.
See: 5 New Jersey Register 258(b).
As amended, R.1973 d.366, eff. 12/21/1973.
See: 6 New Jersey Register 50(b).
As amended, R.1974 d.132, eff. 5/31/1974.
See: 6 New Jersey Register 255(b).
As amended, R.1974 d.140, eff. 6/11/1974.
As amended, R.1974 d.247, eff. 9/6/1974.
See: 6 New Jersey Register 387(b).
As amended, R.1975 d.21, eff. 1/30/1975.
See: 7 New Jersey Register 94(b).
As amended, R.1976 d.240, eff. 7/29/1976.
See: 8 New Jersey Register 412(a).
As amended, R.1976 d.404, eff. 12/15/1976.
See: 9 New Jersey Register 4(a).
As amended, R.1978 d.204, eff. 6/23/1978.
See: 10 New Jersey Register 315(a).
As amended, R.1979 d.190, eff. 5/11/1979.
See: 11 New Jersey Register 270(c).
As amended, R.1980 d.151, eff. 4/10/1980.
See: 12 New Jersey Register 249(b).
As amended on an emergency basis, R.1981 d.429, eff. 10/20/1981, exp. 12/21/1981. See: 13 New Jersey Register 753(b). Readopted, R.1981 d.511, eff. 12/22/1981. See: 13 New Jersey Register 753(b), 14 New Jersey Register 101(c).
(a): "October 20, 1981" was "April 10, 1980"; "Six" percent was "8" percent; and "or shall be ... rate of interest" added.
(b): "October 20, 1981" was "April 10, 1980"; "17" percent was "14 1/2 " percent.
(e): "October 20, 1981" was "April 10, 1980".
Amended by R.1988 d.282, effective 6/20/1988.
See: 19 New Jersey Register 2089(a), 20 New Jersey Register 1343(b).
Change "17" to "six" percent per annum. Added text to (b) "but not more ... 1 percent per annum".
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a), deleted ", made on or after October 20, 1981," following "chattels"; in (b), deleted the last sentence; deleted (d) and (e).

N.J. Admin. Code § 3:1-1.2 Interest rates; other loans

Notwithstanding any provisions of N.J.S.A. 31:1-1 or N.J.A.C. 3:1-1.1 and except as otherwise provided by law, any person may charge a rate of interest on any loan which rate does not exceed one percent in excess of the discount rate on 90-day commercial paper in effect at the Federal Reserve Bank of New York on the date of the loan, at any time when that discount rate exceeds seven percent. Nothing in this subsection shall authorize any person to make any loan which is not authorized by law, nor shall anything in this subsection apply to loans secured by a first lien on real estate on which there is erected or to be erected a structure containing one, two, three, four, five or six dwelling units, a portion of which structure may also be used for non-residential purposes. Additionally, nothing in this subsection (a) shall be applicable to the exceptions contained in N.J.S.A. 31:1-1(e) and N.J.A.C. 3:1-1.1(c).

History

R.1979 d.290, eff. 7/27/1979.
See: 11 New Jersey Register 429(b).
Readoption: R.1984 d.397, filed August 16, 1984.
See: 16 New Jersey Register 1642(a), 16 New Jersey Register 2356(a).
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Rewrote the section.

Subchapter 2 PROCEDURAL RULES

N.J. Admin. Code § 3:1-2.1 Definitions

The following words and terms, when used in the subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Accepted" means that an application has been received by the Department and it contains all necessary information required or needed by the Department for its review, whether for expedited or regular processing, and the Department has acknowledged in writing that the application is ready for review.

"Adequately managed" means, unless otherwise determined in writing by the Commissioner:

The achievement of a composite rating of 1 or 2 under the Uniform Financial Institution Rating System or an equivalent rating system, in connection with the most recent examination or subsequent review of the bank, savings bank, or savings and loan; and
At least a rating of 2 for management, if such a rating is given.

"Bank" means a New Jersey chartered bank as defined in N.J.S.A. 17:9A-1 and shall include a limited purpose trust company.

"Banking institution" means a depository, or a similar institution chartered by the Federal government or another state.

"Branch application" means an application by a banking institution to establish a full branch or a minibranch office, or to relocate a principal office, full branch office or mini-branch office, or to interchange a principal office and full branch office.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Company" means any corporation, partnership, business trust, association or any other person except an individual.

"Controlling interest" means ownership or control of a majority of the issued and outstanding capital stock or securities of a corporation, having voting rights.

"Department" means the New Jersey Department of Banking and Insurance.

"Depository" means bank, savings bank or savings and loan association.

"Foreign bank" means a banking institution which has no branch offices in this State.

"Fully funded reserve" means the allowance for loan and lease losses as that term is defined in 12 C.F.R. § 325.2(a) or its successor section.

"Individual" means a natural person.

"Newly-chartered institution" means an institution which has been open to the public for business fewer than three years.

"Out-of-State association" means a savings and loan association or building and loan association insured by the Federal Deposit Insurance Corporation and chartered under the laws of a state other than New Jersey, but not as a bank as defined in 12 U.S.C. § 1813(a)(2).

"Out-of-State bank" means a state bank, as defined in the Federal Deposit Insurance Act, 12 U.S.C. § 1813(a)(2), which is chartered under the laws of a state other than New Jersey.

"Savings and loan association" means a New Jersey chartered savings and loan association, and shall include a capital stock association, and a mutual association.

"Savings bank" means a New Jersey chartered savings bank, and shall include a capital stock savings bank and a mutual savings bank.

"Sufficient compliance" means that the depository has received a currently applicable Community Reinvestment Act, 12 U.S.C. §§ 2901 et seq., (CRA) rating of "satisfactory or better" by the applicable Federal regulatory agency. A depository which has a currently applicable CRA rating by the applicable Federal regulatory agency of "needs to improve" shall be considered to be in sufficient compliance if it has entered into an agreement with the Federal agency which is intended to improve its CRA rating, and the Department has verified that the institution has taken reasonable steps to comply with the agreement.

"Trade area" means the assessment area of insured institutions as designated for purposes of compliance with the Community Reinvestment Act, 12 U.S.C. §§ 2901 et seq. For uninsured institutions, such as limited purpose trust companies, it means the area within five miles of the institution's proposed office.

"Well capitalized" means a depository that exceeds the required minimum level for each relevant capital measure, as that term is defined in 12 U.S.C. § 1831 or its successor section.

History

Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Deleted "executed indicia of title" as an acceptable document.
Repeal and New Rule, R.1992 d.483, effective 12/7/1992.
See: 24 New Jersey Register 3034(a), 24 New Jersey Register 4341(a).
Section was "Applications; acceptance".
Amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Added "Accepted", "Adequately managed", "Newly-chartered institution" and "Well capitalized"; in "Sufficient compliance", inserted the U.S.C. reference; substituted "means" for "shall mean" throughout.
Amended by R.2002 d.38, effective 2/4/2002.
See: 33 New Jersey Register 3598(a), 34 New Jersey Register 731(a).
Inserted "Fully funded reserve".
Amended by R.2004 d.50, effective 2/2/2004.
See: 35 New Jersey Register 4350(a), 36 New Jersey Register 647(a).
In "Accepted", inserted ", whether for expedited or regular processing, " following "for its review"; added "Trade area".

N.J. Admin. Code § 3:1-2.2 Charter applications

(a) With the exception of applications made by entities as described in (d) below, every applicant for a depository charter is required to file with the Department the following data in addition to the statutorily required certification of incorporation and affidavits required by N.J.S.A. 17:9A-9, 17:12B-14 and 17:12B-246:

An economic feasibility study delineating the proposed trade area to be served by the applicant, as well as yearly deposit estimates for the first three years of operation;
A pro forma balance sheet and profit and loss statement which shall project the financial condition and net income or loss of the depository on an annual basis for a period of three years and shall indicate the anticipated break-even date, and a business plan for the depository;

Biographical forms for each director, in the form of the Federal Financial Institutions Examination Council Interagency Biographical and Financial Information Report in use at the time of application, incorporated herein by reference. Copies of the report may be obtained on the FDIC website at www.fdic.gov, and authorizations by such persons for background checks;

The required non-refundable application filing fee;
An indicia of title for the proposed site;
A copy of an application to be filed with the Federal Deposit Insurance Corporation (F.D.I.C.) for deposit insurance, if the applicant has applied for a charter that includes the authority to accept deposits. When the final application is filed with the F.D.I.C., a copy shall be simultaneously transmitted to the Department;
The proposed directors' code of conduct governing activities both inside and outside the bank;
If the site is to be acquired or leased from an affiliated person, an application is required by N.J.A.C. 3:1-10.2;
A business plan in the form of the Federal Financial Institutions Examination Council Interagency Model Business Plan Guidelines in use at the time of application, incorporated herein by reference. Copies of the Guidelines may be obtained on the FDIC website at www.fdic.gov;
Fingerprint cards in a form obtained from the Department, except where the applicant applies for deposit insurance or in the case of an interim charter application pursuant to (d) below;
All other information required of a specific applicant by the Commissioner; and
Any changes in (a)1 through 11 above.

(b) The Commissioner may return to the applicant any charter application which does not comply with (a) above.

(c) The Commissioner shall accept or reject a charter application within one year after the applicant submits the application. The failure of the applicant to provide all necessary information within one year shall constitute sufficient grounds to reject the application. The Commissioner may extend the one-year limitation when the applicant is not substantially at fault for the delay.

(d) Where a charter application is made for an institution formed solely to exist on an interim basis as part of a merger transaction or company reorganization, and the entity will not be open to the public, is not required to maintain deposit insurance under applicable Federal law, a certificate of authority is not required to be issued pursuant to State law and the institution will not be the surviving entity in the transaction, the following shall be filed with the Department:

The entity's executed certificate of incorporation;
If applicable, the executed merger agreement pursuant to N.J.S.A. 17:9A-134;
If applicable, the executed subscription agreement from the parent organization;
A certified copy of the board resolutions approving the transaction; and
The filing fee required by N.J.A.C. 3:1-2.2 3(a)1.

(e) Pursuant to N.J.A.C. 3:3-2.1, personal information and the business plan filed pursuant to this section shall be confidential and shall not be subject to public inspection or copying pursuant to the Open Public Records Act, N.J.S.A. 47:1A-1 et seq.

History

Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Changed name to N.J. Council of Savings Institutions.
Repeal and New Rule, R.1992 d.483, effective 12/7/1992.
See: 24 New Jersey Register 3034(a), 24 New Jersey Register 4341(a).
Section was "Notice; publication".
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a), inserted "required by" preceding the N.J.A.C. references in the introductory paragraph, rewrote (a)6 and added (a)10.
Amended by R.2006 d.287, effective 8/7/2006.
See: 38 N.J.R. 1627(a), 38 N.J.R. 3160(a).
In the introductory paragraph of (a), substituted "With the exception of applications made by entities as described in (d) below, every" for "Every" and "N.J.S.A." for "N.J.A.C."; in (a)1 and (a)2, substituted "three" for "five"; rewrote (a)3; inserted present (a)9 and (a)10; recodified former (a)9 and (a)10 as (a)11 and (a)12; in (a)12, substituted "11" for "9"; and added (d) and (e).

N.J. Admin. Code § 3:1-2.3 Branch applications of depositories

(a) An application by a depository to establish a branch office or a minibranch office shall contain the following items before it will be accepted by the Department:

A completed current application form, including the name of the depository and the location of the applied for branch or minibranch office;
An original certification of a copy of the resolution authorizing the application;
If the proposed transaction involves the acquisition of deposits from another banking institution:

i. Pro forma balance sheet projections reflecting the acquiring depository before and after the acquisition; and

ii. Projections of the ratio of Tier 1 capital to total assets of the depository before and after the acquisition;

If the branch site is to be acquired or leased from an affiliated person, an application as required by N.J.A.C. 3:1-10.2; and
All other documentation required of a specific applicant by the Commissioner or which the applicant wishes the Department to consider.

(b) An application by a depository to relocate a principal office, full branch office or minibranch office from a location in this State to another location in this State, shall contain the following items before it will be accepted by the Department:

A completed current application form, including the name of the depository and both locations involved in the applied for relocation;
An original certification of a copy of the resolution authorizing the application; and
If the branch site is to be acquired or leased from an affiliated person, an application as required by N.J.A.C. 3:1-10.2; and
All other documentation required of a specific applicant by the Commissioner or which the applicant wishes the Department to consider.

(c) An application by a depository to relocate a branch office or minibranch office from a location outside this State to another location in that state shall contain the following items before it will be accepted by the Department:

A completed current application form, including the name of the depository and both locations involved in the applied for relocation;

An original certification of a copy of the resolution authorizing the application;

If the branch site is to be acquired or leased from an affiliated person, an application as required by N.J.A.C. 3:1-10.2; and
All other documentation required of a specific applicant by the Commissioner, or which the applicant wishes the Department to consider.

(d) An application by a depository to interchange a branch office and a principal office shall contain the following items before it will be accepted by the Department:

A completed current application form, including the name of the depository and the location of each office involved in the applied for interchange;
An original certification of a copy of the resolution authorizing the application; and
All other documentation required of a specific applicant by the Commissioner or which the applicant wishes the Department to consider.

(e) The Commissioner may return to the applicant any branch application which does not comply with (a), (b), (c), or (d) above.

(f) The Commissioner shall accept or reject a branch application within one year after the applicant submits the application. The failure of the applicant to provide all necessary information within one year shall constitute sufficient grounds to reject the application. The Commissioner may extend the one-year limitation when the applicant is not substantially at fault for the delay.

(g) A depository that directly or through a predecessor bank, savings bank or State association by merger or other reorganization has been in business for at least three years, and which is well capitalized, adequately managed, and if applicable, has received in its most recent examination under the "Community Reinvestment Act of 1977," 12 U.S.C. §§ 2901 et seq., a rating of not less than "satisfactory record of meeting community credit needs," or its equivalent, may apply for expedited branch office approval for full branch, mini-branch, relocation, auxiliary and interchange applications by filing for such expedited approval with the Commissioner. The application shall contain:

A certification by the depository, in a form specified by the Commissioner, that recites the following:

i. The depository meets the criteria set forth in (g) above;

ii. The depository is entitled to request expedited processing and does request such processing;

iii. Information identifying each principal office of a State-chartered bank, savings bank or savings and loan association which has been open for less than three years and is located in the trade area of the applicant's proposed branch office;

iv. The cost of the proposed branch office and whether the investment in the office complies with the limitations set forth in N.J.S.A. 17:9A-24(13) or 17:12B-166; and

v. A statement that the transaction complies with N.J.A.C. 3:1-10.1 et seq. regarding the interests of any executive officers, directors, managers and others in the premises, if any.

(h) The Department may remove an accepted application from expedited review if it presents a significant supervisory or compliance concern, or it raises a significant legal or policy issue requiring additional review.

(i) An accepted application for expedited processing shall be deemed approved on the 30th day after receipt by the Commissioner, unless approved or denied earlier by the Commissioner in writing, who as part of the application shall consider whether the interests of the public will be served to advantage by the establishment of such branch.

History

Amended by R.1984 d.301, eff. 7/16/1984.
See: 16 N.J.R. 946(a), 16 N.J.R. 1966(a).
Substantial changes in section.
Repeal and New Rule, R.1992 d.483, effective 12/7/1992.
See: 24 N.J.R. 3034(a), 24 N.J.R. 4341(a).
Section was "Objection and request for oral presentation; time for filing; content".
Amended by R.1993 d.258, effective 6/7/1993.
See: 25 N.J.R. 1033(a), 25 N.J.R. 2248(a).
Deleted (a)10 and redesignated existing (a)11 to (a)10.
Amended by R.1996 d.483, effective 10/7/1996.
See: 28 N.J.R. 2661(a), 28 N.J.R. 4417(b).
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 N.J.R. 213(a), 33 N.J.R. 1087(a).
In (a), (b), (c) and (d), inserted "items" following "following"; in (b) and (c), deleted former 5 and recodified former 6 as 5; added (g).
Amended by R.2004 d.50, effective 2/2/2004.
See: 35 N.J.R. 4350(a), 36 N.J.R. 647(a).
Rewrote (g)1; added (h); recodified former (g)2 as (i), deleted the first sentence and substituted "An accepted application for expedited processing shall" for "An application shall".
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Deleted former (a)2 and recodified (a)3 through (a)6 as (a)2 through (a)5; deleted former (b)2 and recodified (b)3 through (b)5 as (b)2 through (b)4; deleted former (c)2 and recodified (c)3 through (c)5 as (c)2 through (c)4; and deleted former (d)2 and recodified (d)3 through (d)4 as (d)2 through (d)3.

N.J. Admin. Code § 3:1-2.4 Branch application of out-of-State banks and out-of-State associations

(a) An application by an out-of-State bank that has no branch offices in New Jersey to acquire a branch office in this State shall contain the following items:

A completed current application form, containing the name of the depository, the name of the depository selling the branch and the location of the applied for branch;

The required application filing fee;

An opinion of counsel that the out-of-State bank is authorized to acquire a branch in New Jersey;
If the out-of-State bank intends to immediately relocate the branch to a new location in this State, the exact location of the proposed relocation; and
A copy of the application filed with the home state regulator.

(b) An out-of-State bank or out-of-State association, that has at least one branch office in this State, may establish additional branch offices in this State by filing a notice with the Department, so long as the out-of-State bank or out-of-State association is adequately capitalized, will be adequately capitalized and managed after the branch is established, and has achieved sufficient compliance with the Community Reinvestment Act. The out-of-State bank or out-of-State association shall send notice to the New Jersey Bankers Association, or its successor organization, if any, for publication in their weekly bulletins.

History

Amended by 47 N.J.R. 709(a), effective 4/6/2015.

N.J. Admin. Code § 3:1-2.5 Charter applications; notice and publication

(a) When a charter application is filed with the Department, the Department shall so advise, in writing, the New Jersey Bankers Association, or its successor organization, if any. Notice of receipt of the application shall also be posted on the Department's website at www.state.nj.us/dobi.

(b) When the Department finds that a charter application is complete, the Department shall send notice to the applicant setting forth a hearing date. The Department shall also post notice of the hearing on the Department's website at www.state.nj.us/dobi within one week of sending the notice. In addition, the Department shall advise through a notice, electronically or in writing, the New Jersey Bankers Association, or its successor organization, if any, of the hearing date. The notice shall also contain a statement that an objection, if any, shall be filed with the Department no later than 10 business days prior to the scheduled hearing date and list the requirements for an objection to be considered by the Department as set forth at N.J.A.C. 3:1-2.7(b).

(c) Within 10 calendar days after notification of the formal hearing date for any charter application, the applicant shall publish notice of the application once a week for four successive weeks in a newspaper designated by the Commissioner, which is published and circulated in the municipality in which said charter is proposed to be established, or if there be no such newspaper, then in a newspaper of general circulation in the municipality.

(d) The notice shall contain the following:

The names of the incorporators;
The name and mailing address of the applicant;
The proposed location of the principal office;
The amount of capital stock and surplus, or the amount of capital deposits, whichever is applicable;
The hearing date; and
A listing of the requirements for an objection to be considered by the Department as set forth at N.J.A.C. 3:1-2.7(b) and a statement indicating that any objections to the application must be filed with the Department no later than 10 business days prior to the scheduled hearing date.

(e) The incorporators shall cause a copy of the notice in the form prescribed in (d) above to be forwarded to the chief executive officer of every banking institution having an office within five miles of the proposed location, and to such other offices as the Commissioner shall designate, not more than 10 calendar days after formal notification of the formal hearing date and at least three weeks before the scheduled hearing. Regarding applications of savings and loan associations, the incorporators shall also cause a copy of the notice in the form prescribed by (d) above to be forwarded to the chief executive officer of every savings and loan association having an office within the county where the principal office of the State association is to be located, if not within five miles.

History

Amended by 47 N.J.R. 709(a), effective 4/6/2015.

N.J. Admin. Code § 3:1-2.6 Branch applications; notice and publication

(a) When a branch application is accepted, the Department shall send notice to the applicant and shall also post notice of the acceptance on the Department's website at www.state.nj.us/dobi. The Department shall also advise, in writing, the New Jersey Bankers Association, or its successor organization, if any, of the acceptance of the application. Each notice shall contain the following:

The name and mailing address of the applicant;
A brief statement of the nature of the application;
The precise location of the site involved in the particular application;
The date the Department accepted the application; and
The publication of notice shall also include the following statement:

"An individual, bank, savings bank or savings and loan association may object to any full branch or relocation application, and may request that an oral presentation be conducted. All such requests must be in writing and filed within 10 calendar days of the date of the Department's publication of notice of the accepted application on its website at http://www.njdobi.org. Individuals or financial institutions interested in perfecting an objection or request for oral presentation should immediately consult the Department's procedural rules for guidance."

(b) The notice prescribed by (a) above shall be published on the Department's website.

History

Amended by 47 N.J.R. 709(a), effective 4/6/2015.

N.J. Admin. Code § 3:1-2.7 Charter applications; objections and hearings

(a) An objection to a new charter application of a depository, if any, shall be filed in the Department no later than 10 business days prior to the scheduled hearing date.

(b) To be considered by the Commissioner, an objection shall be in writing and shall contain:

A summary of the reasons for protest;
Facts supporting the protest, including relevant economic or financial data;
Any adverse effects on the objector which may result from the approval of the application;
An indication as to whether the objector intends to appear personally at the charter hearing. A fee of $ 750.00 shall accompany a notice of intent to appear at a charter hearing, except that a non-profit public interest objector shall instead include a $ 100.00 fee; and
A certification that the objection containing the information set forth in (b)1 through 4 above and a request for a copy of the application were mailed or delivered to the applicant, and proof of mailing or delivery to the applicant of the objection and request.

(c) Upon receipt of notice that an objection has been filed, an applicant shall, within five calendar days, forward and deliver to the objector copies of the application and all supportive data submitted relative to the application. The applicant shall file with the Commissioner proof of delivery to and receipt by the objector of this data. Within seven days after receiving this data, the objector may then file additional comments with the Department regarding matters contained in the application, and shall send copies of all comments to the applicant.

(d) The Commissioner may determine not to consider the objection of any objector not complying with this section.

(e) The Commissioner may extend any time period set forth in this section to allow for an objection and/or for consideration of an objection by the applicant or the Department.

(f) A formal hearing, pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., shall be held on all charter applications where an objection(s) has been filed in accordance with this rule. Only those objectors which comply with this section shall be permitted to appear at the hearing.

(g) Where no complying objections have been filed, the hearing on the charter application shall not constitute a "contested case" under the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. The hearing shall be an investigative, fact-finding hearing. The hearing shall, at the Commissioner's discretion, be conducted by the Commissioner or his or her designee who shall report to the Commissioner and advise him or her on the matter delegated. The Commissioner shall make a determination or issue an order, based upon that advice and report, as he or she shall, in his or her discretion determine, and that determination or order shall have the same force and effect as if the Commissioner had conducted the hearing personally, and shall constitute a final agency decision.

History

Repeal and New Rule, R.1992 d.483, effective 12/7/1992.
See: 24 New Jersey Register 3034(a), 24 New Jersey Register 4341(a).
Section was "Charter applications; publication of hearing dates".
Recodified from N.J.A.C. 3:1-2.6 and amended by R.1996 d.483, effective 10/7/1996
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former N.J.A.C. 3:1-2.7, "Branch applications; objections and oral presentations", recodified to N.J.A.C. 3:1-2.8.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a), substituted "from" for "of" following "five business days".
Amended by R.2006 d.287, effective 8/7/2006.
See: 38 N.J.R. 1627(a), 38 N.J.R. 3160(a).
Rewrote (a), (d) and (f); in the introductory paragraph of (b), inserted "shall"; in (b)4, substituted "intends to appear personally" for "will object"; rewrote (b)5; in (c), inserted commas preceding and following "within five calendar days"; and added (g).

N.J. Admin. Code § 3:1-2.8 Branch applications; objections and oral presentations

(a) An objection to a branch application must be filed with the Department within 10 days of the publication of the notice prescribed by N.J.A.C. 3:1-2.6(a) on the Department's website, or 30 days after that day if an extension is requested in writing within the 10-day period. An objection to a mini-branch application must be filed within 20 days after publication. An objection to an application to branch accepted as expedited as provided in N.J.A.C. 3:1-2.3(g) shall be filed not later than 10 days after publication of the notice as set forth above.

(b) An objection shall be in writing and contain:

A summary of the reasons for protest;
Facts supporting the protest, including relevant economic or financial data;
Any adverse effects on the objector which may result from approval of the application;
An indication as to whether the objector requests to have a branch hearing. A fee of $ 750.00 shall accompany an application for a branch hearing, except that a non-profit public interest objector shall instead include a $ 100.00 fee. If it is later determined that an oral presentation will not be held, the fee will be returned to each of the objectors requesting an oral presentation; and
Proof that the objection and a request for a copy of the application were mailed to the applicant.

(c) Upon receiving notice from the objector that an objection has been filed, an applicant shall within seven calendar days forward and deliver to the objector copies of the application and all supportive data submitted relative to the application. The applicant shall file with the Department proof of delivery to and receipt by the objector of this data. Within 14 calendar days after receiving data from the applicant, the objector may file additional comments with the Commissioner regarding matters contained in the application, and shall send copies of all comments to the applicant.

(d) Within 10 days after receiving final comments from an objector, the Commissioner shall notify the objector and the applicant as to whether the objection is substantial and will therefore be considered. An objection is substantial only if:

It is in writing and filed on time;
It contains a summary of the reasons for protest, a statement of the specific matters in the application to which the protestant objects and the reason for the objection, facts supporting the protest including relevant economic or financial data, and a summary of any adverse effects on the objector which may result from the approval of the application; and
It pertains to at least one of the criteria for approval.

(e) The applying depository may file an answer to any substantial objection within 15 days after receipt of written notice from the Commissioner that such protest is considered substantial by furnishing four copies of the answer to the Commissioner.

(f) The Department may grant a request for oral presentation on branch applications only if:

The objector requesting the oral presentation has filed and perfected an objection and oral presentation request in accordance with this section; and
The Commissioner finds that the objector requesting the oral presentation has presented sufficient reasons indicating that it is necessary and warranted and that the matter cannot be resolved on the papers.

(g) Notwithstanding (f) above, the Department may schedule a hearing or oral presentation on any application if deemed necessary or warranted under the circumstances.

(h) There shall ordinarily be no oral presentations on minibranch, auxiliary or limited facility branch office applications.

History

New Rule, R.1992 d.483, effective 12/7/1992.
See: 24 New Jersey Register 3034(a), 24 New Jersey Register 4341(a).
Old section "Insufficiency of data in support of application; hearing" recodified to 2.8.
Recodified from N.J.A.C. 3:1-2.7 and amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former N.J.A.C. 3:1-2.8, "Insufficiency of data in support of application; hearing", recodified to N.J.A.C. 3:1-2.9.
Amended by R.2004 d.50, effective 2/2/2004.
See: 35 New Jersey Register 4350(a), 36 New Jersey Register 647(a).
Rewrote (a).
Amended by R.2006 d.287, effective 8/7/2006.
See: 38 N.J.R. 1627(a), 38 N.J.R. 3160(a).
In (a), substituted "10 days after publication of the notice as set forth above" for "the time set forth in the notice published pursuant to N.J.A.C. 3:1-2.6"; in (b)4, substituted "requests" for "applies"; in (e), substituted "within" for "until"; in the introductory paragraph of (f), substituted "branch applications" for "applications for branch application"; in (f)1, inserted "in accordance with this section"; in (f)2, inserted "Commissioner finds that the"; and in (h), deleted "communication terminal branch," preceding "auxiliary".

N.J. Admin. Code § 3:1-2.9 Insufficiency of data in support of application; hearing

(a) In any matter where the Department shall find that the applicant or objector has not filed sufficient data, information or material in support of or in opposition to a branch application or a charter application, the applicant or objector may be required to file supplementary data, information or material, or be subject to dismissal of the application or objection.

(b) All papers required to be filed shall be received in the Department by close of business on the date due. If the due date falls on a weekend or holiday then the filing shall be effected by close of business on the very next business day. Upon good cause shown, extensions of time within which to file must be considered if requested in writing with notice to all parties at least five days prior to due date.

History

Recodified from N.J.A.C. 3:1-2.8 and Amended by R.1992 d.483, effective 12/7/1992.
See: 24 New Jersey Register 3034(a), 24 New Jersey Register 4341(a).
Revised (a); prior 2.8 "Notice of oral presentation" repealed.
Recodified from N.J.A.C. 3:1-2.8 by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former N.J.A.C. 3:1-2.9, "Oral presentations", recodified to N.J.A.C. 3:1-2.10.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Amended by R.2006 d.287, effective 8/7/2006.
See: 38 N.J.R. 1627(a), 38 N.J.R. 3160(a).
In (b), substituted "shall" for "must" two times.

N.J. Admin. Code § 3:1-2.10 Oral presentations

(a) If there is to be oral presentation, the Department shall notify the applicant and objector, if any, of the date, time, place and nature of the proceeding.

(b) Any oral presentation pursuant to the subchapter may be held before the Commissioner, or his or her designee, as presiding officer.

(d) The hearing officer, if designated by the Commissioner pursuant to N.J.A.C. 3:1-2.7(g), or where an oral presentation is conducted pursuant to N.J.A.C. 3:1-2.8, may limit the time for any oral presentation as deemed necessary to afford all objectors appearing an opportunity to present oral testimony, consistent with the need for an orderly hearing to be concluded within one business day.

History

Amended by R.1992 d.483, effective 12/7/1992.
See: 24 New Jersey Register 3034(a), 24 New Jersey Register 4341(a).
Added new (a); redesignated existing (a)-(d) as (b)-(e).
Recodified from N.J.A.C. 3:1-2.9 by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former N.J.A.C. 3:1-2.10, "Failure of party requesting oral presentation to appear", recodified to N.J.A.C. 3:1-2.11.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (b), substituted "his or her designee, as presiding officer" for "before any deputy commissioner, regulatory officer or any employee of the Department authorized by the Commissioner".
Amended by R.2006 d.287, effective 8/7/2006.
See: 38 N.J.R. 1627(a), 38 N.J.R. 3160(a).
In (c), deleted "unless the Commissioner shall determine that a private presentation would be in the public interest" from the end; deleted former (d) and (e); and inserted present (d).

N.J. Admin. Code § 3:1-2.11 Failure of party requesting oral presentation to appear

When the party requesting the oral presentation or having notified the Department of an intent to appear at a charter hearing fails to appear at a scheduled proceeding without sufficient reason therefor, such failure to appear shall be treated as a withdrawal of the objection and/or the request for an oral presentation. In the event that a party fails to appear at an oral presentation, any fees paid shall be retained by the State.

History

Recodified from N.J.A.C. 3:1-2.10 by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former N.J.A.C. 3:1-2.11, "Minibranches; space limitation", recodified to N.J.A.C. 3:1-2.12.

N.J. Admin. Code § 3:1-2.12 Minibranches; space limitation

(a) For the purpose of N.J.S.A. 17:9A-1(16), a bank shall be deemed to occupy the sum of the enclosed areas which it has leased or purchased in conjunction with an application to establish a minibranch, subject to the exceptions in (c) below.

(b) Occupied space shall include all enclosed customer, teller, work, storage, platform and employee lounge areas.

(c) Occupied space shall not include outside facilities such as drive-up or walk-up windows, apparatus or space; common entrance ways or areas which are shared with one or more other business entities; or restroom facilities.

(d) Applications for minibranches which occupy in excess of 500 square feet will be denied. The applicant for a minibranch shall have the burden of establishing that 500 or less square feet will be occupied.

History

Recodified from N.J.A.C. 3:1-2.11 by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former N.J.A.C. 3:1-2.12, "Prehearing conference", recodified to N.J.A.C. 3:1-2.13.

N.J. Admin. Code § 3:1-2.13 Prehearing conference

(a) Prior to any hearing, or oral presentation, the hearing officer may, in his or her discretion, direct all parties and counsel to appear before him or her for a prehearing conference for any or all of the following purposes:

Simplification and clarification of the issues;
Admission and stipulations of fact and of the contents and authenticity of documents; and
Such other matters as may aid in the orderly disposition of the proceeding, including disclosure of the names of witnesses and of documents or in (b) below.

(b) Such conference, in the discretion of the hearing officer, need not be recorded, but the hearing officer shall enter in the record an order signed by the parties which recites the results of the conference. Such order, a copy of which shall be furnished to each party, shall include the hearing officer's rulings upon matters considered at the conference, together with appropriate directions, if any, to the parties; and such order shall control the subsequent course of the proceedings unless notified at the oral presentation for good cause shown by appropriate order of the hearing officer.

(c) Meetings called by the Department with the applicant for purposes of clarifying issues raised in an application shall not constitute a "prehearing conference" pursuant to (a) and (b) above.

History

Recodified from N.J.A.C. 3:1-2.12 by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former N.J.A.C. 3:1-2.13"Procedure for oral presentation", recodified to N.J.A.C. 3:1-2.14.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Substituted "presiding" for "regulatory" throughout.
Amended by R.2006 d.287, effective 8/7/2006.
See: 38 N.J.R. 1627(a), 38 N.J.R. 3160(a).
Substituted "hearing" for "presiding" once in (a) and throughout (b); and added (c).

N.J. Admin. Code § 3:1-2.14 Procedure for oral presentation

(a) Both applicant and objector may raise issues and present information only if same have been affirmatively raised in the application, the objection, or the comprehensive objection. All other matters will be excluded unless the hearing officer, if designated, rules otherwise, and then only for good cause shown.

(b) All studies, reports or the like may be offered only if previously submitted to the Department and the applicant or objector, as applicable, pursuant to the hearing officer's direction.

(c) The applicant and the objector shall each be permitted to make an opening statement, stating precisely what information they will present. The applicant and participants may then present witnesses, materials and data. Questions may be addressed to the applicants, objectors and witnesses after each of their presentations by the hearing officer or Department hearing panel. Witnesses shall be sworn. Cross-examination shall be permitted in contested cases in accordance with N.J.S.A. 52:14B-10.

(d) A verbatim transcript shall be made of all hearings conducted at the Department. The applicant shall arrange for a stenographer for the hearing. The applicant and objectors shall bear a pro rata share of the transcript costs for the transcripts required by the Department and all other regulatory agencies requesting same. Copies of the transcript may be obtained directly from the stenographic service that created the transcript. In the alternative, a copy of the transcript will be available for inspection at the Department's offices. Copies of the transcript shall not be made by the Department.

History

Recodified from N.J.A.C. 3:1-2.13 by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former section, "Priority", repealed.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (c), substituted "presiding" for "regulatory".
Amended by R.2006 d.287, effective 8/7/2006.
See: 38 N.J.R. 1627(a), 38 N.J.R. 3160(a).
Rewrote the section.

N.J. Admin. Code § 3:1-2.15 Closing of branch offices

(a) A bank, savings bank or savings and loan association shall notify the Department not less than 30 days before closing a full branch office. The institution shall include in this notice the following:

The name of the institution and the location of its principal office;
The location of the branch office which will be closed;
The prospective date of closing;
A statement of reasons leading to the decision to close the branch;
A map of the general area served by the branch showing all remaining branches of State or Federally chartered banks, savings banks and savings and loan associations within such area; and
A statement indicating the effect the branch closing will have on the availability of financial services in the area.

(b) If a bank, savings bank or savings and loan association acquires a branch or deposits of a branch from the Federal Deposit Insurance Corporation or has an option to purchase a branch, and closes it within 180 days, or if it sells a branch to another depository which operates the office as a branch, it may comply with this rule by filing a Certificate of Discontinuance with the Commissioner.

(c) A bank, savings bank or savings and loan association may submit to the Department a copy of the branch closing notice filed with its Federal regulator in lieu of the filings required by (a)1 through 4 above.

(d) Notice requirements for closing of branch offices are as follows:

Beginning within 10 calendar days after notification to the Department, the bank, savings bank or savings and loan association shall publish notice of the proposed closing once a week for two successive weeks in a newspaper designated by the Commissioner, which is published and circulated in the municipality in which said branch is to be closed, or if there be no such newspaper, then in a newspaper of general circulation in the municipality. The institution shall include in the notice the name of the institution, the location of the branch office which will be closed and the prospective date of closing, the location of the depository's nearest branch office, and a statement indicating that all comments to the closing of the branch may be made to the institution and to the Department of Banking, along with the mailing address of the Department and the institution.

A bank, savings bank or savings and loan association which notifies its customers of the branch closing in accordance with Federal law is exempt from the publication requirement in (d)1 above.
For at least 30 days prior to the branch closing, the bank, savings bank or savings and loan association shall conspicuously post notice of the proposed branch closing in the branch to be closed. This notice in the branch shall contain at least the prospective date of closing, the location of the depository's nearest branch office, and a statement indicating that all comments regarding the closing of the branch may be made to the institution and to the Department along with the mailing address of the institution and the Department.
The notice requirements of this subsection shall not apply to a branch relocation within the same neighborhood where the customers served by the closed branch would be substantially unaffected by the move. In addition, the notice requirements of this subsection shall not apply to a consolidation of branches after a merger or acquisition if the branches are located in the same neighborhood and the nature of the business or customers served is not affected.

(e) If the Commissioner determines that there are valid concerns regarding the effect of the closing upon the local community, the Commissioner shall be authorized to conduct such meetings with the institution closing the branch, and with banks, savings banks, savings and loan associations, community leaders and others, as are necessary in his or her judgment to explore the effect of the branch closing on the community and the possibility of replacing such branch office with other adequate facilities.

(f) The Commissioner may suspend the notice requirements of this rule in the event of an emergency or a supervisory merger or acquisition, or when otherwise in the public interest.

(g) Banks, savings banks and savings and loan associations shall maintain a file in their principal office which is open to the public and which contains a description of any meetings or hearings which occurred pursuant to this section in the past two years.

History

Repealed by R.1988 d.472, effective 10/3/1988.
See: 20 New Jersey Register 697(a), 20 New Jersey Register 2450(a).
Section "Fees; conversion from mutual to capital stock association" repealed.
New Rule, R.1991 d.392, effective 8/5/1991.
See: 23 New Jersey Register 801(a), 23 New Jersey Register 2305(a).
Amended by R.1991 d.523, effective 10/21/1991.
See: 23 New Jersey Register 2208(b), 23 New Jersey Register 3133(b).
Posting of closure notice in branch offices required; maintenance of file for public inspection, new (e).
Amended by R.1994 d.318, effective 7/5/1994.
See: 26 New Jersey Register 883(b), 26 New Jersey Register 2779(a).
Recodified from N.J.A.C. 3:1-2.17 and amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former section, "Population", repealed.
Recodified from N.J.A.C. 3:1-2.16 and amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (b), deleted "Resolution Trust Corporation or the" preceding "Federal Deposit Insurance Corporation"; in (d)3, substituted "regarding" for "to", "institution" for "Department" and "Department" for "institution". Former N.J.A.C. 3:1-2.15, Relaxation or dispensation of requirements of subchapter, repealed.
Amended by R.2006 d.287, effective 8/7/2006.
See: 38 N.J.R. 1627(a), 38 N.J.R. 3160(a).
In (b), deleted "along with the required fee" from the end; in (d)1, substituted "to" for "of" following "notification"; and in (f), substituted "of" for "on" following "requirements".

N.J. Admin. Code § 3:1-2.16 Officially recognized data sources

(a) The Department shall take official notice of one or more of the following data sources to test the accuracy of data submitted in connection with applications and objections, to resolve factual discrepancies and to weigh the accuracy, reasonableness, and applicability of documentary and oral evidence before it:

United States Department of Commerce, Bureau of the Census, 4700 Silver Hill Road, Suitland, MD 20746, www.census.gov, Census of Housing (published decennially);
United States Department of Commerce, Bureau of the Census, 4700 Silver Hill Road, Suitland, MD 20746, www.census.gov, Census of Population (published decennially);

United States Department of Commerce, Bureau of the Census, 4700 Silver Hill Road, Suitland, MD 20746, www.census.gov, Census of Business (published every five years);

United States Department of Commerce, Bureau of the Census, 4700 Silver Hill Road, Suitland, MD 20746, www.census.gov, Census of Manufacturers (published every five years);
Population Estimates for New Jersey--Official State Estimates, New Jersey Department of Labor and Workforce Development, PO Box 056, Trenton, NJ 08625-0056, www.state.nj.us/labor/lra (published annually);
United States Department of Commerce, Bureau of the Census, 4700 Silver Hill Road, Suitland, MD 20746, www.state.nj.us/dca/lgs, Construction Review (published monthly);
New Jersey Department of Community Affairs, Division of Local Government Services, PO Box 800, Trenton, NJ, 08625, http://www.state.nj.us/dca/lgs, Annual Report (published annually);
New Jersey Department of Labor and Workforce Development, Division of Labor Planning and Analysis, PO Box 056, Trenton, NJ 08625-0056, www.state.nj.us/labor/lra, State of New Jersey-Residential Construction Authorized by Building Permits (published annually and available also on a monthly basis);
United States Department of Commerce, Bureau of the Census, 4700 Silver Hill Road, Suitland, MD 20746, www.census.gov, Current Population Reports (published monthly);
United States Internal Revenue Service, 31 Hopkins Plaza, Baltimore, MD 21203, http://www.irs.ustreas.gov, Statistics of Income (published annually);
New Jersey Department of Community Affairs, Division of Local Government Services, PO Box 800, Trenton, NJ, 08625, http://www.state.nj.us/dca, United States Census Data for New Jersey Townships (provides tables of statistical information from the most recent United States Census paralleling those available for non-townships in printed census reports);
New Jersey Industrial Directory (published annually);
Local zoning ordinances and master plans;
Federal Deposit Insurance Corporation, 20 Exchange Place, New York, NY 10005, www.fdic.gov, Operating Banking Offices (published annually);
Federal Deposit Insurance Corporation, 20 Exchange Place, New York, NY 10005, www.fdic.gov, Bank Operating Statistics (published annually);

Federal Deposit Insurance Corporation, 20 Exchange Place, New York, NY 10005, www.fdic.gov, Changes Among Operating Banks and Branches (published annually);

Federal Deposit Insurance Corporation, 20 Exchange Place, New York, NY 10005, www.fdic.gov, Summary of Deposits in All Commercial and Mutual Savings Banks (published annually);
Federal Home Loan Bank Board, 101 Park Avenue, New York, NY 10178, http://www.fhlbny.com; Summary Savings Accounts by Geographic Area (published annually);
Thomson Financial Publishing, 4709 W. Gulf Road, Skokie, IL 60076, http://www.tfp.com, Polk's World Bank Directory (published semiannually);
Department of Agriculture, PO Box 330, Trenton, NJ 08625-0330, http://www.state.nj.us/agriculture, Soil Conservation Services Studies and Reports;
New Jersey Department of Labor and Workforce Development, Division of Employment Security, PO Box 056, Trenton, NJ 08625-0056, www.state.nj.us/labor/lra, Covered Employment Trends (published annually and available on a monthly basis);
Various County Planning Board Reports, for example, population studies and projections, employment trends, industrial-commercial development studies, and so forth; and
New Jersey Department of Banking and Insurance, PO Box 325, Trenton, NJ 08625-0325, www.state.nj.us/dobi, Annual Report.

(b) Other officially noticeable data will be considered when applicable and relevant.

(c) Any applicant or objector(s) shall, simultaneously with the filing of an application or objection, indicate which of the foregoing sources they object to and detail in writing their reasons for objecting.

History

Amended by 47 N.J.R. 709(a), effective 4/6/2015.

N.J. Admin. Code § 3:1-2.17 Applications; copies

An original and one copy of all submissions relative to any application shall be filed with the Department.

History

Recodified from N.J.A.C. 3:1-2.19 by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former N.J.A.C. 3:1-2.18, "Officially recognized data sources", recodified to 3:1-2.17.
Recodified from N.J.A.C. 3:1-2.18 by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Former N.J.A.C. 3:1-2.17, Officially recognized data sources, recodified to N.J.A.C. 3:1-2.16.

N.J. Admin. Code § 3:1-2.18 Charter applications; conditions for approval

(a) The Commissioner shall condition approval of a charter application by a depository on the following factors:

If the depository is authorized to take deposits, on the depository becoming a member of the Federal Deposit Insurance Corporation;
If the depository is a stock institution, it will issue and sell shares of its authorized capital stock in sufficient amount to raise its capital base before commencement of operations to at least the minimum amount set forth in N.J.A.C. 3:1-2.1 9, and will obtain prior approval from the Department for any person purchasing more than five percent of the authorized capital stock.
The depository shall comply with all requirements with respect to loans and transactions involving the depository and its directors, offices and other persons set forth in subtitles 1 and 2 of Title 17 of the New Jersey Statutes Annotated and Title 3 of the New Jersey Administrative Code, including, but not limited to, N.J.S.A. 17:9A-71, 17:9A-72, and N.J.S.A. 17:9A-195, and N.J.A.C. 3:1-11, 3:6-3, 3:6-15, and 3:7-5;
For the first three years after issuance of the certificate of authority, the depository shall obtain prior approval from the Commissioner before installing any person on the board of directors or employing any person with the depository in an executive officer position as defined in N.J.A.C. 3:6-1.1;
For the first three years after issuance of the certificate of authority, the depository shall maintain:

i. A tier I capital-to-assets ratio, as that ratio is defined in 12 C.F.R. § 325.2(k), that is at least eight percent of the bank's total assets unless prior written consent has been received from the Commissioner permitting a lower ratio; and

ii. A fully funded reserve;

The depository shall, during the period from the date of the decision approving the charter application until the date of the commencement of business, provide a monthly report to the Chief Examiner of Applications by the 10th calendar day of the month following the month being reported. The report shall include the following:

i. The depository's progress at raising capital;

ii. The depository's progress with respect to the construction of its facilities;

iii. A status report with respect to acquiring staffing and filling executive positions;

iv. A status report with respect to any other regulatory approvals that the depository is seeking;

v. A status report that summarizes the depository's monthly and total expenditures to date; and

vi. Any other matters that management deems relevant; and

Such other conditions for a specific applicant as the Commissioner identifies as appropriate.

History

Amended by 47 N.J.R. 709(a), effective 4/6/2015.

N.J. Admin. Code § 3:1-2.19 Minimum and maximum stock subscriptions

(a) Each charter application for a depository shall provide for stated capital of at least $ 6,000,000. If the depository is a stock institution, capital shall include at least $ 3,000,000 in capital stock, or such other amount as required by the Commissioner; except that an application for a charter for a trust company, which does not have authority to take deposits, may provide for a stated capital of $ 2,000,000 in capital stock; and except that an application for a charter incident to the purchase of a failed institution or a branch or branches of a failed institution, may provide for stated capital of $ 5,000,000, or more, or six percent of deposits acquired, whichever is greater, with at least $ 2,500,000 in capital stock for a stock institution, so long as the depository agrees to raise additional capital to reach $ 6,000,000 within one year following issuance of the Certificate of Authority while also satisfying the capital requirements set forth in N.J.A.C. 3:4.

(b) The incorporators of a depository shall subscribe to all stock listed as issued on the certificate of incorporation, which shall be at least 25 percent of the total capital required by (a) above.

(c) After a charter application is accepted, the balance of the capital stock, if any, shall be offered to the general public in the area to be served by the depository. The proceeds of such sale shall be placed in escrow and remain in escrow and not released until the bank obtains a Certificate of Authority. The form of the escrow agreement shall be approved by the Department.

(d) On or after May 7, 2007, no individual may subscribe, directly or indirectly (which term shall include, but not be limited to, ownership of a holding company that owns a depository institution, and ownership through the individual's spouse, children, siblings or parents, or business associates acting in concert), for stock in excess of 24.9 percent of the total voting shares of the depository institution, either at formation of the depository or any time subsequent thereto, except where the acquisition is made pursuant to N.J.S.A. 17:9A-411b. Notwithstanding this restriction, the Commissioner may approve the direct or indirect ownership by an individual of more than 24.9 percent of the voting shares of a depository institution if he or she finds that such ownership will not be detrimental to the safety and soundness and proper corporate governance of the depository. In making this determination, the Commissioner shall consider, without limitation, whether:

There is a voting trust for the individual's shares in excess of 24.9 percent and whether there are appropriate rules governing the voting of the trust shares that limit the impact of the ownership in excess of 24.9 percent by providing for the independence of the voting of such shares;
There is a plan by which the individual will reduce his or her ownership to 24.9 percent or less over time;
The individual has experience in banking, and whether his or her involvement in banking institutions demonstrates an appropriate level of expertise in banking;
Management of the depository involved demonstrates an appropriate level of expertise in banking;
There are independent directors on the board, and if so, their percentage membership of the board;
There is a detailed corporate governance plan;
There is a policy in place to take detailed corporate minutes;
There is a policy in place for the recusal of the individual owner on matters affecting his or her personal interests related to the depository; and
There is a policy for review of insider transactions that is independent of the parties involved.

(e) The determination made pursuant to (d) above shall constitute a final agency decision.

History

Amended by R.1984 d.119, eff. 4/16/1984.
See: 16 N.J.R. 174(a), 16 N.J.R. 870(a).
Specific minimums deleted, Commissioner granted greater discretion; (d) deleted.
Amended by R.1991 d.48, effective 2/4/1991.
See: 22 N.J.R. 3425(a), 23 N.J.R. 294(b).
Minimum changed from $ 2,000,000 to $ 7,000,000.
Amended by R.1992 d.483, effective 12/7/1992.
See: 24 N.J.R. 3034(a), 24 N.J.R. 4341(a).
Revised heading and (a)-(c); added (d)-(e).
Amended by R.1993 d.258, effective 6/7/1993.
See: 25 N.J.R. 1033(a), 25 N.J.R. 2248(a).
Revised (a).
Recodified from N.J.A.C. 3:1-2.21 and amended by R.1996 d.483, effective 10/7/1996.
See: 28 N.J.R. 2661(a), 28 N.J.R. 4417(b).
Former N.J.A.C. 3:1-2.20, "Charter applications; conditions for approval", recodified to 3:1-2.19.
Recodified from N.J.A.C. 3:1-2.20 and amended by R.2001 d.112, effective 4/2/2001.
See: 33 N.J.R. 213(a), 33 N.J.R. 1087(a).
Rewrote (c). Former N.J.A.C. 3:1-2.19, Charter applications; conditions for approval, recodified to N.J.A.C. 3:1-2.18.
Amended by R.2002 d.38, effective 2/4/2002.
See: 33 N.J.R. 3598(a), 34 N.J.R. 731(a).
In (a), inserted references to stock institutions and updated capital amounts.
Amended by R.2007 d.130, effective 5/7/2007.
See: 38 N.J.R. 4777(a), 39 N.J.R. 1668(a).
Deleted (d); recodified (e) as (d); rewrote (d); and added new (e).

N.J. Admin. Code § 3:1-2.20 Criteria for branch approval: Public interest

(a) In reaching a determination as to whether an applicant meets the requirement that "the interests of the public will be served to advantage by the establishment of such full branch" as required by N.J.S.A. 17:9A-20(A)(1)(b), the Commissioner shall consider only the following factors:

The availability of the proposed office to the general public or that segment of the public to be served as the case may be;
The presence and experience of a newly-chartered institution or an institution subject to supervisory review by the Department within the trade area of the proposed office;
The conditions set forth in Departmental regulations regarding insider real estate transactions, if any; and
The current financial condition of the applicant, including, but not limited to, capital, asset quality, management, earnings and liquidity. Department files, with respect to the factors contained in this subsection, shall be confidential as required by N.J.S.A. 17:9A-264 and shall not be open or available for review by either the applicant or objectors; and
The Commissioner's determination with respect to these factors shall be a final agency decision.

(b) The number of existing institutions and the ability of existing institutions within the trade area of the proposed office to compete with the applicant shall not form the sole basis for denying the full branch approval.

History

R.1983 d.573, effective 12/5/1983.
See: 15 New Jersey Register 1706(a), 15 New Jersey Register 2032(b).
Recodified from N.J.A.C. 3:1-2.22 by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former N.J.A.C. 3:1-2.21, "Minimum and maximum stock subscriptions", recodified to 3:1-2.20.
Recodified from N.J.A.C. 3:1-2.21 and amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Rewrote (a); in (b), substituted "the sole" for "a" preceding "basis". Former N.J.A.C. 3:1-2.20, Minimum and maximum stock subscriptions, recodified to N.J.A.C. 3:1-2.19.

N.J. Admin. Code § 3:1-2.21 Criteria for branch approval: Compliance with Community Reinvestment Act

In determining whether to approve a branch application, the Commissioner shall consider whether the institution has achieved sufficient compliance with the Community Reinvestment Act of 1977, 12 U.S.C. §§ 2901 et seq.

History

R.1983 d.573, effective 12/5/1983.
See: 15 New Jersey Register 1706(a), 15 New Jersey Register 2032(b).
Recodified from N.J.A.C. 3:1-2.23 and amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former N.J.A.C. 3:1-2.22, "Criteria for branch approval: Public interest", recodified to 3:1-2.21.
Recodified from N.J.A.C. 3:1-2.22 by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Former N.J.A.C. 3:1-2.21, Criteria for branch approval; Public interest, recodified to N.J.A.C. 3:1-2.20.

N.J. Admin. Code § 3:1-2.22 Charter conversions

(a) Applications for conversion from a Federally-chartered depository institution to a State-chartered institution shall not be considered a charter application for purposes of this subchapter. Applications for such a conversion shall be filed in accordance with the requirements set forth in (b) through (d) below.

(b) A Federally-chartered depository that directly or through a predecessor bank, savings bank or association by merger or other reorganization has been in business for at least three years, and which is well capitalized, adequately managed, and if applicable, has received in its most recent examination under the Community Reinvestment Act of 1977, 12 U.S.C. §§ 2901 et seq., a rating of not less than "satisfactory record of meeting community credit needs," or its equivalent, may apply for expedited approval for conversion by filing for such expedited approval with the Commissioner. The application shall include the required filing fee and shall contain:

A certification by the depository, in a form specified by the Commissioner, that includes the following:

i. A statement that the depository meets the criteria set forth in (b) above;

ii. The amount of the required filing fee;

iii. A statement that the depository is entitled to request expedited processing and does request such processing;

iv. The executed certificate of incorporation;

v. A copy of the applicant's business plan for the next succeeding three year period, in the form of the Interagency Model Business Plan Guidelines in use at the time of application, incorporated herein by reference. Copies of the Guidelines may be obtained on the FDIC website at www.fdic.gov;

vi. A plan of conversion;

vii. Biographical forms for each director, in the form of the Interagency Biographical and Financial Information Report in use at the time of application, incorporated herein by reference. Copies of the report may be obtained on the FDIC website at www.fdic.gov. The financial information set forth in the form shall not be required;

viii. Certification from the depository that it has complied with and meets each of the requirements set forth in N.J.S.A. 17:9A-150, 17:12B-224 and 225, and 17:16M-1 et seq., as applicable, with a certification as to each item individually; and

ix. A certified copy of the resolution of the board of directors approving the conversion.

(c) The Commissioner shall issue a decision on an accepted application for expedited processing within 60 days after receipt of a completed application by the Commissioner. For good cause shown, the Commissioner may, prior to the expiration of the 60-day period, and upon written notice to the applicant, extend the time for issuing a decision an additional 60 days.

(d) Where the conversion application does not qualify for an expedited review pursuant to (b) above, the applicant shall file the following information:

All of the information required in (b) above;
A pro forma balance sheet and profit and loss statement which shall project the financial condition and net income or loss of the depository on an annual basis for a period of three years; and

A copy of the application filed with the applicable Federal regulator for the conversion.

(e) A Federally-chartered savings association seeking ultimately to convert to a State-chartered savings bank may file the application for such conversion required under N.J.A.C. 3:32-2 contemporaneously with the application required in this section. The Department shall review and consider the two applications simultaneously.

History

New Rule, R.1986 d.293, effective 7/21/1986.
See: 17 N.J.R. 2487(a), 18 N.J.R. 1453(a).
Recodified from N.J.A.C. 3:1-2.24 by R.1996 d.483, effective 10/7/1996.
See: 28 N.J.R. 2661(a), 28 N.J.R. 4417(b).
Former N.J.A.C. 3:1-2.23, "Criteria for branch approval: Promise of success", recodified to 3:1-2.22.
Recodified from N.J.A.C. 3:1-2.23 and amended by R.2001 d.112, effective 4/2/2001.
See: 33 N.J.R. 213(a), 33 N.J.R. 1087(a).
Rewrote (b); deleted (e). Former N.J.A.C. 3:1-2.22, Criteria for branch approval; Compliance with Community Reinvestment Act, recodified to N.J.A.C. 3:1-2.21.
Repeal and New Rule, R.2006 d.287, effective 8/7/2006.
See: 38 N.J.R. 1627(a), 38 N.J.R. 3160(a).
Section was "Modification of order and/or rehearing".
Administrative correction.
See: 38 N.J.R. 3529(b).

N.J. Admin. Code § 3:1-2.23 Fees; banks and savings banks

(a) A bank or savings bank shall pay to the Commissioner for use of the State the following fees:

| 1. | For filing an application for charter | $ 15,000 | | --- | --- | --- | | 2. | For filing plans of acquisition, per company, per bank or savings bank; the fee is charged if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requestor is subject to assessment | $ 3,000 | | 3. | For the issuance of a certified copy of any certificate of incorporation or merger or plan of reorganization or any other certificate or affidavit filed in the Department, plus $ 2.00 per page if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requester is subject to assessment | $ 25.00 | | 4. | For the issuance of any other approval by the Commissioner, plus per diem charges where applicable; the fee is charged if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requestor is subject to assessment | $ 100.00 | | 5. | For filing for conversion of a Federally-chartered bank to a State-chartered bank | $ 5,000 | | i. In the alternative, for an expedited review | $ 2,500. | |

(b) An out-of-State bank shall pay to the Commissioner for use of the State the following fees:

| 1. | For filing an application to acquire a branch as the first branch in this State | $ 1,500 | | --- | --- | --- | | 2. | For filing an application for approval of a change of location of a New Jersey branch office as a part of an application to enter the State through acquisition | $ 100.00 | | 3. | For the issuance of any other approval by the Commissioner, plus per diem charges where applicable | $ 100.00 |

(c) In addition to the fees in (a), a per diem charge may be assessed when a special investigation of a filing is required.

(d) The Department shall, upon written request, furnish verification of a State-chartered bank, savings bank or savings and loan's authority to conduct business in New Jersey. The fee shall be $ 25.00 per verification if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requester is subject to assessment.

History

Emergency New Rule, R.1989 d.406, effective 7/3/1989 (expires September 1, 1989).
See: 21 N.J.R. 2397(a).
New Rule, R.1989 d.449, effective 8/21/1989.
See: 21 N.J.R. 1601(b), 21 N.J.R. 2473(b).
Amended by R.1991 d.244, effective 5/6/1991.
See: 23 N.J.R. 642(a), 23 N.J.R. 1408(b).
Change of term at (a)4, from "communication terminal branch office" to "automated teller machine."
Amended by R.1991 d.294, effective 6/17/1991.
See: 23 N.J.R. 929(b), 23 N.J.R. 1919(b).
Added fee for conversion from a savings bank to an association.
Amended by R.1994 d.208, effective 5/2/1994.
See: 26 N.J.R. 286(a), 26 N.J.R. 1827(a).
Amended by R.1994 d.318, effective 7/5/1994.
See: 26 N.J.R. 883(b), 26 N.J.R. 2779(a).
Recodified from N.J.A.C. 3:1-2.25 and amended by R.1996 d.483, effective 10/7/1996.
See: 28 N.J.R. 2661(a), 28 N.J.R. 4417(b).
Former N.J.A.C. 3:1-2.24, "Modification of Order and/or rehearing", recodified to 3:1-2.23.
Recodified from N.J.A.C. 3:1-2.24 and amended by R.2001 d.112, effective 4/2/2001.
See: 33 N.J.R. 213(a), 33 N.J.R. 1087(a).
In (a), added 2ii; added (d). Former N.J.A.C. 3:1-2.23, Modification of Order and/or rehearing, recodified to N.J.A.C. 3:1-2.22.
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Deleted former (a)2 through (a)7 and recodified (a)8 as (a)2, inserted "; the fee is charged if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requestor is subject to assessment" in (a)2; deleted former (a)9 through (a)16 and recodified (a)17 as (a)3, inserted "if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requester is subject to assessment" in (a)3, deleted former (a)18 and (a)19, recodified (a)20 as (a)4 and inserted "; the fee is charged if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requestor is subject to assessment" following "applicable" in (a)4; deleted (a)21 and (a)22; in (b)2, inserted "as a part of an application to enter the State through acquisition"; and in (d), added "if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requester is subject to assessment" at the end.
Amended by R.2006 d.287, effective 8/7/2006.
See: 38 N.J.R. 1627(a), 38 N.J.R. 3160(a).
Added (a)5.

N.J. Admin. Code § 3:1-2.24 Fees, State associations

(a) Every State association shall pay to the Commissioner the following fees:

| 1. | Application to establish a mutual association | $ 7,500 | | --- | --- | --- | | 2. | Application to establish a stock association | $ 15,000 | | 3. | Certification by the Commissioner of papers or records on file with the Department, plus $ 2.00 per page for each certification if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requester is subject to assessment | $ 25,00 |

(b) Each out-of-State association shall pay to the Commissioner the following fees:

| 1. | For filing an application to acquire a branch, if the branch would be the out-of-State association's first branch in this State | $ 1,500 | | --- | --- | --- | | 2. | For filing an application for approval of a change of location of a New Jersey branch office as part of an application to open, occupy or maintain a branch | $ 100.00 | | 3. | For the issuance or any other approval by the Commissioner, plus per diem charges where applicable | $ 100.00 |

(c) In addition to the fees in (a) above, a per diem charge may be assessed when a special investigation of a filing is required.

History

Emergency New Rule, R.1989 d.406, effective 7/3/1989 (expires September 1, 1989).
See: 21 N.J.R. 2397(a).
New Rule, R.1989 d.449, effective 8/21/1989.
See: 21 N.J.R. 1601(b), 21 N.J.R. 2473(b).
Amended by R.1991 d.244, effective 5/6/1991.
See: 23 N.J.R. 642(a), 23 N.J.R. 1408(b).
Added new (a)7, establishing a $ 500.00 fee for ATM application; recodified remaining paragraphs.
Amended by R.1991 d.294, effective 6/17/1991.
See: 23 N.J.R. 929(b), 23 N.J.R. 1919(b).
Added fee for conversion from an association to a savings bank.
Amended by R.1994 d.208, effective 5/2/1994.
See: 26 N.J.R. 286(a), 26 N.J.R. 1827(a).
Amended by R.1994 d.318, effective 7/5/1994.
See: 26 N.J.R. 883(b), 26 N.J.R. 2779(a).
Recodified from N.J.A.C. 3:1-2.26 and amended by R.1996 d.483, effective 10/7/1996.
See: 28 N.J.R. 2661(a), 28 N.J.R. 4417(b).
Former N.J.A.C. 3:1-2.25, "Fees; banks and savings banks", recodified to 3:1-2.24.
Recodified from N.J.A.C. 3:1-2.25 and amended by R.2001 d.112, effective 4/2/2001.
See: 33 N.J.R. 213(a), 33 N.J.R. 1087(a).
In (a), added 6ii. Former N.J.A.C. 3:1-2.24, Fees; banks and savings banks, recodified to N.J.A.C. 3:1-2.23.
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Deleted former (a)3 through (a)15 and recodified (a)16 as (a)3; inserted "if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requester is subject to assessment" in (a)3, and deleted (a)17 through (a)21; substituted "Each" for "Every" in introductory paragraph of (b), added present (b)1, recodified former (b)1 and (b)2 as b(2) and (b)3 and inserted "as part of an application to open, occupy or maintain a branch" in (b)2.

N.J. Admin. Code § 3:1-2.25 Relaxation or dispensation of requirements of subchapter

Any procedural requirements of this subchapter may be relaxed or dispensed with by the Commissioner, in his or her discretion, in any case where strict adherence thereto may be deemed inappropriate or unnecessary or may result in injustice.

History

New Rule, R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Former N.J.A.C. 3:1-2.25, Fees, State associations, recodified to N.J.A.C. 3:1-2.24.

N.J. Admin. Code § 3:1-2.26 Reserved

History

Recodified to N.J.A.C. 3:1-2.25 by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Section was "Fees; State associations".

Subchapter 3 MORTGAGE LOANS IN DISASTER AREAS

N.J. Admin. Code § 3:1-3.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Commissioner" means the Commissioner of the Department of Banking and Insurance of the State of New Jersey or his or her duly authorized deputy or representative.

"Department" means the New Jersey Department of Banking and Insurance.

"Disaster area" means any area of the State of New Jersey which has been proclaimed to be a disaster by the President of the United States or the Governor of New Jersey, or by any official lawfully succeeding to their respective duties or duly authorized to act for them.

"Financial institution" means any bank, savings bank, savings and loan association, or insurance company that is organized under the laws of this State or is authorized to do business and is doing business under the laws of this State and that is subject to the supervision of the Department of Banking and Insurance of the State of New Jersey.

"Mortgage loan" means any loan made by a financial institution which is secured by a mortgage constituting a lien upon real property or upon a leasehold interest in the fee of real property. Such a mortgage loan may be an existing mortgage loan or part interest thereof purchased or otherwise acquired by a financial institution constituting a lien upon real property or upon a leasehold interest in the fee of real property.

"Period of emergency" means a period of time terminating one year from the date upon which an area was proclaimed to be a disaster area. Such period of time may be extended for not more than six months from the termination date thereof if the Commissioner shall find that emergency conditions affecting mortgage loans still prevail within a disaster area.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In "Commissioner", neutralized gender reference; added "Department"; in "Financial institution", deleted "building and loan association" preceding "or insurance company" and substituted "that" for "which" throughout.

N.J. Admin. Code § 3:1-3.2 Duties of Commissioner

(a) When any area of this State has been proclaimed to be a disaster area, the Commissioner shall investigate and review conditions in the disaster area to determine the extent of destruction and damage to real property and to determine whether or not real property which has been destroyed, damaged or materially affected by the disaster is subject to mortgage liens securing mortgage loans by any financial institution.

(b) If the Commissioner determines that real property within the disaster area, constituting the security of mortgage loans held by financial institutions has been destroyed, damaged or materially affected by the disaster, he may authorize financial institutions to exercise emergency mortgage powers as enumerated in N.J.A.C. 3:1-3.3 Emergency mortgage powers exercisable by financial institutions.

(c) The Commissioner shall authorize the exercise of such emergency mortgage powers by declaring this subchapter to be immediately operative and effective and said declaration shall be announced publicly and circulated in newspapers and financial publications throughout the State.

(d) When any financial institution shall exercise or use any emergency mortgage powers, as enumerated in this subchapter, the Commissioner shall ascertain and determine in connection with and as part of the usual examinations and audits conducted by the Department concerning the affairs, conditions and status of such financial institutions, whether such financial institution has complied with the requirements enumerated in N.J.A.C. 3:1-3.3.

History

Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Internal cites corrected.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).

N.J. Admin. Code § 3:1-3.3 Emergency mortgage powers exercisable by financial institutions

(a) When at any time the Commissioner, pursuant to N.J.A.C. 3:1-3.2, has declared that this Subchapter shall become operative and effective, a financial institution may exercise and use the emergency mortgage powers enumerated in (b) below.

(b) The emergency mortgage powers which a financial institution may exercise and use pursuant to this subchapter shall consist only of the following:

If the security of a mortgage loan, when made originally, consisted of real property improved by a one-family dwelling, an additional mortgage loan may be made. The total of such additional mortgage loan, together with the unpaid or unamortized principal balance due upon the existing mortgage loan or loans shall not exceed 160 percent of the appraised value of the real property, according to the appraisal certification on file with the financial institution.
If the security of a mortgage loan, when made originally, consisted of real property improved by either a two-family dwelling, three-family dwelling, or four-family dwelling, an additional mortgage loan may be made. The total of such additional mortgage loan, together with the unpaid or unamortized principal balance due upon the existing mortgage loan or loans shall not exceed 100 percent of the appraised value of the real property according to the appraisal certification on file with the financial institution.
If a mortgage loan is secured by real property which, when originally made was represented by improvements other than those described in (b)1 and 2 above, a financial institution may make an additional mortgage loan. The total of any such additional mortgage loan, together with the unpaid or unamortized principal balance due upon the existing mortgage loan or loans, shall not exceed 133 1/3 percent of the appraised value according to the appraisal certification on file with the financial institution.
When any financial institution holds an existing mortgage loan which by its terms permits additional sums to be advanced or loaned in limited amounts, such financial institution may make additional loans or advances in any amounts, notwithstanding any limitation imposed in the original mortgage instrument; provided, however, that the total of such additional loans or advances shall not exceed the difference between the original principal amount of the existing mortgage loan and the unamortized or unpaid balance thereof.
A financial institution may make a mortgage loan secured by real property which is subject to an existing mortgage loan or loans held by another financial institution and such mortgage loan shall be subject to all of the restrictions, limitations and conditions provided herein.
A financial institution may reduce the rate of interest on mortgage loans secured by real property within a disaster area.
A financial institution may extend the term within which any mortgage loan must be amortized or paid for additional periods of time but in no event shall such an extension exceed a period of time twice the term of the original mortgage loan.

History

Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Corrected internal cites.

N.J. Admin. Code § 3:1-3.4 Preliminary requirements

(a) Before any financial institution may exercise or use any of the emergency powers as enumerated in this subchapter, said financial institution must comply with the following requirements:

It must obtain and file, a certification to be signed by an appraiser as required by N.J.A.C. 3:1-8.2, which shall set forth the amount and extent of the damage or destruction sustained to the real property which is the security of any existing or proposed mortgage loan, a finding that such damage or destruction was caused by the disaster, and the amount required to pay for the cost of any construction, rehabilitation, alteration, repair or improvement of such real property.
It must obtain from the borrower or mortgagor a sworn statement which shall set forth the proceeds of any mortgage loan shall be used to pay the cost of construction, rehabilitation, alteration, repair or improvement of the real property.
Such certifications and statements shall be kept on file with the financial institution.

(b) In addition to the requirements enumerated in (a)1 and 2 above, a financial institution, prior to the exercise or use of any emergency mortgage powers, shall undertake and complete any and all investigations, appraisals and other precautions which it would ordinarily require in making a mortgage loan not otherwise provided by N.J.S.A. 17:2A-1 et seq., and this Subchapter.

History

Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Corrected internal cites.
Amended by R.1996 d.168, effective 4/1/1996.
See: 28 New Jersey Register 3(a), 28 New Jersey Register 1830(a).
In (a)1 deleted requirement for signature of second person.

N.J. Admin. Code § 3:1-3.5 Limitations

(a) Notwithstanding any other provision of this subchapter, no financial institution shall exercise or use any emergency mortgage powers as enumerated herein unless it complies with the following limitations:

The amount of funds which a bank may invest or advance in any mortgage loan made pursuant to this subchapter shall not exceed 10 percent of its aggregate capital stock, surplus and undivided profits accounts.
The amount of funds which a savings bank may invest or advance in any mortgage loan made pursuant to this subchapter shall not exceed 10 percent of its surplus account.
The amount of funds, which a savings and loan may invest or advance in any mortgage loan made pursuant to this subchapter shall not exceed one percent of capital.
The amount of funds, which an insurance company may invest or advance in any mortgage loan made pursuant to this subchapter shall not exceed that permitted under the insurance laws of this State.

(b) No financial institution investing or advancing any funds in connection with mortgage loans made pursuant to this subchapter may exclude the principal balances owing thereon in determining the aggregate amount of its assets that it may invest in all mortgage loans as prescribed by applicable statutes.

(c) No financial institution shall be authorized or permitted to exercise or use any emergency mortgage power enumerated herein in connection with any real property or improvement thereon not destroyed, damaged or materially affected by the disaster itself.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).

Subchapter 6 FEES

N.J. Admin. Code § 3:1-6.1 Reserved

History

Repealed by R.2006 d.233, effective 6/19/2005.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Section was "Definitions".

N.J. Admin. Code § 3:1-6.2 Reserved

History

Repealed by R.2006 d.233, effective 6/19/2005.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Section was "Assessments".

N.J. Admin. Code § 3:1-6.3 Reserved

History

Repealed by R.2006 d.233, effective 6/19/2005.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Section was "Payment dates".

N.J. Admin. Code § 3:1-6.4 Reserved

History

Repealed by R.2006 d.233, effective 6/19/2005.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Section was "Effective date".

N.J. Admin. Code § 3:1-6.5 Annual review

The fees assessed by this subchapter shall be reviewed at least annually and if necessary shall be increased or decreased in accordance with the services performed by the Department.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Substituted "subchapter" for "regulation".

N.J. Admin. Code § 3:1-6.6 Examination charge and per diem rate

(a) The individual per hour per person examination charge for an examination of a person not assessed under N.J.A.C. 3:5 shall be $ 42.00, plus $ 15.00 per day for travel expenses for in-State travel. This examination charge is also referred to as the per diem rate. The fee for out-of-State travel shall approximate the cost of this travel.

(b) The Department shall bill examination charges in increments of one-half hour.

History

New Rule, R.1991 d.195, effective 4/5/1991.
See: 23 New Jersey Register 245(a), 23 New Jersey Register 1125(a).
Amended by R.1991 d.350, effective 7/1/1991.
See: 23 New Jersey Register 1073(b), 23 New Jersey Register 2028(a).
Increased examination fees on trust companies and trust departments from $ 300.00 to $ 325.00.
Amended by R.1992 d.250, effective 6/15/1992.
See: 24 New Jersey Register 1420(a), 24 New Jersey Register 2242(a).
Amended by R.1996 d.384, effective 8/5/1996.
See: 28 New Jersey Register 2106(a), 28 New Jersey Register 3780(a).
Changed from per diem to per hour charges.
Amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Section was "Examination charge". Deleted former (a), recodified (b) and (c) as (a) and (b); in (a), substituted "a licensee, credit union, trust company, out-of-State bank, out-of-State association or trust department of a bank, savings bank or savings and loan association, or any person not specified in this section" with "a person not assessed under N.J.A.C. 3:5" and inserted the second sentence; and substituted "examination charges" with "institutions in (a) and (b) above" in (b).

N.J. Admin. Code § 3:1-6.7 Failure to pay fees or examination charges

(a) If a person pays an examination charge, application fee, or any other fee or charge, other than an assessment made under N.J.A.C. 3:5, with a check which is returned for insufficient funds or is not paid for any other reason, the Department shall advise the person by letter. The person shall have 20 days from the date of such letter to provide the Department with a certified or cashier's check payable to the Treasurer, State of New Jersey for the amount of the dishonored check plus $ 10.00. If the Department does not receive a certified or cashier's check within 20 days of the date of this letter, the Department shall suspend the license of the person or the authority of the person to conduct business in this State until payment by certified or cashier's check is received. N.J.A.C. 3:1-7.6(b) shall apply to all returned checks submitted in payment of assessments imposed pursuant to N.J.A.C. 3:5.

(b) If a person fails to pay an examination charge within 30 days after the bill is sent, the Department shall send a second billing. The person shall have 20 days from the date of such letter to provide the Department with payment of the fee. If the person fails to provide such payment within 20 days, the Department shall suspend the license of the person or the authority of the person to conduct business in this State until payment is received.

(c) Prior to a suspension set forth in (a) or (b) above, the person may request a hearing pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1. The person shall place the disputed amount in escrow pending disposition of the hearing and shall provide proof of same to the Department.

History

New Rule, R.1995 d.208, effective 4/17/1995.
See: 27 New Jersey Register 20(b), 27 New Jersey Register 1576(a).
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a), added "Treasurer," preceding "State of New Jersey" in the second sentence; added (c).
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Section was "Failure to pay license and examination charges". Substituted "person" for "licensee" throughout; in (a), deleted "license fee" following "application fee," ; inserted ", other than an assessment made under N.J.A.C. 3:5", and added the last sentence; substituted "person or the authority of the person to conduct business in this State" for "licensee" in the next to last sentence of (a) and the last sentence of (b); and substituted "the person" for "a licensee" in (c).
Administrative Correction.
See: 38 N.J.R. 3016(a).

Subchapter 7 MISCELLANEOUS

N.J. Admin. Code § 3:1-7.1 Name change

A licensee who makes any change in name shall, within 10 days of such change, submit written proof of the name change to the Commissioner, and shall surrender its license or licenses for issuance of a new license or licenses reflecting the change. The licensee shall submit evidence of the name change in the form of a copy of the amended certificate of incorporation, alternate name registration, or amended certificate of authority bearing the dated filing stamp of the Department of Treasury, Division of Revenue or a copy of the trade name certificate filed with the office of the county clerk of the county in which the business is located. Within 30 days of receipt of the notice of name change, and all documentation necessary to effectuate the change, the Commissioner shall issue a new license that reflects the change. While the licensee is awaiting the issuance of the license, the licensee may continue in business, provided that all documents are supplied, unless the licensee receives a notice of suspension or revocation, or unless the licensing period, if any, expires.

History

Emergency amendment, R.1989 d.407, effective 7/3/1989 (expires September 1, 1989).
See: 21 New Jersey Register 2398(a).
Fees raised at (a)1; mortgage banker fees added at (a)1xiii.
Branch office fees added at (b).
Adopted concurrent proposal R.1989 d.510, effective 8/31/1989.
See: 21 New Jersey Register 2398(a), 21 New Jersey Register 3082(a).
Provisions of emergency amendment R.1989 d.407 readopted without change.
Amended by R.1997 d.257, effective 6/16/1997.
See: 29 New Jersey Register 1489(a), 29 New Jersey Register 2641(a).
In (a), changed time for notification of name change from 30 days to 10 days, specified the legal evidence that must accompany the notification, allowed issuance of a new license as alternative to endorsement; and added last two sentences.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Rewrote (a).
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Rewrote the section.

N.J. Admin. Code § 3:1-7.2 Duplicate licenses and certificates

(a) A licensee may request a duplicate license or certificate when the original license or certificate issued has been lost or destroyed.

(b) The request for the issuance of such duplicate license or certificate shall be made on forms available from the Department.

History

Emergency amendment, R.1989 d.407, effective 7/3/1989 (expires September 1, 1989).
See: 21 New Jersey Register 2398(a).
Fees increased; mortgage banker or broker added.
Adopted concurrent proposal R.1989 d.510, effective 8/31/1989.
See: 21 New Jersey Register 2398(a), 21 New Jersey Register 3082(a).
Provisions of emergency amendment R.1989 d.407 readopted without change.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Rewrote (b) and (c).
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Deleted (c).

N.J. Admin. Code § 3:1-7.3 Requests for certificate of standing, licensee verification, licensing statutes and licensee listings

(a) The Department shall furnish, upon written request, a certificate of standing with seal for a licensee. The fee shall be $ 30.00 per certificate if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requester is subject to assessment.

(b) The Department shall furnish upon written request a licensee verification, indicating if a person or entity is licensed and its main office. The fee shall be $ 10.00 per verification if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requester is subject to assessment.

(c) The Department shall furnish, upon written request, a copy of licensing statutes or licensee listings. The fee shall be $ 0.75 per page for the first 10 pages, $ 0.50 per page for the 11th to 20th pages and $ 0.25 per page for all pages over 20 or as otherwise established by N.J.S.A. 47:1A-1 et seq.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Rewrote the section.
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Added "if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requester is subject to assessment" in (a) and (b).

N.J. Admin. Code § 3:1-7.4 Address and official e-mail address change

(a) Each licensee referenced in N.J.A.C. 3:23-2.1 that changes a licensed business address at any time shall, within 10 days of the change, submit information relative to the address change to the Commissioner, and surrender the affected license or licenses; except that pawnbrokers, check cashers and insurance premium finance companies shall comply with the provisions of N.J.A.C. 3:16-1.6, 3:24-1.5(h), or N.J.S.A. 17:16D-4, respectively. Licensees submitting a notice of change of address pursuant to this section shall submit their license or licenses for the issuance of the new license reflecting the change. Within 30 days of receipt of the notice of change of address and all documentation necessary to effectuate the change, the Commissioner shall issue a new license or licenses that reflect the change. With the exception of check cashers, while the licensee is awaiting the issuance of the license or licenses reflecting the new address, the licensee may continue in business, provided that all documentation is supplied, unless the licensee receives notice of suspension or revocation, or unless the licensing period if any, expires.

(b) Each licensee referenced in N.J.A.C. 3:23-2.1 that changes its official e-mail address shall, within 10 days of the change, notify the Department in writing of such a change. The written notice shall be supplied on letterhead signed by an officer of the licensed entity and include the full name of the entity, its old e-mail address, its new e-mail address and the effective date of the change. The notice shall be sent to: New Jersey Department of Banking and Insurance, Division of Banking, Attention: Office of Consumer Finance, 20 West State Street, P.O. Box 040, Trenton, New Jersey 08625-0040.

History

Emergency amendment (new rule), R.1989 d.407, effective 7/3/1989 (expires September 1, 1989).
See: 21 N.J.R. 2398(a).
Adopted concurrent proposal R.1989 d.510, effective 8/31/1989.
See: 21 N.J.R. 2398(a), 21 N.J.R. 3082(a).
Provisions of emergency amendment R.1989 d.407 readopted without change.
Amended by R.1991 d.195, effective 4/15/1991.
See: 23 N.J.R. 254(a), 23 N.J.R. 1125(a).
Motor vehicle installment sellers, sales finance companies, home repair salesmen, home repair contractors and home financing agencies exempted from the $ 75.00 fee.
Amended by R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Inserted N.J.A.C. cites, changed time for notification of change of address from 20 days to 10 days, inserted exception clause for pawnbrokers, check cashers and insurance premium finance companies, and added last three sentences.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 N.J.R. 213(a), 33 N.J.R. 1087(a).
Rewrote the section.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
In the first sentence, substituted "referenced" for "reference", deleted "in Schedule A or N.J.A.C. 3:1-7.2(c)1 in Schedule B" following "N.J.A.C. 3:1-7.1(a)1", inserted "and" preceding "surrender", deleted "and pay to the Department an address change fee of $ 75.00" following "affected license or licenses" and substituted "cashers" for "cashiers"; deleted "and fees" following "documentation" in the second sentence; and in the third sentence, substituted "With the exception of check cashers, while" for "While"; deleted "new" preceding "license or licenses" and inserted "reflecting the new address"; substituted "is" for "and fees are"; deleted "biennial" preceding "licensing period" and inserted "if any".
Amended by R.2008 d.178, effective 7/7/2008.
See: 40 N.J.R. 1399(a), 40 N.J.R. 3989(a).
Section was "Address change". Inserted designation (a); in (a), substituted "Licensed lenders and each" for "Every" and updated the N.J.A.C. references; and added (b).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
In (a) and (b), substituted "Each" for "Licensed lenders and each" and deleted "(b)" following "N.J.A.C. 3:23-2.1".

N.J. Admin. Code § 3:1-7.5 Fees subject to review

The fees in the schedules of this subchapter shall be subject to periodic review and shall be increased or decreased in accordance with the cost of the services performed by the Department.

History

Recodified from N.J.A.C. 3:1-7.4 by R.1989 d.407, effective 7/3/1989 (expires September 1, 1989).
See: 21 New Jersey Register 2398(a).
Adopted concurrent proposal R.1989 d.510, effective 8/31/1989.
See: 21 New Jersey Register 2398(a), 21 New Jersey Register 3082(a).
Provisions of emergency amendment R.1989 d.407 readopted without change.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Inserted "cost of the" preceding "services performed".

N.J. Admin. Code § 3:1-7.6 Penalty for late filing of annual reports and/or late payment of assessments

(a) Business licensees under the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq. (RMLA), licensees under the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 to 43 (CFLA), motor vehicle installment sellers, home repair contractors, home financing agencies, check cashers, money transmitters, debt adjusters, foreign money transmitters, pawnbrokers, insurance premium finance companies, foreclosure consultants, or any other licensees who fail to file an annual report on a timely basis as specified below shall be subject to a penalty as specified in (c) below. With the exception of licensees under RMLA and CFLA, all licensees who file applications to renew their license after the license expiration date shall be subject to a penalty of $ 50.00. Business licensees under RMLA and licensees under CFLA who file renewal license applications after the expiration of their licenses shall be subject to N.J.A.C. 3:15-2.7 and 3:17-2.6, respectively, including any penalties specified therein. Individual licensees under RMLA who file renewal license applications after the expiration of their license shall be subject to N.J.A.C. 3:15-2.1 5.

Annual reports filed electronically will be deemed late if received after the date set in N.J.A.C. 3:23-4.1 of the year following the calendar year covered by the annual report.
Annual reports filed by hard copy shall be considered late if mailed or shipped with an overnight delivery service after March 1 of the year following the calendar year covered by the annual report. Hard copy reports may only be filed by licensees who have received an exemption from the Department pursuant to N.J.A.C. 3:23-4.2 prior to filing.
Annual reports found by the Department to be incomplete shall be deemed not filed.
Any report not filed by the date due, including those deemed not filed, shall be considered late and will be subject to penalty.

(b) A business licensee under the RMLA, a licensee under the CFLA, motor vehicle installment seller, home repair contractor, home financing agency, check casher, money transmitter, debt adjuster, foreign money transmitter, pawnbroker, insurance premium finance company, foreclosure consultants, and any other licensee that submits payment of the assessment imposed upon them pursuant to N.J.S.A. 17:1C-33 et seq. and N.J.A.C. 3:5 after the due date indicated on their assessment statement shall be subject to a penalty.

Assessments paid with a dishonored or returned check shall be considered unpaid until a replacement check is received by the Department.

Assessments not paid because a replacement check has not been received by the due date as required by (b)1 above shall be subject to a penalty.

(c) Unless otherwise prescribed by a statute applicable to a particular license type, a licensee who files an annual report after the date due as set forth in (a) above and/or whose assessment payment is unpaid as set forth in N.J.S.A. 17:1C-36, shall be subject to a penalty in accordance with the following:

For late filing of the annual report, the penalty shall be not more than $ 100.00 per day.
For late payment of the assessment, the penalty shall be $ 150.00 per day up to a maximum of 20 percent of the total assessment due.

(d) In addition to any monetary penalties, a license shall be subject to revocation for an assessment that remains unpaid after the due date indicated on the assessment statement and/or for failing to file an annual report by the due date.

(e) The imposition of penalties shall not prevent the Department from imposing further penalties on the licensee for transacting business without a license.

History

New Rule, R.1991 d.195, effective 4/5/1991.
See: 23 N.J.R. 245(a), 23 N.J.R. 1125(a).
Amended by R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
In first sentence deleted reference to sales finance companies and inserted additional categories subject to penalty; and inserted second sentence.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 N.J.R. 213(a), 33 N.J.R. 1087(a).
Rewrote the section.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Section was "Penalty for late filing". Rewrote the section.
Amended by R.2007 d.306, effective 10/1/2007.
See: 39 N.J.R. 2299(a), 39 N.J.R. 4111(a).
In the introductory paragraph of (a), deleted "$ 50.00 per day" preceding the first occurrence of "penalty" and inserted "as specified in (c) below"; in the introductory paragraph of (c), substituted "an" for "a late", deleted "and/or whose assessment is unpaid" following "report", and inserted "and/or whose assessment payment is unpaid as set forth in N.J.S.A. 17:1C-36"; and in (c)1, substituted "not more than $ 100.00" for "$ 50.00".
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Rewrote the introductory paragraph of (a); in (a)1, substituted "the date set in N.J.A.C. 3:23-4.1" for "April 1st"; and in the introductory paragraph of (b), substituted "business license under the RMLA, a licensee under the CFLA" for "licensed lender" and inserted a comma following "company".
Amended by R.2014 d.015, effective 1/6/2014.
See: 45 N.J.R. 969(a), 46 N.J.R. 65(a).
In the introductory paragraph (a) and of (b), inserted "foreclosure consultants,".

Subchapter 9 HOME MORTGAGE DISCLOSURE

N.J. Admin. Code § 3:1-9.1 Authority; scope; enforcement

(a) This subchapter is promulgated pursuant to the provisions of N.J.S.A. 17:16F-11 and N.J.S.A. 17:1-8.1 et seq. This subchapter applies to depository institutions that make mortgage loans. Nothing in this subchapter is intended to, nor shall it be construed to, encourage unsound lending practices or the allocation of credit.

(b) Compliance with this subchapter and N.J.S.A. 17:16F-1 et seq. shall be enforced by the Commissioner of Banking and Insurance of the State of New Jersey.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a), substituted "N.J.S.A. 17:16F-11" for "Chapter I, Public Laws of 1977"; in (b), substituted "N.J.S.A. 17:16F-1 et seq." for "Chapter I, Public Laws of 1977"; substituted "subchapter" for "regulation" throughout.

N.J. Admin. Code § 3:1-9.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Act" means N.J.S.A. 17:16F-1 et seq.

"Annual percentage rate" means the annual percentage rate of finance charge as calculated in accordance with Federal Reserve Board Regulation Z and its supplements.

"Applicant" means any person who files with a depository institution a written, or oral-in-person, request containing such information as is reasonably required by the depository institution for a mortgage loan as defined in this Act.

"Application" means a signed, completed application form submitted to a depository institution containing such information as required by that depository institution for reviewing a residential mortgage loan request or a home improvement loan request.

"Branch office" means any office approved as a branch of the depository institution by that depository institution's Federal or State supervisory agency. Branch office shall not include an office of a depository institution which is fully automated and solely operated by the customer.

"Census tract" means a geographic area as defined and approved by the United States Bureau of Census for statistical purposes. The census tract definitions to be used are those which have been approved for use in the 1980 Census of Population and Housing.

"Depository institution" means any banking institution as defined in N.J.S.A. 17:9A-1, any association as defined in N.J.S.A. 17:12B-5, or any State or Federal credit union, which makes mortgage loans. Any non-depository, majority-owned subsidiary of a depository institution shall be deemed to be part of its parent depository institution for the purposes of this subchapter. No depository institution may aggregate its reports with any other depository institution, subsidiary, affiliate, or otherwise.

"Federally guaranteed mortgage loans" means FHA, FmHA, or VA loans which are insured under Title II of the National Housing Act or under Title V of the Housing Act of 1949 or which are guaranteed under Chapter 37 of Title 38, United States Code.

"Home improvement loan" means a loan unsecured or secured by collateral other than a first lien on a residential real property:

The proceeds of which, all or in part, are to be used for the purposes of repairing, rehabilitating, or remodeling an existing residential dwelling located in a State as stated by the borrower to the lender at the time of the loan transaction; or
That is recorded on the books of the depository institution as a home improvement loan; or
Which is a secondary mortgage loan or a consumer loan, repayable in equal periodic installments, the proceeds of which, all or in part, are to be used for the purpose of repairing, rehabilitation, or remodeling an existing residential dwelling.

"Metropolitan Statistical Area" (MSA) and "Primary Metropolitan Statistical Area" (PMSA) mean geographical areas as defined by the Office of Management and Budget of the United States government for statistical purposes. The MSA/PMSA definitions to be used are for the following MSA's/PMSA's:

Allentown-Bethlehem, PA-NJ;
Bergen-Passaic, NJ;
Atlantic City, NJ;
Jersey City, NJ;
Middlesex-Somerset-Hunterdon, NJ;
Monmouth-Ocean, NJ;
Newark, NJ;
Philadelphia, PA-NJ;
Trenton, NJ;
Vineland-Millville-Bridgeton, NJ;
Wilmington, DL-NJ-MD;

"Mortgage loan" means a "residential mortgage loan" as defined in this section or a "home improvement loan" as defined in this section.

"Oral-in-person request" means an inquiry for information about the terms of a mortgage loan, in reference to a specific property, by a natural person on his/her own behalf which is received on the institution's premises by any person at the depository institution who customarily receives or is authorized to receive such requests.

"Residential mortgage loan" means a loan which is secured by a first lien on residential real property located in a State, including a first lien refinancing of an existing loan, but shall not include:

Temporary financing (such as a construction loan); or
Purchase of an interest in a pool of mortgage loans (such as mortgage participation certificates issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, or the Farmers Home Administration); or
A loan made primarily for business or consumer purposes (other than to purchase, repair, rehabilitate, or remodel residential real property) but in connection with which a first lien on residential real property is taken as collateral.

"Residential real property" means real property that has been improved by a residential dwelling, including single family and multi-family dwellings, and individual units of condominiums and cooperatives.

"State" means any State of the United States of America, the District of Columbia, and the Commonwealth of Puerto Rico.

History

As amended, R.1977 d.470, eff. 12/15/1977.
See: 10 New Jersey Register 39(b).
As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(b), 11 New Jersey Register 534(b).
Amended by R.1985 d.98, effective 3/4/1985.
See: 16 New Jersey Register 2872(a), 17 New Jersey Register 577(a).
Definition "Standard Metropolitan Statistical Area" changed to "Metropolitan Statistical Area".
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In "Depository institution", rewrote the first sentence and substituted "subchapter" for "regulation" in the second sentence.

N.J. Admin. Code § 3:1-9.3 Reserved

History

As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(b), 11 New Jersey Register 534(b).
Amended by R.1985 d.98, effective 3/4/1985.
See: 16 New Jersey Register 2872(a), 17 New Jersey Register 577(a).
(b) Deleted text "Any depository institution ... April 30, 1980,".
Repealed by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Section was "Exemptions".

N.J. Admin. Code § 3:1-9.4 Reserved

History

As amended, R.1978 d.304, eff. 9/1/1978.
See: 10 New Jersey Register 314(c), 10 New Jersey Register 416(b).
As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(b), 11 New Jersey Register 534(b).
As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a), 15 New Jersey Register 439(b).
Section substantially amended.
Amended by R.1985 d.98, effective 3/4/1985.
See: 16 New Jersey Register 2872(a), 17 New Jersey Register 577(a).
Deleted cross reference and added "the Department of Banking".
Repealed by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Section was "Compilation of mortgage and home improvement loan data".

N.J. Admin. Code § 3:1-9.5 Reserved

History

As amended, R.1978 d.304, eff. 9/1/1978.
See: 10 New Jersey Register 314(c), 10 New Jersey Register 416(b).
As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(b), 11 New Jersey Register 534(b).
As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a), 15 New Jersey Register 439(b).
Section was recodified with changes from N.J.A.C. 3:1-9.7.
Amended by R.1985 d.98, effective 3/4/1985.
See: 16 New Jersey Register 2872(a), 17 New Jersey Register 577(a).
(b) Deleted "SMSA" substituted "MSA/PMSA".
Repealed by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Section was "Disclosure to public".

N.J. Admin. Code § 3:1-9.6 Reserved

History

As amended, R.1978 d.304, eff. 9/1/1978.
See: 10 New Jersey Register 314(c), 10 New Jersey Register 416(b).
As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(b), 11 New Jersey Register 534(b).
As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a). 15 New Jersey Register 439(b).
Section was recodified with changes from N.J.A.C. 3:1-9.7.
Emergency amendment, R.1989 d.407, effective 7/3/1989 (expires September 1, 1989).
See: 21 New Jersey Register 2398(a).
Processing fee raised at (c).
Adopted concurrent proposal R.1989 d.510, effective 8/31/1989.
See: 21 New Jersey Register 2398(a), 21 New Jersey Register 3082(a).
Provisions of emergency amendment R.1989 d.407 readopted without change.
Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Deleted (d), to comport with Federal reporting requirements.
Repealed by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Section was "Filing requirements; processing fee".

N.J. Admin. Code § 3:1-9.7 Violations of the Act

(a) No depository institution shall discriminate by intent or in effort on a basis that is arbitrary or unsupported by a reasonable analysis of the lending risks associated with the applicant for a given loan or the condition of the property to secure it, in the accepting applications, granting, withholding, extending or renewing, or in the fixing of rates, terms, conditions, or provisions of any mortgage loan on real property located in the municipality in which a depository institution has a home or branch office, or in any municipality contiguous to such municipality, merely because such property is located in a specific neighborhood or geographical area.

(b) It shall not be a violation of the Act or this regulation if the mortgage loan is made pursuant to a specific public or private program, the purpose of which is to increase the availability of mortgage loans within a specific neighborhood or geographical area.

(c) No depository institution may discourage, or refuse to allow, receive, or consider, any application, request, or inquiry regarding a mortgage loan, or discriminate in imposing conditions upon, or in processing, any such application, request, or inquiry on any basis prohibited by law.

History

As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(b), 11 New Jersey Register 534(b).

N.J. Admin. Code § 3:1-9.8 Powers of the Commissioner; investigations and hearings

(a) In order to aid in determining whether the Act or N.J.A.C. 3:1-9.7 has been violated by a depository institution other than a national bank, the Commissioner shall have the power to hold hearings, issue subpoenas to compel the attendance of witnesses and the production of documents, papers, books, records and other evidence before him or her.

(b) In the case of a failure of any person to comply with any subpoena issued by the Commissioner or to testify to any matter concerning which he or she may be lawfully interrogated, the Commissioner may apply to the Superior Court for an order requiring the attendance of such person and the giving of testimony or production of evidence.

(c) The Commissioner will grant all written requests for hearing received from national banks. If a national bank requests a hearing and submits voluntarily to the authority of the Commissioner, the Commissioner's powers will be as specified in subsections (a) and (b) of this section.

History

As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(d), 11 New Jersey Register 534(b).
As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a), 15 New Jersey Register 439(b).
Section recodified from N.J.A.C. 3:1-9.10.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a), deleted "hereof" following "N.J.A.C. 3:1-9.7"; in (a) and (b), neutralized gender references.

N.J. Admin. Code § 3:1-9.9 Orders; grounds; content; hearing; service

(a) If the Commissioner determines that a depository institution is in violation of the Act or N.J.A.C. 3:1-9.7 he shall:

Order such depository institution to cease its unlawful practices as provided by N.J.S.A. 17:16F-9; or
Order such depository institution other than a national bank to show cause why a cease and desist order should not be issued.

(b) The order to show cause shall be returnable in not less than 20 days from the date of service hereof. The order to show cause shall contain:

A statement of the time and place of hearing;
A reference to the particular section of the statute or rule charged to have been violated;
A short and plain statement of the facts giving rise to the alleged statutory or rule violation.

(d) If upon the return of the order to show cause the Commissioner determines that a depository institution is in violation of the Act, he shall order such depository institution to cease and desist such practices.

(e) Service of the cease and desist order shall be made by certified mail, return receipt requested.

History

As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(b), 11 New Jersey Register 534(b).
As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a), 15 New Jersey Register 439(b).
Section recodified with changes from N.J.A.C. 3:1-9.11.

N.J. Admin. Code § 3:1-9.10 Investigatory hearings; presiding officer

Any hearing held pursuant to this subchapter may be conducted by the Commissioner or his or her designee.

History

As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(b), 11 New Jersey Register 534(b).
As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a), 15 New Jersey Register 439(b).
Recodified from 9.12.
Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Language changed to reflect two levels of hearings, investigatory and contested cases.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Substituted "his or her designee" for "Deputy Commissioner".

N.J. Admin. Code § 3:1-9.11 Presiding officer's powers

(a) It shall be the duty of the presiding officer to inquire fully into the facts as they relate to the matter before him or her. With respect to cases assigned to him or her, the presiding officer shall have the authority, subject to the provisions of this subchapter and the Act, to:

Administer oaths and affirmations;

Grant applications for subpoenas;

Rule upon offers of proof and receive relevant evidence;
Take or cause depositions to be taken whenever the ends of justice would be served thereby;
Limit lines of questioning or testimony which are repetitive, cumulative or irrelevant;
Regulate the course of the investigatory hearing, and, if appropriate or necessary, exclude persons or counsel from the hearings for contemptuous conduct and strike all related testimony of witnesses refusing to answer any proper question;
Preside over conferences for the settlement or simplification of the issues by consent of the parties;
Dispose of procedural requests, motions or similar matters which shall be made part of the record of the proceeding;
Call, examine and cross-examine witnesses and to introduce into the record documentary or other evidence;
Request the parties at any time during the investigatory hearing to state their respective positions concerning any issue in the case or theory in support thereof; and
Take any other action necessary to effectuate the purposes of the Act or to provide for a full and fair investigatory hearing.

History

As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a), 15 New Jersey Register 439(b).
Recodified from N.J.A.C. 3:1-9.13.
Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Language changed to make clear that the first level of hearing is investigatory.

N.J. Admin. Code § 3:1-9.12 Investigatory hearing procedure

(a) Any party, through counsel, shall have the right to call, examine and cross-examine witnesses, and to introduce into the record documentary or other relevant evidence.

(b) The parties shall not be bound by rules of evidence, whether statutory, common law or adopted by the rules of court. All relevant evidence is admissible. The presiding officer may, in his or her discretion, exclude any evidence or offer of proof if he or she finds that its probative value is substantially outweighed by the risk that its admission will either necessitate undue consumption of time or create substantial danger of undue prejudice or confusion. The presiding officer shall give effect to the rules of privilege recognized by law. Every party, through counsel, shall have a right to present his cause by oral and documentary evidence and to submit rebuttal evidence. Every party, through counsel, and the presiding officer shall have the right to examine and cross-examine as may be required for a full and true disclosure of the facts.

History

As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a), 15 New Jersey Register 439(b).
Recodified from N.J.A.C. 3:1-9.14.
Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Language changed to make clear that the first level of hearing is investigatory.

N.J. Admin. Code § 3:1-9.13 Report of presiding officer

In any case where a person, other than the Commissioner, shall sit as presiding officer, he or she shall submit a written report of his or her findings and conclusions to the Commissioner together with a recommendation as to the disposition of the matter, unless the Commissioner directs otherwise. Copies shall at the same time be forwarded to all parties appearing at the hearing.

History

As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(b), 11 New Jersey Register 534(b).
As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a), 15 New Jersey Register 439(b).
Recodified from N.J.A.C. 3:1-9.15.
Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Language changed to make clear that the first level of hearing is investigatory.

N.J. Admin. Code § 3:1-9.14 Exceptions to report of presiding officer

An original and one copy of any exceptions to the presiding officer's report and recommendation may be filed by any party with the Commissioner within seven days after service of the report and recommendation.

History

As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(b), 11 New Jersey Register 534(b).
As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a), 15 New Jersey Register 439(b).
Recodified from N.J.A.C. 3:1-9.16.
Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Language changed to clarify first level of hearings is investigatory.

N.J. Admin. Code § 3:1-9.15 Decision by the Commissioner

(a) The Commissioner shall issue a written decision and order. He or she shall mail copies to the parties by certified mail, return receipt.

(b) Upon receipt of the presiding officer's report and recommendation and any exceptions filed thereto, the Commissioner shall issue a decision and order which shall either:

Adopt in toto the findings of the fact and conclusions of law of the presiding officer; or
Reject the report and recommendation of the presiding officer and make specific, detailed findings of fact and conclusions of law; or
Adopt, reject or modify each of the presiding officer's findings of fact and conclusions of law.

(c) If the Commissioner adopts either in whole or in part the report and recommendation of the presiding officer, it shall not be necessary for him or her to repeat those facts and conclusions in his or her order, and they shall automatically be considered part thereof.

History

As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a), 15 New Jersey Register 439(b).
Recodified from N.J.A.C. 3:1-9.15.
Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Language changed to clarify first level of hearings is investigatory.

N.J. Admin. Code § 3:1-9.16 Continued violation of Act; penalty

(a) A depository institution which continues to violate the provisions of the Act or N.J.A.C. 3:1-9.7 after being ordered by the Commissioner to cease such practices shall be liable to a penalty of $5,000 for each offense. Such penalty shall be in addition to and not in lieu of any other provisions of law applicable upon a depository institution's failure to comply with an order of the Commissioner.

(b) If the Commissioner determines that a depository institution is continuing to violate the provisions of the Act or N.J.A.C. 3:1-9.7 after being ordered to cease such practices, he or she shall issue and serve such depository institution by certified mail, return receipt requested, an order to pay the applicable penalties assessed against the depository institution.

History

As amended, R.1979 d.415, eff. 10/18/1979.
See: 11 New Jersey Register 426(b), 11 New Jersey Register 534(b).
As amended, R.1983 d.85, eff. 3/21/1983.
See: 15 New Jersey Register 4(a), 15 New Jersey Register 439(b).
Recodified from N.J.A.C. 3:1-9.16.
Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Cite corrected and non-sexist language added.

N.J. Admin. Code § 3:1-9.17 Notice of charges; continued violation of Act

(a) If it appears to the Commissioner that a depository institution, other than a national bank, is continuing to violate the provisions of the Act or N.J.A.C. 3:1-9.7 of this subchapter after being ordered to cease such practices, he shall issue and serve upon such depository institution by certified mail, return receipt requested, a notice of such charges.

(b) The notice shall include:

The particular sections of the statutes and rules involved; and
A copy of the detailed statement of facts constituting the basis of the alleged violation.
A statement that the depository institution has the right to request a hearing on the charges by submitting a written request for a hearing within 10 days of receipt of the charges; however, the time period may be extended at the discretion of the Commissioner. The hearing shall be conducted in accordance with the Administrative Procedures Act, N.J.S.A. 52:14B-1 et seq. and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1.

History

Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Added provisions for requests for and the holding of hearings.

N.J. Admin. Code §§ 3:1-9.18 through 3:1-9.19 Reserved

Subchapter 10 RESTRICTIONS ON REAL PROPERTY TRANSACTIONS

N.J. Admin. Code § 3:1-10.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Affiliated person" means the following:

A director, manager or executive officer of an institution;
A spouse of a director, manager or executive officer of an institution;
A member of the immediate family of a director, manager or executive officer of an institution or an affiliate of an institution;
Any corporation or organization of which a director, manager or executive officer of such institution is an officer or partner or is, directly or indirectly either alone or is, directly or indirectly either alone or with his or her spouse, the owner of 10 percent or more of any class of equity securities or the owner with other directors, managers and executive officers of such institution and their spouses of 25 percent or more of any class of equity securities;
Any trust or other estate in which a director, manager or executive officer of such institution or the spouse of such person has a substantial beneficial interest or as to which such person or his or her spouse serves as trustee or in a similar fiduciary capacity.

"Executive officer" means a person who participates or has authority to participate, other than in the capacity of a director, in major policy-making functions of the institution, whether or not: the person has an official title; the title contains a designation of assistant; or the person is serving without salary or other compensation. The chairman of the board, the president, every vice president, the cashier, the secretary, the treasurer and the comptroller are considered to be executive officers, unless by resolution of the board of directors or by the bylaws of the institution any such executive officer is excluded from participation in major policy-making functions, other than in the capacity of a director, and the executive officer does not actually participate therein.

"Immediate family" of any natural person means the following (whether by the full or half blood or by adoption):

Such person's spouse, father, mother, children, brothers, sisters and grandchildren;
The father, mother, brothers and sisters of such person's spouse; and
The spouse of a child, brother or sister of such person.

"Institution" means a bank as defined in N.J.S.A. 17:9A-1(1), a savings bank as defined in N.J.S.A. 17:9A-1(13) and a State association as defined in N.J.S.A. 17:12B-5(1).

History

As amended, R.1982 d.242, eff. 8/2/1982.
See: 14 New Jersey Register 490(a), 14 New Jersey Register 834(a).
Amended definition of "Executive officer".
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).

N.J. Admin. Code § 3:1-10.2 Application required on real property transactions

When an institution files an application for a branch, minibranch, limited facility branch, branch relocation, auxiliary or new charter and intends to purchase or lease, directly or indirectly, the premises applied for from an affiliated person, it shall simultaneously file a detailed real estate application concerning the proposed transaction with the Commissioner for his or her approval. In the event an institution desires to enter into such a transaction on an existing office it must file a detailed real estate application concerning the proposed transaction with the Commissioner for his or her approval.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).

N.J. Admin. Code § 3:1-10.3 Approval of denial of real estate applications

(a) The real estate application concerning a transaction with an affiliated person will be denied unless the applicant shall establish to the Commission's satisfaction that:

The terms and conditions of the proposed transaction are in the best interests of the institution; and
The applicant provides a written attestation of an independent appraiser that the terms and conditions of the proposed transaction are equal to or better than those which the institution would have obtained had the premises been purchased or leased in an arm's length transaction with a non-affiliated third party.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 N.J.R. 213(a), 33 N.J.R. 1087(a).
In (a)2, inserted "applicant provides a written attestation of an independent appraiser that the" preceding "terms".

N.J. Admin. Code § 3:1-10.4 Objectors and hearings

The Commissioner's deliberations on the acceptability of a real estate transaction shall be made pursuant to his or her examination powers and shall be confidential pursuant to N.J.S.A. 17:9A-264. However, this shall not preclude objectors from raising similar and/or parallel issues in written or oral objections which may relate to the applicable statutory criteria for the particular application involved.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).

Subchapter 11 RESTRICTIONS ON LOANS INVOLVING AFFILIATED PERSONS

N.J. Admin. Code § 3:1-11.1 Definitions

The following words or terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Affiliate" means a corporation, association, partnership or any type of business organization whatsoever, in which the banking institution, association or holding company owns at least 20 percent of the outstanding common stock unless the banking institution, association or holding company can rebut the presumption of the exercising of significant influence.

"Affiliated person" means the following:

A director, manager or executive officer of an institution or an affiliate of an institution;
Any corporation or organization (other than the bank or a majority-owned subsidiary of the bank) of which such person is an officer or partner or is directly or indirectly, either alone or together with one or more members of his immediate family, the beneficial owner of 10 percent or more of any class or equity securities;
Any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as a trustee or in a similar fiduciary capacity;
A spouse of a director, manager or executive officer of an institution or an affiliate of an institution.
A member of the immediate family of a director, manager or executive officer of an institution or an affiliate of an institution.

"Executive officer" means a person who participates or has authority to participate, other than in the capacity of a director, in major policy-making functions of the institution, whether or not: the person has an official title; the title contains a designation of assistant; the person is serving without salary or other compensation. The chairman of the board, the president, every vice president, the cashier, the secretary, the treasurer and the comptroller are considered to be executive officers, unless by resolution of the board of directors or by the bylaws of the institution any such executive officer is excluded from participation in major policy-making functions, other than in the capacity of a director, and the executive officer does not actually participate therein.

"Immediate family" of any natural person means the following (whether by the full or half blood or by adoption):

Such person's spouse, father, mother, children, brothers, sisters and grandchildren;
The father, mother, brothers and sisters of such person's spouse; and
The spouse of a child, brother or sister of such person.

"Institution" means a bank or a savings bank as defined in N.J.S.A. 17:9A-1 and a State association as defined in N.J.S.A. 17:12B-5(1).

History

As amended, R.1982 d.243, eff. 8/2/1982.
See: 14 New Jersey Register 490(b), 14 New Jersey Register 834(b).
Amended definition of "Executive officer." Changed senior to executive officer.
Amended by R.1985 d.556, effective 11/4/1985.
See: 17 New Jersey Register 2073(b), 17 New Jersey Register 2606(b).
Added "or a savings bank" to Institution.
Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Corrected internal cite to N.J.S.A.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In "Affiliated person", inserted new 1 and recodified existing 1 through 4 as 2 through 5.

N.J. Admin. Code § 3:1-11.2 Prohibition

(a) No institution or affiliate thereof may, either directly or indirectly, make a loan to any director or executive officer of an institution or to any affiliated person of such institution, or purchase any such loan, unless the terms and conditions of the loan (including, but not limited to, interest rate, maturity and collateral) are comparable to those terms and conditions then prevailing for a comparable loan to a nonaffiliated person.

(b) Any loans or extensions of credit made pursuant to a benefit or compensation program shall be permitted if the benefit or compensation program:

Is widely available to employees of an institution and, in the case of loans or extensions of credit to a director or executive officer of its affiliates, is widely available to employees of the affiliates at which that person is a director or executive officer; and

Treats any director or executive officer of the institution on an equal basis with other employees of the institution and, in the case of loans or extensions of credit to a director or executive officer of its affiliates, treats such director or executive officer on an equal basis as other employees of the affiliates at which that person is a director or executive officer.

(c) Nothing in this section shall be construed to affect other existing limitations on amounts or kinds of loans or extensions of credit to directors or executive officers.

History

As amended, R.1982 d.243, eff. 8/2/1982.
See: 14 New Jersey Register 490(b), 14 New Jersey Register 834(b).
Added executive to officer.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a), added designation; added (b) and (c).

Subchapter 12 MULTIPLE PARTY DEPOSIT ACCOUNTS

N.J. Admin. Code § 3:1-12.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Act" means N.J.S.A. 17:16I-1 et seq., which may also be cited as "Multiple Party Deposit Account Act."

"Account" means a contract of deposit of funds between a depositor and a financial institution, and includes a checking account, savings account, certificate of deposit, share account and other like arrangement.

"Beneficiary" means a person named in a trust account as one for whom a party to the account is named as trustee.

"Financial institution" means any organization authorized to do business under State or Federal laws relating to financial institutions, including, without limitation, banks and trust companies, savings banks, building and loan associations, and savings and loan associations.

"Joint account" means an account payable on request to one or more of two or more parties whether or not mention is made of any right of survivorship, and regardless whether the names of the parties are stated in the conjunctive or in the disjunctive.

"Multiple party account" means any of the following types of account: a joint account; a P.O.D. account; or a trust account. It does not include accounts established for deposit of funds of a partnership, joint venture, or other association for business purposes, or accounts controlled by one or more persons as the duly authorized agent or trustee for a corporation, unincorporated association, charitable or civic organization or a regular fiduciary or trust account where the relationship is established other than by deposit agreement.

"Net contribution" means the contribution of a party to a joint account as of any given time which is the sum of all deposits thereto made by or for him, less all withdrawals made by or for him which have not been paid to or applied to the use of any other party, plus a pro-rata share of any interest or dividends included in the current balance. The term includes, in addition, any proceeds of deposit life insurance added to the account by reason of the death of the party, whose net contributions is in question.

"Party" means a person who, by the terms of the account, has a present right, subject to request, to payment from a multiple-party account. A P.O.D. payee or beneficiary of a trust account is a party only after the account becomes payable to him by reason of his surviving the original payee or trustee. Unless the context otherwise requires, it includes a guardian, conservator, personal representative, or assignee, including an attaching creditor, of a party. It also includes a person identified as a trustee of an account for another whether or not a beneficiary is named, but it does not include any named beneficiary unless he has a present right of withdrawal.

"Payment" means a withdrawal, payment on check or other directive of a party, and any pledge of sums on deposit by a party of any setoff, or reduction or other disposition of all or part of an account pursuant to a pledge. Payment to a third person pursuant to check or otherwise is a withdrawal.

"P.O.D. account" means an account payable on request to one person during lifetime and on his death to one or more P.O.D. payees, or to one or more persons during their lifetimes and on the death of all of them to one or more P.O.D. payees.

"P.O.D. payee" means a person designated on a P.O.D. account as one to whom the account is payable on request after the death of one or more persons.

"Request" means a proper request for withdrawal, or a check or order for payment, including special requirements concerning necessary signatures and regulations of financial institutions. A notice of intent to withdraw is treated as a request for withdrawal.

"Trust account" means an account in the name of one or more parties as trustee for one or more beneficiaries where the relationship is established by the form of the account and the deposit agreement with the financial institution and there is no subject of the trust other than the sums on deposit in the account; it is not essential that payment to the beneficiary be mentioned in the deposit agreement. A trust account does not include a regular trust account under a testamentary trust of a trust agreement which has significance apart from the account or a fiduciary account arising from a fiduciary relation such as attorney-client.

"Written notice or order" means the notice or order necessary to access or affect an account which notice is effecting for a particular transaction from the time it is brought to the attention of the individual conducting that transaction.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In opening paragraph, deleted last sentence; in "Act", deleted "chapter 491. Public Laws of 1979," preceding "N.J.S.A. 17:16I-1".

N.J. Admin. Code § 3:1-12.2 Types of contracts

(a) A financial institution may maintain different deposit contracts for "joint accounts," "P.O.D. accounts," and "trust accounts."

(b) Different contract forms should be used for any multiple party deposit account where the parties do not intend to create a right of survivorship.

(c) A single party contract with a power of attorney or formal trust is an acceptable form for parties who do not want present rights to the account for all parties, or who do not intend to create a right of survivorship, or who otherwise intend to create rights and obligations different from those created by the Act.

History

Administrative correction.
See: 26 New Jersey Register 2568(b).

N.J. Admin. Code § 3:1-12.3 Type of accounts

Nothing in the Act or in this subchapter is to be construed as requiring a financial institution to enter into any deposit account contract. Financial institutions are not required to open any multiple party deposit account that fails to provide for rights of survivorship as provided in N.J.S.A. 17:16I-5.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Substituted "that fails to" for "which does not"; substituted "N.J.S.A. 17:16I-5" for "section 5 of the Act".

N.J. Admin. Code § 3:1-12.4 Specific content of deposit contract

(a) The following information must be included in all multiple party account contracts:

A statement that the account is subject to the provisions of the Multiple Party Deposit Account Act, N.J.S.A. 17:16I-1 et seq.
Express provisions that:

i. Identify the type of account; that is, whether it is a joint account, a P.O.D. account, or a trust account; and

ii. Specify the present interests of all parties with an explanation that parties will share equally in the absence of proof of net contribution unless the parties expressly agree otherwise; and

iii. Specify that unless otherwise provided there is a right of survivorship among parties, but the account must expressly provide for a right of survivorship between or among two or more P.O.D. payees or trust beneficiaries.

A statement of no liability to the financial institutions for payments made pursuant to the Act. Any multiple party account may be paid, on request, to any one or more of the parties. The financial institution may also make payment from a multiple-party account, including payment of the entire account balance: pursuant to any statutory or common law right of set off, levy, attachment or other valid legal process or court order, relating to the interest of any one or more of the parties; and on request to a trustee in bankruptcy, receiver in any state or Federal insolvency proceeding, or other duly authorized insolvency representative of any one or more of the parties. The financial institutions shall not be required to determine net contributions. If the information in this subsection was not provided in the account contract, it may be provided to the parties by subsequent notice.
The necessary form of notice required to effectively change the terms of the deposit contract. Where there is more than one party, that is, joint accounts or two or more original payees in P.O.D. accounts or two or more trustees in trust accounts, the financial institution may require that the party giving the notice pursuant to N.J.S.A. 17:16I-6 or N.J.S.A. 17:16I-12 provide the current address of every other party affected by the notice if such address is known.
An acknowledgement of having read the contract which must be signed by all parties.

(b) Model forms may be found in Appendix A to this chapter, incorporated herein by reference.

History

Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Added new (b) referencing Model Forms in Appendix A.
Administrative correction.
See: 25 New Jersey Register 2860(a).
Amended by R.1996 d.241, effective 5/20/1996.
See: 28 New Jersey Register 1440(a), 28 New Jersey Register 2543(a).
Rewrote (a)3.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a)1, deleted "(P.L. 1979, c.491)".

N.J. Admin. Code § 3:1-12.5 Additional provisions

A financial institution may include any additional provisions in its form of contract which are necessary to inform fully its depositors of the terms of multiple party deposit accounts and applicable rules, provided that such provisions are not inconsistent with the provisions of the Act or this subchapter.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Substituted "rules" for "regulations"; substituted "or" for "of" following "Act".

N.J. Admin. Code § 3:1-12.6 Change in contract

No financial institution or party may change the form of contract without the written notice required in the Act.

History

Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Corrected term "financial institution."

N.J. Admin. Code § 3:1-12.7 Copy of contract

Financial institutions shall provide copies of the multiple-party account provisions. Copies should be made available.

N.J. Admin. Code § 3:1-12.8 Limitation of subchapter

Nothing in this subchapter shall be deemed to supersede specific provisions set out in the Act. Therefore, in the event of any question as to which authority is to be followed, the provisions in the Act will prevail.

History

Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Corrected a spelling error.

N.J. Admin. Code § 3:1-12.9 Effective dates

As required in the Act, any multiple-party account opened on or after May 28, 1980 is subject to the provisions of the Act. The Act has prospective effect only and therefore will apply only to accounts opened on or after that date. The specific provisions as set out in this subchapter will become effective as of the date of adoption and will have prospective effect only unless all parties to the contract agree to retroactively have them apply to accounts opened on or after May 28, 1980.

Subchapter 13 INSURANCE ACTIVITIES

N.J. Admin. Code § 3:1-13.1 Insurance tie-in prohibition

(a) No lender shall require any borrower to obtain insurance from a licensed insurance agent or broker, owned by or controlled directly or indirectly by that lender, as a precondition for obtaining financing.

(b) In the event a loan or other financing is granted for personal, family or household purposes, and if insurance is required and is available through the lender, the terms of the loan agreement or a separate written notice to the borrower shall state that the borrower has the option of securing such insurance from a source of the borrower's own choosing. Nothing herein shall prevent the lender from reserving the right to refuse to accept, for reasonable cause, an insurer or insurance offered by the consumer; provided however, the lender must give written notice to the consumer stating specific reasons why insurance coverage provided by the consumer is unacceptable to the lender.

(c) No lender shall, in connection with any application for a loan secured by a mortgage on real property located in New Jersey, require any mortgagor to obtain by purchase or otherwise a fire insurance policy in excess of the replacement value of the covered premises as permitted under N.J.S.A. 17:36-5.1 9 as a condition for granting such mortgage loan.

(d) For purposes of this section, the term "lender" means any bank, savings bank, savings and loan association, credit union, licensed lender, banking institution, bank holding company, savings and loan service corporation or any other person, or any subsidiary or affiliate thereof, who makes a loan secured by a first, second or subsequent mortgage on real property located in New Jersey.

History

Amended by R.1984 d.209, effective 6/4/1984.
See: 16 New Jersey Register 586(a), 16 New Jersey Register 1338(a).
Added "provided however, the ... to the lender."
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a), deleted "banking institution, bank holding company, savings and loan association, savings and loan association service corporation, credit union or any other type of" preceding "lender"; in (b), substituted "lender" for "lending institution"; inserted new (c) and (d).

N.J. Admin. Code § 3:1-13.2 Reserved

History

Repealed by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Former N.J.A.C. 13:1-13.2, Amount of fire insurance required, recodified to N.J.A.C. 13:1-13.1 (c) and (d).

Subchapter 14 REVOLVING CREDIT EQUITY LOANS

N.J. Admin. Code § 3:1-14.1 Authorization

A bank, savings bank or savings and loan association shall have authority to make loans secured by a lien on real estate that shall be known as a "Revolving Credit Equity Loan" and may charge, contract for and receive thereon interest at a rate or rates agreed to by the bank, savings bank or savings and loan association and the borrower.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).

N.J. Admin. Code § 3:1-14.2 Revolving credit equity loan agreement

(a) A revolving credit equity loan shall be made pursuant to an agreement between the bank, savings bank or savings and loan association and the borrower whereby:

The bank, savings bank or savings and loan association may permit the borrower to obtain advances of money from the bank, savings bank or savings and loan association from time to time or the bank, savings bank or savings and loan association may advance money on behalf of the borrower from time to time as directed by the borrower.
The amount of each advance and permitted interest charges and/or insurance charges are debited to the borrower's account and payments and credits are credited to the same account;
Interest is computed on the unpaid principal balance of the account from time to time; and
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.

N.J. Admin. Code § 3:1-14.3 Terms of agreement

(a) If an agreement governing a revolving credit equity loan so provides:

The bank, savings bank or savings and loan association may at any time change the terms of the agreement, including the terms governing the periodic interest rate, the calculation of interest, or the method of computing the required amount of periodic installment payments, provided however, that the period interest rate shall not be changed more than once in each billing cycle nor shall the minimum installment payment be less than 1/240 of the outstanding principal balance due plus interest accrued at the end of the billing cycle.
The bank, savings bank or savings and loan association may apply any changes made pursuant to (a)1 above to all then outstanding unpaid indebtedness in the borrower's account including any indebtedness which shall have arisen from advances obtained prior to the effective date of the change of the periodic interest rates or required minimum periodic installment.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a)1, deleted "or from time to time" preceding "change".

N.J. Admin. Code § 3:1-14.4 Notification of changes

(a) The bank, savings bank or savings and loan association shall notify each borrower of any change in terms in the manner set forth in the agreement governing the plan and in compliance with the Truth-in-Lending Act and regulations promulgated thereunder, as in effect from time to time, if applicable; provided however, that if such change has the effect of increasing the interest rate or other changes to be paid by the borrower, the bank, savings bank or savings and loan association shall mail or deliver to the borrower at least 15 days before the effective date of the change a clear and conspicuous written notice that shall describe the change and the existing term or terms of the agreement affected by the change and shall also set forth the effective date and an explanation, if necessary, of the change.

(b) No notice of a change is required under (a) above if a change in interest rate is made under a properly disclosed variable rate plan that ties the interest rate change to an index or formula.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).

N.J. Admin. Code § 3:1-14.5 Interest

No interest shall be paid, deducted or received in advance, except that a bank, savings bank or savings and loan association may charge at closing up to three discount points computed as a percentage of the credit extended. Interest shall not be compounded and shall be computed only on unpaid principal balances, except that interest due but unpaid may be considered part of the unpaid principal balance. For purposes of computing interest all installment payments shall be applied no later than the next business day after the date of receipt at the designated office or offices of the bank, savings bank or savings and loan association as set forth in the agreement, and interest shall be charged for the actual number of days elapsed at a daily rate of 1/365th of the yearly rate.

History

Amended by R.1993 d.218, effective 5/17/1993.
See: 25 New Jersey Register 1033(b), 25 N.J.R 1965(a).
Revised text.

N.J. Admin. Code § 3:1-14.6 Methods of computing interest

(a) Interest may be computed in each billing cycle by any of the following methods, in accordance with the agreement between the bank, savings bank or savings and loan association and the borrower.

By converting each yearly rate to a daily rate and multiplying such daily rate by the applicable portion of the daily unpaid principal balance of the account, in which case each daily rate is determined by dividing each yearly rate by 365; or
By multiplying 1/12th of each yearly rate by the applicable portion of the average daily unpaid principal balance of the account in the billing cycle, in which case the average daily unpaid principal balance is the sum of the amount unpaid each day during the cycle divided by the number of days in the cycles; or
By converting each yearly rate to a daily rate and multiplying such daily rate by the number of days in the billing cycle and then multiplying by the applicable portion of the average daily unpaid principal balance of the account in the billing cycle, in which case each daily rate is determined by dividing each yearly rate by 365, and the average daily unpaid principal balance is the sum of the amount unpaid each day during the cycle divided by the number of days in the cycle.

(b) For all the methods of computation in (a)1-3 above, the billing cycle shall be monthly (except that a month may vary from 27 to 35 days) and the unpaid principal balance on any day shall be determined by addition to any balance unpaid as of the beginning of that day all advances, past due interest, and other permissible amounts charged to the borrower and deducting all payments and other credits made or received that day.

Subchapter 15 AVAILABILITY OF FUNDS

N.J. Admin. Code § 3:1-15.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Banking institution" means any State or Federally chartered commercial bank, savings bank or savings and loan association.

History

Amended by R.1991 d.48, effective 2/4/1991.
See: 22 New Jersey Register 3425(a), 23 New Jersey Register 294(b).
Amended "after hours deposits".
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Deleted "After hours deposits", "Business day", "Check", "Deposit account", "Personal or family purposes", and "Time deposit".

N.J. Admin. Code § 3:1-15.2 Compliance with Federal law

Each banking institution shall comply with 12 C.F.R. 229 (Regulation CC) or with its successor regulation.

History

Recodified from N.J.A.C. 3:1-15.8 and amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Rewrote the section. Former N.J.A.C. 3:1-15.2, Availability of funds, repealed.

N.J. Admin. Code § 3:1-15.3 Reserved

History

Repealed by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Section was "Content of written disclosure statement".

N.J. Admin. Code § 3:1-15.4 Reserved

History

Repealed by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Section was "Initial written disclosure".

N.J. Admin. Code § 3:1-15.5 Reserved

History

Repealed by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Section was "Change in policy".

N.J. Admin. Code § 3:1-15.6 Reserved

History

Repealed by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Section was "Filing of written disclosure statements".

N.J. Admin. Code § 3:1-15.7 Reserved

History

Repealed by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Section was "Banking institutions' rights".

N.J. Admin. Code § 3:1-15.8 Reserved

History

Repealed by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Former N.J.A.C. 3:1-15.8, Compliance with Federal Law, recodified to N.J.A.C. 3:1-15.2.

Subchapter 16 MORTGAGE LOANS, FEES, OBLIGATIONS

N.J. Admin. Code § 3:1-16.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Application" means the document(s) or information, including the payment of any fees, that a particular lender or broker requires a borrower to submit for the purpose of having the lender or broker begin to process the loan document(s) to determine whether to grant or deny a mortgage loan.

"Borrower" means a natural person or persons who applies for credit or to whom credit is offered or extended primarily for personal, family or household purposes, and shall mean all co-borrowers, except that the lender may require the co-borrowers to designate one of the co-borrowers as the borrower for the purposes of these rules or, at the election of such natural person or persons, shall mean the attorney for the natural person or persons, but shall not mean other agents of the borrower.

"Borrower's agent" means a person or entity hired, contracted or requested by the borrower to supply information or documentation to the lender. A borrower's agents may include the seller, the borrower's attorney, depository institutions, title insurance companies, employer, spouse, surveyor, etc. A borrower's agents shall not include any person or entity hired, contracted or selected by the lender to perform a service or provide information or documentation to the lender, such as an appraiser, a credit reporting agency, the lender's attorney, the investor, etc.

"Broker" means any mortgage broker as that term is defined in N.J.S.A. 17:11C-53, or any lender when accepting and processing a mortgage loan application on behalf of a lender which will issue the commitment or loan denial.

"Business day" means any day on which the office or offices of the lender or broker are open to the public to provide financial services. A day shall not be regarded as a business day solely because the lender or broker conducts some transactions by appointment for particular customers on that day. A day may be a business day even though the lender or broker does not make entries into the books of the business on that day.

"Commitment" means a signed statement issued by a lender in which the lender promises to make a loan of specified terms to a specified borrower, and which is based on a satisfactory underwriting analysis of the appraisal, if an appraisal is required in connection with the loan, and a satisfactory underwriting analysis of the credit report, if a credit report is required in connection with the loan, except that any document indicating approval of a loan application which is contingent on the approval of a party to whom the lender seeks to sell the loan shall not be deemed a commitment.

"Current market yield" means:

In the case of a mortgage loan originated under a special program of, or committed for sale before expiration of the lock-in agreement to, a particular secondary market purchaser, the yield being sought by that purchaser for that loan; or
In the case of a mortgage loan not originated or committed as described in paragraph 1 above and not to be held in the lender's portfolio, the yield being sought, for the type of mortgage loan applied for, by the secondary market purchaser which purchased the highest dollar volume of such mortgage loans from the lender during the preceding 12-month period; or
In the case of a mortgage loan to be held in the lender's portfolio, the average commitment rate offered by the lender, for the type of mortgage loan applied for, during the preceding 30-day period.

"Lender" means a State or Federally-chartered bank, savings bank, savings and loan association, credit union, or a mortgage lender or correspondent mortgage lender as defined in N.J.S.A. 17:11C-53.

"Lock-in agreement" means an agreement between the lender and the borrower whereby the lender guarantees until a specified date the availability of a specified rate of interest or specified formula by which the rate of interest will be determined and/or specific number of discount points, provided the loan is approved and closed by the specified date. If a specified date is not determinable, the lender may fulfill the requirement of this provision by setting forth with specificity the method by which the duration of the lock-in period will be determined. The term "lock-in agreement" does not include an agreement to fix the rate executed three or fewer calendar days before closing where appropriate disclosures have been made under the provisions of this subchapter.

"Mortgage loan" means any closed-end loan to a borrower which is secured by a first mortgage on real property located in New Jersey on which there are one to four dwelling units, a portion of which may be used for nonresidential purposes.

"Promptly refund" or "return" means to refund or return to the borrower within seven calendar days following receipt of a written request for same from the borrower.

"Receipt" (or "received") means:

In the case of the lender, actual receipt (or actually received) at the office or by the person designated by the lender or broker as the place where or the person to whom the application or documentation must be submitted or, if no such place or person is designated, at the lender's or broker's principal office or any of its branch offices; or
In the case of a borrower:

i. Actual receipt (or actually received) where the document or correspondence is personally delivered to the borrower or sent to the borrower by registered or certified mail or by means of a commercial delivery service; or

ii. The third calendar day following deposit in the regular U.S. mail.

"Substantial fault of the borrower" means that the borrower or the borrower's agent:

Failed to provide in a timely manner information or documentation required by the lender;
Provided or omitted any information, in the application or subsequently, which upon verification proves to be significantly inaccurate causing the need for review or further investigation by the lender;
Failed to produce on or before the date specified by the lender all of the documentation specified in the commitment or closing instructions as being required for closing, which date may be less than seven calendar days following the date of receipt of the commitment or closing instructions; or
Failed to be ready, willing and able to close the loan or before the date specified by the lender.
For purposes of this section:

i. A person provides information or documentation "in a timely manner" if such information and documentation is received by the lender within seven calendar days after the person receives a request for same or within the time frame established by the lender if that time frame extends beyond seven calendar days after receipt of the request; and

ii. Information is "significantly inaccurate" if the correct information would, in the reasonable opinion of the lender, cause the borrower to be disqualified for the type of loan for which the borrower has applied or cause the secondary market source for which the loan is being originated to refuse to purchase the loan.

"Trust funds" means funds which are held in accordance with the terms of a written agreement between the lender and the borrower or seller, which provides that upon the occurrence of a specific condition or event the funds or a portion thereof shall be disbursed to the borrower or seller. Trust funds do not include escrows collected or held by the lender for taxes and insurance.

History

Amended by R.1989 d.332, effective 6/19/1989.
See: 21 N.J.R. 957(a), 21 N.J.R. 1668(b).
Definitions of "borrower" and "borrower's agent" added. "Current market yield" definition amended to include components specifically addressed to portfolio lenders and special loan programs for which there may be no identifiable secondary market.
Amended by R.1992 d.149, effective 4/6/1992 (Operative for Federally-chartered financial institutions is June 5, 1992).
See: 23 N.J.R. 2613(b), 24 N.J.R. 3(a), 24 N.J.R. 1380(a).
Revised definitions.
Administrative change.
See: N.J.R. May 4, 1992.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 N.J.R. 213(a), 33 N.J.R. 1087(a).
In "Broker", substituted "N.J.S.A. 17:11C-2" for "N.J.S.A. 17:11B-1d"; in "Lender", inserted "or correspondent mortgage banker" and substituted "N.J.S.A. 17:11C-2" for "N.J.S.A. 17:11B-1c".
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
In definition "Broker", updated the N.J.S.A. reference; in definition "Lender", substituted "lender" for "banker" twice and updated the N.J.S.A. reference; and in definition "Mortgage loan", substituted "are" for "is a" and "four" for "six family" and inserted "units".

N.J. Admin. Code § 3:1-16.2 Fees

(a) No lender shall charge a borrower any fees incident to the origination, processing or closing of a mortgage loan other than the following, except as otherwise authorized by State or Federal law, either explicitly or as interpreted by the appropriate regulator in official staff commentary, regulatory bulletins, or memoranda.

Application fee: Defined as a fee imposed by a lender or broker for accepting or processing a mortgage loan application. The application fee shall not be based upon a percentage of the principal amount of the loan or the amount financed;
Credit report fee, which shall not exceed the amount paid, or to be paid to the credit reporting agency by the party who receives the credit report directly from the credit reporting agency. The initial charge to the borrower may be based on a reasonable estimate provided that any amount in excess of the amount paid to the party providing the credit report is refunded to the borrower at or prior to closing;
Appraisal fee: Defined as a fee charged to a borrower by a lender or broker to recover the direct cost of the fee charged by a duly credentialed real estate appraiser for an appraisal in connection with a mortgage loan application. An appraisal fee may be charged to a borrower by a residential mortgage lender or by a residential mortgage broker, but not by both in connection with the same mortgage loan application. The initial charge to the borrower may be based on a reasonable estimate, provided that any amount in excess of the direct cost of the appraisal performed by a duly credentialed appraiser is refunded to the borrower at or prior to closing. The direct cost of any subsequent appraisal may be charged to a borrower in connection with the same property subject to the same mortgage loan application only for good cause shown. In determining good cause for such purposes, the following factors shall be considered:

i. Any changed circumstances shown to materially affect the value of the appraised property;

ii. The period of time since any prior appraisal was performed in connection with the same property subject to the same mortgage loan application, provided no material delay was caused by the lender;

iii. Compliance with applicable Federal regulations; and

iv. Such other factors as may reasonably be deemed material to the specific determination.

Commitment fee: Defined as a fee, exclusive of third-party fees, imposed by a lender as consideration for binding the lender to make a loan in accordance with the terms and conditions of its commitment and payable on or after acceptance of the commitment, except a lock-in fee charged pursuant to (a)5 below. The amount of any commitment fee shall be reasonably related to its purpose and may be based upon a percentage of the principal amount of the loan or the amount financed;
Lock-in fee: Defined as that portion of the commitment fee charged by a lender as the consideration for execution and fulfillment of the terms of the lock-in agreement. A lock-in fee may comprise all of the commitment fee. No lock-in fee shall be received by a lender prior to inception of the lock-in period;
Warehouse fee: Defined as a fee charged by a lender not to exceed the cost associated with holding the particular mortgage loan pending sale to a permanent investor and payable at closing. The fee shall be based on the actual holding period and warehouse rate and the initial coupon rate on the mortgage loan. No profit shall accrue to the lender from the fee;
Third party fees: Limited to the following fees paid or actually incurred by a lender on behalf of a borrower:

i. Overnight delivery, messenger, fax, and other special delivery fees, provided that the type of service is authorized by the borrower in advance in writing or the specific service is authorized by the borrower in writing;

ii. Flood certification fees;

iii. Pest inspection or certification fees;

iv. Final inspection fee, not to exceed the amount of the fee paid or actually incurred to a third party or, if the final inspection is done in-house, not to exceed the going charge for such inspections by third parties;

v. Outside counsels' fees as permitted by N.J.S.A. 46:10A-6;

vi. Certified check fees, not to exceed the amount of the fee paid or actually incurred by the lender to the issuer of the certified check or, if the lender issues the certified check, not to exceed its usual fee for providing this service to its customers;

vii. Update fees to update the borrower's credit report and appraisal, not to exceed the amount of the fee paid or actually incurred by the lender to the credit reporting agency or appraiser or, if the appraisal is done in-house, not to exceed the going charge for such updates by third parties;

viii. One-time mortgage insurance premiums or, if the premiums are not collected on a one-time basis, not more than one-year of premiums;

ix. Survey fees;

x. Recording fees which shall not exceed the statutory amount for recording the deed, mortgage, and note, and which shall not include any amount for recording an assignment of the mortgage;

xi. Title and title search fees, including title insurance premiums;

xii. Taxes;

xiii. Tax service fees;

xiv. Radon test fees; and

xv. Fees not included among the above third party fees may be charged provided that prior written approval is obtained from the Department. The Department will only approve third party fees which are of benefit to the borrower and represent a cost not associated with the lender's overhead. Accordingly, the Department will not approve fees for document preparation, processing, underwriting, file updates, lender reviews, copying, funding, and miscellaneous.

Discount points or fractions thereof: A discount point is defined as an amount of money equal to one percent of the principal amount of the loan and payable only at closing.
A service fee not to exceed $ 25.00 to cancel the mortgage, providing that the borrower has received prior written notice of the fee required by the lender, and providing further that if the lender collects the service fee at the time of the mortgage transaction and transfers the servicing rights prior to cancellation, the lender shall refund the service fee to the borrower.

(b) If a lender or broker uses a term for a fee which is different than a term listed in (a) above, the lender or broker shall be able to document to the Department that the fee fits the definition and description of a permissible fee listed above, and that the fee functions accordingly.

(c) This section does not restrict the imposition of fees after the closing of a mortgage loan, such as late fees and variable-to-fixed rate conversion fees.

(d) The Commissioner is authorized to order any person to make restitution for fees charged which are impermissible or improperly charged, or to make refunds when required, under these rules. Nothing in this subsection is deemed to set a limit on the amount of fees a lender may charge on a mortgage loan.

History

Amended by 49 N.J.R. 3817(a), effective 12/18/2017

N.J. Admin. Code § 3:1-16.3 Application process

(a) Before a lender or broker accepts any application fee in whole or in part, any credit report fee, appraisal fee or any fee charges as reimbursement for third party fees, the lender or broker shall make written disclosure to the borrower (which disclosure may be contained in the application) as required by this section or N.J.A.C. 3:1-16.1 0, respectively, setting forth:

A description and the amount of each such fee;
Whether all or any part of such fees are refundable;
The terms and conditions for the refund, if all or any part of the fees are refundable, provided that, where applicable, the terms and conditions may be disclosed by making reference to these rules with proper citation;
A realistic estimate of the number of calendar days required to issue a commitment following receipt of such fees by the lender. If the lender subsequently determines that the estimate is unrealistic, it may return the application and all fees paid and offer the borrower the opportunity to reapply subject to a new estimate;
The name or title of a person within the lender's organization to whom the borrower may address written questions, comments, or complaints and who will be required to promptly respond to such inquiries; and
For correspondent mortgage lenders, a statement indicating that the licensee is a correspondent mortgage lender and as such does not hold mortgage loans or service mortgage loans for more than 90 days in the regular course of business.

(b) The disclosures required in (a) above shall be acknowledged in writing by the borrower and maintained by the lender or broker and a copy of such acknowledgment shall be given to the borrower.

(c) Except where explicitly authorized to return an application, or for other reasons consistent with due diligence, a lender is obligated to process an application submitted to it and to exert conscientious effort to either grant or deny the application within the realistic estimate disclosed as required in (a) above.

(d) Not later than three business days after the lender receives the borrower's application, or before closing of the loan, whichever is earlier, the lender shall provide the borrower with a good faith estimate as a dollar amount or range of each fee for a settlement service which the borrower is likely to incur.

For the purpose of this subsection, "settlement service" shall mean a service related to the origination, processing, or closing of a mortgage loan, and for which the lender anticipates the borrower will pay a fee at or before settlement based upon the lender's general experience.
With respect to the settlement service fees imposed on a borrower by the lender (and not by third parties), the lender shall indicate which, if any, of such fees are refundable in whole or in part and the terms and conditions for such refund.
Good faith estimates of fees for settlement services which are made pursuant to, and conform to, Federal Regulation X shall satisfy the disclosure requirement of this subsection, provided that the lender also makes the disclosures required by (d)2 above.

(e) The borrower may, without penalty or responsibility to pay additional fees, withdraw an application at any time prior to acceptance of a commitment. Upon such withdrawal, the lender or broker shall be responsible to refund to the borrower only those fees to which the borrower may be entitled pursuant to the terms set forth in the written disclosure required by (a) above, except that:

Where the lender or broker has failed to provide the borrower with the written disclosure required by (a) above, the lender or broker shall promptly refund to the borrower all funds paid to the lender or broker;
Where the lender has failed to issue a commitment or justifiable credit denial and its realistic estimate of the time needed to do so has expired through no substantial fault of the borrower and the borrower has withdrawn his or her application as a result, the lender shall promptly refund to the borrower all funds paid to the lender;
Where an application is denied, or a commitment is issued on terms and conditions substantially dissimilar to those for which the application was submitted and which are unacceptable to the borrower, for reasons (other than bona fide underwriting considerations) which the lender knew or should have known at the time of application from the facts disclosed on the face of the application, the lender shall promptly refund to the borrower all funds paid to the lender. For purposes of this paragraph, a commitment is issued on terms and conditions which are "substantially dissimilar" to those for which the application was submitted if the interest rate, discount points or commitment fee as set forth in the commitment is higher than, or the term of the loan as set forth in the commitment is different than, the corresponding terms of the loan for which application was made.

History

Amended by R.1992 d.149, effective 4/6/1992 (Operative for Federally-chartered financial institutions is June 5, 1992).
See: 23 N.J.R. 2613(b), 24 N.J.R. 3(a), 24 N.J.R. 1380(a).
Amended by R.1993 d.423, effective 9/7/1993.
See: 25 N.J.R. 2625(b), 25 N.J.R. 4063(b).
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 N.J.R. 213(a), 33 N.J.R. 1087(a).
In (a)6, inserted "correspondent" preceding references to mortgage bankers throughout and deleted "non-servicing" throughout.
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
In (a)6, substituted "lenders" for "bankers" and "lender" for "banker".

N.J. Admin. Code § 3:1-16.4 Lock-in agreements

(a) All lock-in agreements shall be in writing and shall contain at least the following provisions:

The expiration date of the lock-in, if any;
The interest rate locked in, if any;
The discount points locked in, if any;
The commitment fee locked in, if any;
The lock-in fee, if any; and
A statement advising of the provisions of (b), (c) and (d) below if applicable and of the provisions of N.J.A.C. 3:1-16.6(a).

(b) The lender shall make a good faith effort to process the mortgage loan application and/or stand ready to fulfill the terms of its commitment before the expiration date of the lock-in agreement and any extension thereof.

(c) In the event a lock-in agreement is executed and the loan applied for is denied, the lender shall promptly refund any lock-in fee paid.

(d) Any lock-in agreement received by a lender by mail or through a broker must be signed by the lender before it will become effective. The borrower may rescind the lock-in agreement until receipt of a copy of the agreement signed by the lender by providing the lender with written notification of such rescission. Mailed notification of rescission shall be effective upon mailing. If a borrower elects to so rescind, the lender shall promptly refund any lock-in fee paid.

History

Amended by R.1992 d.149, effective 4/6/1992.
See: 23 New Jersey Register 2613(b), 24 New Jersey Register 3(a), 24 New Jersey Register 1380(a).

N.J. Admin. Code § 3:1-16.5 Commitment process

(a) At or before issuance of a commitment, the lender shall disclose in writing the following:

The expiration date of the commitment;
The amount financed, which shall have the same meaning as that term is defined in Federal Regulation Z;
In the event the interest rate is not subject to increase before expiration of the commitment:

i. The finance charge, which shall mean the dollar amount the credit will cost the borrower;

ii. The annual percentage rate, which shall mean the cost of the credit to the borrower as a yearly rate; and

iii. The payment schedule, which shall mean the number, amounts and timing of payment scheduled to repay the obligation;

In the event the interest rate is subject to increase before expiration of the commitment:

i. The basis, index or method, if any, which will be used to determine the rate at closing. Such basis, index or method shall be established and disclosed with direct reference to the movement of an interest rate index or of a national or regional index that is available to and verifiable by the borrower and beyond the control of the lender; or

ii. A statement in at least 10-point bold type that "The interest rate will be a rate established by the lender in its discretion" followed by a statement in the same type indicating when the prevailing rate would be set and advising the borrower of his or her right to demand redisclosure of the rate and points pursuant to subsection (c) below once they are so set; and

iii. In addition to the requirements of (a)4i or ii above, the finance charge, annual percentage rate and payment schedule based on the rate at which a lender is closing or committing loans on the date the disclosure is made, together with a statement in at least the same size type as the disclosure, either immediately above or immediately below the disclosure, to the effect that:

"These figures are for illustrative purposes only. They reflect the rate now in effect, NOT necessarily the rate you will pay at closing, which will be established as indicated in this commitment."

The amount of the commitment fee, if any, and whether and under what circumstances the commitment fee shall be refundable, provided that, where applicable, the latter disclosure may be made by referencing either N.J.A.C. 3:1-16.6(a) or N.J.A.C. 3:1-16.6(b) of these rules;
All other fees yet to be paid by the borrower, including, but not limited to, warehouse fees and discount points, except that fees previously disclosed by the lender need not be redisclosed;

In the event the interest rate, annual percentage rate or term may vary after closing,

i. An identification and specification of the terms which are variable;

ii. The circumstances under which the above terms may change;

iii. Any limitation on a change;

iv. The effect of a change; and

v. An example of the payment terms that would result from an increase;

The time, if any, within which the commitment must be accepted by the borrower; and
Whether any fees or discount points charged by the lender and set forth in the commitment are subject to change before closing and, if so, the circumstances under which such fees or discount points may change.

(b) The information required to be disclosed in this section may be contained in one or more documents, for example, in a Federal Regulation X or Federal Regulation Z form disclosure and a supplement containing the information required under this section but not required by Regulation X or Regulation Z, as the case may be.

(c) The provisions of a commitment cannot be changed prior to expiration of the specified period within which the borrower must accept it. If any information necessary for an accurate disclosure required by (a) above is unknown to the lender at the time disclosure is required, the lender shall make the disclosure based upon the best information reasonably available to it and shall state that the disclosure is an estimate.

(d) If the interest rate (or initial interest rate in the case of a variable rate loan), discount points or fees charged by the lender and set forth in the commitment are subject to increase before closing, such terms shall be fixed no later than midnight of the third business day before the date the loan closes. The borrower may demand that the lender advise him or her, either orally or in writing, of such terms once they are so fixed and the lender shall promptly comply with any such demand. The right conferred by this subsection is not permitted to be modified or waived by the borrower except for a bona fide personal financial emergency. To modify or waive the right, the borrower shall give the lender a dated written statement that describes the emergency, specifically modifies or waives this right, and bears the signatures of all borrowers. Printed forms for this purpose are prohibited.

(e) A lender who commits to make a mortgage loan may assign the commitment to another lender authorized to make mortgage loans in this State, or allow another such lender to close the loan, provided that:

The lender who committed to make the mortgage loan shall obtain and maintain in accordance with its record retention schedule a copy of the mortgage note and the closing statement; and

The lender who committed to make the mortgage loan shall remain responsible for ensuring that the ultimate lender closes the loan in accordance with the terms and conditions of the commitment and applicable New Jersey and Federal laws and regulations.

History

Amended by R.1992 d.149, effective 4/6/1992 (Operative for Federally-chartered financial institutions is June 5, 1992).
See: 23 New Jersey Register 2613(b), 24 New Jersey Register 3(a), 24 New Jersey Register 1380(a).
Amended by R.1994 d.559, effective 11/7/1994.
See: 26 New Jersey Register 3234(a), 26 New Jersey Register 4347(b).

N.J. Admin. Code § 3:1-16.6 Expiration of lock-in or commitment

(a) In the event a lock-in agreement has been executed, and the loan does not close before the expiration date of either the lock-in agreement or any commitment issued consistent therewith through no substantial fault of the borrower, the borrower may:

Withdraw the application or reject or terminate any commitment, whereupon the lender shall promptly refund to the borrower any lock-in fee and any commitment fee paid by the borrower; or
Have the lock-in agreement extended for no more than 14 calendar days following expiration of the commitment or, where no commitment issued before expiration of the lock-in, for no more than 14 calendar days following issuance of the commitment. If the borrower elects to extend the lock-in agreement, the lender may elect either to close the loan at or below the lock-in rate, in which case the lender may keep the lock-in fee, or may elect to close the loan above the lock-in rate but no higher than that which would provide a current market yield but no gross profit or "spread" to the lender, in which case the lender shall refund the lock-in fee to the borrower. All other terms and conditions of the loan shall be as specified in the commitment, regardless whether the loan closes before or after the expiration date of the commitment.

(b) In the event a lock-in agreement has not been executed and a commitment has been issued, and the loan does not close before the expiration date of the commitment through no substantial fault of the borrower, the borrower may:

Terminate the commitment, whereupon the lender shall promptly refund to the borrower any commitment fee paid by the borrower; or

Have the commitment extended for a reasonable period of time, not to exceed 14 calendar days, to permit closing.

History

Amended by R.1992 d.149, effective 4/6/1992 (Operative for Federally-chartered financial institutions is June 5, 1992).
See: 23 New Jersey Register 2613(b), 24 New Jersey Register 3(a), 24 New Jersey Register 1380(a).
Revised (a)2 and (b)2.

N.J. Admin. Code § 3:1-16.7 Closing

Provided that the conditions of its commitment have been met, and upon reasonable notice, the lender shall be ready, willing and able to meet any closing date scheduled in accordance with the terms of its commitment.

N.J. Admin. Code § 3:1-16.8 Trust funds

Before accepting any trust funds, each lender shall disclose in writing to the party or parties depositing such funds the purpose for which the fund is established, the amount of the trust fund, the period for which the trust fund will be held and the conditions upon which the funds will be disbursed or released.

N.J. Admin. Code § 3:1-16.9 No private right of action

A failure to comply with this subchapter shall not be deemed to provide a party to the transaction with any legal rights or remedies he or she would not otherwise enjoy pursuant to the contractual relationship between the parties.

N.J. Admin. Code § 3:1-16.10 Special rules for brokers

(a) No broker shall charge or collect from a borrower on its own behalf any fees other than an application fee and discount points or fractions thereof. A broker may collect a fee on behalf of a lender provided that the entire amount of the fee is transmitted to the lender.

(b) Before accepting any loan application, the broker shall make written disclosure to the borrower in a separate service agreement setting forth:

The amount of the broker's application fee, if any;
Whether and under what circumstances all or any part of the broker's application fee may be refundable;
The amount of any discount points which are payable to the broker for its services;
A statement advising of the provisions of (c) below;
A detailed listing of the specific services that will be provided or performed by the broker, together with a statement that all fees which are payable to the broker will be refunded if the broker does not perform the services indicated; and
Whether the broker places loans exclusively with any three or fewer lenders and, if so, the name(s) of such lender(s).

(c) No broker may execute a lock-in agreement or issue a commitment on its own behalf or on behalf of any lender or guarantee acceptance into any particular loan program or promise any specific loan terms or conditions.

(d) No broker may accept a lender's lock-in agreement from a borrower or any lock-in fee in connection therewith unless the lock-in agreement contains all of the disclosures required in N.J.A.C. 3:1-16.4(a).

(e) The disclosures required in (b) above shall be acknowledged in writing by the borrower and maintained by the broker and a copy of such acknowledgement shall be given to the borrower.

History

Amended by R.1992 d.149, effective 4/6/1992 (Operative for Federally-chartered financial institutions is June 5, 1992).
See: 23 New Jersey Register 2613(b), 24 New Jersey Register 3(a), 24 New Jersey Register 1380(a).
Revised (a) and (b).
Old section 16.10 "Compliance with Federal laws" was repealed.

N.J. Admin. Code § 3:1-16.11 Reserved

History

Amended by R.1992 d.149, effective 4/6/1992 (operative for Federally-chartered financial institutions is June 5, 1992).
See: 23 N.J.R. 2613(b), 24 N.J.R. 3(a), 24 N.J.R. 1380(a).
Recodified with revisions from N.J.A.C. 3:1-16.12. Old section 3:1-11 was "Special rules for brokers."
Repealed by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Operative date".

N.J. Admin. Code § 3:1-16.12 Reserved

Subchapter 17 AUTOMATED TELLER MACHINES ATM

N.J. Admin. Code § 3:1-17.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Automated teller machine" means an automated facility or terminal owned or rented by a bank, savings bank or savings and loan association at which a customer may do one or more of the following:

Make deposits;
Obtain disbursements from a deposit or loan account; or
Transfer money from a deposit or loan account.

Included within this definition is a communication terminal facility as defined in N.J.S.A. 17:9A-1(17), and a remote service unit as defined in N.J.S.A. 17:12B-8(e).

"Bank," "savings bank," "savings and loan association" and "credit union" means State chartered institutions having a branch office or branch offices in New Jersey, unless otherwise indicated.

"Foreign financial institution" means a State or Federally chartered bank, savings bank, savings and loan association or credit union which has no principal or branch offices in this State.

"Sharing access" means the ability of financial institutions, other than the institution owning or renting the automated teller machine, to allow their customers to use the machine to consummate transactions, make deposits, initiate inquiries or otherwise conduct business with such financial institutions.

History

Amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In "Automated teller machine", substituted "facility" for "branch office" in the closing paragraph.

N.J. Admin. Code § 3:1-17.2 On site location

A bank, savings bank or savings and loan association may establish, maintain, or operate an automated teller machine or machines on the premises, or within 200 feet of the premises, or its principal office or any of its branch or auxiliary offices, without filing a notice with the Department. The 200 feet shall be measured from the portion of the property line of the office or branch closest to the automated teller machine.

History

Amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).

N.J. Admin. Code § 3:1-17.3 Off site location

Before establishing an automated teller machine more than 200 feet from its premises, a bank, savings bank or savings and loan association must file written notice to Commissioner containing the location of the proposed automated teller machine.

History

Amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).

N.J. Admin. Code § 3:1-17.4 Interstate transactions

(a) A customer having an account in a foreign financial institution may make deposits to that account from an automated teller machine located in New Jersey.

(b) A foreign bank or foreign association that accepts applications for loans through an automated teller machine, automated loan machine, computer terminal or any other electronic device located in this State shall be deemed to be transacting business as that term is used in N.J.S.A. 17:9A-316 and 17:12B-214, in violation of those statutes, except that this section shall not apply to in-person contact over a telephone, nor to drawing on a pre-existing line of credit.

History

Recodified from N.J.A.C. 3:1-17.5 by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former section, "Shared ownership", repealed.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Deleted (a) and (b); recodified former (c) as new (a); inserted new (b).

N.J. Admin. Code § 3:1-17.5 Reserved

History

Recodified to N.J.A.C. 3:1-17.4 by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Section was "Interstate access".

Subchapter 18 FOREIGN BANKS AND ASSOCIATIONS; REGISTRATION OF SERVICE FACILITIES

N.J. Admin. Code § 3:1-18.1 Definitions

The following words and terms shall have the following meanings when used in this subchapter, unless the context clearly indicates otherwise:

"Back office operation" shall mean the following activities:

Data processing;
Recordkeeping;
Accounting;
Check and deposit sorting and posting;
Computation and posting of interest;
Clerical, computer, and statistical activities which are similar to the activities in paragraphs 1 through 5 above;
Producing and mailing correspondence and other documents;
Maintaining credit balances; and
Such other similar activities that the Commissioner approves.

"Back office operation" shall not mean:

Making loans;

Making underwriting decisions; and

Accepting deposits.

"Department" shall mean the New Jersey Department of Banking and Insurance.

"Foreign association" shall mean an association chartered by the Federal government or another state which has no principal or branch offices in this State.

"Foreign bank" shall have the meaning which that term has in N.J.S.A. 17:9A-1.

"Foreign financial institution" shall include a foreign bank and a foreign association.

History

Amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Amended by R.2001 d.112, effective 4/2/2001.
See: 32 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
Amended "Back office operation"; added "Department".

N.J. Admin. Code § 3:1-18.2 Registration requirement

Prior to engaging in back office operations in this State, a foreign financial institution shall register a service facility with the Department.

History

Amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).

N.J. Admin. Code § 3:1-18.3 Registration process

(a) A foreign financial institution may request to register a service facility by submitting to the Department the following items:

A letter requesting registration of a service facility to conduct back office operations, which letter shall include the name of the foreign financial institution and the address of its principal United States office, the address of the proposed service facility, and the name and address of the foreign financial institution agent in this State for service of process; and
The required registration fee.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a), substituted "submitting" for "mailing" in the introductory paragraph.

N.J. Admin. Code § 3:1-18.4 Registration fee

(a) A foreign financial institution shall submit a registration fee of $ 500.00 to the Department with its request to become registered, except if the initial registration of the service facility has occurred in the second year of the biennial period, the registration fee shall be $ 250.00.

(b) After becoming registered, a foreign financial institution which intends to continue operating a service facility in this State shall submit to the Department biennially a registration renewal fee of $ 500.00.

N.J. Admin. Code § 3:1-18.5 Notification of registration or deficiency by the Department

(a) The Department shall, within 30 days of receipt of the materials specified in N.J.A.C. 3:1-18.3, notify the foreign financial institution that the service facility is registered by the Department or, in the event the request for registration is incomplete, the Department shall, within 30 days of receipt of the incomplete request, notify the foreign financial institution of the nature of the deficiency.

(b) The registration of the service facility shall not become effective until the foreign financial institution has received notification from the Department, except that, if the foreign financial institution has not received notification of registration from the Department within 30 days of the Department's receipt of all of the materials specified in N.J.A.C. 3:1-18.3, or notification of deficiency within 30 days of the Department's receipt of an incomplete request, such request for registration shall be deemed to have been granted by the Department.

(c) Nothing in this rule shall prohibit a foreign financial institution from purchasing or leasing office space in this State for use as a service facility, or from preparing such office space for use as a service facility prior to notification of registration by the Department.

(d) A foreign financial institution may register more than one service facility, but shall submit a separate request for registration, with the required fee, for each service facility and shall receive notification of that registration prior to engaging in back office operations at that service facility.

N.J. Admin. Code § 3:1-18.6 Permitted activities at service facilities

(a) A foreign bank or foreign association may conduct only back office operations at a service facility.

(b) Back office operations conducted by foreign financial institutions in this State may be conducted only at service facilities.

N.J. Admin. Code § 3:1-18.7 Examination of service facilities

(a) A service facility shall be subject to examination by the Department to determine whether the foreign financial institution is operating the service facility in accordance with State law.

(b) The cost for the examination of a service facility shall be paid by the foreign financial institution and shall be billed at the Department's per diem rate (see: N.J.A.C. 3:1-6.6).

History

Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Deleted "for examinations of depository institutions" following "rate" in (b).

N.J. Admin. Code § 3:1-18.8 Hearing to close service facilities

The Commissioner may, upon notice and a hearing, order a foreign financial institution to close a service facility operated in violation of law. Such hearing shall be conducted in accordance with the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Rules of Practice, N.J.A.C. 1:1.

Subchapter 19 NEW JERSEY CONSUMER CHECKING ACCOUNTS

N.J. Admin. Code § 3:1-19.1 Definitions

The following words and terms, as used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Account agreement" means the agreement governing a New Jersey Consumer Checking Account.

"ATM" means automated teller machine.

"Check" means any check as defined in N.J.S.A. 12A:3-104, share draft, negotiable order of withdrawal, or similar means of making payment or transfers to third parties, the customer, or others, which is drawn on an account in a depository institution and is payable on demand. It shall not include debits to the account for maintenance charges, fees, printing checks, pre-arranged automatic withdrawals, and other similar services.

"Consumer" means a natural person who resides in this State, except that a credit union may require that the natural person be a member of the credit union in accordance with the credit union's rules of membership.

"Customer" means a consumer who has a New Jersey Consumer Checking Account.

"New Jersey Consumer Checking Account" or "account" means a deposit account established pursuant to N.J.S.A. 17:16N-3 and with respect to which the account holder is permitted to make payments to third parties or others by check.

"Non-conforming account" means a New Jersey Consumer Checking Account which does not contain the characteristics set forth in N.J.A.C. 3:1-19.2 but has been individually approved by the Commissioner pursuant to N.J.A.C. 3:1-19.3.

N.J. Admin. Code § 3:1-19.2 Features of New Jersey Consumer Checking Accounts

(a) A New Jersey Consumer Checking Account which is subject to subsection c of N.J.S.A. 17:16N-3 shall have all of the following features:

The account agreement shall not require more than $ 50.00 as an initial deposit amount;
The account agreement shall not require the customer to maintain a minimum balance of more than $ 1.00 in order to maintain the account;
The account agreement shall allow the customer to make at least eight withdrawals by check per periodic cycle from the account without charge. For the purpose of this paragraph, the withdrawal shall be deemed made when paid by the depository institution. This minimum number of withdrawals is based on the assumption that the periodic cycle is approximately 30 days. If the periodic cycle is substantially longer or shorter than 30 days, the minimum number shall be adjusted accordingly;
The account agreement shall not authorize a charge exceeding $ 0.50 for each transaction in excess of the number required by (a)3 above;
The account agreement shall allow a customer, of a depository institution which permits withdrawals to be made from checking accounts by means of withdrawal slips, to make unlimited withdrawals by withdrawal slip from the account without charge;
The account agreement shall allow a customer to make unlimited deposits into the account without charge;
The account agreement shall not authorize a charge for maintaining the account which exceeds $ 3.00 per periodic cycle. Also, the maximum amount of the charge is based on the assumption that the periodic cycle is approximately 30 days. If the periodic cycle is substantially longer or shorter than 30 days, the maximum amount shall be adjusted accordingly;
The account agreement shall not authorize a charge to the customer for printing checks for the account which is more than its charge to its regular checking account holders for that service; and
The account agreement may provide that the depository institution may charge customers for ATM usage and for banking services not specified in this chapter if, and to the same degree that, it charges its regular checking account holders for that usage and services.

N.J. Admin. Code § 3:1-19.3 Alternative accounts

(a) A depository institution may apply to the Commissioner for approval of any account that does not conform to the criteria set forth in N.J.A.C. 3:1-19.2 as a New Jersey Consumer Checking Account.

(b) Each application for approval of an alternative form of account shall provide:

The initial deposit amount necessary to open the account;
The minimum balance required to maintain the account;
The maximum number of checks that may be written per month without charge;
The maximum number of non-check withdrawals per month without charge;
The maximum maintenance charge per month;
The maximum number of deposits which may be made per month without charge;
The maximum per transaction charge per month for transactions in excess of those specified in (b)3, 4, and 6 above;
The length of the periodic cycle of the account; and
Any other fees which will be charged the customer.

(c) In deciding whether to approve such an account, the Commissioner shall consider whether the account meets the stated purpose of the Act to make New Jersey Consumer Checking Accounts available to consumers at low cost, and has substantially equivalent characteristics to the account in N.J.A.C. 3:1-19.2.

(d) The Commissioner shall issue a decision on an application for approval of alternative forms of accounts within 30 days of receipt of the application, although the Commissioner may extend the time for issuing such decision by notifying the depository institution of such extension within the 30-day period. If neither a decision nor a notice of extension has been issued within that time, the application shall be deemed approved.

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (a), substituted "that" for ", which" preceding "does not conform"; in (b) and (d), substituted references to alternative forms for "non-conforming".

N.J. Admin. Code § 3:1-19.4 Closing New Jersey Consumer Checking Accounts

(a) A depository institution may refuse to open or may close a New Jersey Consumer Checking Account for the following reasons:

For fraudulent activity or overdrafts, or to protect the customers or employees of the depository institution from physical harm, under the same standards which it applies to holders of its regular checking accounts:
If the consumer has a regular checking account or another New Jersey Consumer Checking Account in that depository institution or in any other depository institution;
If the consumer makes an intentional material misrepresentation to the depository institution in connection with the account; or
If the fees and other revenue obtained from the account are less than the cost to the depository institution to provide the account, provided that the depository institution complies with the requirements of (b) through (d) below.

(b) No depository institution is required to offer a New Jersey Consumer Checking Account at a cost to a customer which is less than the cost to the depository institution to provide the account. In computing the cost of the account, the depository institution shall deduct the investment value of deposits in the account.

(c) A depository institution that determines that the revenue it obtains through fees that it charges to the account holder is less than its cost of offering a New Jersey Consumer Checking Account, and which intends to discontinue offering the account on that basis, shall notify the Department 30 days prior to such discontinuance, and shall submit with such notice the data supporting its determination regarding cost.

(d) A depository institution which discontinues an account pursuant to (c) above shall not thereby be relieved from its statutory obligation to provide a New Jersey Consumer Checking Account to consumers unless it provides data supporting a conclusion by the Commissioner that the depository institution would lose money on any account that would satisfy the requirements of N.J.S.A. 17:16N-3.

History

Amended by R.1996 d.168, effective 4/1/1996.
See: 28 New Jersey Register 3(a), 28 New Jersey Register 1830(a).
In (a)1 added physical harm.
Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (c), substituted "that" for "which" throughout; in (d), substituted "that" for "which" and substituted "N.J.S.A. 17:16N-3" for "P.L. 1991, c.210".

N.J. Admin. Code § 3:1-19.5 Consumer information requirements

(a) A depository institution that is required by N.J.S.A. 17:16N-3 to offer a New Jersey Consumer Checking Account shall provide reasonable in-person information and assistance to customers regarding New Jersey Consumer Checking Accounts generally, and related financial services.

(b) A depository institution that is required by N.J.S.A. 17:16N-3 to offer a New Jersey Consumer Checking Account shall post in a conspicuous place in the lobby of each office of the depository institution a sign and make printed material available in the public area which indicates that the office offers New Jersey Consumer Checking Accounts. The notice and printed material shall explain the significant features and limitations of such an account. A depository institution may identify its New Jersey Consumer Checking account by any name, provided that it also indicates conspicuously that the account is a "New Jersey Consumer Checking Account."

History

Amended by R.2001 d.112, effective 4/2/2001.
See: 33 New Jersey Register 213(a), 33 New Jersey Register 1087(a).
In (b), inserted "printed" preceding "material" in the first and second sentences, and substituted "significant" for "material" in the second sentence; substituted "N.J.S.A. 17:16N-3" for "P.L. 1991, c.210" and "that" for "which" throughout.

N.J. Admin. Code § 3:1-20.1 Definitions

The following words, when used in this subchapter, shall have the following meanings:

"Department" means the New Jersey Department of Banking and Insurance.

"Individual" means a natural person.

N.J. Admin. Code § 3:1-20.2 Requests for disclosure of social security numbers

(a) The Department may request that any individual subject to the licensing, permit, registration, reporting or filing requirements set forth in N.J.A.C. 3 submit his or her social security number to the Department. All such requests shall either include or be accompanied by a notice stating:

The purpose or purposes for which the Department intends to use the social security number;
That disclosure made pursuant to the request is either voluntary or mandatory; and
That the request is authorized by this section and by such other law as may be applicable.

Chapter 2 ADVERTISING

Subchapter 1 ADVERTISING BY FINANCIAL INSTITUTIONS

N.J. Admin. Code § 3:2-1.1 Authority, scope and enforcement

(a) This subchapter is promulgated pursuant to the provisions of N.J.S.A. 17:16H-1 et seq. This subchapter applies to financial institutions subject to supervision, regulation or licensing by the Department.

(b) Compliance with this subchapter and N.J.S.A. 17:16H-1 et seq. shall be enforced by the Commissioner.

History

Amended by R.1988 d.524, effective 11/7/1988.
See: 20 New Jersey Register 1025(a), 20 New Jersey Register 2750(b).
Substituted "subchapter" for "regulation".
Amended by R.2000 d.343, effective 8/21/2000.
See: 32 New Jersey Register 2177(a), 32 New Jersey Register 3059(a).
Changed N.J.S.A. references throughout; and in (a), substituted a reference to this subchapter for a reference to this regulation.

N.J. Admin. Code § 3:2-1.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Act" means N.J.S.A. 17:16H-1 et seq.

"Advertisement" means any announcement, statement, assertion or representation which is placed before the public in a newspaper, magazine, or other publication or in the form of a notice, circular, pamphlet, letter or poster or over any radio or television station or in any other way.

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Department" means the New Jersey Department of Banking and Insurance.

"Deposit account" means an account that is held by or offered to a consumer, and includes time, demand, savings, and negotiable order of withdrawal accounts.

"Disclaimer" means any statement in any advertisement which affects, limits or in any way modifies the offer that is the subject of the advertisement.

"Financial institution" means any bank, savings bank, state association, credit union, residential mortgage lender, correspondent mortgage lender, residential mortgage broker, residential mortgage loan originator, consumer lender, or sales finance company, or any other institution, corporation, partnership, or individual subject to supervision, regulation or licensing by the Department.

"Lender" means the financial institution which makes the loan or issues the loan commitment.

"Mortgage loan" means a loan made by a financial institution to a natural person for a personal, family or household purpose, secured by a mortgage constituting a lien upon real property on which there is erected or to be erected a structure containing one to four dwelling units, a portion of which may be used for nonresidential purposes, or upon a lease of the fee of such real property, in the making of which the financial institution relies primarily upon the value of the mortgaged property.

"Point" means an amount of money equal to one percent of the principal amount of the loan.

History

Amended by R.1988 d.524, effective 11/7/1988.
See: 20 N.J.R. 1025(a), 20 N.J.R. 2750(b).
Added "mortgage banker, mortgage broker" to "financial institution"; added definitions "lender", "mortgage loan" and "point".
Amended by R.1995 d.244, effective 8/7/1995.
See: 27 N.J.R. 793(a), 27 N.J.R. 2883(b).
Added the definition of "Deposit account".
Amended by R.2000 d.343, effective 8/21/2000.
See: 32 N.J.R. 2177(a), 32 N.J.R. 3059(a).
In "Act", changed N.J.S.A. reference; inserted "Commissioner" and "Department"; and rewrote "Financial institution".
Amended by R.2011 d.162, effective 6/6/2011.
See: 43 N.J.R. 335(a), 43 N.J.R. 1330(b).
In definition "Financial institution", substituted "residential mortgage lender, correspondent mortgage lender, residential mortgage broker, residential mortgage loan originator" for "licensed lender, including a mortgage banker, correspondent mortgage banker, mortgage broker, secondary lender"; and in definition "Mortgage loan", substituted "four" for "six".

N.J. Admin. Code § 3:2-1.3 Required disclosure

(a) The advertising of maximum interest rates and yield on time and savings deposits shall comply with the requirements of the Federal Truth in Savings Law, 12 U.S.C. §§ 4301 et seq., and Federal Reserve Regulation DD, 12 CFR 230.

(b) All advertisements of loan products shall comply with the requirements of the Federal Truth-in-Lending Law and Regulation Z, 15 U.S.C. 1601 et seq. and 12 CFR 226 et seq., respectively, where applicable.

History

Amended by R.1988 d.524, effective 11/7/1988.
See: 20 New Jersey Register 1025(a), 20 New Jersey Register 2750(b).
Added (c).
Amended by R.1990 d.236, effective 5/7/1990.
See: 22 New Jersey Register 1353(c).
"Federal Home Loan Bank Board" changed to "Office of Thrift Supervision".
Amended by R.1995 d.244, effective 8/7/1995.
See: 27 New Jersey Register 793(a), 27 New Jersey Register 2883(b).
In (a) substituted the Federal Truth in Savings Law and Federal Reserve Regulation DD for other rules as the advertising standards to be met, deleted former (b), and recodified (c) as (b).
Amended by R.2006 d.73, effective 2/21/2006.
See: 37 New Jersey Register 3101(a), 38 New Jersey Register 1181(a).
Section heading was "Disclosure of interest rates"; in (a), substituted "shall" for "must."

N.J. Admin. Code § 3:2-1.4 Violations of the Act

(a) No financial institution shall make, publish, disseminate, circulate, or place before the public, or cause directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of banking, lending or being a financial institution or with respect to any person in the conduct of such business, which is inaccurate, untrue, deceptive or misleading, or which negatively affects the public's confidence in such financial institution or financial institutions in general.

(b) Without limiting (a) above, the following conduct shall be deemed deceptive or misleading:

The advertisement of "immediate approval" of a loan application or "immediate closing" of a loan, or words to that effect;

The advertisement of a "no-point" mortgage loan when points, as defined herein, are charged or the advertisement of an incorrect specific number of points;

The advertisement of unqualified access to credit without clearly and conspicuously disclosing that material limitations on the availability of such credit may exist, including, but not limited to, limitations such as the percentage of down payment required, that a higher interest rate or points may be required, or that restrictions as to the maximum principal amount of the loan offered may apply;
The advertisement of a specific rate for a mortgage loan unless:

i. The lender offers lock-in agreements to a reasonable number of qualified applicants at that rate; or

ii. The advertiser specifically states in the advertisement that the expressed rate is the rate at which such loans offered by the lender are currently being closed or committed (in cases where the lender customarily commits to close at a specific rate) and that the rate is subject to change;

The advertisement of a mortgage loan by a residential mortgage broker (or residential mortgage lender that acts merely as a mortgage broker with regard to the advertised loan) or by a mortgage loan originator employed by such licensee that does not specifically and conspicuously state that the advertiser will not make any mortgage loan commitments or fund any mortgage loans under the advertised program and does not contain a statement that conspicuously states that the advertising licensee, or his or her employer if the advertiser is a licensed mortgage loan originator, arranges loans with third-party providers;
The advertisement of a mortgage loan or mortgage loan services by a residential mortgage lender, correspondent mortgage lender, residential mortgage broker or residential mortgage loan originator without including in the advertisement or broadcast announcement, the name, address and telephone number of the licensee and the words "licensed by the N.J. Department of Banking and Insurance";
The advertisement of a deposit account which does not comply with the requirements of the Federal Truth in Savings Law, 12 U.S.C. 4301 et seq., and Federal Reserve Regulation DD, 12 CFR 230; and
The failure of any advertisement to comply with the provisions of N.J.A.C. 3:2-1.3.

(c) No loan or savings product may be advertised by an entity subject to this subchapter unless the entity has the advertised product available to a reasonable number of qualified applicants responding to the advertisement on the date the advertisement appears, or on the next business day if the advertisement appears on a day the advertiser is not open for business.

(d) Nothing in this section shall require a lender to offer any loan product to an unqualified applicant.

History

Amended by R.1988 d.524, effective 11/7/1988.
See: 20 N.J.R. 1025(a), 20 N.J.R. 2750(b).
Added (b)-(d).
Amended by R.1990 d.236, effective 5/7/1990.
See: 22 N.J.R. 690(b), 22 N.J.R. 1353(c).
Added as deceptive practice, advertisement of a yield on a deposit account for a term of less than one year without reference to the basis of compounding.
Amended by R.1993 d.295, effective 6/21/1993 (operative September 1, 1993).
See: 25 N.J.R. 1035(a), 25 N.J.R. 2687(a).
Amended by R.1993 d.423, effective 9/7/1993.
See: 25 N.J.R. 2625(b), 25 N.J.R. 4063(b).
Amended by R.1994 d.559, effective 11/7/1994.
See: 26 N.J.R. 3234(a), 26 N.J.R. 4347(b).
Amended by R.1995 d.244, effective 8/7/1995.
See: 27 N.J.R. 793(a), 27 N.J.R. 2883(b).
Substituted the Federal Truth in Savings Law and Federal Reserve Regulation DD as the advertising standard for deceptive or misleading conduct.
Amended by R.1995 d.407, effective 8/7/1995.
See: 27 N.J.R. 1715(a), 27 N.J.R. 2883(a).
Amended by R.2000 d.343, effective 8/21/2000.
See: 32 N.J.R. 2177(a), 32 N.J.R. 3059(a).
In (b), rewrote 6.
Amended by R.2006 d.73, effective 2/21/2006.
See: 37 N.J.R. 3101(a), 38 N.J.R. 1181(a).
Rewrote (b)3 and 5; added (b)8.
Amended by R.2011 d.162, effective 6/6/2011.
See: 43 N.J.R. 335(a), 43 N.J.R. 1330(b).
In (b)5 and (b)6, substituted "lender" for "banker" throughout; in (b)5, inserted "residential" throughout and "or by a mortgage loan originator employed by such licensee" and substituted "advertising licensee, or his or her employer if the advertiser is a licensed mortgage loan originator," for "mortgage broker (or mortgage banker acting as set forth above)"; and in (b)6, substituted the first occurrence of "residential" for "licensed lender with", "lender, residential" for "banker or" and "or residential mortgage loan originator" for "authority".

N.J. Admin. Code § 3:2-1.5 Notification of possible violation; cease and desist order; grounds; content; hearing; service

(a) If it appears to the Commissioner, based on his or her examination of the advertisement of a financial institution, that the financial institution is in violation of the Act or this chapter, the Commissioner may order such financial institution to show cause why an order directing the financial institution to cease and desist from using the advertisement in question should not be issued.

(b) The order to show cause shall be returnable in not less than 20 days from the date of service thereof. The order to show cause shall contain the following:

A statement that the financial institution may request a hearing pursuant to the Administrative Procedure Act;
A reference to the particular section of the statute or rule charged to have been violated;
A short and plain statement of the facts giving rise to the alleged statutory or rule violation.

History

Amended by R.2000 d.343, effective 8/21/2000.
See: 32 New Jersey Register 2177(a), 32 New Jersey Register 3059(a).
In (a), neutralized gender references.
Amended by R.2006 d.73, effective 2/21/2006.
See: 37 New Jersey Register 3101(a), 38 New Jersey Register 1181(a).
Rewrote the section.

N.J. Admin. Code § 3:2-1.6 Hearings

Upon notification of a request for a hearing by a financial institution in response to an order to show cause issued pursuant to N.J.A.C. 3:2-1.5, the Commissioner shall certify the matter as a contested case. An administrative hearing will then be conducted pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Rules of Practice, N.J.A.C. N.J.S.A. 1:1-1 et seq.

History

Amended by R.1985 d.183, effective 4/15/1985.
See: 17 New Jersey Register 238(a), 17 New Jersey Register 904(a).
Deleted "the procedure established for contested cases." and added "the Administrative ...N.J.A.C. 1:1-1.1 et seq."

N.J. Admin. Code § 3:2-1.7 Continued violation of Act; penalty

A financial institution which continues to violate the provisions of N.J.A.C. 3:2-1.4 hereof after being ordered by the Commissioner to cease such practices shall be subject to a penalty not to exceed $ 500.00 for each violation.

N.J. Admin. Code § 3:2-1.8 Reserved

History

Repealed by R.1995 d.407, effective 8/7/1995.
See: 27 New Jersey Register 1715(a), 27 New Jersey Register 2883(a).
Section was "Disclaimer; size of type".

N.J. Admin. Code § 3:2-1.9 Administrative Procedure Act

Except as otherwise provided in the Act and this subchapter, the procedures followed by the Commissioner shall conform to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq.

History

Amended by R.2000 d.343, effective 8/21/2000.
See: 32 New Jersey Register 2177(a), 32 New Jersey Register 3059(a).
Substituted a reference to this subchapter for a reference to these regulations, and changed N.J.S.A. reference.

Chapter 3 DEPARTMENT ORGANIZATION

Subchapter 1 MISSION AND ORGANIZATION

N.J. Admin. Code § 3:3-1.1 Mission statement of the Department

The mission of the Department of Banking and Insurance is to regulate the banking, insurance and real estate industries in a professional and timely manner that protects and educates consumers and promotes the growth, financial stability and efficiency of those industries.

History

Amended by R.1997 d.394, effective 8/25/1997.
See: 29 N.J.R. 4097(a).
Substantially amended section.
Amended by R.2003 d.138, effective 4/7/2003.
See: 34 N.J.R. 4022(a), 35 N.J.R. 1539(c).
Rewrote the section.

N.J. Admin. Code § 3:3-1.2 Organization of the Division

(a) The organization of the Division of Banking in theDepartment of Banking and Insurance appears below.

Data in image

History

Amended by 50 N.J.R. 1478(a), effective 7/2/2018

Subchapter 2 CONFIDENTIAL RECORDS

N.J. Admin. Code § 3:3-2.1 Confidential records

(a) Throughout the Department of Banking and Insurance, the following shall be deemed to be confidential and not government records pursuant to N.J.S.A. 47:1A-1 et seq.

Documents obtained or prepared incident to an examination or audit of a financial institution, its holding institution or its subsidiary and any examination or audit report;
Business plans and incorporators' financial statements filed in connection with a charter or license application, and all materials the Department receives or prepares incident to an application by a financial institution or other person to make a leeway or other investment;
Complaint files maintained by the Department;
Memoranda or other correspondence between the Department and the Office of the Attorney General, and all memoranda within the Department concerning advice given by the Office of the Attorney General;
Documents obtained pursuant to an ongoing investigation by the Department of a financial institution or other person, when disclosure would be inimical to the public interest;
Memoranda of understanding between the Department and a financial institution;
Information regarding individual institutions obtained pursuant to surveys conducted by the Department;
Personnel or pension records of an individual employed by the Department, except that the following information shall not be deemed confidential:

i. An individual's name, title, position, salary, payroll record, length of service in the Department and in the government, date of separation from government service and the reason therefor, and the amount and type of pension he or she is receiving; and

ii. Data contained in information which discloses conformity with specific experimental, educational or medical qualifications required for government employment or for receipt of a public pension, but in no event shall detailed medical or psychological information be released;

Personnel or pension records of an employee, officer, director or other person affiliated with a financial institution, such as the residence address, residence telephone number, salary or social security number, when such information is contained in any report, filing or record held by the Department; and

Information provided to the Nationwide Mortgage Licensing System and Registry pursuant to the New Jersey Residential Mortgage Lending Act identifying an applicant's or licensee's social security number, home address, and home telephone number.

(b) The fact that a document is not listed in (a) above shall not be construed as evidence that the document is a government record for purposes of N.J.S.A. 47:1A-1 et seq.

History

Amended by 50 N.J.R. 1478(a), effective 7/2/2018

N.J. Admin. Code § 3:3-2.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Independent auditor" means a certified public accountant or other person approved by the Commissioner of Banking and Insurance who is retained by the depository institution pursuant to 12 U.S.C. 1831 m(a) or N.J.S.A. 17:9A-253.

"Report of Examination" means documents obtained or prepared incident to an examination or audit of a financial institution pursuant to N.J.S.A. 17:9A-260, its holding institution or its subsidiary and any examination or audit report.

History

New Rule, R.1994 d.49, effective 1/18/1994.
See: 25 New Jersey Register 4819(a), 26 New Jersey Register 351(a).
Administrative change.
See: 29 New Jersey Register 4099(a).

N.J. Admin. Code § 3:3-2.3 Release of Bank Examination Reports to independent auditors

(a) The Report of Examination shall be made available for inspection by an independent auditor retained by the depository institution in connection with the audit of the depository institution subject to the following conditions:

The independent auditor shall review the Report of Examination only on the premises of the institution and shall not make or retain any copies of such information; and
The independent auditor shall not disclose the confidential supervisory information for any purpose without the prior written approval of the Commissioner except as necessary to provide advice to the institution.

History

New Rule, R.1994 d.49, effective 1/18/1994.
See: 25 New Jersey Register 4819(a), 26 New Jersey Register 351(a).
Administrative change.
See: 29 New Jersey Register 4099(a).

Subchapter 3 DISABILITY DISCRIMINATION GRIEVANCE PROCEDURE

N.J. Admin. Code § 3:3-3.1 Definitions

The following words and terms, as used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"ADA" means the Americans with Disabilities Act, 42 U.S.C.A. § 12101 et seq.

"Agency" means the New Jersey Department of Banking and Insurance.

"Designated decision maker" means the Commissioner of Banking and Insurance or his or her designee.

History

Administrative change.
See: 29 New Jersey Register 4099(a).

N.J. Admin. Code § 3:3-3.2 Purpose

(a) These rules are adopted by the agency in satisfaction of the requirements of the ADA and regulations promulgated pursuant thereto, 28 C.F.R. 35.107.

(b) The purpose of these rules is to establish a designated coordinator whose duties shall include assuring that the agency complies with and carries out its responsibilities under the ADA. Those duties shall also include the investigation of any complaint filed with the agency pursuant to N.J.A.C. 3:3-3.5 through 3.8.

N.J. Admin. Code § 3:3-3.3 Required ADA notice

In addition to any other advice, assistance or accommodation provided, a copy of the following notice shall be given to anyone who inquires regarding the agency's compliance with the ADA or the availability of accommodation which would allow a qualified individual with a disability to receive services or participate in a program or activity provided by the agency.

AGENCY NOTICE OF ADA PROCEDURE

The agency has adopted an internal grievance procedure providing for prompt and equitable resolution of complaints alleging any action prohibited by the U.S. Department of Justice regulations implementing Title II of the Americans with Disabilities Act. Title II states, in part, that "no otherwise qualified disabled individual shall, solely by reason of such disability, be excluded from participation in, be denied the benefits of or be subjected to discrimination" in programs or activities sponsored by a public entity.

Rules describing and governing the internal grievance procedure can be found at N.J.A.C. 3:3-3. As those rules indicate, complaints should be addressed to the agency's designated ADA Coordinator, who has been designated to coordinate ADA compliance efforts, at the following address:

ADA Coordinator

Department of Banking and Insurance

20 West State Street

PO Box 040

Trenton, New Jersey 08625-0040

A complaint may be filed in writing or orally, but should contain the name and address of the person filing it, and briefly describe the alleged violation. A form for this purpose is available from the designated ADA coordinator. In cases of employment related complaints, the procedures established by the Department of Personnel, N.J.A.C. 4A:7-1.1 et seq., will be followed where applicable.
A complaint should be filed promptly within 20 days after the complainant becomes aware of the alleged violation. (Processing of allegations of discrimination which occurred before this grievance procedure was in place will be considered on a case-by-case basis.)
An investigation, as may be appropriate, will follow the filing of a complaint. The investigation will be conducted by the agency's designated ADA Coordinator. The rules contemplate informal but thorough investigations, affording all interested persons and their representatives, if any, an opportunity to submit evidence relevant to a complaint.
In most cases a written determination as to the validity of the complaint and a description of the resolution, if any, will be issued by the designated decision maker and a copy forwarded to the complainant no later than 45 days after its filing.
The ADA coordinator will maintain the files and records of the agency relating to the complaints filed.
The right of a person to a prompt and equitable resolution of the complaint filed hereunder will not be impaired by the person's pursuit of other remedies such as the filing of an ADA complaint with the responsible Federal department or agency or the New Jersey Division on Civil Rights. Use of this grievance procedure is not a prerequisite to the pursuit of other remedies.
The rules will be construed to protect the substantive rights of interested persons, to meet appropriate due process standards and to assure that the agency complies with the ADA and implementing Federal rules.

History

Administrative change.
See: 29 New Jersey Register 4099(a).

N.J. Admin. Code § 3:3-3.4 Designated ADA coordinator

(a) The designated coordinator of ADA compliance and complaint investigation for the agency is:

ADA Coordinator

Department of Banking and Insurance

20 West State Street

PO Box 040

Trenton, New Jersey 08625-0040

(b) All inquiries regarding the agency's compliance with the ADA and the availability of accommodation which would allow a qualified individual with a disability to receive services or participate in a program or activity provided by the agency should be directed to the designated coordinator identified in (a) above.

(c) All complaints alleging that the agency has failed to comply with or has acted in a way that is prohibited by the ADA should be directed to the designated ADA coordinator identified in this section, in accordance with the procedures set forth in N.J.A.C. 3:3-3.5 through 3.8.

History

Administrative change.
See: 29 New Jersey Register 4099(a).

N.J. Admin. Code § 3:3-3.5 Complaint procedure

A complaint alleging that the agency has failed to comply with the ADA or has acted in a way that is prohibited by the ADA shall be submitted either in writing or orally to the designated ADA coordinator identified in N.J.A.C. 3:3-3.4. A complaint alleging employment discrimination will be processed pursuant to the rules of the Department of Personnel, N.J.A.C. 4A:7-1.1 through 3.4, if those rules are applicable.

N.J. Admin. Code § 3:3-3.6 Complaint contents

(a) A complaint submitted pursuant to this subchapter may be submitted in or on the form set forth at N.J.A.C. 3:3-3.7.

(b) A complaint submitted pursuant to this subchapter shall include the following information:

The name of the complainant, and/or any alternate contact person designated by the complainant to receive communication or provide information for the complainant;
The address and telephone number of the complainant or alternate contact person; and
A description of manner in which the ADA has not been complied with or has been violated, including times and locations of events and names of witnesses if appropriate.

N.J. Admin. Code § 3:3-3.7 Complaint form

The following form may be utilized for the submission of a complaint pursuant to this subchapter:

| Americans with Disabilities Act Grievance Form | | --- | | Date: ................... | | Name of grievant: ......................................................... | | Address of grievant: ...................................................... | | Telephone number of grievant: ............................................. | | Disability of grievant: ................................................... | | Name, address and telephone number of alternate contact person: ........... | | ........................................................................... | | ........................................................................... | | Agency alleged to have denied access: | | Department: ............................................................... | | Division: ................................................................. | | Bureau or office: ......................................................... | | Location: ................................................................. | | Incident or barrier: | | Please describe the particular way in which you believe you have been denied the benefits of any service, program or activity or have otherwise been subject to discrimination. Please specify dates, times and places of incidents, and names and/or positions of agency employees involved, if any, as well as names, addresses and telephone numbers of any witnesses to any such incident. Attach additional pages if necessary | | ........................................................................... | | ........................................................................... | | ........................................................................... | | ........................................................................... | | ........................................................................... | | Proposed access or accommodation: | | If you wish, describe the way in which you feel access may be had to the benefits described above, or that accommodation could be provided to allow access. | | ........................................................................... | | ........................................................................... | | ........................................................................... | | A copy of the above form may be obtained by contacting the designated ADA coordinator identified at N.J.A.C. 3:3-3.4. |

N.J. Admin. Code § 3:3-3.8 Investigation

(a) Upon receipt of a complaint submitted pursuant to this subchapter, the designated ADA coordinator will notify the complainant of the receipt of the complaint and the initiation of an investigation into the matter. The designated ADA coordinator will also indicate a date by which it is expected that the investigation will be completed, which date shall not be later than 45 days from the date of receipt of the complaint, unless a later date is agreed to by the complainant.

(b) Upon completion of the investigation, the designated ADA coordinator shall prepare a report for review by the designated decision maker for the agency. The designated decision maker shall render a written decision within 45 days of receipt of the complaint, unless a later date is agreed to by the complainant, which decision shall be transmitted to the complainant and/or the alternate contact person if so designated by the complainant.

Subchapter 4 PETITIONS FOR RULES; RULEMAKING NOTICE

N.J. Admin. Code § 3:3-4.1 Scope

This subchapter shall apply to all petitions made by interested persons for the promulgation, amendment or repeal of any rule by the Department of Banking and Insurance, pursuant to N.J.S.A. 52:14B-4(f). These rules apply to requirements for a public comment period extension or a public hearing when sufficient public interest is established, and to the rulemaking notice the Department will provide.

N.J. Admin. Code § 3:3-4.2 Procedure for petitioner

(a) Any person who wishes to petition the Department to promulgate, amend or repeal a rule must submit to the Commissioner, in writing, the following information:

The name of the petitioner;
The substance or nature of the rulemaking which is requested;
The reasons for the request and the petitioner's interest in the request;
References to the statutory authority for the Department to take the requested action; and
A caption at the top of the document identifying it as a petition for rulemaking pursuant to N.J.S.A. 52:14B-4(f) and this subchapter.

(b) Petitions shall be sent to the following address:

New Jersey Department of Banking and Insurance

Legislative and Regulatory Affairs

ATTN: Rulemaking Petitions

PO Box 325

Trenton, NJ 08625-0325

(c) Any document submitted to the Department of Banking and Insurance which is not in substantial compliance with (a) above shall not be deemed to be a petition for a rule requiring further Department action pursuant to N.J.S.A. 52:14B-4(f).

N.J. Admin. Code § 3:3-4.3 Procedure of the Department

(a) Upon receipt of a petition in compliance with N.J.A.C. 3:3-4.2, the Department will file a notice of petition with the Office of Administrative Law for publication in the New Jersey Register. The notice will include:

The name of the petitioner;
The substance or nature of the rulemaking action which is requested;
The problem or purpose which is the subject of the request; and
The date the petition was received.

(b) Within 60 days of receiving a petition, the Department will mail to the petitioner, and file with the Office of Administrative Law, for publication in the New Jersey Register, a notice of action on the petition which will include:

The name of the petitioner;
The Register citation for the notice of petition, if that notice appeared in a previous Register;
Certification by the Commissioner that the petition was duly considered pursuant to law;
The nature or substance of the Department's action upon the petition; and
A brief statement of reasons for the Department's action.

Deny the petition and provide a written statement of the Department's reasons to the petitioner, and include such reasons in its notice of action;
Grant the petition and within 90 days file a notice of proposed rule or a notice of preproposal for a rule with the Office of Administrative Law; or
Refer the matter for further deliberations, the nature of which shall be specified to the petitioner and in the notice of action and which shall conclude within 90 days of such referral. Upon conclusion of such further deliberations, the Department shall either deny the petition or grant the petition and initiate a rulemaking proceeding within 90 days.

N.J. Admin. Code § 3:3-4.4 Rulemaking activity

(a) The Department shall provide notice of new rules, amendments, repeals, or adoptions by posting these rules on its website at http://www.n1.qov/dobi/leqsreqs.htm [File Link Not Available] and to the news media maintaining a press office in the State House Complex.

(b) The Department shall post its proposals in the Department's Library, which is located on the 1st Floor, 20 West State Street, Trenton, NJ 08625. The Department shall also distribute its proposals to the Department's list of "interested persons" by e-mail or hard copy. Interested persons are those who have informed the Department in writing that they wish to receive notice of its proposed regulations.

History

Amended by 50 N.J.R. 1478(a), effective 7/2/2018

N.J. Admin. Code § 3:3-4.5 Sufficient public interest for the purposes of extending the comment period or granting a public hearing

(a) In determining whether sufficient public interest has been demonstrated for the purposes of extending the comment period pursuant to N.J.A.C. 1:30-5.4, the Commissioner shall consider the following criteria:

Whether comments received indicated a previously unrecognized impact on regulated entities or persons; or
Whether comments received raise unanticipated issues related to the notice of proposal.

(b) In determining whether sufficient public interest has been demonstrated for purposes of conducting a public hearing pursuant to N.J.A.C. 1:30-5.5, the Commissioner shall consider the application of an interested person that has been submitted on a form prescribed by the Commissioner. Such application shall be submitted within 30 days following the publication of the notice of proposal in the New Jersey Register.

A person interested in having a public hearing held on a notice of proposal shall submit an application on a form prescribed by the Commissioner, to Legislative and Regulatory Affairs, Department of Banking and Insurance, 20 West State Street, PO Box 325, Trenton, NJ 08625-0896. The application shall contain the following information:

i. The person's name, address, telephone number, agency or association (if applicable);

ii. The citation and title of the proposed rule and the date the notice of proposal was published in the New Jersey Register; and

iii. The reasons a public hearing regarding the notice of proposal is considered necessary pursuant to (c) below.

(c) Sufficient public interest for the purpose of holding a public hearing, pursuant to N.J.A.C. 1:30-5.5, shall be demonstrated if upon reviewing the application the Commissioner determines that additional data, findings and/or analysis regarding the notice of proposal are necessary for the Department to review prior to adoption of the proposal in order to ensure that the notice of proposal does not violate the intent of the statutory authority.

(d) A public hearing on a notice of proposal shall be conducted in accordance with the provisions of N.J.A.C. 1:30-5.5.

(e) The recommendations of the hearing officer, and the Commissioner's decision to accept, reject or modify any recommendations, shall be summarized and published in the New Jersey Register pursuant to N.J.A.C. 1:30-5.5(g).

History

Amended by R.2011 d.004, effective 1/3/2011.
See: 42 N.J.R. 1766(a), 43 N.J.R. 33(b).
In the introductory paragraph of (b), substituted "30" for "60".

Chapter 4 DEPOSITORY INSTITUTIONS

Subchapter 1 CAPITAL REQUIREMENTS

N.J. Admin. Code § 3:4-1.1 Purpose and scope

(a) This subchapter implements the capital requirements of the "Banking Act of 1948," N.J.S.A. 17:9A-1 et seq. and the "Savings and Loan Act (1963)," N.J.S.A. 17:12B-1 et seq.

(b) This subchapter shall apply to all depository institutions.

History

New Rule, R.2008 d.69, effective 4/7/2008.
See: 39 N.J.R. 4983(a), 40 N.J.R. 1826(a).
Former N.J.A.C. 3:4-1.1, Definitions, recodified to N.J.A.C. 3:4-1.2.

N.J. Admin. Code § 3:4-1.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Bank" means a bank as defined in N.J.S.A. 17:9A-1.

"Capital stock association" means a capital stock association as defined in N.J.S.A. 17:12B-244.

"Capital stock savings bank" means a capital stock savings bank as defined in N.J.S.A. 17:9A-8.1.

"Classified assets" means assets, or portions thereof, which have a well defined weakness or weaknesses attributable to the unfavorable record of the obligor, insufficiency of security, or other factors noted in the examiners comments.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Department" means the New Jersey Department of Banking and Insurance.

"Depository institution" means a bank, savings bank, capital stock savings bank, capital stock association or mutual association.

"Mutual association" means a mutual association as defined in N.J.S.A. 17:12B-5.

"Qualifying capital" means qualifying capital as defined at 12 CFR Part 324.

"Risk weighted assets" for a bank and savings bank means risk weighted assets as defined at 12 CFR Part 324, and for a savings and loan association, means risk weighted assets as defined at 12 CFR 324.

"Savings bank" means a savings bank as defined in N.J.S.A. 17:9A-1 (13).

"Tier 1 capital" means Tier 1 capital as defined at 12 CFR Part 324.

"Total assets" means total assets as defined at 12 CFR Part 324.

History

Amended by R.1997 d.380, effective 9/15/1997.
See: 29 N.J.R. 2589(a), 29 N.J.R. 4099(b).
Added "Commissioner" and "Department".
Amended by R.2002 d.383, effective 11/18/2002.
See: 34 N.J.R. 2173(a), 34 N.J.R. 2549(b), 34 N.J.R. 3957(b).
Rewrote "Bank", "Capital stock association", "Capital stock savings bank", "Mutual association", "Qualifying capital", "Risk weighted assets", "Savings bank", "Tier 1 capital" and "Total assets".
Recodified from N.J.A.C. 3:4-1.1 by R.2008 d.69, effective 4/7/2008.
See: 39 N.J.R. 4983(a), 40 N.J.R. 1826(a).
Former N.J.A.C. 3:4-1.2, Minimum leverage capital requirement, recodified to N.J.A.C. 3:4-1.3.

N.J. Admin. Code § 3:4-1.3 Minimum leverage capital requirement

(a) The minimum leverage capital for a depository institution shall be a ratio of Tier 1 capital to total assets of four percent.

(b) Notwithstanding (a) above, the Commissioner may establish for a depository institution a minimum ratio of Tier 1 capital total assets of more than four percent based on the following factors:

The financial history and condition of a depository institution, and its future earnings prospects;
The managerial resources of the depository institution;
The funding and liquidity of the depository institution;
The interest-rate risk exposure of the depository institution;
The concentration of assets of the depository institution; or
The volume of assets classified as substandard, doubtful or loss, or subject to special mention.

History

Amended by R.1997 d.380, effective 9/15/1997.
See: 29 N.J.R. 2589(a), 29 N.J.R. 4099(b).
Recodified from N.J.A.C. 3:4-1.2 by R.2008 d.69, effective 4/7/2008.
See: 39 N.J.R. 4983(a), 40 N.J.R. 1826(a).
Former N.J.A.C. 3:4-1.3, Minimum risk-based capital requirement, recodified to N.J.A.C. 3:4-1.4.

N.J. Admin. Code § 3:4-1.4 Minimum risk-based capital requirement

A depository institution shall maintain qualifying capital of at least eight percent of its risk weighted assets. At least four percent of this qualifying capital shall be in the form of Tier 1 capital.

History

Recodified from N.J.A.C. 3:4-1.3 by R.2008 d.69, effective 4/7/2008.
See: 39 N.J.R. 4983(a), 40 N.J.R. 1826(a).
Former N.J.A.C. 3:4-1.4, Unsafe operations, recodified to N.J.A.C. 3:4-1.5.

N.J. Admin. Code § 3:4-1.5 Unsafe operations

(a) A depository institution which has leverage capital and/or risk-based capital below the minimum required levels shall be deemed to be operating in an unsafe or unsound manner for purposes of N.J.S.A. 17:9A-266 et seq. and 17:12B-177 et seq.

(b) A depository institution which has entered into and is in compliance with a written agreement with the Department or has submitted to the Department and is in compliance with a plan approved by the Department to increase its capital ratios to such levels as the Department deems appropriate and to take such other action as may be necessary for the depository institution to be operated so as not to be engaged in such an unsafe or unsound practice will not be deemed to be engaged in an unsafe or unsound practice on account of its capital ratios.

(c) Notwithstanding (a) above, the Department is not precluded from taking any authorized action against a depository institution with capital above the minimum requirements if the specific circumstances deem such action to be appropriate.

History

Amended by R.1997 d.380, effective 9/15/1997.
See: 29 N.J.R. 2589(a), 29 N.J.R. 4099(b).
Recodified from N.J.A.C. 3:4-1.4 by R.2008 d.69, effective 4/7/2008.
See: 39 N.J.R. 4983(a), 40 N.J.R. 1826(a).
Former N.J.A.C. 3:4-1.5, Unsafe condition, recodified to N.J.A.C. 3:4-1.6.

N.J. Admin. Code § 3:4-1.6 Unsafe condition

(a) A depository institution which has a ratio of Tier 1 capital to total assets of less than two percent shall be deemed to be in an unsafe condition for purposes of N.J.S.A. 17:9A-269 or N.J.S.A. 17:12B-179.

(b) A depository institution which has entered into and is in compliance with a written agreement with the Department to increase its capital ratios to such levels as the Department deems appropriate and to take such other action as may be necessary for the depository institution to be operated in a safe and sound manner will not be deemed to be an unsafe condition on account of its capital ratio.

(c) Notwithstanding (a) above, the Department is not precluded from taking action against a depository institution which has a ratio of Tier 1 capital to total assets equal to or greater than two percent if the depository institution is otherwise in an unsafe condition, or such action is otherwise authorized.

History

Amended by R.1997 d.380, effective 9/15/1997.
See: 29 N.J.R. 2589(a), 29 N.J.R. 4099(b).
Recodified from N.J.A.C. 3:4-1.5 by R.2008 d.69, effective 4/7/2008.
See: 39 N.J.R. 4983(a), 40 N.J.R. 1826(a).
Former N.J.A.C. 3:4-1.6, Capital for interim conversion, recodified to N.J.A.C. 3:4-1.7.

N.J. Admin. Code § 3:4-1.7 Capital for interim conversion

(a) Notwithstanding any rule to the contrary, a depository institution with a ratio of Tier 1 capital to assets in excess of two percent shall be deemed to be adequately capitalized to qualify for a conversion to a bank, savings bank, capital stock savings bank, capital stock association or mutual association pursuant to N.J.S.A. 17:9A-17.1 et seq. or 17:16M-1 et seq., provided that:

The conversion is an interim step toward a merger or acquisition with another institution; and
After the merger or acquisition, the resulting depository institution will satisfy all capital maintenance requirements.

History

New Rule, R.1993 d.661, effective 12/20/1993.
See: 25 N.J.R. 4545(a), 25 N.J.R. 5917(c).
Amended by R.1997 d.380, effective 9/15/1997.
See: 29 N.J.R. 2589(a), 29 N.J.R. 4099(b).
Recodified from N.J.A.C. 3:4-1.6 by R.2008 d.69, effective 4/7/2008.
See: 39 N.J.R. 4983(a), 40 N.J.R. 1826(a).

Subchapter 2 COMPENSATION

N.J. Admin. Code § 3:4-2.1 Purpose and scope

(a) This subchapter implements the stock option plan set forth in the "Banking Act of 1948" at N.J.S.A. 17:9A-8.10 and 27.50 et seq.

(b) This subchapter shall apply to all depositories.

History

New Rule, R.2008 d.69, effective 4/7/2008.
See: 39 N.J.R. 4983(a), 40 N.J.R. 1826(a).
Former N.J.A.C. 3:4-2.1, Definitions, recodified to N.J.A.C. 3:4-2.2.

N.J. Admin. Code § 3:4-2.2 Definitions

The following words and terms, when used in the subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Bank" means a bank as defined in N.J.S.A. 17:9A-1.

"Depository" means a bank, savings bank or savings and loan association, and includes a limited purpose trust company.

"Savings and loan association" means a capital stock association established pursuant to N.J.S.A. 17:12B-244 et seq.

"Savings bank" means a capital stock savings bank established pursuant to N.J.S.A. 17:9A-8.1 et seq.

History

Amended by R.1997 d.380, effective 9/15/1997.
See: 29 N.J.R. 2589(a), 29 N.J.R. 4099(b).
Deleted Public Law reference from "Bank", "Savings and loan association" and "Savings bank".
Amended by R.2002 d.383, effective 11/18/2002.
See: 34 N.J.R. 2173(a), 34 N.J.R. 2549(b), 34 N.J.R. 3957(b).
Rewrote "Bank".
Recodified from N.J.A.C. 3:4-2.1 by R.2008 d.69, effective 4/7/2008.
See: 39 N.J.R. 4983(a), 40 N.J.R. 1826(a).
Former N.J.A.C. 3:4-2.2, Stock option plans, recodified to N.J.A.C. 3:4-2.3.

N.J. Admin. Code § 3:4-2.3 Stock option plans

(a) A bank may permit its directors, officers and employees to participate in a stock option plan established pursuant to N.J.S.A. 17:9A-27.50 et seq., and a savings bank may permit its directors, officers and employees to participate in a stock option plan established pursuant to N.J.S.A. 17:9A-8.10.

(b) A savings and loan association may permit its directors, officers and employees to participate in a stock option plan to the same extent as permitted for banks and savings banks so long as the association complies with N.J.S.A. 17:9A-27.50 et seq.

(c) A depository may not grant stock options to a director for less than the higher of the par value or 100 percent of the fair market value of the shares at the time the options are granted. A depository may not grant stock options to an officer or employee for less than the higher of the par value or 85 percent of the fair market value of the shares at the time the options are granted. Stock option plans may not provide for the payment of cash to directors by the depository upon cancellation of the options.

(d) A stock option plan must be adopted by the depository's board of directors and approved by the holders of two-thirds of the capital stock of the depository entitled to vote.

History

Recodified from N.J.A.C. 3:4-2.2 by R.2008 d.69, effective 4/7/2008.
See: 39 N.J.R. 4983(a), 40 N.J.R. 1826(a).

Subchapter 3 REPORTING REQUIREMENTS

N.J. Admin. Code § 3:4-3.1 Purpose and scope

(a) The purpose of this subchapter is to set forth the form of report to be filed with the Department by banks and out-of-State banks with a branch office in this State as required pursuant to N.J.S.A. 17:9A-256. This subchapter further sets forth when the filing of such reports shall be waived pursuant to N.J.S.A. 17:9A-256E.

(b) This subchapter shall apply to all banks and out-of-State banks with a branch office in this State required to file reports with the Department pursuant to N.J.S.A. 17:9A-256.

N.J. Admin. Code § 3:4-3.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Bank" means a bank or savings bank.

"Branch office" means a branch office as defined in N.J.S.A. 17:9A-1.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Department" means the New Jersey Department of Banking and Insurance.

"Out-of-State bank" means a state bank, as defined in the Federal Deposit Insurance Act, 12 U.S.C. § 1813(a)(2), that is chartered under the laws of a state other than this state.

History

Amended by R.2002 d.383, effective 11/18/2002.
See: 34 New Jersey Register 2173(a), 34 New Jersey Register 2549(b), 34 New Jersey Register 3957(b).
In "Branch office", substituted "means a branch office" for "is".

N.J. Admin. Code § 3:4-3.3 Call reports and official email address

(a) Pursuant to N.J.S.A. 17:9A-256, every bank and out-of-State bank with a branch office in this State shall file a semi-annual report with the Department that sets forth the bank's assets and liabilities as of June 30 and December 31 of each year, on a form to be provided by the Commissioner. The reports shall be in the general form of report adopted by the Federal Financial Institutions Examination Council for purposes of filing by banks with the Federal Deposit Insurance Corporation pursuant to 12 CFR Part 324 or with the Board of Governors of the Federal Reserve System pursuant to 12 U.S.C. § 324. Such reports shall be filed with the Department within 30 days after the end of the relevant six-month period. Upon request, the Commissioner may extend the due date for not more than 10 days.

(b) The requirements at (a) above shall not apply to a bank or out-of-State bank that files reports of financial condition with the Federal Deposit Insurance Corporation pursuant to 12 CFR Part 324 or with the Board of Governors of the Federal Reserve System pursuant to 12 U.S.C. § 324.

(c) In addition to the reports required to be filed pursuant to (a) above, the Commissioner may require such additional reports from a particular bank, as the Commissioner deems necessary, to obtain a full and complete knowledge of such bank's condition. Reports filed pursuant to this subsection shall be considered confidential and shall not be subject to public inspection or copying pursuant to the Open Public Records Act, N.J.S.A. 47:1A-1 et seq.

(d) Notwithstanding the provisions at (b) above, each bank shall provide the Department, in writing, on letterhead signed by an officer, with its official email address. Within 10 days following any change in the official email address previously provided to the Department, the bank shall notify the Department of the change in the same manner and include the full name of the entity, its old email address, its new email address, and the effective date of the change. The notice shall be sent to: New Jersey Department of Banking and Insurance, Division of Banking, Attention: Depositories, 20 West State Street, PO Box 040, Trenton, New Jersey 08625-0040.

History

Amended by R.2008 d.178, effective 7/7/2008.
See: 40 N.J.R. 1399(a), 40 N.J.R. 3989(a).
Section was "Call reports". Added (d).

N.J. Admin. Code § 3:4-3.4 Penalties

Failure to comply with the provisions of this subchapter shall result in the imposition of penalties as authorized by law, including, but not limited to, penalties authorized by N.J.S.A. 17:9A-256D.

Subchapter 4 AGENTS OF FOREIGN BANKS

N.J. Admin. Code § 3:4-4.1 Purpose and scope

(a) The purpose of this subchapter is to specify the activities that foreign banks and agents of foreign banks may conduct in New Jersey. It also specifies what activities are illegal for foreign banks and agents of foreign banks.

(b) This subchapter shall apply to foreign banks and agents of foreign banks that conduct business in New Jersey.

N.J. Admin. Code § 3:4-4.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Agency Agreement" means a written agreement between a foreign bank and another person acknowledging that the other person is an agent of the foreign bank, and providing that the agent and the foreign bank shall be subject to the jurisdiction of the Department and New Jersey courts regarding the activities of the agent in the course of his or her agency activities in this State. An agency agreement is necessary for the foreign bank to conduct business in this State pursuant to N.J.S.A. 17:9A-316E.

"Agent" means a person:

Identified as an agent of the foreign bank in an agency agreement;
Who is not an employee of the foreign bank; and
Shall include an insured depository institution affiliate located in New Jersey which acts in New Jersey on behalf of a foreign bank.

"Affiliate" means entities that are related, directly or indirectly, through a common ownership interest of 10 percent or more.

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Department" means the New Jersey Department of Banking and Insurance.

"Foreign bank" means a company, other than a banking institution, organized under the laws of the United States, another state or a foreign government, which is authorized by the laws under which it is organized to exercise some or all of the powers specified in N.J.S.A. 17:9A-24(4), 25(4), (5) and (13), and 28(3) through (9).

"Insured depository institution affiliate" means any banking institution, as defined in N.J.S.A. 17:9A-1, or association, as defined in N.J.S.A. 17:12B-5, the deposits of which are insured by the Federal Deposit Insurance Corporation, that controls or is controlled by, or is under common control with a foreign bank.

"Payday loan" means an agreement with respect to which an agent, acting on behalf of the foreign bank, solicits, negotiates, facilitates or agrees to defer the presentment of a negotiable item to the foreign bank, or defer the deposit of an item for collection, or defer debiting the borrower's account electronically or by any other means, in return for a consideration or other thing of value where the rate, fee or other consideration charged for such forbearance exceeds the limitation on usury set forth at N.J.S.A. 2C:21-19. "Payday loan" shall include, but not be limited to, such loans made:

In person;
Through an agent;
By electronic means (including telephone, fax, computer, internet or similar means); or
Through response to an advertisement or solicitation made in this State.

"Primary regulator" means the regulator that issued the charter to the foreign bank.

"Refund anticipation loan" means an agreement with respect to which an agent, acting on behalf of the foreign bank, solicits, negotiates, facilitates or loans a borrower funds, or extends any other consideration to a borrower in return for an assignment of the borrower's tax refund or for any other agreement by the borrower to repay the loan or other consideration from the borrower's tax refund where the rate, fee or other consideration charged for forbearance of the agent or foreign bank exceeds the limitations on usury set forth at N.J.S.A. 2C:21-19. "Refund anticipation loan" includes, but is not limited to, such loans made:

In person;
Through an agent;
By electronic means (including telephone, fax, computer, internet or similar means); or
Through response to an advertisement or solicitation made in this State.

"Retail seller" means any person selling goods or services in New Jersey and includes a retail seller as defined in N.J.S.A. 17:16C-1(c).

"Title loan" means an agreement with respect to which an agent, acting on behalf of the foreign bank, solicits, negotiates, facilitates or agrees to make a loan, secured by a title to a motor vehicle, in return for a consideration or other thing of value where the rate, fee or other consideration of such forbearance exceeds the limitation on usury set forth at N.J.S.A. 2C:21-19. "Title loan" shall include but not be limited to, such loans made:

In person;
Through an agent;
By electronic means (including telephone, fax, computer, internet or similar means); or
Through response to an advertisement or solicitation made in this State.

N.J. Admin. Code § 3:4-4.3 Prohibited activities

(a) Except as may be permitted by (b) below and by N.J.A.C. 3:4-4.4 through 4.6 for the particular types of agents referenced therein, and by N.J.A.C. 3:4-4.7, foreign banks and their-agents are prohibited from engaging in the following activities, which constitute transacting business in this State.

Accepting retail deposits;

Soliciting loans in person or through New Jersey media;

Receiving or accepting loan applications;
Making loans, including any types of loans specifically defined in N.J.A.C. 3:4-4.2;
Making loan underwriting decisions; or
Accepting fees other than in conjunction with closings.

(b) The prohibitions in (a) above shall not apply to an insured depository institution affiliate of a foreign bank.

N.J. Admin. Code § 3:4-4.4 Permitted activities

(a) For the purposes of N.J.S.A. 17:9A-316 a foreign bank shall not be deemed to transact business or maintain an office in this State by virtue of conducting business in this State through an agent.

(b) For the purposes of N.J.S.A. 17:9A-316E, and this subchapter "conducting business" means:

Closing loans in New Jersey provided that:

i. The agent is an attorney admitted to practice in New Jersey, a New Jersey-licensed title insurance producer, or an insured depository institution affiliate; and

ii. The interest rate charged does not exceed the maximum permitted by N.J.S.A. 2C:21-19(a);

Performing appraisals on real property in New Jersey in connection with a loan, provided that the agent or other individual who performs the appraisal is properly licensed or certified pursuant to N.J.S.A. 45:14F-1 et seq.;
Examining the progress of construction on real property in New Jersey that is security for a loan;
Soliciting the purchase, negotiating the purchase, or purchasing portfolios of loans or other instruments in the secondary market; or
Using the New Jersey court system to enforce the provisions of a loan, to the extent permitted by law.

N.J. Admin. Code § 3:4-4.5 Sellers of retail goods

(a) Subject to (b) below, in connection with the sale of retail goods or services by its own business, a retail seller in this State may:

Offer or distribute information from a foreign bank to a customer;
Offer or distribute an application to a customer;
Receive, accept for transmittal to a foreign bank, or transmit to a foreign bank a customer's application or application information; and
Receive fees from a customer in connection with a sale.

(b) A retail seller may engage in the activities set forth in (a) above provided that the conditions set forth below are fulfilled.

The foreign bank, with regard to the retail seller's activities:

i. Makes the underwriting decision out of State;

ii. Does not have an office in this State;

iii. Does not display signage in this State;

iv. Does not advertise in New Jersey-based media; and

v. Does not receive retail deposits from the customer through the seller; and

The retail seller, and relevant employees of the retail seller, are licensed in good standing to engage in the activity if a person who is not an employee of a banking institution as defined in N.J.S.A. 17:9A-1, or an entity that is not such a banking institution would be required to be licensed by this State to engage in the same activity.

N.J. Admin. Code § 3:4-4.6 Non-depository affiliates

(a) Subject to (b) below, an entity or an employee of an entity located in this State, that is not an insured depository institution affiliated with a foreign bank, may:

Offer or distribute information from the foreign bank to a customer;
Offer or distribute an application for banking products or services to a customer;
Transmit, or receive, or accept for transmittal to the foreign bank a customer's application or application information; and
Receive fees from a customer in connection with banking products or services.

(b) An entity, or an employee of an entity as described in (a) above may engage in the activities enumerated in (a) above provided that the conditions set forth below are fulfilled.

The foreign bank, with regard to the entity's or employee's activities:

i. Makes the underwriting decision out of State;

ii. Does not have an office in this State;

iii. Does not display signage in this State;

iv. Does not advertise in New Jersey-based media; and

v. Does not receive retail deposits from the customer through the employee or entity. This restriction shall not, however, prohibit the receipt by a foreign bank from such an entity or an employee of such an entity of a transmittal of funds held or controlled by the affiliate in a brokerage account, mutual fund, money market or other non-depository account to a depository account in the foreign bank; and

The entity and employee(s) as described in (a) above are licensed in good standing to engage in the activity if a person who is not an employee of a banking institution as defined in N.J.S.A. 17:9A-1, or an entity that is not such a banking institution, would be required to be licensed by this State to engage in the same activity.

N.J. Admin. Code § 3:4-4.7 Emergency cases

(a) The Commissioner may, in emergent cases, permit agents of a foreign bank to conduct activities in this State that would otherwise be prohibited by N.J.A.C. 3:4-4.3, subject to the following conditions:

The primary regulator of the foreign bank shall verify to the Department that the bank presents no safety and soundness or consumer protection concerns, and shall agree to notify the Department promptly if such concerns develop during the time the agent is engaging in activities in New Jersey;
The primary regulator of the foreign bank shall agree to remain the primary regulator of the foreign bank;
The agent activities of the foreign bank in this State are conducted pursuant to the regulatory law of the primary regulator, including powers provisions, except that such activities shall be subject to the general law of New Jersey, including, but not limited to theft, fraud, and criminal law;
The approval granted by the Commissioner shall be limited to a specified period, not to exceed 180 days. If concluding agent activities within the specified period would constitute a substantial hardship, the foreign bank may apply to the Commissioner for one or more extensions not to exceed 180 days each;
The foreign bank shall agree that the Commissioner may withdraw the approval for cause, provided that the primary regulator has been given notice of such cause and has not taken effective action to correct it or otherwise address it satisfactorily; and
The foreign bank shall agree that the Commissioner shall have access to the institution and documents for purposes of determining its compliance with the conditions for admission to the State and whether there have been violations of general state law, provided that the Commissioner has requested documents or information from the primary regulator and has not received the same in a timely manner.

(b) Statements satisfying the conditions in (a) above shall be submitted in writing to the Commissioner as a basis for approval.

N.J. Admin. Code § 3:4-4.8 Penalties

Violation of this subchapter shall subject the foreign bank and the agent to the penalties authorized by law, including, but not limited to, those provided in N.J.S.A. 17:9A-330.

Chapter 5 DEDICATED FUNDING ASSESSMENT

Subchapter 1 PURPOSE AND SCOPE

N.J. Admin. Code § 3:5-1.1 Purpose and scope

(a) The purpose of this subchapter is to set forth the funding mechanism for the support of the Division of Banking in the Department of Banking and Insurance as required by N.J.S.A. 17:1C-33 et seq., and to distribute the financial burden proportionately among depository institutions and other financial entities that the Division of Banking, in the Department of Banking and Insurance, charters, licenses and registers consistent with the Division's regulatory activities.

(b) These rules apply to banks, savings banks, savings and loan associations, credit unions, business licensees under the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq., licensees under the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 to 43, check cashers, money transmitters, consumer lenders, pawnbrokers, sales finance companies, insurance premium finance companies, home repair contractors, home repair finance agencies, motor vehicle installment sellers, debt adjusters, high cost home loan counselors, and foreclosure consultants.

History

Amended by R.2011 d.294, effective 12/19/2011.
See: 43 N.J.R. 1629(a), 43 N.J.R. 3331(a).
Rewrote (b).
Amended by R.2014 d.015, effective 1/6/2014.
See: 45 N.J.R. 969(a), 46 N.J.R. 65(a).
In (b), deleted "persons licensed or registered under the New Jersey Licensed Lenders Act, P.L. 1996, c. 157, N.J.S.A. 17:11C-1 et seq.," preceding "business", substituted a comma for "and" following "adjusters", and inserted ", and foreclosure consultants".

Subchapter 2 DEFINITIONS

N.J. Admin. Code § 3:5-2.1 Definitions

The following words and terms, as used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Act" means N.J.S.A. 17:1C-33 et seq.

"Application fees for licensees" means the non-refundable charges imposed on other financial entities for processing of applications submitted by them to the Department.

"Assessment" means the assessment imposed for the special functions of the Division relative to the financial regulation, supervision and monitoring of depository institutions and other financial entities that it licenses during the previous fiscal year.

"Call report" means the report of general financial condition submitted by all insured depository institutions to the Federal Deposit Insurance Corporation or the National Credit Union Administration, as the case may be, on a quarterly basis and shall include reports filed with the Department by limited purpose companies on a semiannual basis pursuant to N.J.S.A. 17:9A-256.

"Charter fees" means the nonrefundable charges imposed for the initial review by the Division of those seeking New Jersey approval for the initial establishment of a bank, savings bank, savings and loan association or credit union or for the designation as a low income credit union.

"Commissioner" means the Commissioner of Banking and Insurance.

"Consumer Finance" means the Office of Consumer Finance in the Division of Banking in the Department of Banking and Insurance.

"Department" means the Department of Banking and Insurance.

"Depositories" means the Office of Depositories in the Division of Banking in the Department of Banking and Insurance.

"Depository institution" means any entity holding an approval from the Department for the initial establishment of a bank, savings bank, savings and loan association or credit union, irrespective of whether the entity accepts deposits.

"Division" means the Division of Banking in the Department of Banking and Insurance.

"Licensee" means any regulated entity other than a depository institution or credit union.

"Other financial entity" means a person who is licensed pursuant to: the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq.; the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 to 43; the Check Cashers Regulatory Act of 1993, P.L. 1993, c. 383 (N.J.S.A. 17:15A-30 et seq.); the New Jersey Money Transmitters Act, P.L. 1998, c. 14 (N.J.S.A. 17:15C-1 et seq.); the Insurance Premium Finance Company Act, P.L. 1968, c. 221 (N.J.S.A. 17:16D-1 et seq.); the Retail Installment Sales Act of 1960, P.L. 1960, c. 40 (N.J.S.A. 17:16C-1 et seq.); the Door-to-Door Retail Installment Sales Act of 1968, P.L. 1968, c. 223 (N.J.S.A. 17:16C-61.1 et seq.); the Home Repair Financing Act, P.L. 1960, c. 41 (N.J.S.A. 17:16C-93 et seq.); the Door-to-Door Home Repair Sales Act of 1968, P.L. 1968, c. 224 (N.J.S.A. 17:16C-95 et seq.); the Debt Adjusters Act, P.L. 1979, c. 16 (N.J.S.A. 17:16G-1 et seq.); the Pawnbroking Law, P.L. 1931, c. 294 (N.J.S.A. 45:22-1 et seq.); the New Jersey Home Ownership Security Act, P.L. 2003, c. 64, §11(N.J.S.A. 46:10B-32); or the Foreclosure Rescue Fraud Prevention Act, P.L. 2011, c. 146 (N.J.S.A. 46:10B-53 et seq.).

"Regulated entity" means a depository institution, other financial entity or person chartered, licensed or registered by the Division of Banking or that should be chartered, licensed or registered.

History

Amended by 51 N.J.R. 825(a), effective 6/3/2019

Subchapter 3 CERTIFICATION OF EXPENSES; SPECIAL FUNCTION APPORTIONMENT

N.J. Admin. Code § 3:5-3.1 Expense certification

(a) In accordance with N.J.S.A. 17:1C-33 et seq. the Director of the Division of Budget and Accounting in the Department of the Treasury shall, on or before August 15 in each year, ascertain and certify to the Commissioner by category the total amount of expenses incurred by the State in connection with the administration of the special functions of the Division of Banking in the Department of Banking and Insurance relative to the financial regulation, supervision and monitoring of depository institutions and other financial entities it licenses during the preceding fiscal year. Those expenses shall include, in addition to the direct cost of personal service, the cost of maintenance and operation, the cost of employee benefits and the workers' compensation paid for and on account of personnel, rentals for space occupied in State-owned or State-leased buildings and all other direct and indirect costs of the administration of those functions of the Department, as well as any amounts remaining uncollected from the assessment of the previous fiscal year. Certification made pursuant to this subchapter shall be made by the Director of the Division of Budget and Accounting.

(b) Upon receipt of the certification made by the Director of the Division of Budget and Accounting pursuant to (a) above, but no later than September 1 in each year following the close of the previous fiscal year, the Commissioner shall issue the assessment for the amount of the expenses incurred by, or on behalf of, the special functions of the Division. Statements of the individual assessments made pursuant to this subsection and in accordance with N.J.A.C. 3:5-4 shall be distributed via mailing among all regulated entities.

(c) The Commissioner shall certify the amount of the individual assessment issued to each regulated entity. Each regulated entity shall remit the amount so certified and assessed to it to the Department. Amounts collected by the Department shall be used for reimbursement to the State for expenses incurred in connection with the special functions of the Division relative to the financial regulation, supervision and monitoring of depository institutions and other financial entities it charters, licenses or registers, provided that the amount collected for those expenses shall not exceed the amount appropriated by the Legislature for those expenses.

Subchapter 4 ASSESSMENT COMPUTATION FORMULA

N.J. Admin. Code § 3:5-4.1 Departmental expenses

(a) The direct expenses of the Office of Depositories and the Office of Consumer Finance shall be maintained and allocated to each Office separately.

(b) Centralized expenses such as the Commissioner's Office, and other centralized operating units which supply support to Depositories and Consumer Finance shall be apportioned between Depositories and Consumer Finance on the basis of the percentage of full time employees in each Office.

(c) The direct expenses for Depositories shall be added to the Depositories' apportioned share for centralized expenses. This will produce the total amount of the expenses for Depositories for the preceding fiscal year.

(d) The direct expenses for Consumer Finance will be added to the apportioned share for centralized expenses attributable to Consumer Finance. This will produce the total amount of the expenses for Consumer Finance for the preceding fiscal year.

N.J. Admin. Code § 3:5-4.2 Total assessments

All regulated entities shall be assessed a total assessment. The total assessment shall consist of the total of a base assessment and a volume assessment, if applicable.

History

Amended by 51 N.J.R. 825(a), effective 6/3/2019

N.J. Admin. Code § 3:5-4.3 Base assessments

(a) Base assessments shall be determined by the Commissioner in accordance with N.J.S.A. 17:1C-46 taking into account such factors as the average size of the regulated entities within each regulated industry and the extent of the Division's regulatory activities required with respect to each type of regulated industry. The Department shall also consider the potential impact of the base assessment amount on business entities of various sizes in an effort to allocate the total assessment in a manner proportionate to the Department's regulatory activities with respect to each regulated entity.

(b) With the exception of credit unions, the base assessment for depository institutions shall not exceed $ 5,000.

Credit unions having $ 10 million or less in assets: $ 500.00;
Credit unions having more than $ 10 million, but not more than $ 40 million in assets: $ 1,500; and
Credit unions having more than $ 40 million in assets: $ 5,000.

(d) The base assessment for licensees shall be limited in the following manner:

The Department shall assign a weight to the manner and complexity of regulating the businesses of licensees by determining a complexity factor greater than zero and not more than five.
In determining the complexity factor, the Department shall consider criteria such as statutorily mandated regulatory activities, number and locations of business sites, varying degrees of complexity in oversight and/or reporting requirements and any other criteria that the Commissioner deems appropriate.
The Department shall multiply the complexity factor by an amount not to exceed $ 300.00, which amount shall be published annually by the Department in the New Jersey Register as a public notice and in a Departmental Bulletin.

History

Public Notice: Notice of Base Assessments for Fiscal Year 2008 for Entities or Persons Licensed or Registered by the Division of Banking, Office of Consumer Finance.
See: 40 N.J.R. 7003(a).
See: 41 N.J.R. 3112(a).
Public Notice: Notice of Base Assessments for Fiscal Year 2009 for Entities or Persons Licensed or Registered by the Division of Banking, Office of Consumer Finance.
See: 41 N.J.R. 4562(a).
Public Notice: Notice of Base Assessments for Fiscal Year 2010 for Entities or Persons Licensed or Registered by the Division of Banking, Office of Consumer Finance.
See: 42 N.J.R. 2991(b).
Public Notice: Notice of Base Assessments for Fiscal Year 2011 for Entities or Persons Licensed or Registered by the Division of Banking, Office of Consumer Finance.
See: 44 N.J.R. 178(b).

N.J. Admin. Code § 3:5-4.4 Volume assessments

(a) The volume assessment for depository institutions shall be calculated as follows:

The Department shall deduct the total base assessments for depositories from the total expenses for Depositories for the preceding calendar year.
Using filings of each depository institution, the Department shall calculate, to nine decimal places, the percentage of total assets under supervision held by each depository institution in relation to the total assets under supervision for all depository institutions as of December 31 of the prior calendar year.

The Department shall multiply the percentage for each depository institution times the expenses remaining after the total of the base assessments of depository institutions has been deducted from the total amount of expenses for Depositories for the preceding fiscal year.

The volume assessment for each depository institution shall be added to the base assessment for each depository institution.

(b) The volume assessment for credit unions shall be calculated as follows:

There is no volume assessment for credit unions with assets under $ 40 million.
The Department shall calculate the volume assessment for credit unions with assets of $ 40 million dollars or more by comparing the assets of each such individual credit union with the assets of a depository institution of equal size and assessing the credit union the same volume assessment that the credit union would have been assessed if the credit union had been a depository institution.
In order to calculate the volume assessments set forth in (b)2 above, the Department will calculate, to nine decimal places, the percentage of the assets of each individual credit union, based on filings made by the credit union, as compared to the total assets for depository institutions which was used to calculate the volume assessment for depository institutions in (a)1 above. This figure will be multiplied by the expenses remaining after deduction of base assessments for depository institutions calculated pursuant to (a)2 above.
The total assessment for each credit union with assets under $ 40 million shall equal the base assessment for the credit union.
The volume assessment for each credit union with assets of $ 40 million or more shall be added to that credit union's base assessment, to produce the total assessment.

Using filings of each licensee, the Department shall calculate the percentage, to nine decimal places, of the loan volume and/or its equivalent as calculated below for each licensee, in relation to total loan volume and/or its equivalent for all licensees as of December 31 of the prior calendar year.

i. The volume assessment for licensees of Consumer Finance shall be calculated on the basis of the total loan volume and/or its equivalent as calculated by the Department.

ii. The Department shall determine the total loan volume for licensees that make and/or purchase loans based on the total dollar amount of regulated closed loans made, purchased and brokered by all licensees during the preceding calendar year, as reported in the licensees' annual reports.

iii. For the purposes of this section, licensees that make loans include mortgage bankers, correspondent mortgage bankers, secondary lenders, business licensees under the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq., consumer lenders, pawnbrokers, sales finance companies, insurance premium finance companies, home repair contractors, and motor vehicle installment sellers. Licensees that purchase loans include consumer lenders, sales finance companies and home financing agencies.

iv. For purposes of the calculation of the volume assessment for those who make loans, the Department shall consider the dollar volume of such loans. In calculating the volume assessment for licensees that purchase loans, the volume of loans purchased shall be considered as if it were dollars loaned. In calculating the volume assessment for sales finance companies that both make and purchase loans, the Department shall consider the total loan volume of such licensees to be the dollar volume of loans made plus the dollar volume of loans purchased by such licensees.

v. For residential mortgage brokers and for residential mortgage lenders who broker loans, the Department shall determine the dollar volume of closed loans brokered by each licensee for the preceding calendar year as reported in the licensee's annual report. For purposes of calculation of the volume assessment for residential mortgage brokers, the Department shall consider the volume of closed loans brokered for each licensee as if it were the volume of dollars loaned by a licensee. In calculating the volume assessment for residential mortgage lenders who also broker loans, the Department shall consider the total loan volume of such licensees to be the dollar volume of loans made plus the dollar volume of closed loans brokered by such licensees.

vi. For check cashers, the Department shall consider the dollar volume of checks cashed for a fee by each licensee for the preceding calendar year, as reported in the licensee's annual report. The volume shall include all checks cashed for a fee or other compensation, whether received directly or indirectly, and shall treat the dollar volume of such checks as if it were a volume of dollars loaned. The volume shall include payroll services as defined in N.J.S.A. 17:15A-31.

vii. For money transmitters and foreign money transmitters, the Department shall consider the dollar volume of money transmitted, the dollar volume of bills paid and the dollar volume of checks sold by each licensee for the preceding calendar year as reported in the licensee's annual report. This total dollar volume shall be treated for assessment purposes as if it were dollars loaned.

viii. For the purposes of determining the volume assessment for sales finance companies and motor vehicle installment sellers licensed under N.J.S.A. 17:16C-1 et seq., the Department shall consider the dollar volume of loans for goods as defined by N.J.S.A. 17:16C-1(a) and the dollar volume of loans for services. For sales finance companies, the Department shall consider the dollar volume of such loans made plus the dollar volume of such loans purchased by those licensees.

ix. For the purposes of determining the volume assessment for licensees under the Licensed Lenders Act, N.J.S.A. 17:11C-1 et seq., the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq. or the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 to 43, the volume assessment shall be based on the aggregate dollars loaned or its equivalent as determined in accordance with this chapter for all their authorities.

x. There will be no volume assessment for entities licensed to act as debt adjusters pursuant to N.J.S.A. 17:16G-1 or high cost home loan credit counselors registered pursuant to N.J.S.A. 46:10-22 et seq.

xi. For purposes of determining the volume assessment of foreclosure consultants, the Department shall consider the number of foreclosure consultant agreements entered into by the licensee in accordance with N.J.S.A. 46:10B-56 and N.J.A.C. 3:18 and the total compensation received for having provided distressed property services in accordance with N.J.S.A. 46:10B-56.b(1) and 58, for the preceding calendar year.

The Department shall multiply the percentage for each licensee regulated by Consumer Finance times the expenses remaining after the total assessments for credit unions and the base assessments of licensees have been deducted from the total amount of expenses for Consumer Finance for the preceding fiscal year.

The volume assessment, if any, for each entity regulated by Consumer Finance shall be added to their previously determined base assessment.

For the purpose of determining the total assessment for licensees under the Licensed Lenders Act, N.J.S.A. 17:11C-1 et seq., the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq. or the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 to 43, licensees with more than one authority shall pay a separate base assessment for each separate authority, which shall be added to a single volume assessment, if any, based on the aggregate dollars loaned or its equivalent for all their authorities.

(d) A regulated entity that ceases business or that is acquired shall be responsible for the filing of an annual report for the calendar year in which operations ceased or the acquisition occurred and the payment of the base assessment and any volume assessment for the entire preceding calendar year and for the year in which its operations ceased or it was acquired, as set forth below in this subsection. An entity that ceases business or is acquired shall:

Notify the Department in writing of its intention to cease business or be acquired at least 30 days prior to the date on which it will cease operating or be acquired, and provide the name, address and telephone number of the person within the licensee's operation to whom all communications from the Department should be directed and who will be responsible to ensure the payment of assessment(s) and filing of the final annual report;
Pay all assessments that are due and owing as of the date on which the notice referenced in (1) above is provided and that may be subsequently issued;

Prepay the base assessment for the year of the discontinuance or acquisition by paying the amount of the most recently billed base assessment. Such prepayment shall be due within 15 days of being notified by the Department of the amount of the prepayment due. Adjustments to the base assessment, if any, and the final volume assessment for the year of discontinuance or acquisition will be billed in the year following the discontinuance or acquisition; and

Return all license(s) or other credential(s) issued by the Department no later than 30 days after ceasing business or being acquired.

(e) Failure to comply with the above will subject the regulated entity to the penalties authorized by N.J.S.A. 17:1C-42, 43, or 44, together with any penalties applicable to the particular type of regulated entity as authorized by statute.

History

Amended by R.2007 d.306, effective 10/1/2007.
See: 39 N.J.R. 2299(a), 39 N.J.R. 4111(a).
Rewrote (d); and added (e).
Amended by R.2011 d.294, effective 12/19/2011.
See: 43 N.J.R. 1629(a), 43 N.J.R. 3331(a).
In (c)1iii, inserted "business licensees under the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq.,"; in (c)1v, inserted "residential" preceding "mortgage" throughout and substituted "lenders" for "bankers" twice; and in (c)1ix and (c)4, inserted ", the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq. or the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 to 43,".
Amended by R.2014 d.015, effective 1/6/2014.
See: 45 N.J.R. 969(a), 46 N.J.R. 65(a).
Added (c)1xi.

Subchapter 5 MAXIMUM TOTAL OF ASSESSMENTS

N.J. Admin. Code § 3:5-5.1 Maximum assessment

(a) The total amount assessable to regulated entities in any fiscal year for the purposes of this subchapter shall not exceed the lesser of:

The total amount of expenses incurred by the State in connection with the administration of the special functions of the Division during the preceding fiscal year as ascertained by the Director of the Division of Budget and Accounting in the Department of the Treasury, on or before August 15 in each year, and certified to the Commissioner by category pursuant to N.J.A.C. 3:5-3.1; or
.0001084 times the sum of:

i. The average total assets for State-chartered banks, savings banks, and savings and loan associations for the preceding five calendar years' data, excluding the two most recent calendar years; plus

ii. The total average loan volume for residential mortgage loans closed by licensed lenders pursuant to the New Jersey Licensed Lenders Act, P.L. 1996, c. 157 (N.J.S.A. 17:11C-1 et seq.) and business licensees under the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq., for the preceding five calendar years' data, excluding the two most recent calendar years.

History

Amended by R.2007 d.306, effective 10/1/2007.
See: 39 N.J.R. 2299(a), 39 N.J.R. 4111(a).
Rewrote (a)2.
Administrative correction.
See: 39 N.J.R. 4923(a).
Amended by R.2011 d.294, effective 12/19/2011.
See: 43 N.J.R. 1629(a), 43 N.J.R. 3331(a).
In (a)2ii, inserted "and business licensees under the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq.,".

Subchapter 6 OBJECTION TO ASSESSMENT

N.J. Admin. Code § 3:5-6.1 Time to object and decision on objections

(a) Within 15 days after the date of mailing a statement of the assessment as provided in N.J.A.C. 3:5-3.1(b), a regulated entity may file objections to its assessment with the Commissioner. All such objections must be filed in writing.

(b) Upon being filed, the validity of such objections shall be determined by the Commissioner in accordance with N.J.S.A. 17:1C-36 and 37.

(c) If, after having determined the validity of an objection, the Commissioner finds any part of the assessment against the objecting regulated entity excessive, erroneous, unlawful or invalid, he or she shall transmit to the objector, by registered mail, his or her findings and an amended statement of the assessment in accordance with those findings, which shall have the same force and effect as an original statement of the assessment. If the Commissioner finds the entire statement of the assessment unlawful or invalid, he or she shall notify the objector, by registered mail, of that determination, and the original statement of the assessment shall be null and void. If the Commissioner finds that the statement as rendered is neither excessive, erroneous, unlawful nor invalid, in whole or in part, he or she shall transmit notice thereof to the objector by registered mail.

Subchapter 7 COLLECTION; NOTICE OF DELINQUENCY

N.J. Admin. Code § 3:5-7.1 Unpaid assessments

(a) If any regulated entity to which a statement of the assessment has been mailed fails or refuses to pay the amount within 30 days of the date of mailing, or fails to file with the Commissioner objections to the statement of the assessment as provided in N.J.A.C. 3:5-6, the Commissioner shall transmit to the State Treasurer a certified copy of both the statement of the assessment and the notice of the neglect or refusal of the regulated entity to pay the amount thereof, and at the same time shall mail by registered mail to the entity a copy of the statement of the assessment and the notice of the neglect or refusal transmitted to the State Treasurer.

(b) If a statement of the assessment against which objections are filed is not paid in full within 30 days after the date of mailing to the objector of notice of a finding that the objections have been disallowed, or if an amended statement of the assessment is not paid within 30 days of the date a copy thereof is mailed by registered mail to the objector, the Commissioner shall give notice of the delinquency to the State Treasurer and to the objector, and the State Treasurer shall proceed to make the collection.

(c) In accordance with N.J.S.A. 17:1C-40, no action or proceeding shall be maintained in any court for the purpose of restraining or delaying the collection or payment of a statement of the assessment rendered in accordance with the provisions of this chapter and N.J.S.A. 17:1C-33 et seq.

(d) No action for recovery of an amount paid shall be maintained in any court unless objections have been filed with the Commissioner. In an action for recovery of any payments, plaintiff may raise any relevant issue of law, but the Commissioner's findings of fact shall be presumptive evidence of the facts therein stated.

N.J. Admin. Code § 3:5-7.2 Collection; sale of goods

In accordance with N.J.S.A. 17:1C-43 within 10 days after receipt of the notice and certified copy of the statement of the assessment, the State Treasurer shall proceed to collect the amount stated to be due, with legal interest, by seizure and sale of any goods or chattels, including stocks, securities, bank accounts, surety bonds, realty, evidences of debt and accounts receivable belonging to the regulated entity anywhere within the State. The State Treasurer shall not seize any goods or chattels held by the regulated entity on behalf of another.

N.J. Admin. Code § 3:5-7.3 Additional remedy

As provided in N.J.S.A. 17:1C-44 as an additional remedy, the State Treasurer may issue a certificate to the Clerk of the Superior Court that a regulated entity is indebted under these rules in an amount stated in the certificate. The clerk shall immediately enter upon his record of docketed judgments the name of the regulated entity, and of the State, the amount of debt so certified, and the date of the entry. The entry shall have the same force and effect as the entry of a docketed judgment in the Office of the Clerk, and the State Treasurer shall have all the remedies and may take all of the proceedings for the collection thereof which may be had or taken upon the recovery of a judgment in a civil action, but without prejudice to the regulated entity's right of appeal.

Subchapter 8 REGULATED ENTITIES EXEMPT FROM FEES AND CHARGES; EXCEPTIONS

N.J. Admin. Code § 3:5-8.1 Fees and exemptions

(a) Notwithstanding any law or regulation to the contrary, a regulated entity paying the amounts assessed to it in statements of the assessment made pursuant to N.J.A.C. 3:5-3 shall be exempt from all fees or charges imposed by the Division pursuant to any other provision of law or regulation, except for:

Charter fees;

Application fees for licenses;

Mortgage solicitor registration application fees;
Fees for entry by a foreign depository institution whether from another state of the United States or from another country into New Jersey for branch, trust or other activities;
Fees charged under the Governmental Unit Deposit Protection Act, P.L. 1970, c. 236 (N.J.S.A. 17:9-41 et seq.);
Fees charged any entity not chartered, licensed or registered by this State, including, but not limited to, activities conducted by foreign banks pursuant to section 316 of P.L. 1948, c. 47 (N.J.S.A. 17:9A-316) or foreign associations pursuant to section 214 of P.L. 1963, c. 144 (N.J.S.A. 17:12B-214);
Fees charged qualified corporations authorized pursuant to section 213 of P.L. 1948, c. 67 (N.J.S.A. 17:9A-213) to perform either registrar and transfer agent activities or activities permitted for qualified educational institutions; and
Such other fees as may be specified as not exempt pursuant to N.J.S.A. 17:1C-33 (P.L. 2005, c.

and any amendments thereto.

(b) Nothing in this section shall exempt a regulated entity from paying any fine or penalty imposed by the Commissioner for a violation of a statute or regulation.

(c) Except as provided in paragraph (1) of subsection d. of section 7 of the New Jersey Home Ownership Security Act of 2002, P.L. 2003, c. 64 (N.J.S.A. 46:10B-28), all fees, charges, fines and penalties as described in (a) and (b) above shall be remitted to the State Treasurer for deposit into the General Fund, and those fees, charges, fines and penalties shall not be part of the assessment funding mechanism or considered in the calculation pursuant to N.J.A.C. 3:5-5.

Subchapter 9 IMPROPER REPORTING OF INFORMATION TO THE DEPARTMENT

N.J. Admin. Code § 3:5-9.1 Penalty for improper reporting

(a) A depository institution that submits figures on assets, deposits or any other factor used by the Department to compute the depository institution's assessment that are substantially or materially in error shall be liable for an administrative penalty not to exceed $ 10,000 for each submission that contains substantially or materially incorrect information.

(b) A licensee that submits figures on loan volume, number of branches, or any other factor used by the Department to compute the licensee's assessment that are substantially or materially in error shall be liable for an administrative penalty not to exceed $ 10,000 for each submission that contains substantially or materially incorrect information.

(c) In addition to any monetary penalty that may be imposed against a licensee pursuant to (b) above, the Commissioner may take action to revoke, suspend or refuse to renew the license of a licensee that submits substantially or materially erroneous figures. The suspension, revocation or refusal to renew a license shall be in addition to any monetary penalty imposed pursuant to (b) above.

(d) The administrative penalty authorized pursuant to this subsection may be recovered in a summary proceeding in accordance with the Penalty Enforcement Law of 1999, P.L. 1999, c. 274 (N.J.S.A. 2A:58-10 et seq.). Pursuant to N.J.S.A. 17:1C-48d, a willful violation of this section shall be considered a crime of the third degree.

Chapter 6 GENERAL PROVISIONS

Subchapter 1 DEFINITIONS

N.J. Admin. Code § 3:6-1.1 Definitions

The following words and terms, when used in the chapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Bank" means a bank as defined in N.J.S.A. 17:9A-1(1).

"Banking institution" means a bank, savings bank, an out-of-State bank having a branch office in this State, an out-of-country bank having a branch office in this State, and a national banking association having its principal or a branch office in this State.

"Capital funds" of a savings bank are deemed to include capital notes of the savings bank for purposes of computing lending limitations.

"Capital stock association" means a capital stock association as defined in N.J.S.A. 17:12B-244(a).

"Capital stock savings bank" means a savings bank organized or converted pursuant to N.J.S.A. 17:9A-8.1 to 8.17.

"De novo branch" means a new branch office of a banking institution or foreign bank established not by means of the acquisition of an existing insured depository institution or branch office of an insured depository institution or by the means of the conversion, merger, or consolidation of any such institution or branch office.

"Executive officer" means a person who participates or has authority to participate, other than in the capacity of a director, in major policy-making functions of the bank, whether or not: the person has an official title; the title contains a designation of assistant; or the person is serving without salary or other compensation. The chairman of the board, president, every vice president, cashier, secretary, treasurer and comptroller are considered to be executive officers, unless pursuant to resolution of the board of directors or the bylaws of the bank any such executive officer is excluded from participation in major policy-making functions, other than in the capacity of a director, and the executive officer does not actually participate therein.

"Insured depository institution" means any banking institution or state or Federally-chartered savings association, the deposits of which are insured by the Federal Deposit Insurance Corporation.

"Issuer" means a qualified bank that acts either by itself or with others as an underwriter of securities.

"Mutual association" means a mutual association as defined in N.J.S.A. 17:12B-5(31).

"Qualified bank" means a qualified bank as defined in N.J.S.A. 17:9A-1(12).

"Savings bank" means a savings bank as defined in N.J.S.A. 17:9A-1(13).

"State association" means a State association as defined in N.J.S.A. 17:12B-5(1).

"Trust account" means any account, relationship or arrangement administered by a qualified bank acting in any capacity as defined by N.J.S.A. 17:9A-28.

History

Amended by 46 N.J.R. 759(b), effective 5/5/2014.

Subchapter 2 APPROVED DEPOSITORIES FOR INVESTMENTS COMPRISING SECURITY FUNDS

N.J. Admin. Code § 3:6-2.1 Approved depositories

The following institutions are approved as depositories for investments comprising security funds created pursuant to N.J.S.A. 17:9A-31: banks, savings banks and national banking associations having a principal or a branch office in New Jersey having total capital stock and surplus of at least $ 2,000,000 which are authorized to do a fiduciary business.

History

Amended by R.1979 d.23, effective 1/17/1979.
See: 10 New Jersey Register 527(b), 11 New Jersey Register 58(b).
Amended by R.2001 d.203, effective 6/18/2001.
See: 33 New Jersey Register 926(a), 33 New Jersey Register 2079(c).
Rewrote the section.

Subchapter 3 LIMIT ON LOANS TO AN EXECUTIVE OFFICER

N.J. Admin. Code § 3:6-3.1 Limitation on loans to an executive officer

The $ 10,000 maximum loan limitation prescribed in N.J.S.A. 17:9A-72B(2) on loans to an executive officer is increased to an aggregate amount not to exceed at any one time 2.5 percent of the capital funds of the bank, as defined in N.J.S.A. 17:9A-60, or $ 25,000 whichever is greater, but in no event more than $ 100,000.

History

R.1983 d.606, effective 1/3/1984.
See: 15 New Jersey Register 1786(a), 16 New Jersey Register 45(a).
Recodified from N.J.A.C. 3:6-3.2 by R.2001 d.203, effective 6/18/2001.
See: 33 New Jersey Register 926(a), 33 New Jersey Register 2079(c).
Former N.J.A.C. 3:6-3.1, Definition of executive officer, was repealed.

N.J. Admin. Code § 3:6-3.2 Exclusion

In accordance with N.J.S.A. 17:9A-74B(3), loans to finance the education of an executive officer's children are excluded from the limitations set out in N.J.A.C. 3:6-3.1.

History

Recodified from N.J.A.C. 3:6-3.3 and amended by R.2001 d.203, effective 6/18/2001.
See: 33 New Jersey Register 926(a), 33 New Jersey Register 2079(c).
Rewrote the section. Former N.J.A.C. 3:6-3.2, Limitation on loans to an executive officer, was recodified to N.J.A.C. 3:6-3.1.

N.J. Admin. Code § 3:6-3.3 Reserved

History

R.1983 d.606, effective 1/3/1984.
See: 15 New Jersey Register 1786(a), 16 New Jersey Register 45(a).
Recodified to N.J.A.C. 3:6-3.2 by R.2001 d.203, effective 6/18/2001.
See: 33 New Jersey Register 926(a), 33 New Jersey Register 2079(c).
Section was "Exclusion".

Subchapter 5 FEDERAL FUNDS TRANSACTIONS

N.J. Admin. Code § 3:6-5.1 Exclusion from limitation on liability

(a) In "sales of Federal funds," the liability of a transferee bank to a transferor bank shall not be subject to any limitation on liability to a transferor bank imposed by N.J.S.A. 17:9A-62.

(b) In sales of Federal funds, the liability of a transferee bank to a transferor savings bank shall not be subject to any limitation on liability to a transferor savings bank.

History

R.1970 d.51, May 11, 1970.
See: 2 N.J.R. 30(b), 2 N.J.R. 46(a).
Amended by R.1974 d.27, eff. 2/1/1974.
See: 6 N.J.R. 2(b), 6 N.J.R. 97(b).
Amended by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
Rewrote the section.

N.J. Admin. Code § 3:6-5.2 Sales of Federal funds by State member banks, State nonmember banks and savings banks

(a) As used in this subchapter, in the case of State banks which are members of the Federal Reserve System, "sales of Federal funds" include transactions which involve the temporary transfer and sale of immediately available funds either from one member bank in the Federal Reserve System to another member bank in the Federal Reserve System or to another bank not in the Federal Reserve System.

(b) In the case of a State bank which is not a member of the Federal Reserve System, "sales of Federal funds" include transactions which involve the temporary transfer and sale of immediately available funds from the nonmember bank to another nonmember bank or to a member bank.

(c) In the case of a savings bank, "sales of Federal funds" include transactions which involve the temporary transfer and sale of immediately available funds from the savings bank to a nonmember bank or to a member bank.

History

Amended by R.1974 d.27, eff. 2/1/1974.
See: 6 N.J.R. 2(b), 6 N.J.R. 97(b).
Recodified from N.J.A.C. 3:6-5.3 by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
Former N.J.A.C. 3:6-5.2, Definition, was repealed.

N.J. Admin. Code § 3:6-5.3 Reserved

History

Recodified to N.J.A.C. 3:6-5.2 by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
Section was "Sales of Federal funds by State member banks, State nonmember banks and savings banks".

Subchapter 6 SHORT-TERM INVESTMENT OF CASH IN FIDUCIARY ACCOUNTS

N.J. Admin. Code § 3:6-6.1 Type of investment

Cash held for various fiduciary accounts may be invested on a short term basis in a variable account note of a single borrower by a bank defined in N.J.S.A. 17:9A-36(2). Participating accounts will thus be provided with a readily accessible medium for short-term investment of their cash balances.

N.J. Admin. Code § 3:6-6.2 Provisions of note

(a) Under this arrangement, the borrower delivers its note to evidence the amount of the loan outstanding from time to time.

(b) The note may be a demand obligation or have a fixed maturity (in which case it is understood that the borrower will renew the note at maturity) and may set forth provisions concerning the rate and payment of interest in the note or in a separate agreement to which reference is made in the note.

(c) The note must be payable to the order of the bank or to a nominee of the bank and may be repayable by the borrower in whole or in part at any time, and should contain columns for entering changes in the amount of the loan outstanding, the dates of such changes, and the initial of an employee of the bank authorized by the borrower to make such entries.

(d) While it is preferable that all entries affecting the balance of the note shall be recorded thereon, it is satisfactory for such entries to be recorded separately, provided adequate documentation is maintained in regard to all such entries.

(e) All notes must be kept in the custody of duly authorized employees of the bank.

History

Amended by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
In (a), neutralized gender reference.

N.J. Admin. Code § 3:6-6.3 Fluctuations in participations

The amount of the loan may be subject to daily fluctuations as the participants increase or decrease their participations. The net amount of any such increase or decrease depends initially upon the particular requirements of the participants. If it is desired to participate an account in the loan or to increase its existing participation therein, a "buy" order is prepared for the dollar amount of the planned participation. If it is desired to reduce or withdraw an account's participation, a "sell" order is prepared. All buy and sell orders must be combined at the end of each day's business when the net amount of any proposed increase or decrease in the loan is determined.

N.J. Admin. Code § 3:6-6.4 Confirmation of changes in loan; provision for interest rate

On the following business day, the net figure referred to in N.J.A.C. 3:6-6.3, Fluctuations in participations, must be communicated to the borrower by telephone. If the figure indicates a proposed increase in the loan, this communication is an offer to lend the amount of the increase which the borrower may either accept or reject in whole or in part. If the figure indicates a proposed reduction in the loan, communication constitutes a demand for payment of the amount of the reduction. The resulting increase or decrease in the loan and the new balance due must be then recorded by making appropriate entries on the note. The balance so entered, when confirmed by the borrower in writing, should be understood to constitute conclusive evidence of the balance owing on the loan. The net amount of any increase (or decrease) in the loan must be promptly credited to (or charged against) the borrower's account with the bank. Interest must be paid monthly on the daily amount of the loan outstanding during the preceding month at a rate which is mutually agreed upon by the bank and the borrower and specified in the note or related agreement. In the event the borrower issues its own commercial paper, the interest rate shall not be less than that which will yield the simple interest equivalent to the discount rate currently being paid by the borrower on its 180-day commercial paper. If any change in the 180-day rate is established by the borrower, the rate of interest paid on the variable amount loan must be changed simultaneously, unless a rate higher than the 180-day rate has been agreed upon and is being paid.

History

Amended by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
Rewrote the section.

N.J. Admin. Code § 3:6-6.5 Maintenance of loan records in bank$DQ$s trust department

(a) Participations of each account in the loan must be reflected in the securities record of each account in the bank's trust department.

(b) A participation record for each account must be also maintained and a check must be made each time a change in the amount of the loan occurs to assure that these participation records are in balance with the outstanding amount of the note.

N.J. Admin. Code § 3:6-6.6 Authorization to invest in this type of collective investment

(a) Where collective investments of the type described in this subchapter are not specifically authorized by the governing instruments of the various participating accounts, such investments may be made pursuant to N.J.S.A. 17:9A-37 and in such case:

Participation in such investment shall be restricted to accounts in which the bank is acting in a fiduciary capacity specified in paragraphs (5), (6), (9) and (10) of N.J.S.A. 17:9A-28;
The written variable note duly executed by the parties and a written outline of the procedure, as above set forth, controlling participation in such investment or a written incorporation by reference of the above-mentioned procedure shall constitute the written plan in accordance with the provisions of N.J.S.A. 17:9A-37(E);
The note is of a borrower whose commercial paper is rated at least A-1 by the financial periodicals rating commercial paper (for example, Standard and Poor) and such note is either payable on demand or at the call of the bank; and
The determination of whether such collective investment shall constitute a legal common trust fund or a discretionary common trust fund shall be determined in accordance with the provisions of N.J.S.A. 17:9A-38D and the Prudent Investor Act, N.J.S.A. 3B:20-11.1 et seq.

History

Amended by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
In (a)3, deleted N.J.S.A reference and in (a)4, amended existing N.J.S.A. reference and inserted the second N.J.S.A. reference.

N.J. Admin. Code § 3:6-6.7 Parity provision

This regulation is issued to enable banks to establish and maintain common trust funds on an equal basis with common trust funds established and maintained by national banking associations.

Subchapter 8 CONVERSIONS OF SAVINGS BANK CHARTERS

N.J. Admin. Code § 3:6-8.1 Authorization for conversion

(a) Any mutual savings bank may apply to the Commissioner to convert itself to a mutual association by organizing and transferring its assets and liabilities to a newly-chartered mutual association, and any capital stock savings bank may apply to the Commissioner to convert itself to a bank by organizing and transferring its assets and liabilities to a newly-chartered bank.

(b) Before applying to the Commissioner for a conversion pursuant to (a) above, the savings bank shall obtain a resolution of the savings bank's board of directors indicating that the conversion is advisable and in the best interests of the members or shareholders.

(c) After the board of directors has adopted a resolution, a meeting of the members or stockholders shall be held upon not less than 10 days' written notice. The notice shall contain a statement of the time, place and purpose for which such meeting is called. At this meeting, the members or shareholders shall vote on whether the savings bank shall convert to an association or bank, as the case may be. An affirmative vote of at least two-thirds of the members present, or shares eligible to be voted which are represented at the meeting, either in person or by proxy, may approve the conversion.

History

Amended by R.1994 d.208, effective 5/2/1994.
See: 26 N.J.R. 286(a), 26 N.J.R. 1827(a).
Recodified from N.J.A.C. 3:6-8.2 and amended by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
In (a), substituted "newly-charted mutual association" for "newly-chartered capital stock association". Former N.J.A.C. 3:6-8.1, Definitions, was repealed.

N.J. Admin. Code § 3:6-8.2 Application for conversion

(a) An application for a conversion from a savings bank to an association or bank shall contain the following:

A certified copy of the resolution of the board of directors authorizing the conversion;
A certified copy of the resolution adopted by the stockholders or members relating to the plan of conversion, containing the following information:

i. The total number of votes eligible to be cast;

ii. The total number of votes represented in person or by proxy at the special meeting;

iii. The total number of votes cast in favor and against each matter; and

iv. The percentage of votes cast in favor and against each matter.

A certificate of incorporation for the new association or bank;

Biographical information for each of the incorporators and/or directors on forms approved by the Commissioner;

A completed form from the New Jersey State Police requesting criminal history record information for each director and/or incorporator, along with a cashier's check, certified check or money order for the applicable amount, payable to the State Police, stapled to the front of each form;
A copy of the savings bank's most recent quarterly Consolidated Report of Condition indicating the savings bank's financial condition. This requirement shall be deemed satisfied if this information is accessible to the Department via the internet;
Financial projections for the converted association or bank for the next three years. Projections shall include a consolidated average balance sheet and a profit and loss statement at the end of each year. This financial information shall include projections of all relevant regulatory capital requirements and capital ratios as well as appropriate income ratios;
A business plan for three years; and
Copies of all applications for Federal regulatory approval and all approvals required in connection with the conversion, or, if no application or approval is required, a statement or opinion of counsel to that effect.

(b) The Commissioner may, in his or her discretion, waive any of the application requirements of (a) above based on any of the following:

The financial condition of the institution;
Whether the institution was recently chartered;
Whether the public would be served by considering the application in an expeditious manner;
Whether the conversion is one step in an integrated application; or
Any other factor which may affect the need for a review of any of the materials specified in (a) above.

History

Amended by R.1994 d.208, effective 5/2/1994.
See: 26 N.J.R. 286(a), 26 N.J.R. 1827(a).
Recodified from N.J.A.C. 3:6-8.3 and amended by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
In (b), rewrote the introductory paragraph, in 4 substituted "or" for "and", and rewrote 5. Former N.J.A.C. 3:6-8.2, Authorization for conversion, was recodified to N.J.A.C. 3:6-8.1.
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Inserted "; and" in (a)8, substituted a period for "; and" in (a)9 and deleted (a)10.
Amended by R.2006 d.406, effective 12/4/2006.
See: 38 N.J.R. 2552(a), 38 N.J.R. 5008(a).
Rewrote (a)6; and in (a)7, inserted "and capital ratios".

N.J. Admin. Code § 3:6-8.3 Reserved

History

Recodified to N.J.A.C. 3:6-8.2 by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
Section was "Application for conversion".

Subchapter 10 UNSECURED DAYS FUNDS TRANSACTIONS

N.J. Admin. Code § 3:6-10.1 Description; unsecured days funds

Unsecured days funds transactions represents the sale of excess funds, usually on an unsecured basis, for a period longer than overnight or a weekend. Such transactions are commonly referred to as "term federal funds". Sales are restricted to an insured bank which is defined as being a commercial bank whose deposits are insured by the Federal Deposit Insurance Corporation.

N.J. Admin. Code § 3:6-10.2 Limitation on such investments

A bank or savings bank may sell unsecured days funds (term Federal funds) to any insured bank, as defined in N.J.A.C. 3:6-10.1, provided the total amount sold to any one insured bank does not exceed 15 percent of the capital funds of the bank or savings bank as reported in the latest consolidated report of condition on file with the Department of Banking and Insurance.

History

Amended by R.1991 d.171, effective 4/1/1991.
See: 23 New Jersey Register 147(a), 23 New Jersey Register 998(a).
Changed from 10 percent to 15 percent.
Amended by R.2001 d.203, effective 6/18/2001.
See: 33 New Jersey Register 926(a), 33 New Jersey Register 2079(c).
Inserted "bank or" preceding "savings bank" throughout and substituted "capital funds" for "surplus" following "15 percent of the".

Subchapter 11 SHORT-TERM INVESTMENTS FOR TRUST CASH

N.J. Admin. Code § 3:6-11.1 Type of investment

Cash held for various fiduciary accounts may be invested on a short term basis utilizing the cost method in determining the value of property and investments of the common trust fund.

N.J. Admin. Code § 3:6-11.2 Provisions for cost valuation

(a) Investments must be limited largely to bonds, notes or other evidences of indebtedness which are payable on demand (including variable amount notes) or which have a maturity date not exceeding 91 days from the date of purchases. However, 20 percent of the value of the fund may be invested in longer term obligations.

(b) Principal is to be valued at cost. The difference between cost and anticipated receipt on maturity is accrued on a straight-line basis.

(d) After effecting the entries and withdrawals not less than 40 percent of the value of the remaining assets of the fund must be composed of cash, demand obligations and assets that mature on the fund's next business day.

Subchapter 12 STATE BANK AND SAVINGS BANK PARITY

N.J. Admin. Code § 3:6-12.1 State bank and savings bank parity with Federal and out-of-State institutions

(a) Banks and savings banks may exercise those powers, rights, benefits or privileges authorized as of January 20, 2004 and thereafter for national banks, Federal savings banks or Federal savings associations, either directly or through a financial subsidiary or other subsidiary, to the same extent and subject to the same limitations as national banks, Federal savings bank or Federal savings associations may exercise those powers, rights, benefits or privileges. Pursuant to P.L. 2000, c. 69, §3(N.J.S.A. 17:9A-24b.1), banks and savings banks may exercise such powers, rights, benefits or privileges, consistent with (c) below, notwithstanding the provisions of N.J.S.A. 17:9A-1 et seq. or any other law. If, under Federal law, the exercise of a power, right, benefit or privilege is subject to compliance with state law in the state in which the national bank, Federal savings bank or Federal savings association exercises the power, right, benefit or privilege, then the exercise of the power, right, benefit, or privilege in this State shall be subject to New Jersey law.

(b) Banks and savings banks may exercise those powers, rights, benefits or privileges as of January 20, 2004 and thereafter authorized for out-of-State banks, savings banks or savings associations either directly or through a financial subsidiary or other subsidiary, to the same extent and subject to the same limitations as out-of-State banks, savings banks or savings associations may exercise those powers, rights, benefits or privileges, provided that before exercising any such power, right, benefit or privilege, the Commissioner has approved, by rule, the exercise of such a power, right, benefit or privilege by banks and savings banks generally, or the bank or savings bank provides notice of its intent to exercise such a power, right, benefit or privilege to the Commissioner and, on a case by case basis, the Commissioner either approves the activity or does not determine, within 45 days of his or her receipt of such notice, that the power, right, benefit or privilege is not to be exercised by the bank or savings bank on one or more of the grounds specified in (d) below. Pursuant to P.L. 2000 c. 69, §3(N.J.S.A. 17:9A-24b.1), banks and savings banks may exercise such powers, rights, benefits or privileges, consistent with (c) and (d) below, notwithstanding the provisions of N.J.S.A. 17:9A-1 et seq. or any other law. If the exercise of a power, right, benefit or privilege is subject to compliance with state licensing law in the state to which the institution looks for the authority to exercise the power, right, benefit or privilege, then the exercise of the power, right, benefit, or privilege in this State shall be subject to applicable New Jersey licensing law regulating the conduct in which the bank or savings bank seeks to engage.

The New Jersey Code of Criminal Justice, N.J.S.A. 2C:1-1 et seq., including, but not limited to, the criminal usury limits established at N.J.S.A. 2C:21-19 as applied to loan products;
New Jersey statutes and rules providing for the structure and corporate governance of banks and savings banks, including, but not limited to, statutes and rules governing amendments of certificates of incorporation, adoptions of bylaws, rights of shareholders or members, membership of boards of directors, closing of branch offices, establishing of de novo branch offices by foreign banks, applications where there is a supervisory concern, and requests for approvals or no objection opinions where there is a supervisory concern;
New Jersey statutes and rules providing the Department with supervisory powers over banks and savings banks with regard to safety and soundness and other matters, including, but not limited to, the power to issue orders and apply for relief from a court of competent jurisdiction established at N.J.S.A. 17:9A-266 et seq., and the power to require reports and examination by the Department pursuant to N.J.S.A. 17:9A-252 et seq. and similar law;
The provisions of N.J.S.A. 17:16N-1 et seq. and any rules regarding Consumer Checking Accounts; and
The New Jersey Home Ownership Security Act of 2002 (N.J.S.A. 46:10B-22 et seq.).

(d) Prior to the exercise of any power, right, benefit, or privilege exercised by an out-of-State bank, savings bank, or savings association, a bank or savings bank shall submit a notice of intent for the Commissioner's approval. Such notice of intent shall include: a description of the intended activity; a copy of the statutory or regulatory authority, including any pertinent regulatory interpretation of such authority, that governs the out-of-State institution that the applicant bank or savings bank proposes as the basis for such exercise of parity; and a business plan and statement of the general or specific experience of the applicant that establishes how such exercise of parity would be conducted in a manner consistent with safe and sound banking practices. The items submitted as part of the business plan and the statement of experience shall be treated as confidential by the Department and shall not be public records pursuant to N.J.S.A. 47:1A-1 et seq. The Commissioner may disapprove the exercise of any power, right, benefit or privilege on the grounds of: an incomplete notice of intent, safety and soundness, failure to comply with New Jersey licensing requirements, or other grounds as provided in this rule. The Commissioner may condition the exercise of any power, right, benefit or privilege on the grounds of safety and soundness, compliance with New Jersey licensing requirements, or on other grounds as provided in this subchapter.

History

Amended by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
In the first sentence, substituted "and" for "an", and rewrote the fourth sentence.
Repeal and New Rule, R.2004 d.40, effective 1/20/2004.
See: 35 N.J.R. 3433(a), 36 N.J.R. 413(a).
Section was "State bank parity with national banks".
Amended by R.2006 d.406, effective 12/4/2006.
See: 38 N.J.R. 2552(a), 38 N.J.R. 5008(a).
In (c)5, substituted "Home Ownership" for "Homeownership" and "N.J.S.A. 46:10B-22 et seq." for "P.L. 2003, c.64".

N.J. Admin. Code § 3:6-12.2 Reserved

History

Repealed by R.2004 d.40, effective 1/20/2004.
See: 35 New Jersey Register 3433(a), 36 New Jersey Register 413(a).
Section was "State bank parity with out-of-State banks".

N.J. Admin. Code § 3:6-12.3 Reserved

History

Repealed by R.2004 d.40, effective 1/20/2004.
See: 35 New Jersey Register 3433(a), 36 New Jersey Register 413(a).
Section was "Savings banks parity with Federally chartered savings banks".

Subchapter 14 FOREIGN BANKS

N.J. Admin. Code § 3:6-14.1 Biennial fee

The certificate of authority or certificate of renewal of a certificate of authority for a foreign bank shall run from the date of issuance to the end of the biennial period. When the initial certificate is issued in the second year of the biennial certificate period, the certificate fee shall be an amount equal to one-half of the fee for the biennial certificate period. The biennial period shall commence as of April 1 of each odd numbered year. The biennial fee shall be $1,000.

History

R.1983 d.42, eff. 3/7/1983.
See: 15 New Jersey Register 6(a), 15 New Jersey Register 330(a).
Emergency amendment, R.1989 d.406, effective 7/3/1989 (expires September 1, 1989).
See: 21 New Jersey Register 2397(a).
Amended by R.1989 d.449, effective 8/21/1989.
See: 21 New Jersey Register 1601(b), 21 New Jersey Register 2473(b).
Biennial fee increased to $1,000. Amended by R.2005 d.242, effective 7/18/2005.
See: 37 New Jersey Register 1108(a), 37 New Jersey Register 2673(a).
Rewrote the section.

N.J. Admin. Code § 3:6-14.2 Miscellaneous fees

(a) A foreign bank shall pay to the Department of Banking and Insurance the following fees:

| 1. | For filing a copy of its certificate of incorporation, or an amendment or change to the certificate....................................... | $ 100.00; | | --- | --- | --- | | 2. | For filing a statement of its financial condition.. | $ 50.00; | | 3. | For filing a power of attorney.................... | $ 25.00. |

History

New Rule, R.1989 d.449, effective 8/21/1989.
See: 21 New Jersey Register 1601(b), 21 New Jersey Register 2473(b).
Amended by R.1991 d.195, effective 4/15/1991.
See: 23 New Jersey Register 254(a), 23 New Jersey Register 1125(a).
Fees increased from $ 50.00 to $ 100.00 for filing copy of certificate of incorporation or an amendment or change and for each substitution of securities.
Amended by R.2001 d.203, effective 6/18/2001.
See: 33 New Jersey Register 926(a), 33 New Jersey Register 2079(c).
In (a), substituted "Department of Banking and Insurance" for "Commissioner" in the introductory paragraph and deleted 4.

N.J. Admin. Code § 3:6-14.3 Certificate of authority to transact trust business

(a) A foreign bank seeking to obtain or to renew a certificate of authority to transact trust business in this State pursuant to N.J.S.A. 17:9A-316 and 318 shall submit the following:

A Consolidated Report of Condition, as required by the Federal or State regulator of the bank, indicating the bank's financial condition as of the close of business on the December 31st immediately prior to the application. This condition shall be deemed satisfied if the report is filed by the bank with its Federal or State regulator and adequate provision is made for the New Jersey Department of Banking and Insurance to have access to that filing;
The fee required by N.J.A.C. 3:6-14.2(a)2 for filing a statement of financial condition. This fee may be waived if the Department obtains the financial statement from another regulator via the internet;
The biennial fee required by N.J.A.C. 3:6-14.1; and
Proof of current insurance coverage consisting of a copy of the insurance policy covering the trust activities conducted or to be conducted by the foreign bank in New Jersey;

(b) A foreign bank seeking its initial certificate of authority shall also submit the following:

A copy of its certificate of incorporation or articles of association and all amendments thereto, certified by its president or a vice president and attested under its corporate seal by its secretary, an assistant secretary, its cashier or an assistant cashier;
A certificate executed by its president or a vice president and attested under its corporate seal by its secretary, an assistant secretary, its cashier or an assistant cashier, affirming that so long as it shall have a New Jersey certificate of authority it will:

i. Comply with all the requirements of the laws of this State applicable to the transaction of its trust business in this State; and

ii. Promptly following adoption, submit to the Commissioner a copy of each amendment or other change in its certificate of incorporation or articles of association, certified and attested as provided in (b)1 above;

A power of attorney, executed by its president or vice president and attested under its corporate seal by its secretary, an assistant secretary, its cashier or an assistant cashier, authorizing the Commissioner and his or her successors in office to accept service of process upon the foreign bank in any action or proceeding against it affecting or relating to any estate or trust administered under the laws of this State. Such power of attorney shall provide that any such service of process upon the Commissioner shall have the same force and validity as if served directly upon the foreign bank, and that the authority therein granted shall be irrevocable and shall continue in force indefinitely, notwithstanding the expiration, revocation or surrender of the certificate of authority or the non-renewal thereof; and
A letter written by its home state regulator or an attorney opinion letter, confirming that a qualified bank, as defined in N.J.S.A. 17:9A-1(12), is permitted to transact trust business in the jurisdiction in which the foreign bank has its principal office without conditions or restrictions that are significantly more burdensome than those imposed upon foreign banks seeking to transact trust business in New Jersey.

(c) The holder of a certificate of authority shall notify the Department within 30 days of a change of name of the institution or of the decision of the institution to cease trust operations in New Jersey.

(d) A foreign bank that holds a valid certificate of authority from the Department shall be authorized to have a certificate of standing issued by the Department when such a document is requested by a third party. A qualified bank, as defined in N.J.S.A. 17:9A-1(12), shall obtain its certificate of standing or other authorization to conduct trust business in another jurisdiction from the home state regulator of the qualified bank.

History

New Rule, R.2005 d.242, effective 7/18/2005.
See: 37 N.J.R. 1108(a), 37 N.J.R. 2673(a).
Amended by R.2006 d.406, effective 12/4/2006.
See: 38 N.J.R. 2552(a), 38 N.J.R. 5008(a).
In (b)1 and (b)2ii, inserted "or articles of association".

Subchapter 15 SAVINGS BANKS: OFFICERS AND MANAGERS PERMITTED LOANS

N.J. Admin. Code § 3:6-15.1 Terms and conditions

(a) A savings bank may permit its officers and managers and their families and affiliates to become liable to the savings bank only under the same terms and conditions and to the same degree of liability as a bank permits its directors, officers or the corporations or partnerships of the officers or directors of a bank to become liable to a bank under N.J.S.A. 17:9A-71 to 74, N.J.S.A. 17:9A-104 and N.J.A.C. 3:1-11 and 3:6-3.

(b) A savings bank may not permit its officers and managers and their families and affiliates to become liable to the savings bank pursuant to the authority of N.J.A.C. 3:6-12.

(c) The authority of a savings bank to permit its officers and managers and their families and affiliates to become liable to the savings bank under the same terms and conditions and to the same degree of liability as a bank is not to be construed as granting to the savings bank the authority to grant any form or type of loan it is not otherwise authorized to make.

(d) "Manager" of a savings bank means a trustee or director of a savings bank and where reference is made to a director of a bank it shall be deemed to refer to the manager of a savings bank.

History

Amended by R.1994 d.397, effective 8/1/1994.
See: 25 New Jersey Register 3586(b), 26 New Jersey Register 3163(a).
Recodified from N.J.A.C. 3:6-15.2 and amended by R.2001 d.203, effective 6/18/2001.
See: 33 New Jersey Register 926(a), 33 New Jersey Register 2079(c).
In (a), amended N.J.S.A. and N.J.A.C. references; in (b), amended N.J.A.C. reference; and added (d). Former N.J.A.C. 3:6-15.1, Definitions, was repealed.

N.J. Admin. Code § 3:6-15.2 Reserved

History

Recodified to N.J.A.C. 3:6-15.1 by R.2001 d.203, effective 6/18/2001.
See: 33 New Jersey Register 926(a), 33 New Jersey Register 2079(c).
Section was "Terms and conditions".

Subchapter 16 QUALIFIED BANK ACQUISITION OF UNDERWRITTEN SECURITIES

N.J. Admin. Code § 3:6-16.1 Definitions

The following words and terms, when used in the chapter, shall have the following meanings unless the context clearly indicates otherwise:

"Affiliate bank" means a bank at least 90 percent of whose issued and outstanding stock is owned by the same corporation.

"Securities" means:

Bonds, notes or other obligations of or guaranteed by, this State or any agency, authority or instrumentality of this State; and
Bonds, notes or other obligations of any county, municipality, or other governmental unit or subdivision of this State, or any agency, authority, instrumentality of any county, municipality or other governmental unit or subdivision of this State.

History

Amended by R.2001 d.203, effective 6/18/2001.
See: 33 New Jersey Register 926(a), 33 New Jersey Register 2079(c).
Deleted "Issuer", "Qualified bank" and "Trust account".

N.J. Admin. Code § 3:6-16.2 Conditions placed on a qualified bank acquiring certain underwritten securities

(a) A qualified bank may acquire securities, for one or more of its trust accounts, from itself, another member of the underwriting syndicate of the security, or from an affiliate bank, when the qualified bank or affiliate holds the security or securities as a result of its being the underwriter or a member of the underwriting syndicate of the security, provided the following conditions are met with respect to each acquisition:

The acquisition is a prudent and appropriate investment for each of the trust accounts for which it is acquired;
The price paid is fair as established by market quotation of the security or of securities of similar quality, yield and maturity or as established by independent appraisal; and
A notification of such acquisition shall be given by the qualified bank to the person or persons who receive the periodic account statements issued by the qualified bank with respect to the trust account for which the acquisition is made. The notification shall be in writing and may be sent as an individual notice by regular mail or it may be included as part of the next periodic statement. In the case of a common trust fund, notification shall be disclosed in the annual financial report of such fund.

N.J. Admin. Code § 3:6-16.3 Limitations

A qualified bank shall not retain or purchase for its trust accounts or retain or sell to any of its affiliate banks for their trust accounts, securities which in the aggregate will exceed a total of more than 50 percent of an issue of securities regarding which it or any affiliate bank is an issuer.

N.J. Admin. Code § 3:6-16.4 Required records

(a) To support compliance with the provisions of N.J.A.C. 3:6-16.2, a qualified bank shall retain its records relative to the transaction for two years from the date of the acquisition, which records shall include at a minimum:

The quality rating of the issue of the security;
The price, yield and term of the security;
Any and all fees and/or commissions paid;
The portion of the total issue of the security acquired by the qualified bank for its trust accounts and the trust accounts of any affiliated bank; and
The date or dates of purchase.

N.J. Admin. Code § 3:6-16.5 Exemption provision

Nothing contained within the provisions of this subchapter shall be deemed to prohibit a qualified bank from acquiring any securities as permitted by other applicable law or regulation.

Subchapter 17 CONVERSIONS OF BANK CHARTERS

N.J. Admin. Code § 3:6-17.1 Authorization for conversion

(a) Any bank may apply to the Commissioner to convert itself to a capital stock savings bank by organizing and transferring its assets and liabilities to a newly-chartered capital stock savings bank.

(b) Before applying to the Commissioner for a conversion pursuant to (a) above, the bank shall obtain a resolution of the bank's board of directors indicating that the conversion is advisable and in the best interests of the shareholders.

(c) After the board of directors has adopted a resolution, a meeting of the stockholders shall be held upon not less than 10 days' written notice. The notice shall contain a statement of the time, place and purpose for which such meeting is called. At this meeting, the shareholders shall vote on whether the bank shall convert to a capital stock savings bank. An affirmative vote of shareholders of at least two-thirds of the stock represented at the meeting, either in person or by proxy, may approve the conversion.

History

Recodified from N.J.A.C. 3:6-17.2 by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
Former N.J.A.C. 3:6-17.1, Definitions, was repealed.
Amended by R.2006 d.406, effective 12/4/2006.
See: 38 N.J.R. 2552(a), 38 N.J.R. 5008(a).
Rewrote (c).

N.J. Admin. Code § 3:6-17.2 Application for conversion

(a) An application for a conversion from a bank to a capital stock savings bank shall contain the following:

A certified copy of the resolution of the board of directors authorizing the conversion;
A certified copy of the resolution adopted by the stockholders or members relating to the plan of conversion, containing the following information:

i. The total number of votes eligible to be cast;

ii. The total number of votes represented in person or by proxy at the special meeting;

iii. The total number of votes cast in favor and against each matter;

iv. The percentage of votes cast in favor and against each matter.

A certificate of incorporation for the new capital stock savings bank;
Biographical information for each of the incorporators and/or directors on forms approved by the Commissioner;
A completed form from the New Jersey State Police requesting criminal history record information for each director and/or incorporator, along with a cashier's check, certified check or money order for the applicable amount, payable to the State Police, stapled to the front of each form;
A copy of the bank's most recent quarterly Consolidated Report of Condition indicating the bank's financial condition. This condition shall be deemed satisfied if this information is accessible to the Department via the internet;
Financial projections for the converted capital stock savings bank for the next three years. Projections shall include a consolidated average balance sheet and a profit and loss statement at the end of each year. This financial information should include projections of all relevant regulatory capital requirements and capital ratios as well as appropriate income ratios;
A business plan for the capital stock savings bank for three years; and
Copies of all applications for Federal regulatory approval and all approvals required in connection with the conversion, or, if no application or approval is required, a statement or opinion of counsel to that effect.

(b) The Commissioner may, in his or her discretion, waive any of the application requirements of (a) above based on any of the following:

The financial condition of the institution;

Whether the institution was recently chartered;

Whether the public would be served by considering the application in an expeditious manner;
Whether the conversion is one step in an integrated application; or
Any other factor which may affect the need for a review of any of the materials specified in (a) above.

History

Recodified from N.J.A.C. 3:6-17.3 and amended by R.2001 d.203, effective 6/18/2001.
See: 33 N.J.R. 926(a), 33 N.J.R. 2079(c).
In (b), substituted "Commissioner" for "Department", neutralized gender reference and inserted "any of" preceding "the following" in the introductory paragraph, substituted "or" for "and" in 4, and rewrote 5. Former N.J.A.C. 3:6-17.2, Authorization for conversion, was recodified to N.J.A.C. 3:6-17.1.
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Inserted "; and" in (a)8, substituted a period for "; and" in (a)9 and deleted (a)10.
Amended by R.2006 d.406, effective 12/4/2006.
See: 38 N.J.R. 2552(a), 38 N.J.R. 5008(a).
Rewrote (a)6; and in (a)7, inserted "and capital ratios".

N.J. Admin. Code § 3:6-17.3 Reserved

History

Recodified to N.J.A.C. 3:6-17.2 by R.2001 d.203, effective 6/18/2001.
See: 33 New Jersey Register 926(a), 33 New Jersey Register 2079(c).
Section was "Application for conversion".

Chapter 7 SAFE AND SOUND METHODS OF BANKING

Subchapter 1 FIDELITY BONDS

N.J. Admin. Code § 3:7-1.1 Required fidelity coverage of counsel

(a) When a bank, savings bank or State association permits counsel to handle funds, either for distribution at the time of settlement of a mortgage loan or for any other reason, the bank, savings bank or State association shall procure an endorsement rider to its fidelity bond, procured pursuant to N.J.S.A. 17:9A-115 or 17:12B-73, which will cover counsel and all employees of his or her office concerned with such transactions.

(b) In lieu of procuring a rider to its fidelity bond, a bank, savings bank or State association may supply a letter obtained from its insurance company, certifying that attorneys and their employees who perform the services described in (a) above are covered by insurance as employees of the bank, savings bank or State associations.

History

Amended by R.1990 d.497, effective 10/15/1990.
See: 22 New Jersey Register 2205(a), 22 New Jersey Register 3213(a).
Editorial changes including gender neutral language.
Amended by R.1995 d.571, effective 11/6/1995.
See: 27 New Jersey Register 3254(a), 27 New Jersey Register 4281(a).
Amended by R.2000 d.481, effective 12/4/2000.
See: 32 New Jersey Register 3358(a), 32 New Jersey Register 4253(a).
Inserted references to State associations throughout; and in (a), changed N.J.S.A. reference.

Subchapter 2 INTERNAL OPERATIONS PROCEDURE

N.J. Admin. Code § 3:7-2.1 Review of fire insurance

Banks, savings banks and State associations shall periodically review all fire insurance policies supporting loans secured by mortgages and real estate owned by the bank, savings bank or State association to ascertain if the amount of insurance is sufficient considering present values, especially where the policy contains a coinsurance clause. The bank, savings bank or State association may use other prudent means instead of periodic review, such as obtaining insurance for inadequate coverage, to protect itself from exposure to loss from insufficient insurance coverage on these properties.

History

Amended by R.1990 d.497, effective 10/15/1990.
See: 22 New Jersey Register 2205(a), 22 New Jersey Register 3213(a).
Added language requiring "periodic" reviews and insurance for inadequate coverage.
Amended by R.2000 d.481, effective 12/4/2000.
See: 32 New Jersey Register 3358(a), 32 New Jersey Register 4253(a).
Inserted references to State associations throughout.

N.J. Admin. Code § 3:7-2.2 Retention of closing statements

All banks, savings banks and State associations shall obtain closing statements (settlement sheets) from counsel or title companies immediately following mortgage loan closings and file such statements with the documents evidencing the loans.

History

Amended by R.2000 d.481, effective 12/4/2000.
See: 32 New Jersey Register 3358(a), 32 New Jersey Register 4253(a).
Inserted a reference to State associations.

N.J. Admin. Code § 3:7-2.3 Verification of payment of real estate taxes

All banks, savings banks and State associations shall verify the payment of taxes by mortgage borrowers at least annually on or before January 15 of each year, either by requiring the presentation of receipted tax bills or by examining or having examinations made of the tax records.

History

As amended, R.1977 d.428, eff. 11/18/1977.
See: 9 New Jersey Register 452(a), 9 New Jersey Register 556(a).
Amended by R.2000 d.481, effective 12/4/2000.
See: 32 New Jersey Register 3358(a), 32 New Jersey Register 4253(a).
Inserted a reference to State associations.

Subchapter 3 EXAMINATION OF BANKS AND SAVINGS BANKS UNDER DIRECTION OF BOARD OF DIRECTORS, BOARD OF MANAGERS OR BOARD OF TRUSTEES

N.J. Admin. Code § 3:7-3.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Bank" means a bank or savings bank.

"Board of directors" shall include the board of directors of a bank and the board of managers or trustees of a savings bank.

"Department" means the New Jersey Department of Banking and Insurance.

"Financial statement audit report" means an audit report as defined in 12 CFR 363.

"Internal auditor" means any full or part-time employee of the bank appointed by the board of directors to perform the internal audit function for the bank, including an employee of the bank's holding company who has been delegated by the board of the bank and the board of the holding company to perform the internal audit function.

History

Amended by R.2000 d.481, effective 12/4/2000.
See: 32 N.J.R. 3358(a), 32 N.J.R. 4253(a).
Inserted definitions for "Department" and "State association".
Amended by R.2008 d.331, effective 11/3/2008.
See: 40 N.J.R. 3775(a), 40 N.J.R. 6437(a).
Added definition "Financial statement audit report" and deleted definition "State association".

N.J. Admin. Code § 3:7-3.2 Date of examination

The examination shall be commenced within the time period specified in N.J.S.A. 17:9A-253B. Prior to commencing the examination, the person scheduled to conduct the examination shall notify the Department so as to avoid conflict with an examination pursuant to N.J.S.A. 17:9A-260. In the transmittal or report to the bank, the person conducting the examination shall specify the date of completion of the examination.

History

Amended by R.1990 d.497, effective 10/15/1990.
See: 22 N.J.R. 2205(a), 22 N.J.R. 3213(a).
Correction to N.J.S.A. cite; requirement that transmittal include the date of completion of examination.
Amended by R.2000 d.481, effective 12/4/2000.
See: 32 N.J.R. 3358(a), 32 N.J.R. 4253(a).
Changed N.J.S.A. references.
Amended by R.2008 d.331, effective 11/3/2008.
See: 40 N.J.R. 3775(a), 40 N.J.R. 6437(a).
Deleted "or N.J.S.A. 17:12B-176(1)" following "N.J.S.A. 17:9A-253B" and "or 17:12B-172" following "N.J.S.A. 17:9A-260".

N.J. Admin. Code § 3:7-3.3 Confirmation of deposits and debts

The public accountant or other approved person examining for the board of directors shall confirm with certain depositors and debtors the correctness of the deposits due them and debts owed to the bank on various types of loans and contracts purchased. Such confirmations, except for provided exclusions, shall be either of the positive or negative type or any combination of the two types and shall be mailed during each calendar year to the savings deposit accounts and other time deposits, the demand deposit accounts and any and all types of direct loans, serviced loans or contracts purchased. Collateral pledged to secure a loan shall be included in the confirmation. The person conducting the confirmation program will be responsible for resolving to his or her satisfaction any differences disclosed through the confirmation procedures which are deemed to be of a material nature and all such differences which remain unresolved, shall be reported to the board of directors for its further disposition. A schedule reflecting the confirmation program shall be included as a part of the report or included in a supplement to the report.

History

Amended by R.1985 d.485, effective 9/16/1985.
See: 17 New Jersey Register 1702(a), 17 New Jersey Register 2247(a).
Deleted text "10 percent of".
Amended by R.2000 d.481, effective 12/4/2000.
See: 32 New Jersey Register 3358(a), 32 New Jersey Register 4253(a).

N.J. Admin. Code § 3:7-3.4 Exclusions from confirmation program

(a) Unless the board of directors or the persons conducting the examination deem it necessary or advisable, the following are not required to be confirmed under this subchapter:

School savings and club accounts;
Dormant or inactive savings accounts with balances under $ 1,000 provided such accounts are contained in a square control unit and held under dual control;
Demand accounts, sometimes referred to as "special checking accounts" or some other similar type limited activity accounts;
Installment contracts, such as insurance premiums; which by their nature are drawn for periods of one year or less and in amounts of $ 1,000 or less;
Serviced loans, provided that the servicer's outside accountant included in his or her scope a confirmation program which encompasses the serviced loans and the person responsible for this bank's confirmation program receives a copy of the results of the confirmations and is satisfied that the procedures and methods utilized are acceptable; or if the accountant for the servicer states that his or her examination of the servicer encompassed the requirements of the single audit program for mortgage bankers.

History

Amended by R.2000 d.481, effective 12/4/2000.
See: 32 New Jersey Register 3385(a), 32 New Jersey Register 4253(a).

N.J. Admin. Code § 3:7-3.5 Confirmation by internal auditors

The Commissioner may, in writing, excuse a bank from compliance with the foregoing confirmation program if it furnishes the Department with satisfactory proof that its own internal auditors have the capacity to perform the confirmation program, as part of their internal audit program. If such permission is granted, the internal auditor will be required to file annually, in the Department, a recapitulation of the results of his or her confirmation program.

History

Amended by R.2000 d.481, effective 12/4/2000.
See: 32 New Jersey Register 3385(a), 32 New Jersey Register 4253(a).

N.J. Admin. Code § 3:7-3.6 Provision for sampling

Selection of accounts by random sampling, specific selection or any other form of statistical sampling is permitted to provide the proper latitude in achieving a satisfactory confirmation level.

History

Amended by R.1985 d.485, effective 9/16/1985.
See: 17 New Jersey Register 1702(a), 17 New Jersey Register 2247(a).
Deleted "the ten percent" and added "a satisfactory".

N.J. Admin. Code § 3:7-3.7 Review of internal controls and audit program

(a) The public accountant or other approved person shall perform the minimum audit program outlined below unless the scope of the internal auditor's program encompasses said minimum audit program and the internal auditor has complied with the program. The public accountant or approved person shall make such documentation tests of the internal audit program as he or she deems necessary to determine that it encompasses the minimum audit program and that the internal auditor has complied with the program.

(b) The public accountant or other approved person shall indicate in his or her report the portions of the minimum audit program wherein deficiencies were noted and action taken to satisfy minimum standards.

(c) In addition, the public accountant or other approved person shall review the scope, frequency of performance and testing done under the internal audit program of the bank to determine if they are considered adequate for the institution under examination. If the internal audit program is deemed inadequate, he or she shall make suggestions for expansion and shall indicate in his or her report any conditions disclosed in the review which are deemed to reflect a material weakness in internal controls and offer any suggestions believed to strengthen them.

(d) The public accountant or other person shall determine the extent of confirmations that in his or her judgment are necessary pursuant to N.J.A.C. 3:7-3.3 to achieve a satisfactory confirmation level. The report shall clearly disclose the number and dollar amount and percent of accounts confirmed. The report shall also disclose the type of confirmation used (that is, positive or negative) and the basis used to select accounts for confirmation. If statistical sampling is used as the basis for selecting accounts, the report must also disclose the method used and the confidence level achieved.

(e) If the internal auditor has been granted permission to perform the confirmation program, the public accountant or other approved person shall annually review the program and results to determine that the requirements in (d) above have been satisfactorily met and shall so note in his or her report. If the confirmation program performed by the internal auditor is deemed to be insufficient, it shall be the responsibility of the public accountant or other approved person to perform additional confirmations to satisfy the provisions of (d) above.

History

Amended by R.1985 d.485, effective 9/16/1985.
See: 17 N.J.R. 1702(a), 17 N.J.R. 2247(a).
(d)-(e) added.
Amended by R.2000 d.481, effective 12/4/2000.
See: 32 N.J.R. 3385(a), 32 N.J.R. 4253(a).
In (c), inserted a reference to State associations; in (d), inserted a reference to other persons; and in (e), inserted references to other approved persons throughout.
Amended by R.2008 d.331, effective 11/3/2008.
See: 40 N.J.R. 3775(a), 40 N.J.R. 6437(a).
In (c), deleted "or State association" following "bank".

N.J. Admin. Code § 3:7-3.8 Performance frequency of examination scope

The frequency of performance or testing as it relates to the various phases of the minimum audit program hereafter outlined shall be determined by the internal auditor if performed by him or her, the public accountant or other approved person, and scope, performance frequency or testing adopted shall be approved by the board of directors.

History

Amended by R.2000 d.481, effective 12/4/2000.
See: 32 New Jersey Register 3385(a), 32 New Jersey Register 4253(a).
Inserted a reference to other approved persons.

N.J. Admin. Code § 3:7-3.9 Audit program

(a) The minimum audit scope to be performed in banks includes the following:

Cash, cash items and due from banks:

i. Cash shall be counted and reconciled with the general ledger control;

ii. Cash items shall be inspected, checked for propriety, reconciled to general ledger control and clearance of larger items shall be checked;

iii. Clearings and exchanges shall be confirmed. Large items shall be followed to disposition;

iv. Obtain direct confirmation of account balances with other banks; reconcile confirmed balance with general ledger controls, and check authenticity and disposition of reconciling items.

Investment securities:

i. Prepare or obtain a listing of investment securities and reconcile with general ledger controls;

ii. Account for securities owned by inspection, if on hand, or by confirmation if held in safekeeping elsewhere;

iii. Verify bank's records of pledged securities with safekeeping custodian;

iv. Ascertain the market value of securities owned, as of the examination date, or as of a recent pricing. Check authenticity of purchases and sales to supporting documentation and investment authority approved by the board of directors;

v. Review procedures with respect to amortization of premiums and accretion of discounts.

Loans and discounts:

i. Prepare or obtain a listing of the liability ledger and reconcile with general ledger controls;

ii. Notes shall be reviewed for proper officer of board approval;

iii. Collateral and side collateral shall be examined, evaluated and verified to appropriate records including wholesale obligations if carried in loan department;

iv. Participation and/or service agreements shall be reviewed and amounts shall be confirmed and reconciled to appropriate records;

v. Prepare or obtain a listing of past due accounts. Review to the extent deemed appropriate to ascertain collectibility and that past due listings and reports are regularly submitted to the board and are prepared in accordance with standards established by the board.

Mortgage loans:

i. Prepare or obtain a listing of the liability ledger and reconcile with general ledger controls. Escrow balances shall also be listed or obtained and reconciled to the respective controls.

ii. Inspect necessary documentation including approvals;

iii. Participation and/or service agreements shall be reviewed and amounts shall be confirmed and reconciled to appropriate records;

iv. Prepare or obtain a listing of past due accounts including tax or other such delinquencies. Review to the extent deemed appropriate to ascertain collectibility and that past due listings and reports are regularly submitted to the board and are prepared in accordance with standards established by the board.

Installment loans:

i. Prepare or obtain a listing of the liability ledger and reconcile with the general ledger controls;

ii. Notes shall be reviewed for proper officer of board approval. Other related documents shall be examined;

iii. Prepare or obtain a listing of past due accounts. Review to the extent deemed appropriate to ascertain collectibility and that past due listings and reports are regularly submitted to the board and are prepared in accordance with standards established by the board;

iv. Collateral shall be examined, evaluated and verified to appropriate records including wholesale obligations if carried in this department;

v. Participation and/or service agreements shall be reviewed and amounts shall be confirmed and reconciled to appropriate records.

Banking premises and furniture and fixtures:

i. Documents evidencing ownership or leases covering leaseholds shall be examined on all new properties or leaseholds;

ii. Changes in these accounts shall be checked to determine propriety and/or authorization;

iii. Insurance policies and tax receipts shall be inspected;

iv. Ascertain that the board has conducted its annual review of insurance coverages so as to insure adequacy of coverage.

Other real estate owned: Balances shall be listed, reconciled to the general ledger and related documents shall be inspected to ascertain authorizations, ownership and insurance protection.
Accrued interest receivable: Review procedures with respect to accrued interest receivable and test to the extent deemed appropriate.
Other assets: Other assets accounts shall be reviewed and tested to the extent deemed appropriate to determine propriety and/or authorization.
Demand deposits:

i. A list of accounts shall be prepared or obtained and reconciled to the general ledger controls. Reconciling items shall be reviewed and investigated to the extent deemed appropriate;

ii. Review procedures with respect to dormant or inactive accounts;

iii. Overdrafts shall be reviewed. Ascertain that regular overdraft reports are being made to the board in accordance with standards established by the board. The procedures used in preparing such reports shall be reviewed to determine compliance;

iv. Due to bank and treasury tax and loan accounts shall be confirmed and reconciled;

v. Accounts of directors, officers and employees shall be reviewed, including those accounts in which they have an interest.

Certified and official checks:

i. A list of open items shall be made or obtained and reconciled to the general ledger. Checks subsequently presented and paid shall be checked against the listing;

ii. Review procedures with regard to controls over unissued checks.

Time deposits:

i. A listing of accounts shall be prepared or obtained and reconciled to general ledger controls;

ii. Review procedure with respect to dormant or inactive accounts;

iii. Interest and dividend credits to accounts shall be reviewed;

iv. Accounts of directors, officers and employees shall be reviewed, including those accounts in which they have an interest.

Accruals and reserves: Review procedures with respect to accrual and reserve accounts.
Other liabilities: All other liability accounts shall be reviewed and tested to determine propriety and/or authorization.
Capital stock, surplus, undivided profits, capital notes and capital and valuation reserves:

i. A listing of outstanding shares reflected on the stockholders ledger shall be prepared or obtained and reconciled to appropriate controls;

ii. Purchases and sales of certificates shall be tested;

iii. Review procedures with respect to control of unissued certificates;

iv. Entries to these accounts shall be tested for propriety and authorization;

v. Debt outstanding shall be reviewed including check of performance on amortization program and confirmation with lender if deemed necessary.

Contingent liabilities:

i. The probable liability, if any, on claims or lawsuits pending shall be requested from the bank's attorney;

ii. Letters of credit shall be reviewed and substantial items shall be confirmed.

Consignment items: United States Savings Bonds, travelers checks and any other items on consignment shall be confirmed and reconciled with the issuing agent.
Income and expense accounts: Tests of subsidiary accounting records, invoices, vouchers and so forth, relating to major sources of income and expense shall be performed.
Safekeeping: Review systems, procedures and controls relative to such items and confirmed directly with the customers where deemed necessary.
Purchase and sale of customer securities: A test of procedures shall be made to insure that the system of internal controls are adequate, such as, requirements that purchases are made only against available funds; sales are only made upon delivery of securities, and proceeds of sales are promptly credited or remitted.
Bankers blanket bonds and other insurance: Policies shall be reviewed and determination made that the board reviews coverage on an annual basis for adequacy in conformance with the State banking laws.

Collections: System and procedures used in processing of collection items shall be reviewed and confirmations made as deemed appropriate.

Board minutes:

i. The minutes of the meetings of the board of directors and committees thereof shall be examined and major resolutions reviewed to determine if actions taken were in accord with such resolutions;

ii. Director's and officer's obligations shall be reviewed for approvals.

Trust department:

i. Prepare listing of account balances of the various trust and custody accounts (including corporate trust and escrow accounts), and reconcile with respective control accounts. Deposit accounts shall be confirmed and reconciled;

ii. Review overdrafts in trust cash accounts as to authorization and collectibility;

iii. Review selected personal trust accounts and corporate trust accounts to ascertain that the administration of the account is in conformity with the governing instrument. The review should include:

(1) Verification of assets;

(2) Ascertainment of asset conformity to the provisions of the fiduciary instrument;

(3) Transactions were authorized;

(4) Income is properly collected;

(5) Commissions are properly computed;

(6) Disbursements are documented; and

(7) Uninvested or undistributed funds were not held for an unreasonable length of time.

iv. The assets of other accounts, other than those accounts reviewed for conformity, shall be inspected and checked to proper records;

v. Review the minutes of the trust committee to ascertain that trust accounts are being reviewed and that trust accounts acquired or closed had been approved;

vi. Review final accountings on accounts.

On premise electronic data processing department:

i. The review of internal operating procedures and controls as they relate to the data processing department shall encompass at least the following items, or analogous items, but not necessarily be limited to the specific areas outlined:

(1) Review organizational structure to determine if functional responsibilities and separation of duties have been established and are in effect;

(2) Review standards manual, operator's run manual and program run books for propriety. Also review user's guide or procedures manual for currency and correctness with respect to appropriate application;

(3) Review control and/or access restrictions with respect to program run books, computer facilities and tape/disk library;

(4) Review operating logs and documentation with respect to reruns, halts, downtime and so forth;

(5) Review retention policy and protections standards established to determine capability to reconstruct operating programs and master files;

(6) Review equipment maintenance documentation for adherence to established schedules and review arrangements to provide the backup processing time;

(7) Review fidelity, liability, fire and other insurance in light of the nature and volume of application and service contract commitments;

(8) Review input, processing and output controls;

(9) Review program changes and/or program maintenance controls and documentation for propriety and/or authorization;

(10) Test the integrity of records generated either by utilization of "audit through the machine" or "audit around the machine" techniques.

Electronic data processing services:

i. The review of internal operating procedures and controls as they relate to data processing servicers shall encompass at least the following items, or analogous items, but not necessarily be limited to the specific areas outlined:

(1) Review the bank's own insurance and obtain the review coverages of the servicers;

(2) Review service contract;

(3) Check user's guide to ascertain it is current;

(4) Review operational controls such as separation of duties, internal controls and level of accessibility;

(5) Test integrity of records generated;

(6) Review audit scope utilized by the servicer's internal auditor and/or outside accountant. In addition, third party reports and reports of regulatory agencies, if not precluded from inspection by law, should be reviewed;

(7) Review servicer's provision for back-up processing time and management awareness of compatible servicers in the event a change in servicers is necessitated.

History

As amended, R.1978 d.103, eff. 3/21/1978.
See: 10 N.J.R. 54(d), 10 N.J.R. 136(b).
Amended by R.1990 d.497, effective 10/15/1990.
See: 22 N.J.R. 2205(a), 22 N.J.R. 3213(a).
Correction of word "amortization".
Amended by R.1995 d.571, effective 11/6/1995.
See: 27 N.J.R. 3254(a), 27 N.J.R. 4281(a).
Amended by R.2008 d.331, effective 11/3/2008.
See: 40 N.J.R. 3775(a), 40 N.J.R. 6437(a).
In the introductory paragraph of (a), deleted "or savings banks, as applicable," following "banks"; and in (a)26(i)(1), substituted "bank's" for "institution's".

N.J. Admin. Code § 3:7-3.10 Substitute examination

A bank that undergoes a financial statement audit and submits a copy of the report of such audit to the Department may do so in lieu of undergoing a directors' examination and submitting the report as required by N.J.A.C. 3:7-3.3 to 3.9.

History

New Rule, R.2008 d.331, effective 11/3/2008.
See: 40 N.J.R. 3775(a), 40 N.J.R. 6437(a).

Subchapter 5 STATEMENT OF INTEREST OF DIRECTORS OF BANKS, TRUSTEES OR MANAGERS OF SAVINGS BANKS AND STATE ASSOCIATIONS AND EXECUTIVE OFFICERS OF BANKS, SAVINGS BANKS AND STATE ASSOCIATIONS

N.J. Admin. Code § 3:7-5.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Bank" means a bank or savings bank.

"Bank holding company" is a company which controls a bank.

"Business enterprise" means a corporation, limited liability company (LLC), association, business trust, partnership, joint venture, pool, syndicate, sole proprietorship or any other form of business not specifically listed herein, whether or not such enterprise has engaged in transactions with the designated bank. The term "business enterprise" also includes any personal or family trust and any local governmental unit if, and only if, such enterprise has engaged in any transaction with the designated bank during the last year. The term "business enterprise" excludes:

Charitable, social, fraternal, civic or recreational associations;
The designated bank;
A corporation, partnership, or joint venture which is 50 percent or more owned by the designated bank; and
A bank holding company whose control of the designated bank is registered with or approved by the Board of Governors of the Federal Reserve System, pursuant to sections 3 or 5 of the Bank Holding Company Act, 12 U.S.C. 1842 or 1844, or any of such holding company's subsidiaries the control of which has been registered with or approved by the Board of Governors of the Federal Reserve pursuant to sections 3, 4, or 5 of the Bank Holding Company Act, 12 U.S.C. 1842, 1843 or
Any other bank holding company and any company controlled by a bank holding company.

"Business relationship" between the designated bank and the business enterprise shall include:

An extension of credit to the business enterprise by the designated bank, including the discounting of notes; or
A contract, lease or other agreement, other than a deposit relationship, between the designated bank and the business enterprise; and
The acquisition or sale of property, goods or services which aggregated in the past year a dollar value in excess of $ 5,000.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Control" and "company" have the meanings set forth in N.J.S.A. 17:9A-373(e) and (f).

"Designated bank" means the particular bank or savings bank of which a person required by this subchapter to file a statement of interest is a director or executive officer.

"Director" means a director of a bank or a trustee or manager of a savings bank.

"Executive officer" means a person who participates or has authority to participate, other than in the capacity of a director, in major policy-making functions of the bank, whether or not: the person has an official title; the title contains a designation of assistant; or the person is serving without salary or other compensation. The chairman of the board, the president, every vice president, the cashier, the secretary, the treasurer and the comptroller are considered to be executive officers, unless by resolution of the Board of Directors or by the bylaws of the bank any such executive officer is excluded from participation in major policy-making functions, other than in the capacity of a director, and the executive officer does not actually participate therein.

"Interest," with regard to a business enterprise, means:

Ownership, whether legal, equitable or otherwise, of stock or other forms of legal or equitable participation in the enterprise by the reporting person and/or his or her spouse or minor children which, when aggregated, equals or exceeds either 10 percent of the enterprise's total outstanding indicia of ownership, or, in the case of stock, 10 percent of the total outstanding shares of any class of stock;
Indebtedness between the reporting person and a business enterprise (aggregated among the reporting person and his or her spouse and minor children):

i. Equal to or exceeding $ 50,000 owed to the enterprise, provided said enterprise is not primarily engaged in the business of extending credit; or

ii. Equal to or exceeding $ 50,000 or five percent of the enterprise's outstanding debt, whichever is larger, owed from the enterprise.

The holding by the reporting person or his or her spouse or minor child of a position in the enterprise; or
The possession, directly or indirectly, by the reporting person of the power to direct or cause the direction of the management or policies of the enterprise, whether through the ownership of securities, by contract, by intercompany relationships, or otherwise.

"Material change" means:

The acquisition or termination of an interest in a business enterprise; or
The creation of a business relationship between the designated bank and a business enterprise.

"Position," with regard to a business enterprise, means an officer, director, trustee or partner. The term also includes an employee, beneficiary, participant or associate with managerial or policy-making responsibilities, or any similar office regardless of title.

"Principal officer" means a president, executive vice president, senior vice president, vice president, treasurer, secretary or comptroller of a bank. Principal officer also includes any person, regardless of title, who is substantially involved in major policy making functions of the bank.

"Reporting person" means a director or executive officer who is required by this regulation to complete and file a statement of interest with the designated bank.

"State association" means a State association as defined in N.J.S.A. 17:12B-5.

"Subsidiary" means a company controlled by a bank holding company.

History

As amended, R.1982 d.245, eff. 8/2/1982.
See: 14 New Jersey Register 492(a), 14 New Jersey Register 834(d).
Amended definition of principal to executive officer.
Amended by R.1987 d.192 effective 4/20/1987.
See: 19 New Jersey Register 327(a), 19 New Jersey Register 632(a).
Added definitions "Bank holding company", "Control" and "Subsidiary".
Amended by R.1995 d.571, effective 11/6/1995.
See: 27 New Jersey Register 3254(a), 27 New Jersey Register 4281(a).
Amended by R.2000 d.481, effective 12/4/2000.
See: 32 New Jersey Register 3385(a), 32 New Jersey Register 4253(a).
Inserted definitions for "Commissioner" and "State association".

N.J. Admin. Code § 3:7-5.2 Filing a statement of interest

(a) Every director or executive officer of a bank shall, on forms furnished by the Commissioner, complete and file a statement of interest with the designated bank within 30 days after the effective date of this regulation or within 30 days after becoming a director or executive officer of the designated bank. The statement of interest shall include the following information:

Name of the designated bank;
Name of the reporting person;
Title or position of the reporting person with the designated bank;
Name and address of the business enterprise in which the reporting person has an interest.

(b) If a business enterprise reported in accordance with (a) above has a business relationship with the designated bank or State association, then the statement of interest shall also include:

The position or positions held by the reporting person, his or her spouse or minor children with the business enterprise;
The interest in the business enterprise held by the reporting person, his or her spouse or minor children. The approximate percentage or ownership held by the reporting person, his or her spouse or minor children, and the nature of any other forms of interest or influence exercised by each;
A summary of the business relationship between the designated bank and the business enterprise.

(c) The reporting person shall update his or her present statement of interest or file a new statement of interest within 30 days after the occurrence of any material change.

(d) If a reporting person has no interest in a business enterprise, he or she shall complete and file a statement of interest to that effect.

History

As amended, R.1982 d.245, eff. 8/2/1982.
See: 14 New Jersey Register 492(a), 14 New Jersey Register 834(d).
Amended definition of principal to executive officer.
Amended by R.2000 d.481, effective 12/4/2000.
See: 32 New Jersey Register 3385(a), 32 New Jersey Register 4253(a).
In (b), inserted a reference to State associations in the introductory paragraph.

N.J. Admin. Code § 3:7-5.3 Annual review of statement of interest

Every reporting person shall review annually, within 30 days after the annual meeting, the statement of interest he or she has on file with the designated bank or State association to determine if this statement reflects his or her current status and, if so, shall indicate same. If the reporting person's current status is not reflected accurately, he or she shall update the present statement of interest or complete and file a new statement of interest.

History

Amended by R.2000 d.481, effective 12/4/2000.
See: 32 New Jersey Register 3385(a), 32 New Jersey Register 4253(a).
Inserted a reference to State associations.

N.J. Admin. Code § 3:7-5.4 Location and retention of statements of interest

(a) All statement of interest forms shall be maintained at the principal office or at such other office as may be designated by the board of directors. Statement of interest forms which have been superseded by new or corrected forms shall be retained with the new statement of interest forms for a period of two years.

(b) If any director or executive officer of a designated bank ceases to serve in that capacity, the bank shall retain for a period of two years the current statement of interest forms on file with the designated bank.

History

As amended, R.1982 d.245, eff. 8/2/1982.
See: 14 New Jersey Register 492(a), 14 New Jersey Register 834(d).
Added statements of interest could be maintained at other offices as designated by board of directors. Also amended definition of principal to executive officer.
Amended by R.1990 d.497, effective 10/15/1990.
See: 22 New Jersey Register 2205(a), 22 New Jersey Register 3213(a).
Correction in (a) of word "officer" to "office".

N.J. Admin. Code § 3:7-5.5 Access to statement of interest forms

(a) Each completed and filed statement of interest form shall be maintained for review by the State and Federal bank examiners and the following persons associated with the designated bank: directors, senior loan officers, the bank's designated auditor and the bank's designated public accounting firm.

(b) Nothing contained in this regulation shall be construed to prevent a bank from adopting reasonable procedures governing the manner in which persons associated with the bank and entitled under this regulation to review statement of interest forms to obtain access to such forms or copies thereof.

(c) Nothing contained in this regulation shall be construed to prevent a bank from permitting persons, other than those required by this regulation, access to statement of interest forms.

History

As amended, R.1982 d.245, eff. 8/2/1982.
See: 14 New Jersey Register 492(a), 14 New Jersey Register 834(d).
Subsection (a) added review by State and Federal bank examiners; also added the bank's designated public accounting firm.

N.J. Admin. Code § 3:7-5.6 Confidentiality of statement of interest

Pursuant to N.J.S.A. 17:9A-264, statement of interest forms filed with a designated bank shall be confidential.

Chapter 8 RESERVES AND RESERVE DEPOSITARIES

Subchapter 1 APPROVAL OF RESERVE DEPOSITARIES

N.J. Admin. Code § 3:8-1.1 Reserve depositaries approved for nonmember banks of Federal Reserve System

(a) The following are reserve depositaries approved for banks not members of the Federal Reserve System:

Banks and national banking associations with offices in New Jersey that have total assets in excess of $ 100 million; and
Banks and national banking associations with no offices in New Jersey, but with offices within the second and third Federal Reserve Districts, and that have total assets in excess of $ 300 million.

(b) For the purposes of this section, "banks" as used in (a)1 and 2 above excludes savings banks.

History

Amended by R.2006 d.441, effective 12/18/2006.
See: 38 N.J.R. 3103(a), 38 N.J.R. 5354(a).
In (a)1, substituted "with offices" for "located" and "that" for "which", and inserted "and" at the end; in (a)2, substituted "with no offices in New Jersey, but with offices" for "located outside of New Jersey which are", "that" for "which", and a period for "; 'banks' as used herein and in (a)1 of this section excludes savings banks;" at the end; deleted (a)3 through (a)7; and added (b).

Subchapter 2 APPROVED AS RESERVE DEPOSITARIES FOR SAVINGS BANKS

N.J. Admin. Code § 3:8-2.1 General approval

For the purposes of N.J.S.A. 17:9A-187, "reserve depositary" shall have the meaning of that term as set forth in N.J.S.A. 17:9A-49 and in N.J.A.C. 3:8-1.1, the rule implementing that section.

History

Repeal and New Rule, R.2006 d.441, effective 12/18/2006.
See: 38 N.J.R. 3103(a), 38 N.J.R. 5354(a).
Section was "General approval".

N.J. Admin. Code § 3:8-2.2 Reserved

History

Repealed by R.2006 d.441, effective 12/18/2006.
See: 38 N.J.R. 3103(a), 38 N.J.R. 5354(a).
Section was "Specific designation".

Chapter 10 MORTGAGES

Subchapter 5 CHARGE FOR SUBSTITUTION OF POLICIES

N.J. Admin. Code § 3:10-5.1 Maximum charge

No lender or other legal entity servicing mortgages shall make any charge in excess of $ 5.00 for the substitution in midterm by the mortgagor of an insurance policy or policies.

Subchapter 8 APPRAISAL VALUE RELAXED FOR CERTAIN LOANS

N.J. Admin. Code § 3:10-8.1 Appraisal ratio relaxed for certain loans

(a) A bank or savings bank may originate or acquire mortgage loans up to 100 percent of the appraised value of the property, provided that:

The applicant has insufficient resources to make a downpayment of 10 percent or more;
The loan does not exceed the lending limits for FHA loans by county (published at http://www.fha.com);
The aggregate amount of loans originated or acquired pursuant to this section shall not exceed five percent of the capital funds of the bank or savings bank as defined in N.J.S.A. 17:9A-60 without prior approval of the Commissioner; and
One or more of the following conditions are met:

i. The mortgage loan is made to an individual or family of low or moderate income, as defined by 12 U.S.C. § 2901, who will occupy the property as a primary residence;

ii. The mortgage loan is made to a first-time homebuyer who will occupy the property as a primary residence;

iii. The mortgage loan is made to an individual or family who currently resides, or who will reside, in a low or moderate income census tract as defined by 12 U.S.C. § 2901, and who will occupy the property to be mortgaged as a primary residence; or

iv. The mortgage loan is made to an individual or family who is seeking a loan in connection with any State or Federal agency affordable housing construction, purchase or refinancing program.

Subchapter 9 REPORTING REQUIREMENTS ON MORTGAGE FORECLOSURE ACTIONS

N.J. Admin. Code § 3:10-9.1 Purpose and scope

(a) The purpose of this subchapter is to implement the requirements imposed by N.J.S.A. 46:10B-49 regarding the reporting to and publication by the Department of information on the number of residential mortgage foreclosure proceedings instituted by creditors in each county of this State and on the types of residential mortgages sought to be foreclosed upon in such actions.

(b) This subchapter shall pertain to all creditors who file a mortgage foreclosure action in this State.

N.J. Admin. Code § 3:10-9.2 Definitions

The following words and terms shall have the following meaning for purposes of this subchapter:

"Adjustable rate mortgage" means a mortgage loan that does not have a fixed interest rate or on some other basis. During the life of the loan, the interest rate will change based on a specified index rate or on some other basis. Also known as adjustable mortgage loans or variable rate mortgages.

"Conforming mortgage" means a mortgage with a loan amount that does not exceed the loan limits set by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac) or their successors.

"Creditor" means a mortgagee or an agent or assignee of a mortgagee, such as the servicer, who has filed a complaint in the Superior Court of New Jersey seeking to foreclose upon a residential mortgage.

"FHA mortgage" means a mortgage insured by the Federal Housing Administration.

"FICO score" means a borrower's credit score calculated using methodology developed by Fair Isaac Corporation.

"Fixed rate mortgage" means a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

"Interest only mortgage" means a mortgage where the borrower has the option of paying only the interest for a limited period of time.

"Mortgage foreclosure proceeding instituted" means the filing of a complaint in the Superior Court of New Jersey seeking to foreclosure upon a residential mortgage.

"Nonconforming mortgage" means a mortgage with a loan amount that exceeds the loan limits set by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac), or their successors.

"Prime market rate mortgage" means a residential mortgage given to a borrower with a FICO score of 660 or more.

"Reporting quarter" means the calendar quarter immediately prior to the month in which the data is being inputted in accordance with this subchapter.

"Residential mortgage" means a mortgage in which the security is an owner occupied residential property of not more than four dwelling units as defined by N.J.S.A. 2A:50-55.

"Servicer" means a business that collects mortgage payments from borrowers and manages the borrower's escrow accounts.

"Subprime market rate mortgage" means a residential mortgage given to a borrower with a FICO score of less than 660.

"USDA Rural Development Loan" means a mortgage insured by Rural Development Office of the United States Department of Agriculture.

"VA mortgage" means a mortgage insured by the Veteran's Administration.

N.J. Admin. Code § 3:10-9.3 Reporting requirements

(a) With the exception of the first report to be filed by creditors subsequent to the adoption of this subchapter, which shall relate to mortgage foreclosure actions instituted during the third calendar quarter of 2009 and shall be filed by December 31, 2009, within 30 days of the end of each calendar quarter, each creditor shall file electronically on a form prescribed by the Commissioner, a report containing information pertaining to the number of residential mortgage foreclosure actions instituted by that creditor in the aforementioned quarter.

(b) Such reports shall include the following information:

The name of the servicer or the name of the mortgagee if there is no servicer;

The name of the individual submitting the data;
The total number of residential mortgages upon which a mortgage foreclosure proceeding was instituted by the creditor in the State of New Jersey during the reporting calendar quarter;
The total number of residential mortgages on which a mortgage foreclosure proceeding was instituted during the reporting calendar quarter in each municipality in which a property being foreclosed upon is situated;

The following information with respect to the residential mortgages on which foreclosure actions were instituted on properties situated in the respective municipalities referenced in (b)3 above:

i. The number of such mortgages executed in the respective years prior to the filing of the report, with a general category to capture the oldest mortgages reported upon, for example "mortgages executed prior to 2002";

ii. The number of such mortgages that were fixed rate mortgages;

iii. The number of such mortgages that were adjustable rate mortgages;

iv. The number of such mortgages that were conforming mortgages;

v. The number of such mortgages that were nonconforming mortgages;

vi. The number of such mortgages that were VA mortgages;

vii. The number of such mortgages that were FHA mortgages;

viii. The number of such mortgages that were USDA Rural Development Loans;

ix. The number of such mortgages that were prime rate mortgages;

x. The number of such mortgages that were subprime rate mortgages; and

xi. The number of such mortgages that were interest only mortgages; and

A mortgage shall be reported for every pertinent category.

(c) The individual submitting the data shall certify to their being authorized by the creditor to do so and to the truthfulness of the reported data to the best of their knowledge.

(d) On a quarterly basis, the Department shall post on its website a report detailing the information reported by creditors as set forth above on residential mortgage foreclosure actions instituted in the State.

N.J. Admin. Code § 3:10-9.4 Retention requirements

(a) All creditors shall retain copies of the information they report to the Department as set forth in N.J.A.C. 3:10-9.3 for at least three years from the date reported.

(b) The Commissioner may, during the aforesaid retention period, request the production of a readable copy of the reported information for audit purposes.

Chapter 11 INVESTMENTS

Subchapter 1 LOAN AND INVESTMENT APPROVAL

N.J. Admin. Code § 3:11-1.1 Approval to exceed 15 percent limitation

(a) The following are persons which may become liable to a bank or obligations in which a bank may invest in an unlimited amount subject only to the exercise of prudent banking judgment.

General obligations of any State of the United States or any political subdivision thereof.
Such other individual obligations as the Commissioner may from time to time prescribe. A list of these individual obligations shall be kept on file in the office of the Commissioner.

i. Following is the current listing of obligations approved by the Commissioner pursuant to the provisions of this paragraph:

(1) Banks for Cooperatives;

(2) Commodity Credit Corporation;

(3) Export-Import Bank (Participation Certificates or Debentures);

(4) Farmers Home Administration;

(5) Federal Farm Credit Banks Consolidated Systemwide Bonds and Discount Notes;

(6) Federal Home Loan Bank System;

(7) Federal Intermediate Credit Banks;

(8) Federal Land Bank;

(9) Federal National Mortgage Association;

(10) Government National Mortgage Association;

(11) New Jersey Health Care Facilities Financing Authority (provided that no more than 15 percent may be invested in one obligor (individual hospital) which is responsible for the payment of the particular issue);

(12) New Jersey Economic Development Authority (provided that no more than 15 percent may be invested in bonds issued on behalf of one person. Such bonds, exclusive of any portion that may be guaranteed by the Authority, will be aggregated with any other obligations of that person at the bank for determining the 15 percent limitation. The obligations should be classified as loans and will be reported as such in the Department's examination report).

(b) The following are persons which may become liable to a bank or obligations in which a bank may invest in excess of 15 percent, but not in excess of 25 percent of the capital funds of such bank subject to the exercise of prudent banking judgment.

Those obligations as the Commissioner may from time-to-time prescribe. A list of these obligations shall be kept on file in the office of the Commissioner.

i. The following is the current listing of obligations subject to the provisions of this paragraph:

(1) Delaware River and Bay Authority;

(2) Delaware River Port Authority;

(3) New Jersey Housing Finance Agency;

(4) New Jersey Mortgage Finance Agency;

(5) New Jersey Sports and Exposition Authority;

(6) New Jersey Turnpike Authority;

(7) Port Authority of New York and New Jersey (secured by general reserve fund only).

(c) Prudent banking judgment requires that every bank shall maintain in its files credit information adequate to demonstrate that it has exercised prudence in making the determination to invest in a particular obligation.

(d) Request for addition of an obligation to the listings noted in (a) or (b) above may be made by any bank to the commissioner. Such request should be supported by information in sufficient detail to enable the Commissioner to make the necessary determination and should include the bank's appraisal of the information furnished.

History

Amended by R.1974 d.93, effective 4/16/1974.
See: 6 New Jersey Register 168(b).
Amended by R.1978 d.221, effective 7/6/1978.
See: 10 New Jersey Register 316(a).
Amended by R.1979 d.298, effective 8/6/1979.
See: 11 New Jersey Register 315(d), 11 New Jersey Register 429(c).
Amended by R.1994 d.377, effective 7/18/1994.
See: 26 New Jersey Register 1909(a), 26 New Jersey Register 2892(a).
Amended by R.2005 d.165, effective 6/6/2005.
See: 37 New Jersey Register 162(a), 37 New Jersey Register 2008(a).
In (b)1i, deleted former (3) and recodified former (4) through (8) as (3) through (7).

N.J. Admin. Code § 3:11-1.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Bank" means a bank as defined in N.J.S.A. 17:9A-1(1), a savings bank as defined in N.J.S.A. 17:9A-1(13) and a State association as defined in N.J.S.A. 17:12B-5(1).

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Department" means the Department of Banking and Insurance.

"General obligation of any state or any political subdivision thereof" means an obligation supported by the full faith and credit of an obligor possessing general powers of taxation, including property taxation. It includes an obligation payable from a special fund or by an obligor possessing general powers of taxation when an obligor possessing general powers of taxation, including property taxation, has unconditionally promised to make payments into the fund or otherwise available for the payment of the obligation of amounts which (together with any other funds available for the purpose) will be sufficient to provide for all required payments in connection with the obligation.

"Political subdivision of any state" means a county, city, town or other municipal corporation, a public authority, and generally and publicly owned entity which is an instrumentality of the state or of a municipal corporation.

Subchapter 3 ORGANIZATION AND OPERATION OF SMALL BUSINESS INVESTMENT COMPANIES

N.J. Admin. Code § 3:11-3.1 Terms of organization

(a) Banks are authorized to organize or to participate in the organization and to operate, in accordance with N.J.S.A. 17:9A-27(a), small business investment companies formed under the Small Business Investment Act of 1958 15 U.S.C. §§ 661 et seq., under the following terms and conditions.

No bank shall hold shares of stock in more than one such company without prior approval of the Commissioner;
A bank shall in no event hold shares of stock in any such company in an amount aggregating more than five percent of the capital funds of the bank;
No bank shall make a loan or advance to or purchase debentures of any such company if the aggregate of such loans, advances and purchases, together with the stock investment of the bank in such company, will exceed more than 15 percent of the capital funds of the bank;
No bank shall make a loan to any individual, partnership, corporation or association when the amount of that loan together with the following will exceed more than 15 percent of the capital funds of the bank;

i. The amount of the liabilities of any nature of that individual, partnership, corporation or association to any small business investment company; and

ii. The acquisition cost of any shares of that corporation owned by the small business investment company in which the bank has controlling interest.

History

As amended, R.1976 d.416, eff. 12/16/1976.
See: 8 New Jersey Register 498(b), 9 New Jersey Register 4(b).
As amended, R.1977 d.23, eff. 1/28/1977.
See: 9 New Jersey Register 3(b), 9 New Jersey Register 112(c).

N.J. Admin. Code § 3:11-3.2 Violations

The Commissioner may direct a bank to divest its ownership in any small business investment company for failing to comply with the terms, conditions and limitations required by N.J.A.C. 3:11-3.1.

History

R.1977 d.23, eff. 1/28/1977.
See: 9 New Jersey Register 3(b), 9 New Jersey Register 112(c).

N.J. Admin. Code § 3:11-3.3 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Bank" means a bank as defined in N.J.S.A. 17:9A-1(1).

"Capital funds" is as defined in section 60 of the Banking Act of 1948, as amended, and includes any effective regulations pursuant to same.

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Controlling interest" is as defined in section 71 of the Banking Act of 1948, as amended.

History

R.1977 d.23, eff. 1/28/1977.
See: 9 New Jersey Register 3(b), 9 New Jersey Register 112(c).

Subchapter 4 INVESTMENT BY BANK IN CAPITAL STOCK OF BANK PRINCIPALLY ENGAGED IN INTERNATIONAL OR FOREIGN BANKING

N.J. Admin. Code § 3:11-4.1 Authorization

(a) Banks are authorized to subscribe for purchase and hold stock of one or more banks or corporations chartered or incorporated under the laws of the United States or of any state thereof, and principally engaged in international or foreign banking, as defined and authorized under section 25(a) of the Federal Reserve Act, provided that:

Qualification to invest: The total capital stock and surplus of the bank making such investment or investments shall not be less than $ 1,000,000;
Limitations on investment: The total amount invested in all such banks or corporations shall not exceed 10 percent of the total capital stock and surplus of the bank.

N.J. Admin. Code § 3:11-4.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Bank" means a bank as defined in N.J.S.A. 17:9A-1(1).

Subchapter 5 INVESTMENT BY BANK, SAVINGS BANK OR STATE ASSOCIATION IN CAPITAL STOCK OF DOMESTIC OPERATING SUBSIDIARIES

N.J. Admin. Code § 3:11-5.1 Operational subsidiaries

(a) With the prior approval of the Commissioner, a bank may engage in activities, which are a part of the business of banking or incidental thereto, by means of an operating subsidiary corporation. In order to qualify as an operating subsidiary hereunder, at least 80 percent of the voting stock of the subsidiary must be owned by the bank. An application to conduct business as an operating subsidiary shall be accompanied by a $ 100.00 application fee. In addition, the Department shall impose a per diem charge, as required.

(b) An operating subsidiary may perform any business function which the parent bank is permitted to perform.

(c) The Department considers an application for the establishment of a domestic operating subsidiary to be primarily a business decision of the applicant; however, the Commissioner must be satisfied that the general condition of the applicant is satisfactory. The existence of conditions warranting special supervisory attention by the Department normally will preclude approval. A bank should not have an undue amount of criticized assets, particularly in relation to capital; serious or frequent violations of law; inadequate liquidity; adverse operating trends; poor internal controls or other significant problems. Capital, earnings and retention of earnings should be sufficient to support the current level of operations as well as the proposed expansion. In determining the applicant's capacity to support the proposed subsidiary, the estimated cost of establishing or acquiring the subsidiary and the volume and scope of anticipated business will be considered. If the application is for the acquisition of an existing business, the Commissioner will also take into account the public interest factor, similar to the requirement for this consideration on mergers as called for in N.J.S.A. 17:9A-136.

(d) Transactions between the parent bank and the operating subsidiaries are not subject to the limitations in N.J.S.A. 17:9A-62.

(e) Except as otherwise permitted by statute or regulation, all provisions of State banking laws applicable to the operations of the parent bank shall be equally applicable to the operations of its operational subsidiaries.

(f) Unless otherwise provided by statute or regulation, pertinent book figures of the parent bank and its operating subsidiaries shall be consolidated for the purpose of applying applicable statutory limitations.

(g) Each operating subsidiary shall be subject to examination and supervision by the Commissioner in the same manner and to the same extent as the parent bank. If upon examination, the Commissioner shall ascertain that the subsidiary is created or operated in violation of law or regulation or that the manner of operation is detrimental to the business of the parent bank and its depositors, he or she may order the bank to dispose of all or part of such subsidiary upon such term as he or she may deem proper. The cost of an examination into the condition of an existing business proposed to be acquired and operated as an operating subsidiary shall be paid by the applicant as will any subsequent examinations of an approved subsidiary.

(h) Prior to the disposition of an operating subsidiary, the parent bank shall inform the Commissioner, by letter, of the terms of the transaction.

History

Emergency amendment, R.1989 d.406, effective 7/3/1989 (expires September 1, 1989).
See: 21 New Jersey Register 2397(a).
Amended by R.1989 d.449, effective 8/21/1989.
See: 21 New Jersey Register 1601(b), 21 New Jersey Register 2473(b).
Application fee and per diem charge added.

N.J. Admin. Code § 3:11-5.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Bank" means a bank as defined in N.J.S.A. 17:9A-1(1), a savings bank as defined in N.J.S.A. 17:9A-1(13) and a State association as defined in N.J.S.A. 17:12B-5(1).

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Department" means the Department of Banking and Insurance.

Subchapter 6 APPROVED STOCK INVESTMENT

N.J. Admin. Code § 3:11-6.1 Approval of limited investment in Minbanc Capital Corporation

(a) Banks are authorized to subscribe for, purchase and hold common stock in the Minbanc Capital Corporation.

(b) Such investment shall not exceed two percent of the total capital stock and surplus of the bank.

History

R.1971 d.235, eff. 12/30/1971.
See: 3 New Jersey Register 18(b), 3 New Jersey Register 242(b).

N.J. Admin. Code § 3:11-6.2 Surplus defined

Surplus as defined in this regulation shall include surplus, undivided profits, reserve for contingencies, other capital reserves and capital notes and debentures.

History

R.1971 d.235, eff. 12/30/1971.
See: 3 New Jersey Register 18(b), 3 New Jersey Register 242(b).

N.J. Admin. Code § 3:11-6.3 Approval of investment in Student Loan Marketing Association

(a) Banks are authorized to subscribe for, purchase and hold common stock in the Student Loan Marketing Association.

(b) Savings banks are authorized to subscribe for, purchase and hold common stock in the Student Loan Marketing Association.

History

R.1973 d.250, eff. 9/10/1973.
See: 5 New Jersey Register 256(b), 5 New Jersey Register 328(c).

N.J. Admin. Code § 3:11-6.4 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Bank" means a bank as defined in N.J.S.A. 17:9A-1(1).

"Savings bank" means a savings bank as defined in N.J.S.A. 17:9A-1(13).

Subchapter 7 LIMITATION OF LIABILITY TO A BANK, SAVINGS BANK OR STATE ASSOCIATION

N.J. Admin. Code § 3:11-7.1 Definition of capital funds

Capital funds as defined in N.J.S.A. 17:9A-60 is expanded to include contingent reserves.

N.J. Admin. Code § 3:11-7.2 Definition of contingent reserves

(a) Contingent reserves of a bank is defined to include:

Reserve for loan losses or bad debts;
Valuation reserves for securities;

Reserve for contingencies; and

Any other capital accounts excluding specifically allocated reserves or reserves for known specific charges.

History

Amended by R.1983 d.133, effective 5/2/1983.
See: 15 New Jersey Register 192(a), 15 New Jersey Register 688(a).
In (a)1, deleted "less amount of tax payable to the tax free portion of the reserve".

N.J. Admin. Code § 3:11-7.3 Limitations on obligations as endorser or guarantor of installment consumer paper

Obligations as endorser or guarantor of installment consumer paper which carries a full recourse endorsement, repurchase agreement or other unconditional guaranty by the seller may exceed 15 percent but not 25 percent of the capital funds of the bank.

History

Amended by R.2005 d.165, effective 6/6/2005.
See: 37 New Jersey Register 162(a), 37 New Jersey Register 2008(a).
Substituted "recourse" for "resource".

N.J. Admin. Code § 3:11-7.4 Exclusion of obligations from 25 percent limitation

If the bank's files or the knowledge of its officers of the financial condition of each maker of such obligations is reasonably adequate, and upon certification by an officer of the bank designated for that purpose by the board of directors of the bank that the responsibility of each maker of such obligations has been evaluated and the bank is relying primarily upon each such maker for the payment of such obligations, the limitations of N.J.S.A. 17:9A-62 as to the obligations of each such maker shall be the sole applicable loan limitation.

N.J. Admin. Code § 3:11-7.5 Retention of certification

The bank officer certification required under section 4 of this subchapter shall be in writing and shall be retained as part of the records of such bank.

N.J. Admin. Code § 3:11-7.6 Accommodation endorser or guarantor

(a) The liability of an endorser or guarantor who does not receive any of the proceeds of a loan from a bank is not to be considered as an obligation of such endorser or guarantor for purposes of computing his limitation on liability to a bank under N.J.S.A. 17:9A-62.

(b) The liability of an endorser or guarantor is to be considered as an obligation of such endorser or guarantor when he has obtained a loan or has sold or discounted the paper.

N.J. Admin. Code § 3:11-7.7 Exclusion of time balances on deposits from 15 percent limitation

Time balances on deposit with an approved reserve depository, or in any other bank or national banking association located outside of New Jersey whose deposits equal or exceed three billion dollars and are insured by the Federal Deposit Insurance Corporation, may exceed 15 percent but not 25 percent of the capital funds of the bank.

History

Amended by R.1982 d.263, eff. 8/16/1982.
See: 14 New Jersey Register 608(b), 14 New Jersey Register 909(a).
Added out of state banks with deposits of $ 3B.

N.J. Admin. Code § 3:11-7.8 General lending limitations

(a) The total liabilities, including investment securities, of any person which are not fully secured, as determined in a manner consistent with (b) below, by collateral having a market value at least equal to the amount of the liability shall not exceed 15 percent of the capital funds of a bank. The 10 percent limitations prescribed in N.J.S.A. 17:9A-62A and 17:9A-62F are increased pursuant to N.J.S.A. 17:9A-62H.

(b) The total liabilities of any person secured by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations, at least equal to the amount of funds outstanding shall not exceed 10 percent of the capital funds of the bank. This limitation shall be separate from and in addition to the limitation contained in (a) above.

(c) A liability based on the limitation contained in (b) above shall be secured by readily marketable collateral having a current market value of at least 100 percent of the amount of the loan or extension of credit at all times. "Current market value" means the bid or closing price listed for an item in a regularly published listing or an electronic reporting service.

(d) For purposes of this section, "readily marketable collateral" means financial instruments and bullion which are salable under ordinary circumstances with reasonable promptness at a fair market value determined by quotations based on actual transactions on an auction or a similarly available daily bid and ask price market. "Financial instruments" include stocks, notes, bonds, and debentures traded on a national securities exchange, "OTC margin stocks" (as defined in Regulation U of the Federal Reserve Board), negotiable certificates of deposit, commercial paper, bankers' acceptances and shares in money market and mutual funds of the type which issues shares in which banks may perfect a security interest.

(e) Financial instruments may be denominated in foreign currencies which are freely convertible to United States dollars. If collateral is denominated and payable in a currency other than that of the loan or extension of credit which it secures, the collateral must be revalued at least monthly, using appropriate foreign exchange rates, in addition to being repriced at current market value.

(f) Each bank must institute adequate procedures to ensure that the collateral value fully secures the outstanding loan at all times. If collateral values fall below 100 percent of the outstanding loan, to the extent that the loan is no longer in conformance with this section and exceeds the general 15 percent limitation, the loan must be brought into conformance within five business days, except where judicial proceedings, regulatory actions or other extraordinary occurrences prevent the bank from taking action.

(g) The total liabilities of any person secured by a segregated deposit account in the lending bank shall not be subject to any limitation based on the capital funds of the bank.

History

New Rule, R.1983 d.133, effective 5/2/1983.
See: 15 New Jersey Register 192(a), 15 New Jersey Register 688(a).
Amended by R.1995 d.245, effective 5/15/1995.
See: 27 New Jersey Register 794(a), 27 New Jersey Register 1967(a).

N.J. Admin. Code § 3:11-7.9 Loans to financial institutions with the approval of the Commissioner

(a) Loans or extensions of credit to any financial institution or to any receiver, conservator, superintendent of banks, or other agent in charge of the business and property of such financial institutions, when such loans or extensions of credit are approved by the Commissioner, shall not be subject to any limitation based on capital funds.

(b) For purposes of this section, "financial institution" means a commercial bank, savings bank, trust company, savings and loan association, or credit union.

(c) This exception is intended to apply only in emergency situations where a bank is called upon to provide assistance to another financial institution.

History

New Rule, R.1983 d.133, effective 5/2/1983.
See: 15 New Jersey Register 192(a), 15 New Jersey Register 688(a).

N.J. Admin. Code § 3:11-7.10 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Bank" means a bank as defined in N.J.S.A. 17:9A-1(1), a savings bank as defined in N.J.S.A. 17:9A-1(13) and a State association as defined in N.J.S.A. 17:12B-5(1).

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

Subchapter 8 SAVINGS BANKS INVESTMENT SECURITIES

N.J. Admin. Code § 3:11-8.1 Investment securities

(a) In addition to investments otherwise authorized in Article 25 of the Banking Act of 1948, as amended, savings banks are further authorized to invest in the following securities:

Bonds, debentures, notes or other obligations of any business corporation, except bank holding companies, which are defined in (a)3 below, organized under the laws of the United States or any state therein; provided, however, such investment security has received a quality rating in any of the first three quality classifications issued by Moody's Investors Service, Inc., Standard & Poor's Corporation, or Fitch Investors Service, Inc., or has received a quality rating in the first seven quality classifications issued by Duff and Phelps, Inc. If such investment security shall be of a type commonly denominated as "commercial paper" such obligation shall have received a quality rating of P-1 by Moody's Investors Service, Inc., A-1 by Standard & Poor's Corporation, F-1 by Fitch Investors Service, Inc., or Duff 1 plus or minus.
Bonds, debentures, notes and bankers acceptances issued by any banking institution, excluding a savings bank, as defined in section 1(2) of N.J.S.A. 17:9A, which banking institution at the date of its last published statement preceding the date of investment had a combined total of capital stock, surplus, reserve for contingencies and undivided profits equal to at least $ 40 million and also equal to at least five percent of its aggregated deposit liability;
Bonds, debentures, notes and bankers acceptances issued by any bank holding company authorized to do business in New Jersey which is registered as a bank holding company under the provisions of the act of Congress, known as the Bank Holding Company Act of 1956 (act of May 9, 1956, 70 stat. 133), as amended. Such holding company must have as of the date of its last published statement preceding the date of investment a combined total of capital stock, surplus, reserve for contingencies and undivided profits equal to at least $ 40 million and also equal to at least five percent of its aggregate deposit liability;
Bonds, notes, debentures or other obligations issued or insured or guaranteed by any agency, authority, instrumentality or corporate body created by and for the United States Government whether or not such obligations are guaranteed by the United States;

Bonds, notes, debentures or other obligations issued or insured or guaranteed by any agency, authority, instrumentality or corporated body created by and for the State of New Jersey whether or not such obligations are guaranteed by the State of New Jersey.

(b) All investments by savings banks pursuant to the provisions of this subchapter shall be subject to the following conditions and limitations:

No savings bank shall make an investment in any investment security issued by an individual business corporation when the making of such investment will cause the aggregate liability of such corporation to such savings bank in any capacity to exceed five percent of the total indebtedness of such corporation, or two percent of the assets of such savings bank, whichever amount is lesser;
The board of managers shall at all times exercise reasonable discretion in the acquisition, retention and disposition of any investment security;
This subchapter shall not be deemed to authorize any savings bank to acquire any investment which contravenes the specific provisions contained in N.J.S.A. 17:9A-26.1;
If an investment would be authorized both by this subchapter and N.J.S.A. 17:9A-174 -180, then such investment shall be deemed to have been made under such section of N.J.S.A. 17:9A and all limitations applicable to such section shall apply.

History

R.1974 d.145, effective 6/14/1974.
See: 6 New Jersey Register 167(b), 6 New Jersey Register 256(a).
As amended, R.1984 d.38, eff. 2/21/1984.
See: 15 New Jersey Register 2087(a), 16 New Jersey Register 365(a).
Duff and Phelp's, Inc. added as rating company.

N.J. Admin. Code § 3:11-8.2 Approved foreign obligations

(a) Pursuant to N.J.S.A. 17:2-10, savings banks are authorized to invest in the development bonds of foreign governments and obligations of international development banks provided:

The principal and interest of the individual issue is payable in United States dollars;
The aggregate total of all such investments made pursuant to this subchapter shall not exceed five percent of the institution's capital deposits, surplus and reserves; and
Such obligations are approved by the comptroller of the currency for investment by national banks.

(b) A list of obligations approved for such investment shall be kept on file in the office of the Commissioner and will be available upon written request.

History

R.1977 d.238, eff. 7/7/1977 .
See: 9 New Jersey Register 251(c), 9 New Jersey Register 355(b).

N.J. Admin. Code § 3:11-8.3 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Savings bank" means a savings bank as defined in N.J.S.A. 17:9A-1(13) or a State association as defined in N.J.S.A. 17:12B-5(1).

Subchapter 9 STANDBY LETTERS OF CREDIT

N.J. Admin. Code § 3:11-9.1 Standby letters of credit defined

(a) A standby letter of credit is any letter of credit, or similar arrangement however named or described, which represents an obligation to the beneficiary on the part of the issuer:

To repay money borrowed by or advanced to or for the account of the account party; or
To make payment on account of any indebtedness undertaken by the account party; or
To make payment on account of any default by the account party in the performance of an obligation.

(b) As defined in (a) above, the term "standby letter of credit" does not include commercial or traveler's letter of credit issued pursuant to section 25(3) of the Banking Act of 1948, such as:

Letter of credit used to facilitate the purchase and sale of goods;
Where the issuing bank has obtained, or will obtain, documents of title covering the goods; or
Where the credit is reasonably related to the actual value of the goods at the time of purchase and sale.

N.J. Admin. Code § 3:11-9.2 Investment limitation

(a) A standby letter of credit shall be subject to liability limitations prescribed in article 13, section 62, of the Banking Act of 1948, and must be combined with any other nonexempt extension of credit unless prior to or at the time of issuance:

The issuing bank is paid an amount equal to the bank's maximum liability under the standby letter of credit; or
The issuing bank has set aside sufficient funds in a segregated deposit account, clearly earmarked for that purpose, to cover the bank's maximum liability under the standby letter of credit.

N.J. Admin. Code § 3:11-9.3 Authority to issue standby letters of credit

(a) A bank may issue a standby letter of credit on behalf of its customers in the normal course of business:

Provided that the bank's undertaking contains a specified expiration date or be for a definite term; and
The bank's liability is limited to a stated amount.

N.J. Admin. Code § 3:11-9.4 Parity provision

This subchapter is directed toward the creation and maintenance of a substantial parity between banks and national banks in accordance with section 25.2 of the Banking Act of 1948.

Subchapter 10 SAVINGS BANKS AND STATE ASSOCIATIONS: CREDIT CARDS

N.J. Admin. Code § 3:11-10.1 Credit card operations

A savings bank or State association may issue credit cards, extend credit in connection therewith, and otherwise engage in or participate in credit card operations.

N.J. Admin. Code § 3:11-10.2 Parity provisions

(a) This subchapter is issued in accordance with the authority granted to the Commissioner to place savings banks and State associations on a substantial competitive parity with Federally chartered savings and loan associations which currently have the authority to participate in credit card operations.

(b) It is further provided that savings banks and State associations may operate such credit card programs upon the same terms and conditions as the Federal Home Loan Bank Board may prescribe from time to time for such Federally chartered savings and loan associations.

N.J. Admin. Code § 3:11-10.3 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Savings bank" means a savings bank as defined in N.J.S.A. 17:9A-1(13).

"State association" means a State association as defined in N.J.S.A. 17:12B-5(1).

Subchapter 11 RESTRICTIONS OF LEEWAY INVESTMENTS

N.J. Admin. Code § 3:11-11.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Bank" means a bank as defined in N.J.S.A. 17:9A-1(1), a savings bank as defined in N.J.S.A. 17:9A-1(13) and a State association as defined in N.J.S.A. 17:12B-5(1).

"Capital funds" means capital, surplus, reserves, undivided profits and capital notes.

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Control" means the power to directly or indirectly vote 25 percent or more of the voting stock of a subsidiary company, the ability to control in any manner the election of a majority of a subsidiary company's directors or trustees, or the ability to exercise a controlling influence over the management and policies of a subsidiary company.

"Department" means the Department of Banking and Insurance.

"Equity securities" means:

Shares of common or preferred stock registered on a national securities exchange or quoted on the National Association of Securities Dealers Automated Quotation System; and
Equity securities issued by a corporation, partnership or joint venture engaged exclusively in activities which are part of or incidental to the business of the institution.
Equity securities does not mean securities issued by a subsidiary company.

"Subsidiary company" means any corporation, partnership, association, joint venture or other business entity directly or indirectly controlled by a bank.

"Total liabilities" means total liabilities as defined in N.J.S.A. 17:9A-60(3), 60(6) and 60(8).

N.J. Admin. Code § 3:11-11.2 Type of investment

(a) Only to the extent and upon the conditions that have been authorized by N.J.S.A. 17:9A-24.12 and in accordance with the procedures and limitations contained in this subchapter:

A bank, by resolution of its board of directors, and without prior approval of the Commissioner, may invest:

i. In equity securities;

ii. In subsidiary companies which engage in the activities prescribed in this subchapter; and

iii. Directly in those activities which are prescribed in this subchapter for subsidiary companies; and

A bank, by resolution of its board of directors, may apply to the Commissioner for approval to make other investments. The application procedure and approval process shall be as provided in N.J.A.C. 3:11-11.9 and N.J.A.C. 3:11-11.1 0.

History

Amended by R.2005 d.165, effective 6/6/2005.
See: 37 New Jersey Register 162(a), 37 New Jersey Register 2008(a).

N.J. Admin. Code § 3:11-11.3 Equity security investments

(a) A bank shall be prohibited from investing, pursuant to N.J.S.A. 17:9A-24.12, in stocks, preferred or common, issued by a corporation in which it has made a stock investment under some other provision of law.

(b) A bank may invest in equity securities under N.J.S.A. 17:9A-24.12 provided that no bank shall make an investment in the stock of any corporation pursuant to this subchapter, except as otherwise provided by this subchapter, at any time when the total ownership of any one class of equity securities of such corporation exceeds or if the making of such investment would cause such investment to exceed two percentum of any one class of the outstanding equity securities of such corporation. In addition the aggregate amount invested in all classes of the outstanding equity securities of any one corporation shall not exceed three percentum of the capital funds of the bank. A bank, by resolution of its board of directors, may apply to the Commissioner for approval to make an investment in equity securities beyond the maximum amount provided above. The application procedure and approval process shall be as provided in N.J.A.C. 3:11-11.9 and N.J.A.C. 3:11-11.1 0.

(c) This subchapter shall not prohibit a bank from making loans or incurring liabilities authorized by a provision of law other than N.J.S.A. 17:9A-24.12 to any corporation in which the bank has invested in the equity securities pursuant to this subchapter. The total liabilities, not including equity investments made pursuant to this subchapter, of any person incurred by virtue of any provision of law, including this subchapter, are subject to the total liability limitations in N.J.S.A. 17:9A-62.

N.J. Admin. Code § 3:11-11.4 Subsidiary companies

(a) A bank shall be prohibited from contributing to the capital or investing in the capital stock of a subsidiary company, pursuant to N.J.S.A. 17:9A-24.12, in which it has a capital or stock investment pursuant to some other provision of law.

(b) A bank may contribute to the capital or invest in the capital stock of only those subsidiary companies which:

Engage in the activities prescribed in this subchapter; and/or
Are specifically approved by the Commissioner.

(c) This subchapter shall not prohibit a bank from making loans or incurring liabilities authorized by a provision of law, other than N.J.S.A. 17:9A-24.12, to any subsidiary company in which the bank has contributed to the capital or invested in the capital stock pursuant to this subchapter. The total liabilities, not including capital investments made pursuant to this subchapter, of any one subsidiary company to the bank incurred by virtue of any provision of law, including this subchapter, are subject to the total liability limitations in N.J.S.A. 17:9A-62.

N.J. Admin. Code § 3:11-11.5 Permissible activities

(a) A subsidiary company may engage in the following activities:

Originating, investing in, selling, purchasing (including purchasing participations in), servicing, or otherwise dealing in loans of any type which may be made by a bank;
Provide services primarily for other financial institutions (for example, accounting, auditing, clerical, consulting, data processing, investment advisory, managerial);
Acquiring improved or unimproved real property for the purpose of subdividing, developing, constructing improvements thereon, and reselling, leasing or operating such property for the production of income;
Providing real estate services (for example, brokerage, appraisal, inspection, property management, relocation services);
Providing equity and debt investments in corporations or projects designed primarily to promote community welfare, such as economic rehabilitation and development of low income areas by providing housing, services, or jobs for residents;
Providing travel agency and tax preparation services;
Providing insurance brokerage or agency services;
Providing securities services (for example, brokerage, investment advice);
Issuing letters of credit;
Issuing credit cards and engaging in credit card operations;
Acquiring personal property for the purpose of leasing such property;
Acting as underwriter for credit life insurance and credit accident and health insurance that is directly related to an extension of credit by the bank.
Acquiring capital stock of, or becoming a member of, any stock or mutual insurance company whose primary purpose is to provide or underwrite liability or casualty insurance for banks located in the United States of America.

N.J. Admin. Code § 3:11-11.6 Subsidiary company compliance with law

Except as otherwise permitted by statute or regulation, all provisions of State banking laws applicable to the operations of the bank shall be equally applicable to the operations of its subsidiary company.

N.J. Admin. Code § 3:11-11.7 Prohibition against tie-in requirements

A bank, who invests in subsidiary companies pursuant to this subchapter or engages directly in those activities which are prescribed in this subchapter for subsidiary companies, shall not directly or indirectly condition any extension of credit, lease or sale of property of any kind, or furnish any service on the requirement that the customer shall obtain some other credit, property, or service from the bank or any subsidiary company of the bank, other than a loan, discount, deposit, or trust service.

N.J. Admin. Code § 3:11-11.8 Examination of subsidiary companies

(a) Each subsidiary company shall be subject to examination and supervision by the Commissioner in the same manner and to the same extent as the bank. If upon examination the Commissioner shall ascertain that the subsidiary company is created or operated in violation of law or regulation or that the manner of operation is detrimental to the business of the bank and its depositors, the Commissioner may order the bank to dispose of all or part of such subsidiary upon such terms as the Commissioner may deem proper. The cost of an examination into the condition of an existing business proposed to be acquired and operated as a subsidiary company shall be paid by the bank. The cost of any subsequent examinations of a subsidiary company shall be borne by the subsidiary company or the bank.

(b) A bank shall file a letter agreement with the Department signed by both the bank and the subsidiary company, authorizing the Department to conduct such examinations of the records of the subsidiary company that relate to the bank's leeway investment as the Commissioner deems appropriate.

N.J. Admin. Code § 3:11-11.9 Approval procedures for other investments

(a) A bank which seeks to make an investment or engage in any activity requiring the specific approval of the Commissioner shall submit a written application, accompanied by a $ 100.00 application fee. In addition, the Department shall impose a per diem charge, as required. Within 30 days of the filing of such application, the Commissioner shall notify the applicant in writing either that all information required by this section has been filed or that additional specified information must be filed. The Commissioner shall, within 60 days of the date of written notice that all required information has been filed, endorse thereon his or her approval or disapproval.

(b) A bank which makes an application to the Commissioner as specified in this subchapter shall submit the following information:

The total amount, in dollars and as a percentage of assets and capital funds, of investments that the applicant seeks to make;
An identification of the applicant's investment thresholds as determined in accordance with N.J.S.A. 17:9A-24.12;
A description and quantification, as a dollar amount and as a percentage of assets and capital funds, of the applicant's outstanding investments pursuant to this subchapter;
A business plan which describes the proposed specific investment (including any existing investment made pursuant to other laws or regulations) and its anticipated financial impact on the applicant; and
Such other information as may be requested in writing by the Commissioner.

History

Emergency amendment, R.1989 d.407, effective 7/3/1989 (expires September 1, 1989).
See: 21 New Jersey Register 2397(a).
Amended by R.1989 d.449, effective 8/21/1989.
See: 21 New Jersey Register 1601(b), 21 New Jersey Register 2473(b).
Application fee and per diem charge added.

N.J. Admin. Code § 3:11-11.10 Criteria for approval

In determining whether to approve or deny any application for prior approval under this subchapter, the Commissioner shall consider the financial and managerial resources and future prospects of the bank and the investment involved, including the financial capability of the bank to make the proposed investment under this subchapter, conflicts of interest, unsafe and unsound banking practices and any other matter the Commissioner deems to be in the public interest.

N.J. Admin. Code § 3:11-11.11 Recordkeeping requirements

(a) For the purpose of monitoring the bank's diversification of investments made under the leeway provision (N.J.S.A. 17:9A-24.12) and to determine if the investments are in accordance with the applicable investment limitations, the bank is required to maintain records which will identify all such investments made under the leeway provisions:

These records shall contain a description of each leeway investment. The description should contain, but not be limited to the name of the person, partnership, corporation, other business entity, association or body politic (leeway entity) that the bank has invested in; its business address and the amount and form of the investment;
These records shall also contain a detailed listing of any other investments or loans made to each leeway entity pursuant to other provisions of the law. Any other investments or loans shall include, but not be limited to, any loan or extension of credit by the bank to the leeway entity; the purchase by the Bank of securities, other assets, or obligations of the leeway entity under repurchase agreement; the discount by the Bank of promissory notes, bills of exchange, conditional sales contracts, or similar paper, with or without recourse, issued by the leeway entity and discounted for a third party; acceptances of securities issued by a leeway entity as collateral for any loan, and issuance of a guarantee, acceptance, or letter of credit on behalf of a leeway entity;
These records shall be kept up to date in order that they tie into the bank's daily statement of condition.

N.J. Admin. Code § 3:11-11.12 Existing investments

A bank whose existing leeway investments would not conform to the requirements of this subchapter shall not be prohibited solely for that reason from maintaining such investments and making investments to which it was legally committed to prior to July 7, 1986. However, no new leeway investments may be entered into after July 7, 1986 other than in compliance with this subchapter.

Subchapter 12 SAVINGS BANKS: COMMERCIAL LOANS

N.J. Admin. Code § 3:11-12.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise:

"Commercial loans" means any secured or unsecured loan for commercial, corporate, business or agricultural purpose, other than any loans which may otherwise be authorized by law.

"Commissioner" means the Commissioner of the Department of Banking and Insurance of New Jersey.

"Department" means the Department of Banking and Insurance.

"Savings bank" means a savings bank as defined in N.J.S.A. 17:9A-1(13).

"Total assets" means the total asset figure reported in "Schedule RC-K-Quarterly Averages" submitted with the most recent Consolidated Report of Condition for Savings Banks filed with the Federal Deposit Insurance Corporation. In the event the specified schedule is redesignated, the total asset figure reported in the substituted schedule, as designated by the Department, is to be used.

N.J. Admin. Code § 3:11-12.2 Commercial loan limitation

As prescribed in N.J.S.A. 17:9A-26(7), a savings bank may make commercial loans in an aggregate amount that may not exceed 10 percent of the savings bank's total assets without the Commissioner's approval.

N.J. Admin. Code § 3:11-12.3 Application to exceed commercial loan limitation

A savings bank may apply to the Commissioner for approval to exceed the 10 percent commercial loan limitation provided in N.J.S.A. 17:9A-26(7). The application shall be submitted on forms prescribed by the Commissioner. The application shall contain a request by the savings bank to have the Commissioner approve the savings bank's granting commercial loans up to a specific percentage limitation, beyond the statutorily authorized 10 percent, or in an unlimited amount, as the board of the savings bank may by resolution specify. A certified copy of the board resolution shall be submitted with the application. The application shall contain such data as the Commissioner may require in order to make the findings called for in N.J.S.A. 17:9A-26(7) and N.J.A.C. 3:11-12.4.

N.J. Admin. Code § 3:11-12.4 Commissioner approval

(a) Within 30 days of receipt of a completed application, the Commissioner shall approve the application and designate the limited or unlimited amount approved, provided it is found that:

The savings bank is being operated in a safe and sound manner;
The savings bank has capital equal to that required from time to time by the Board of Governors of the Federal Reserve System for a bank chartered under the laws of a state of the United States which is a member of the Federal Reserve System and said capital shall be calculated in accordance with generally accepted accounting principles as applied to banks;
The savings bank is competently managed; and
The savings bank has demonstrated satisfactory experience and expertise in making commercial loans.

Subchapter 13 OFFICERS AND DIRECTORS RESTRICTIONS

N.J. Admin. Code § 3:11-13.1 Borrowing limitation of a director, executive officer and/or related interests

(a) The 10 percent liability limitation prescribed in N.J.S.A. 17:9A-72B(4) is increased so that a bank may extend credit to a director or to a corporation in which such director or an executive officer has a controlling interest, or in which such director or executive officer together with one or more other directors or executive officers has a controlling interest, or to a partnership in which such director or executive officer is a partner, if the proposed liability will not cause the total of the liabilities of the director or executive officer, and the liabilities of each corporation in which such director has a controlling interest, or in which such director or executive officer together with one or more other directors or executive officers has a controlling interest, and the liabilities of each partnership in which such director or executive officer is a partner, to exceed 25 percent of the amount of capital funds of the bank, as defined in N.J.S.A. 17:9A-60 and the rules adopted pursuant thereto; provided, however, that all amounts in excess of 15 percent of the capital funds of the bank shall be fully secured by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations, at least equal to the amount of funds outstanding in excess of said 15 percent.

(b) The maximum liability of an executive officer, exclusive of the corporate and partnership liabilities set out in (a) above, are as limited in N.J.A.C. 3:6-3.2.

History

New Rule, R.1987 d.369, effective 9/8/1987.
See: 19 New Jersey Register 1124(a), 19 New Jersey Register 1641(b).

N.J. Admin. Code § 3:11-13.2 Disqualification of directors

(a) A director of a bank who defaults for 30 days in payment of an undisputed obligation to the bank shall cease to be a director, and shall not be eligible for reappointment to the board until the next annual meeting.

(b) For purposes of (a) above, the following obligations shall constitute obligations of the director:

Obligations of the director; and
Obligations of a corporation or partnership which is controlled by the director.

(c) A director controls a corporation when the director has the power to directly or indirectly vote 25 percent or more of the voting stock, has the ability to control in any manner the election of a majority of the directors, or has the ability to exercise a controlling influence over the management and policies of the corporation. A director who is a general partner of a partnership controls that partnership for purposes of this section.

History

New Rule, R.1994 d.397, effective 8/1/1994.
See: 25 New Jersey Register 3586(b), 26 New Jersey Register 3163(a).

Chapter 12 REGISTRAR AND TRANSFER AGENTS

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:12-1.1 Definitions

The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise.

"Capital" or "capitalization" means the aggregate of capital stock, surplus, undivided profits and unsecured subordinated capital notes or debentures.

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Department" means the Department of Banking and Insurance.

"Fiscal agent" means a domestic corporation, or a foreign corporation authorized to transact business in this State, which transacts business in this State as a fiscal agent for other corporations, as defined in N.J.S.A. 17:9A-25(13).

"Qualified corporation" means a domestic corporation, or a foreign corporation authorized to transact business in this State, which registers with the Department to act as a registrar, transfer agent and/or fiscal agent.

"Registrar" means a domestic corporation, or a foreign corporation authorized to transact business in this State, which transacts business in this State as a registrar for other corporations, as defined in N.J.S.A. 17:9A-28(3).

"Transfer agent" means a domestic corporation, or a foreign corporation authorized to transact business in this State, which transacts business in this State as a transfer agent for other corporations, as defined in N.J.S.A. 17:9A-28(3).

History

Repeal and New Rule, R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Section was "Registrar".
Amended by R.1997 d.300, effective 7/21/1997.
See: 29 New Jersey Register 1583(a), 29 New Jersey Register 3241(a).
Added "Commissioner" and "Department".

N.J. Admin. Code § 3:12-1.2 Effect of rules upon depository institutions

Nothing in this chapter shall be construed as expanding or restricting the powers otherwise conferred by law upon a depository institution, such as a bank or savings bank, to engage in activities as a registrar, transfer agent or fiscal agent, and no such depository institution, in exercising any power otherwise conferred upon it, shall be subject to any provision of this chapter.

History

Repeal and New Rule, R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Section was "Transfer agent".

N.J. Admin. Code § 3:12-1.3 Reserved

History

Repealed by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Section was "Capital".

Subchapter 2 REQUIRED REPORTING AND FILINGS WITH THE DEPARTMENT OF BANKING

N.J. Admin. Code § 3:12-2.1 Application to act as qualified corporation

(a) Prior to transacting business as a registrar, transfer agent or fiscal agent, a corporation shall obtain approval from the Department to act as a qualified corporation. The application to act as a qualified corporation shall be on a form approved by the Commissioner and shall contain the following:

The address of the principal corporate office;
Address of the principal office located in this State;
Names and home addresses of corporate directors and executive officers;
An unqualified audited financial statement prepared by a certified public accountant or a public accountant disclosing its assets, liabilities and capital;
Proof of the fidelity insurance coverage required by N.J.A.C. 3:12-4.1;
Evidence that the applicant has adequate vault or other safe-keeping facilities for the safeguarding of stocks and other securities received, processed or otherwise held for the account of customers;
An application fee of $ 250.00; and
Additional information which may be specifically requested by the Commissioner from a particular filer.

(b) The president or vice president of the corporation shall certify that the information contained on the application is true to the best of his or her knowledge and belief.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.
Amended by R.1997 d.300, effective 7/21/1997.
See: 29 New Jersey Register 1583(a), 29 New Jersey Register 3241(a).
Amended section name; in (a), inserted requirement that form be approved by the Commissioner; amended information to be included on form; and deleted former (c) and (d), relating to filing.

N.J. Admin. Code § 3:12-2.2 Public disclosure of financial information

A qualified corporation, upon request by a corporate client, shall provide its most recent financial statement and proof of fidelity insurance filed with the Department in accordance with N.J.A.C. 3:12-2.1 or 2.4 as applicable.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.
Amended by R.1997 d.300, effective 7/21/1997.
See: 29 New Jersey Register 1583(a), 29 New Jersey Register 3241(a).
Amended disclosure requirements.

N.J. Admin. Code § 3:12-2.3 Examination by a public accountant

(a) The directors of a qualified corporation shall cause the examination of the qualified corporation's records by a certified public accountant or public accountant at least once in each calendar year. The scope of said examination shall include an inventory verification of unissued stock certificates and a confirmation of the last certificate number issued with the corporate issuer. The verifications and confirmations shall not be less than five percent of the accounts serviced or 10 corporate issuers, whichever is greater.

(b) The certified public accountant or public accountant shall render an opinion on the financial statement, the sufficiency of internal controls and the adequacy of the separation of functions.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.
Amended by R.1997 d.300, effective 7/21/1997.
See: 29 New Jersey Register 1583(a), 29 New Jersey Register 3241(a).
Inserted references to Certified Public Accountant.

N.J. Admin. Code § 3:12-2.4 Filing of annual report

(a) On or before April 1 of each year, each qualified corporation shall file an annual report on a form approved by the Commissioner containing the following:

The address of the principal corporate office;
The address of the principal office located in this State;
The names and home addresses of corporate directors and executive officers;
An unqualified audited financial statement as of the end of its most recent fiscal year prepared by a certified public accountant or a public accountant disclosing its assets, liabilities and capital;
Proof of fidelity insurance coverage required by N.J.A.C. 3:12-4.1;
The opinion of a certified public accountant or public accountant required by N.J.A.C. 3:12-2.3(b); and
A filing fee of $ 100.00.

(b) The president or vice president of the corporation shall certify that the information contained on the annual report was reviewed by the Board of Directors and is true to the best of his or her knowledge and belief.

(c) A transfer agent owned by a bank holding company or financial holding company as defined by the Bank Holding Company Act of 1956, 12 U.S.C. § 1841 may submit, in lieu of (a)4 and 6 above, the following:

An unqualified opinion from the parent holding company's independent auditor as to the parent holding company's financial statement for the year to which the annual report pertains;
A letter to the Commissioner of Banking and Insurance attesting that the parent holding company provides and will continue to provide financial support to the transfer agent; and
A statement from the parent holding company's internal auditor, who shall be either a certified public accountant or a public accountant, confirming compliance with the verification requirements of N.J.A.C. 3:12-2.3(a) and offering an opinion as to the transfer agent's financial statement, sufficiency of internal controls and adequacy of the separation of functions.

History

Amended by R.1997 d.300, effective 7/21/1997.
See: 29 N.J.R. 1583(a), 29 N.J.R. 3241(a).
Amended section name and rewrote section.
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Substituted "April 1" for "December 31" in introductory sentence of (a).
Amended by R.2008 d.98, effective 4/21/2008.
See: 40 N.J.R. 5(a), 40 N.J.R. 2109(a).
In the introductory paragraph of (a), substituted "On or before" for "As of"; and added (c).

N.J. Admin. Code § 3:12-2.5 Examination by Commissioner

The Commissioner may at any time, either personally or by a person or persons duly designated by him or her, examine the records of a qualified corporation. The costs of such examination shall be borne by the qualified corporation so examined in accordance with the fees set forth in N.J.A.C. 3:1-6.6(b).

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.
Amended by R.1997 d.300, effective 7/21/1997.
See: 29 New Jersey Register 1583(a), 29 New Jersey Register 3241(a).
Inserted reference to N.J.A.C.

Subchapter 3 CAPITAL REQUIREMENTS

N.J. Admin. Code § 3:12-3.1 Minimum capital

A qualified corporation shall maintain capital equal to $ 5,000 for each corporate issuer serviced or $ 100,000, whichever is greater. Unless otherwise directed by the Commissioner, no qualified corporation shall be required to maintain capital in excess of $ 1,000,000.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.
Amended by R.1997 d.300, effective 7/21/1997.
See: 29 New Jersey Register 1583(a), 29 New Jersey Register 3241(a).

N.J. Admin. Code § 3:12-3.2 Restriction on new accounts for deficient capitalization

A qualified corporation which does not meet the minimum capitalization as required by this chapter shall not enter into a service agreement or contract with a corporate issuer to act as a registrar, transfer agent or fiscal agent. Renewals of existing contracts or agreements are not subject to this regulation.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.

N.J. Admin. Code § 3:12-3.3 Maximum time period for deficient capitalization

A qualified corporation shall not remain in a deficient capital position as calculated by standards prescribed by this chapter for a period of time in excess of 12 months or such other period of time as the Commissioner may prescribe.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.

N.J. Admin. Code § 3:12-3.4 Restriction on capital notes or debentures

For the purposes of meeting minimum capital requirements as prescribed by this Chapter, the total unsecured subordinated capital notes or debentures outstanding shall not exceed the aggregated of capital stock, surplus and undivided profits.

Subchapter 4 REQUIRED INSURANCE

N.J. Admin. Code § 3:12-4.1 Minimum fidelity insurance coverage

(a) A qualified corporation shall obtain a bankers or stockbrokers blanket bond which covers:

Each director who handles or has charge or custody of money, securities or other valuable property of the corporation; and
All officers and employees of the corporation.

(b) The bond shall contain a provision that it shall not be cancellable for any cause unless notice of intention to cancel is filed in the Department at least five days prior to the day upon which cancellation shall take effect.

(c) The bond shall provide for limits of liability for Clause A, dishonest or fraudulent acts, in accordance with the minimum amounts set forth in the following Schedule A. For the first $ 5 million of prescribed primary Clause A coverage, the limits of liability for Clause E, securities forgery, shall not be less than 25 per cent of the minimum amounts of primary coverage prescribed in Schedule A or $ 250,000 whichever is less. For each additional $ 1 million of prescribed primary coverage required, the limits of liability for Clause E shall be increased $ 150,000 up to a maximum of $ 1 million. However, a stock transfer agent errors and omissions insurance policy of equal dollar value coverage may be substituted for a Clause E insuring agreement:

SCHEDULE "A"

| Total number of Shareholders serviced | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Insurance Amounts to be Maintained in Thousands | | | | | | | | | Market value of one share of the highest priced stock serviced as a transfer agent. | | | | | | | | | $ 0.00 | 2.01 | 4.01 | 6.01 | 8.01 | 10.01 | 15.01 | | | 2.00 | 4.00 | 6.00 | 8.00 | 10.00 | 15.00 | 20.00 | | | 0- 2000 | 100 | 150 | 200 | 250 | 300 | 350 | 400 | | 2001- 4000 | 150 | 200 | 250 | 300 | 350 | 400 | 450 | | 4001- 6000 | 200 | 250 | 300 | 350 | 400 | 450 | 500 | | 6001- 8000 | 250 | 300 | 350 | 400 | 450 | 500 | 550 | | 8001-10000 | 300 | 350 | 400 | 450 | 500 | 550 | 600 | | 10001-15000 | 350 | 400 | 450 | 500 | 550 | 600 | 650 | | 15001-20000 | 400 | 450 | 500 | 550 | 600 | 650 | 700 |

(d) For volume and market values in excess of table add $ 100,000 to insurance amount maintained for each additional 10,000 shareholders and add $ 100,000 to insurance amounts maintained for each $ 10.00 market value increment, up to a maximum of $ 10 million.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised (a).
Amended by R.1997 d.300, effective 7/21/1997.
See: 29 New Jersey Register 1583(a), 29 New Jersey Register 3241(a).

N.J. Admin. Code § 3:12-4.2 Mail insurance

A qualified corporation shall provide adequate insurance to cover securities in transit by mail.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.

N.J. Admin. Code § 3:12-4.3 Director$DQ$s review of insurance

Insurance coverages maintained by a qualified corporation shall be reviewed annually by the board of directors to determine the sufficiency of coverages maintained based on the volume and nature of operations. Evidence of the review shall be made available to the Commissioner upon request.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.
Amended by R.1997 d.300, effective 7/21/1997.
See: 29 New Jersey Register 1583(a), 29 New Jersey Register 3241(a).
Added last sentence.

Subchapter 5 PREMISES AND RECORDS

N.J. Admin. Code § 3:12-5.1 Establishment of a place of business

A qualified corporation shall maintain a place of business in the State of New Jersey and establish hours at which time business will be transacted.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.

N.J. Admin. Code § 3:12-5.2 Vault protection

A qualified corporation shall provide a vault for the storage and adequate protection, as determined by the Commissioner, of all stock certificates except those certificates which have been cancelled as a result of a complete transfer transaction.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.

N.J. Admin. Code § 3:12-5.3 Reconstruction of records

A qualified corporation which maintains the corporate issuer's stockholder records or ledger shall develop, implement and maintain a system providing for the reconstruction of the stockholders ledger.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.

N.J. Admin. Code § 3:12-5.4 Safekeeping; stock certificates

(a) A qualified corporation acting as a transfer agent shall provide safekeeping facilities for undeliverable stock certificates.

(b) A record of all items held in safekeeping shall be maintained and such record shall reflect the following minimum information:

The name and last known address of the beneficial owner;
The name of the corporate issuer; and
The certificate number, number of shares and the date each stock certificate was placed in safekeeping facilities.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised (a).

N.J. Admin. Code § 3:12-5.5 Safekeeping unclaimed cash dividends

(a) A qualified corporation acting as a transfer agent shall provide for the adequate protection of unclaimed cash dividends.

(b) A record of all unclaimed cash dividends shall be maintained and such record shall reflect the following minimum information:

The name and last known address of the beneficial owner;
The name of the corporate issuer; and
The date the dividend was paid.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised (a).

N.J. Admin. Code § 3:12-5.6 Escheat

Undeliverable stock certificates, unclaimed cash dividends or any other unclaimed personal property shall be subject to existing State escheat laws.

N.J. Admin. Code § 3:12-5.7 Transfer transaction journal

A qualified corporation acting as a transfer agent shall, based on the volume of transactions, periodically, but at least once in a 12-month period, provide the corporate issuer with a copy of the corporate issuer's transfer transaction journal.

History

Amended by R.1992 d.242, effective 6/15/1992.
See: 24 New Jersey Register 675(b), 24 New Jersey Register 2242(b).
Revised text.

Chapter 13 BANK HOLDING COMPANIES

Subchapter 1 BANK HOLDING COMPANY APPLICATIONS

N.J. Admin. Code § 3:13-1.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Affiliate" means any company that controls, is controlled by, or is under common control with another company.

"Bank" shall have the same definition as provided in section 2 of the Federal "Bank Holding Company Act of 1956,"12 U.S.C. § 1841.

"Bank holding company" has the meaning set forth in subsection (a) of section 2 of the Federal "Bank Holding Company Act of 1956,"12 U.S.C. § 1841(a) and, unless the context requires otherwise, includes a New Jersey bank holding company, an out-of-State bank holding company and a foreign bank holding company.

"Bank supervisory agency" means any of the following:

The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and any successor to these agencies; and
Any agency of another state with primary responsibility for chartering and supervising banks.

"Branch" means an office, unit, station, facility, terminal, space or receptacle at a fixed location other than a principal office, however designated, at which any business that may be conducted in a principal office of a bank or savings bank may be transacted. "Branch office" includes full branch offices, minibranch offices and communication terminal branch offices.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Company" has the meaning set forth in section 2 of the Federal "Bank Holding Company Act of 1956,"12 U.S.C. § 1841.

"Control" of a bank or bank holding company means control as defined in paragraph (2) of subsection (a) of the Bank Holding Company Act of 1956, 12 U.S.C. § 1841(a)(2).

"Foreign bank holding company" means a bank holding company that is organized under the laws of a country other than the United States, including any territory or possession thereof.

"Department" means the New Jersey Department of Banking and Insurance.

"Internal reorganization" means the repositioning of a bank or bank holding company within an affiliated family of entities under common control with no change of the ultimate control.

"New Jersey bank" means a bank that is:

Organized under New Jersey law, N.J.S.A. 17:9A-1 et seq.; or

Organized under Federal law and having its principal place of business in this State.

"New Jersey bank holding company" means a bank holding company that:

Has its principal place of business in this State; and
Is not controlled by a bank holding company other than a New Jersey bank holding company.

"Out-of-State bank holding company" means:

A bank holding company that is not a New Jersey bank holding company; and
Unless the context requires otherwise, includes a foreign bank holding company.

"Person" includes individuals, corporations, associations, societies, firms, partnerships, joint stock companies, trusts and any other group of persons, however organized.

"Subsidiary" shall have the meaning set forth in section 2 of the Federal "Bank Holding Company Act of 1956,"12 U.S.C. § 1841.

"United States" means the United States and includes any of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, and the Virgin Islands.

History

Recodified from N.J.A.C. 3:13-1.2 and amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former section, "Scope and purpose", repealed.
Amended by R.1997 d.70, effective 2/18/1997.
See: 28 New Jersey Register 4831(a), 29 New Jersey Register 547(a).
Added "Department"; and amended "Branch" and "Commissioner".
Amended by R.2003 d.53, effective 2/3/2003.
See: 34 New Jersey Register 3152(a), 35 New Jersey Register 607(a).
Added "Internal reorganization".

N.J. Admin. Code § 3:13-1.2 Application

(a) An application, except as provided in (e) below, to acquire a New Jersey bank or New Jersey bank holding company shall contain the following information on a form provided by the Department:

The name and location of the person proposing to acquire the New Jersey bank or New Jersey bank holding company;
The name and location of the New Jersey bank or New Jersey bank holding company;
Certified copies of:

i. The board resolution of the person authorizing the proposed acquisition of the New Jersey bank or New Jersey bank holding company; and

ii. The board resolution of the New Jersey bank or New Jersey bank holding company being acquired approving the proposed acquisition, when such approval has been adopted;

A list of any New Jersey banks affiliated with the applicant;
If an out-of-State bank holding company, proof that the applicant has complied with or is exempted from the requirements of N.J.S.A. 14A:13-3 and 4 requiring registration by foreign corporations doing business in this State; and
An application fee of $ 1,000 if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requester is subject to assessment.

(b) Upon receipt of a completed application, the Department shall send notice to the applicant, shall post the notice on the Department's website at http://www.njdobi.org and shall send notice to the New Jersey Bankers Association, the New Jersey League of Community Bankers, and/or their successor organizations, if any, for publication in their weekly bulletins.

(c) The applicant shall publish notice of the application in a newspaper of general circulation which is published and circulated in the municipality in which the principal place of business is located.

(d) The notices required by (b) and (c) above shall contain the following:

The name and mailing address of the applicant;
A brief statement of the nature of the application;
The name and address of the New Jersey Bank or New Jersey Bank Holding Company to be acquired; and
The date the Department accepted the application.

(e) An application involving only an internal reorganization shall be required to contain only the information listed in (a)1 and 2 above. The application may be submitted in letter form and shall be deemed to be approved 10 days from receipt by the Department unless the Department notifies the applicant otherwise. In evaluating an application, the Commissioner shall disapprove the application if, in his or her judgement, the internal reorganization negatively affects the safety and soundness of the bank, bank holding company or any affiliate.

History

New Rule, R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Former N.J.A.C. 3:13-1.2, "Definitions", recodified to N.J.A.C. 3:13-1.1.
Amended by R.1997 d.70, effective 2/18/1997.
See: 28 New Jersey Register 4831(a), 29 New Jersey Register 547(a).
Amended by R.2002 d.244, effective 8/5/2002.
See: 34 New Jersey Register 815(a), 34 New Jersey Register 2781(a).
Rewrote (b).
Amended by R.2003 d.53, effective 2/3/2003.
See: 34 New Jersey Register 3152(a), 35 New Jersey Register 607(a).
In (a), substituted ", except as provided in (e) below" for "by a person" and inserted "information on a form provided by the Department" following "following" in the introductory paragraph, deleted 1, recodified existing 2 through 4 as 1 through 3 and 5 through 7 as 4 through 6; added (e).
Amended by R.2004 d.50, effective 2/2/2004.
See: 35 New Jersey Register 4350(a), 36 New Jersey Register 647(a).
In (b), inserted a reference to the Department's website.
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Inserted "if the requester is not subject to assessment pursuant to N.J.A.C. 3:5 but no fee shall be charged if the requester is subject to assessment" in (a)6.

N.J. Admin. Code § 3:13-1.3 Reserved

History

Amended by R.1992 d.40, effective 1/21/1992.
See: 23 New Jersey Register 2904(a), 24 New Jersey Register 229(a).
Deleted (a); redesignated (b)-(c) as (a)-(b) without change.
Repealed by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Section was "Initial registration".

N.J. Admin. Code § 3:13-1.4 Reserved

History

Repealed by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Section was "Annual registration".

N.J. Admin. Code § 3:13-1.5 Reserved

History

Repealed by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Section was "Notification of change".

N.J. Admin. Code § 3:13-1.6 Reserved

History

Repealed by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Section was "Registration fee".

Subchapter 2 BANK HOLDING COMPANY REPORTING

N.J. Admin. Code § 3:13-2.1 Purpose and scope

This subchapter requires filing of financial reports by all persons or companies controlling New Jersey banks or New Jersey bank holding companies. This subchapter will enable the Commissioner to monitor the activities of individuals and companies that control New Jersey banks or New Jersey bank holding companies.

History

Amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).

N.J. Admin. Code § 3:13-2.2 Definitions

The words and terms defined at N.J.A.C. 3:13-1.1 when used in this subchapter, shall have the meanings set forth in N.J.A.C. 3:13-1.1, unless the context clearly indicates otherwise.

History

New Rule, R.1992 d.40, effective 1/21/1992.
See: 23 New Jersey Register 2904(a), 24 New Jersey Register 229(a).
Old section 3:13-2.2, "Reporting for bank holding companies", recodified to N.J.A.C. 3:13-2.3 without change.
Amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).

N.J. Admin. Code § 3:13-2.3 Reporting for bank holding companies

(a) Subject to (c) below, each bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company which is required to furnish the Federal Reserve System with a report of financial data and other information shall concurrently file a copy with the Commissioner. The form of such report shall be the current form required to be filed under regulations of the Board of Governors of the Federal Reserve System.

(b) Subject to (c) below, if a bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company is not required to make any filing with the Federal Reserve System but is required to file a form 10K or its equivalent with the Securities and Exchange Commission, the bank holding company or person shall concurrently file a copy of this report with the Commissioner.

(c) The requirement to concurrently file with the Department copies of the forms filed with the Federal Reserve System or Securities and Exchange Commission as referenced in (a) and (b) above shall be deemed satisfied if the form is filed with the appropriate Federal agency and is publically available.

(d) Each bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company which is required to file with the Federal Reserve System form FR Y-6 entitled "Annual Report for Bank Holding Companies" shall concurrently file a copy of this report with the Commissioner. The copy of FR Y-6 filed with the Commissioner shall include the required copy of the bank holding company's annual report to shareholders or the required copy of form 10K to the Securities and Exchange Commission.

(e) Each bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company which is required to file with the Federal Reserve System form FR Y-6A entitled "Bank Holding Company Report Changes in Investments or Activities" shall concurrently file a copy of this report with the Commissioner.

(f) Each bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company which is required to file with the Federal Reserve System form FR Y-111 entitled "Annual Report of Selected Financial Data for Non-Bank Subsidiaries of Bank Holding Companies" shall concurrently file a copy of this report with the Commissioner.

(g) Each bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company which is required to file with the Federal Reserve System form FR Y-11Q entitled "Combined Federal Statement of Non-Bank Subsidiaries of Bank Holding Companies" shall concurrently file a copy of its June 30 and December 31 report with the Commissioner.

(h) Each bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company which is required to file with the Federal Reserve System form FR Y-11AS entitled "Annual Supplement to the Combined Financial Statements of Non-Bank Subsidiaries of Bank Holding Companies" shall concurrently file a copy of this report with the Commissioner.

(i) Each bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company which is not required to file with the Federal Reserve System shall:

If the bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company is required to file a form 10K with the Securities and Exchange Commission, the bank holding company shall concurrently file a copy of this report with the Commissioner; or
f a bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company is not required to make a filing with the Federal Reserve System or to file a form 10K or its equivalent with the Securities and Exchange Commission, the bank holding company or person shall annually, on or before April 30 of each year, file with the Commissioner the following information:
Name and address of the company;
Names and addresses of principal officers;
Names and addresses of controlling shareholders of the company;
A summary of material business activities and affiliations during the past five years;
A description of pending legal or administrative proceedings in which the company is a party; and
A balance sheet of the company, which may be the "Statement of Condition" from its Call report as defined in N.J.A.C. 3:5-2.1, for each of the five preceding fiscal years, together with related statements of income and sources and applications of funds for each of those fiscal years.

(j) The requirement to concurrently file copies of the Federal Reserve or 10K forms referenced in (a) through (i) above shall be deemed satisfied if the form is filed with the appropriate Federal agency and adequate provision is made for the New Jersey Department of Banking and Insurance to have access to the filing.

History

Amended by 47 N.J.R. 989(a), effective 5/18/2015.

N.J. Admin. Code § 3:13-2.4 Reporting for persons other than bank holding companies

(a) Each person who controls a New Jersey bank or New Jersey bank holding company that does not file a report with any other bank supervisory agency shall annually file with the Commissioner, on or before April 1 of each year, the following information on forms provided by the Department:

Name and address of the person;
A resume of material business activities and affiliations during the past five years;
A description of pending legal or administrative proceedings in which the person is a party and any criminal indictment or conviction of the individual issued by a state or federal court; and
A statement of assets and liabilities of the person for each of the five preceding fiscal years, together with related statements of income and sources and applications of funds for each of those fiscal years.

History

Recodified from N.J.A.C. 3:13-2.3 by R.1992 d.40, effective 1/21/1992.
See: 23 New Jersey Register 2904(a), 24 New Jersey Register 229(a).
Amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Amended by R.1997 d.70, effective 2/18/1997.
See: 28 New Jersey Register 4831(a), 29 New Jersey Register 547(a).
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Substituted "1" for "30" in the introductory paragraph of (a), inserted "and" at the end of (a)3, substituted a period for "; and" at the end of (a)4, and deleted (a)5.

Subchapter 3 BANK HOLDING COMPANY EXAMINATIONS

N.J. Admin. Code § 3:13-3.1 Examination charges

The Commissioner may examine any company which controls a New Jersey bank or New Jersey bank holding company, and shall charge for such an examination an individual per hour per examiner charge plus a per day travel expense charge in amounts set forth in N.J.A.C. 3:1-6.6.

History

Amended by R.1992 d.40, effective 1/21/1992.
See: 23 New Jersey Register 2904(a), 24 New Jersey Register 229(a).
Revised text; section was "Purpose and scope".
Amended by R.1996 d.483, effective 10/7/1996.
See: 28 New Jersey Register 2661(a), 28 New Jersey Register 4417(b).
Amended by R.2002 d.244, effective 8/5/2002.
See: 34 New Jersey Register 815(a), 34 New Jersey Register 2781(a).
Rewrote the section.

N.J. Admin. Code § 3:13-3.2 Reserved

History

Emergency Amendment, R.1989 d.407, effective 7/3/1989 (expired September 1, 1989).
See: 21 New Jersey Register 1986(a), 21 New Jersey Register 2398(a).
Per diem changed to $ 260.00.
Adopted Concurrent Proposal, R.1989 d.510, effective 8/31/1989.
See: 21 New Jersey Register 2398(a), 21 New Jersey Register 3082(a).
Provisions of emergency amendment R.1989 d.407 readopted without change.
Repealed by R.1991 d.195, effective 4/15/1991.
See: 23 New Jersey Register 254(a), 23 New Jersey Register 1125(a).
Section was "Per diem per person examination charge".

Subchapter 5 MUTUAL SAVINGS BANK HOLDING COMPANIES

N.J. Admin. Code § 3:13-5.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise:

"Board of directors" may be used to mean "board of managers."

"Capital stock savings bank" means any savings bank chartered pursuant to the provisions of N.J.S.A. 17:9A-8.1 et seq.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Department" means the New Jersey Department of Banking and Insurance.

"Director" may be used to mean "manager" or "trustee."

"Organizing mutual savings bank" means a mutual savings bank which has its principal office of business in this State, the board of directors of which propose to form a mutual savings bank pursuant to this subchapter.

"Mutual savings bank holding company" means a mutual savings bank holding company formed pursuant to N.J.S.A. 17:9A-382 et seq., which has its principal office of business in this State.

"Subsidiary capital stock savings bank" means a capital stock savings bank which has been incorporated by the directors of a mutual savings bank holding company, a majority of the stock of which subsidiary capital stock savings bank is held by a mutual savings bank holding company.

History

Amended by R.1997 d.70, effective 2/18/1997.
See: 28 N.J.R. 4831(a), 29 N.J.R. 547(a).
Amended "Commissioner" and "Department".
Amended by R.2007 d.381, effective 12/17/2007.
See: 39 N.J.R. 2679(a), 39 N.J.R. 5210(a).
In definition "Capital stock savings bank", deleted "P.L. 1982, c. 9 (" following "provisions of" and the closing parenthesis and a period following "et seq.".

N.J. Admin. Code § 3:13-5.2 Formation of mutual savings bank holding company

(a) The board of directors of an organizing mutual savings bank may apply to the Commissioner to form a mutual savings bank holding company in any of the following ways:

Plan 1: The board of directors may apply to incorporate a mutual savings bank holding company, transfer a portion of the organizing mutual savings bank's assets to the holding company, and then convert the organizing mutual savings bank to a subsidiary capital stock savings bank;
Plan 2: The board of directors may apply to incorporate a mutual savings bank holding company, form a subsidiary capital stock savings bank, and either merge the organizing mutual savings bank into the subsidiary capital stock savings bank or sell or transfer the assets and liabilities of the organizing mutual savings bank to the subsidiary capital stock savings bank and liquidate the organizing mutual savings bank;
Plan 3: The board of directors may apply to form a mutual savings bank holding company by incorporating a subsidiary capital stock savings bank, and by transferring a substantial part of the assets and liabilities of the organizing mutual savings bank to the newly formed subsidiary capital stock savings bank in return for a majority of its capital stock; or
Any other method of reorganization approved by the Commissioner.

N.J. Admin. Code § 3:13-5.3 Application

(a) The board of directors of an organizing mutual savings bank may apply to form a mutual savings bank holding company by submitting the following to the Commissioner:

A description of the proposed formation of the mutual savings bank holding company;
A certified copy of the resolution of the board of directors of the organizing mutual savings bank authorizing the application by a two-third vote of the board;
A certificate of incorporation for the mutual savings bank holding company containing:

i. The name by which the mutual savings bank holding company shall be known;

ii. The street, street number, and municipality where the principal office of the mutual savings bank holding company is to be located;

iii. The names and addresses of the directors of the organizing mutual savings bank;

iv. The number of directors of the mutual savings bank holding company;

v. The names of persons who are to act as directors of the mutual savings bank holding company until their successors are elected and qualified;

vi. The amount of capital deposits and surplus which are to be transferred from the organizing mutual savings bank to the mutual savings bank holding company;

vii. A provision allowing for the retention of any interests of the respective depositors of the organizing mutual savings bank in the assets of the organizing mutual savings bank, according to a fair valuation, including assets which are proposed to be transferred from the organizing mutual savings bank to the mutual savings bank holding company; and

viii. A provision providing for the establishment of a liquidation account;

Biographical statements for each director of the subsidiary capital stock savings bank and mutual savings bank holding company;
A completed form from the New Jersey State Police requesting criminal history record information for each director for the subsidiary capital stock savings bank and mutual savings bank holding company;

Proposed by-laws of the subsidiary capital stock savings;

A business plan for the mutual savings bank holding company and subsidiary capital stock savings bank; and
A copy of any applications for establishment of a mutual savings bank holding company filed with any Federal regulator.

(b) Within 60 days after its execution, the directors shall submit a certificate of incorporation for any subsidiary capital stock savings bank setting forth the following:

The name by which the subsidiary capital stock savings bank shall be known;
The street, street number and municipality in which the principal office of the subsidiary capital stock savings bank is to be located;
The names and addresses of the directors of the mutual savings bank holding company who will be the incorporators of the subsidiary capital stock savings bank;
The number of directors on the board of directors;
The names of the persons who will serve as directors until their successors are elected and qualified;
The amount of capital stock, the number or shares into which it is divided, and the par value of each share, not less than a majority of the total outstanding shares of which will be held in the name of the mutual savings bank holding company; and
The amount of surplus with which the subsidiary capital stock savings bank will commence business.

(c) Along with the certificate of incorporation, each incorporator of the subsidiary capital stock savings bank shall submit an affidavit setting forth the following:

That no fee, commission, or other compensation has been paid, directly or indirectly, by the mutual savings bank holding company or by the subsidiary capital stock savings bank in the course of organizing the subsidiary capital stock savings bank, and that no promotion fees or charges have been provided or are contemplated;

A complete disclosure of all fees paid or agreed to be paid in the matter of chartering and organizing the proposed subsidiary capital stock savings bank;
That at least a majority of the shares of the authorized stock of the subsidiary capital stock savings bank is held by the mutual savings bank holding company; and
That the subsidiary capital stock savings bank proposes to either:

i. Merge with the organizing mutual savings bank;

ii. Purchase the assets of the organizing mutual savings bank; or

iii. Receive the assets and liabilities of the organizing mutual savings bank.

(d) Within 10 days after the date upon which a completed application is filed with the Commissioner, the applicant shall cause to be published a notice of application containing:

The name and address of the applicant;
A brief statement of the nature of the application; and
A statement advising that objections to the application can be filed with the New Jersey Commissioner of Banking, along with the address of the Commissioner.

History

Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Added "; and" in (a)7, substituted a period for "; and" in (a)8 and deleted (a)9.

N.J. Admin. Code § 3:13-5.4 Approval of application

(a) The Commission shall approve the application for a mutual savings bank holding company upon a finding of the following factors:

The establishment of a mutual savings bank holding company is in the best interests of the depositors of the mutual savings bank;
The qualifications, experience and character of the proposed officers and directors of the mutual savings bank holding company are sufficient to result in the successful operation of the mutual savings bank holding company;
The interests of the public will be served by the establishment of a mutual savings bank holding company;
The mutual savings bank holding company is adequately capitalized; and
The establishment of the mutual savings bank holding company meets the requirements of law.

(b) The Commissioner shall approve the charter application of a subsidiary capital stock savings bank filed with an application for a mutual savings bank holding company upon a finding of the following factors:

The qualifications, experience and character of the proposed officers and directors of the subsidiary capital stock savings bank are sufficient to result in the successful operation of the subsidiary capital stock savings bank;
The interests of the public will be served by the establishment of the subsidiary capital stock savings bank; and
The capital stock of the subsidiary capital stock savings bank is in accordance with the amount required for banks pursuant to N.J.S.A. 17:9A-4.

N.J. Admin. Code § 3:13-5.5 Board of directors

(a) The board of directors of a mutual savings bank holding company shall be managed by a board of not less than six nor more than 21 directors.

(b) Directors of a mutual savings bank holding company shall be elected by a plurality of the members of the board of the mutual savings bank holding company at the annual meeting for a term of up to three years, as provided in the by-laws.

(c) A vacancy on the board of directors may be filled by a plurality of the members of the board of directors for the remainder of the unexpired term. If the board fails to fill a vacancy for one year, the Commissioner may appoint a member to the board.

(d) Directors of a mutual savings bank holding company may be paid reasonable compensation. The compensation paid to directors shall be fixed by a majority vote of the board. The Commissioner may direct that the amount of compensation paid to directors be reduced if it is deemed to be excessive. The Commissioner shall consider the duties, experience, education and responsibilities of the director, and any other relevant factors, when making this determination.

N.J. Admin. Code § 3:13-5.6 Officers

(a) The board of directors of a mutual savings bank holding company at the first meeting following each annual meeting may elect a Chairman of the Board and shall elect a President, both of whom shall be directors. The board of directors shall select the Chairman of the Board, President or another officer who is a director to be the chief executive officer. The board of directors shall also appoint a Secretary and a Treasurer, neither of whom need be directors.

(b) A mutual savings bank holding company may pay its officers any reasonable compensation as may be from time to time fixed by the board of directors. The Commissioner may direct that the amount of compensation paid to officers be reduced if it is deemed to be excessive. The Commissioner shall consider the duties, experience, education and responsibilities of the officer, and any other relevant factors, when making this determination.

N.J. Admin. Code § 3:13-5.7 Division of surplus

(a) The board of a mutual savings bank holding company may, by a majority vote of the directors, divide any surplus which is in excess of the amount required for the operations of the mutual savings bank holding company and which is not necessary to maintain the safety and soundness of the mutual savings bank holding company, and may distribute this surplus to the depositors of its subsidiary capital stock savings bank or banks. All such distributions shall be made equitably based on the amount deposited by each depositor in the subsidiary capital stock savings bank or banks.

(b) The Commissioner may, if he or she deems the surplus held by a mutual savings bank holding company to be excessive, either upon petition or on the Commissioner's own initiative, order the savings bank holding company to distribute the surplus to the depositors of its subsidiary capital stock savings bank or banks.

Chapter 14 BANK SERVICE CORPORATIONS

Subchapter 1 BANK SERVICE CORPORATIONS

N.J. Admin. Code § 3:14-1.1 Definitions

The following words and terms shall have the following meanings when used in this chapter, unless the context clearly indicates otherwise:

"Affiliate" means an entity related by common control or substantial ownership to a bank holding company, a banking subsidiary of a bank holding company, a bank, a savings bank, a bank service corporation of a bank holding company, bank, or savings bank, or any other non-banking subsidiary of a bank holding company, bank or savings bank.

"Appropriate Federal banking agency" means the Board of Governors of the Federal Reserve System, the local Federal Reserve Bank having jurisdiction, the Federal Deposit Insurance Corporation, or the Office of the Comptroller of the Currency.

"Bank" shall have the meaning of that term in N.J.S.A. 17:9A-1(1).

"Bank services" means:

Services such as check and deposit sorting and posting, computation and posting of interest and other credits and charges, preparation and mailing of checks, statements, notices, and similar items, or any other clerical, bookkeeping, accounting, statistical, or similar functions;
Any service, other than deposit taking, that the Board of Governors of the Federal Reserve System determines by regulation to be permissible for a bank holding company pursuant to Section 4(c)(8) of the Bank Holding Company Act ( 12 U.S.C.A. § 1843(c)(8)), performed at any geographical location, subject to applicable Federal or state branching laws regulating the geographic location of banks to the extent that those laws are applicable to any activity authorized by this paragraph 2;
Any service, other than deposit taking, approved for such bank service corporation, or for bank service corporations in general, by the Board of Governors of the Federal Reserve System, or by the appropriate local Federal Reserve Bank;
Any service, other than deposit taking, which a bank holding company is authorized to provide to its affiliates pursuant to 12 C.F.R. § 225.21(a)(1), § 225.22(a)(1), or § 225.22(a)(2), provided however that services constituting permitted bank services under this paragraph 4 and which would not constitute permitted bank services under paragraphs 1, 2, or 3 above are provided only to an affiliate of the bank service corporation; and
Any service, other than deposit taking, not described in paragraphs 1, 2, 3 or 4 above, and which has been fully described in an application to the Commissioner, which application the Commissioner has approved, or the period during which the Commissioner could disapprove the application as set forth in N.J.A.C. 3:14-1.3(a) has expired.

"Bank service corporation" means:

A corporation which is organized under Title 14 or Title 14A of the statutes of this State, or which is organized under a general incorporation statute of another state of the United States and which has a Certificate of Authority from the New Jersey Secretary of State or the New Jersey Department of Treasury, Division of Revenue to transact business in this State, to perform bank services, and all of whose capital stock is owned by one or more banking institutions; or
A limited liability company as defined in this chapter.

"Banking institution" means a bank organized under the laws of this State or the laws of another state of the United States, a savings bank organized under the laws of this State or under the laws of another state of the United States, and a national bank organized under the laws of the United States.

"Invest" means an advance of funds to a bank service corporation, whether by the subscription to or purchase of stock, the making of a loan, or otherwise, except a payment for rent earned, goods sold and delivered, or services rendered prior to the making of such payment.

"Limited liability company" means any non-corporate company, partnership, trust, or similar business entity organized under the law of a state (as defined in section 3 of the Federal Deposit Insurance Act) that provides that a member or manager of such company is not personally liable for a debt, obligation, or liability of the company solely by reason of being, or acting as a member or manager of such company and all of whose ownership interest is held by banking institution.

"Person" means natural persons, sole proprietors, limited liability companies, partnerships, corporations, and all other business entities, no matter how designated.

"Savings bank" shall have the meaning of that term in N.J.S.A. 17:9A-1(13).

History

Amended by R.2004 d.309, effective 8/16/2004.
See: 36 N.J.R. 1262(a), 36 N.J.R. 3875(a).
Codified "Bank service corporation" as 1 and 2 and rewrote 2; added "Limited liability Company"; in "Person", substituted "natural persons, sole proprietors, limited liability companies" for "individuals" preceding ", partnerships".
Amended by R.2010 d.036, effective 2/16/2010.
See: 41 N.J.R. 2849(a), 42 N.J.R. 587(b).
In paragraph 1 of definition "Bank service corporation", inserted "or the New Jersey Department of Treasury, Division of Revenue".

N.J. Admin. Code § 3:14-1.2 Permissible activities

(a) Subject to N.J.A.C. 3:14-1.3, a banking institution may engage in the following activities:

Contracting with a bank service corporation for the provision of bank services;

Investing in a bank service corporation, except that:

i. No bank shall invest in any one bank service corporation if the total of all the bank's investments in that bank service corporation exceeds, or if the making of such an investment would cause such total to exceed, 10 percent of the bank's unimpaired capital stock and surplus;

ii. No bank shall invest in a bank service corporation if the total of all the bank's investments in bank service corporations exceeds, or if the making of such an investment would cause such total to exceed, 15 percent of the bank's unimpaired capital stock and surplus;

iii. No savings bank shall invest in any one bank service corporation if the total of all the savings bank's investments in that bank service corporation exceeds, or if the making of such an investment would cause such total to exceed, five percent of the surplus of the savings bank;

iv. No savings bank shall invest in a bank service corporation if the total of all the savings bank's investments in bank service corporations exceeds, or if the making of such an investment would cause such total to exceed, 7.5 percent of the surplus of the savings bank; and

v. No bank or savings bank shall invest in a bank service corporation unless that bank service corporation has agreed in writing to submit to periodic examinations and to regulation by the Department. The costs of such examination shall be borne by the bank or savings bank.

History

Amended by R.2004 d.309, effective 8/16/2004.
See: 36 New Jersey Register 1262(a), 36 New Jersey Register 3875(a).
In (a)2v, added the second sentence.

N.J. Admin. Code § 3:14-1.3 Authority to engage in bank services

(a) A bank service corporation may provide a bank service to a banking institution, an affiliate of a banking institution, or other person, or to combinations or multiples of the above, subject to the limitations set forth in this section.

A bank service which is described in paragraphs 1, 2, or 4 of the definition of "bank service," and which will be provided only to an affiliate, may be provided without application or notice to the Commissioner.
A bank service which is described in paragraphs 1 or 2 of the definition of "bank service," and which will be provided to a non-affiliate, may be provided if:

i. Written application has been received by the Commissioner which fully describes the bank service to be provided, the type of customer to whom the bank service is to be provided, the type of business in which the non-affiliate engages, and any information which supports the conclusion that the provision of the bank service is in the financial interest of the bank service corporation or affiliates of the bank service corporation; and either

(1) The bank service corporation has received approval in writing from the Commissioner; or

(2) At least 60 calendar days have passed since the receipt of the written application by the Commissioner, during which time the bank service corporation did not receive written notification by the Commissioner that the provision of the bank service to the non-affiliate is disapproved; and

ii. The Commissioner, at his or her discretion, has required and has received any additional information which might be relevant to a decision of whether to approve the application, which may include, but shall not be limited to, the names of the non-affiliates to whom the bank service is to be provided.

A bank service which is described in paragraph 3 of the definition of "bank service" may be provided to an affiliate or a non-affiliate if:

i. Written notice has been received by the Commissioner that the service has been approved for such bank service corporation, or for bank service corporations in general, by the Board of Governors of the Federal Reserve System, or by the appropriate local Federal Reserve Bank; and either

(1) The bank service corporation has received approval in writing from the Commissioner; or

(2) At least 60 calendar days have passed since the written notice required to be submitted by (a)3i above has been received by the Commissioner, and during which time the bank service corporation did not receive written notification by the Commissioner that the provision of the bank service is disapproved; and

ii. The Commissioner, at his or her discretion, has required and has received any additional information which might be relevant to a decision to disapprove the bank service, which may include, but shall not be limited to, a description of the bank service to be provided, the names of the non-affiliates to whom the bank service is to be provided, the type of business in which the non-affiliate engages, and any materials which support the conclusion that the provision of the bank service is in the financial interest of the bank service corporation or affiliates of the bank service corporation.

A bank service which is described in paragraph 5 of the definition of "bank service," may be provided to an affiliate or non-affiliate if:

i. Written application has been received by the Commissioner which fully describes the bank service to be provided, the types of customers to whom the bank service is to be provided, the type of business in which the non-affiliate engages, and any information which supports the conclusion that the provision of the bank service is in the financial interest of the bank service corporation or affiliates of the bank service corporation; and either:

(1) The bank service corporation has received approval in writing from the Commissioner; or

(2) At least 90 calendar days have passed since the Commissioner's receipt of the application, during which time the bank service corporation has not received written notification by the Commissioner that the provision of the bank service is disapproved, provided, however, that the Commissioner may make reasonable extensions of the period during which he or she may consider the application; and

ii. The Commissioner, at his or her discretion, has required and has received any additional materials which might be relevant to a decision of whether to approve the application, which may include, but shall not be limited to, the names of the non-affiliates to whom the bank service is to be provided.

(b) A bank service corporation may engage in a bank service described in paragraphs 2, 3, or 4 of the definition of "bank service", only upon the same terms and subject to the same conditions as are set forth in Federal law.

(c) Nothing in this chapter shall be construed to authorize a bank service corporation to engage in any activity which is reserved to banking institutions or qualified banks pursuant to N.J.S.A. 17:9A-213.

History

Amended by R.2004 d.309, effective 8/16/2004.
See: 36 New Jersey Register 1262(a), 36 New Jersey Register 3875(a).
In (a)4i(2), neutralized the gender reference.

N.J. Admin. Code § 3:14-1.4 Standards for approving or disapproving applications

(a) In evaluating an application or notice under N.J.A.C. 3:14-1.3, the Commissioner may disapprove the application or bank service if, in his or her judgment:

The activity is inappropriate for the bank service corporation or for any affiliate;
The activity is unduly risky to the safety and soundness of the bank service corporation or for any affiliate; or
The bank service corporation or any affiliate has a substantial problem in any of the following areas:

i. Financial history and condition;

ii. Managerial resources;

iii. Funding and liquidity;

iv. Interest-rate exposure;

v. Concentration of assets; or

vi. Volume of assets classified as substandard, doubtful or loss, or subject to special mention.

N.J. Admin. Code § 3:14-1.5 Services to noninvestors

(a) A bank service corporation shall not discriminate unreasonably in the provision of any bank services, authorized under N.J.S.A. 17:9A-24.1 et seq. or this chapter, to any banking institution that does not own stock in the bank service corporation on the ground that the nonstockholding banking institution is in competition with a banking institution that owns stock in the bank service corporation, except that:

It shall not be considered unreasonable discrimination for a bank service corporation to charge a nonstockholding banking institution a price for providing bank services that reflects the full cost of offering those services, including the cost of capital and a reasonable return thereon; and
It shall not be considered unreasonable discrimination for a bank service corporation to refuse to provide bank services to a nonstockholding banking institution if comparable bank services are available to the nonstockholding institution from another person at a comparable cost, or if the providing of bank services to the nonstockholding institution would be beyond the reasonable capacity of the bank service corporation.

Chapter 15 RESIDENTIAL MORTGAGE LENDERS; CORRESPONDENT MORTGAGE LENDERS; MORTGAGE BROKERS; QUALIFIED INDIVIDUAL LICENSEES; MORTGAGE LOAN ORIGINATORS

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:15-1.1 Purpose and scope

(a) This chapter implements the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq.

(b) This chapter shall apply to residential mortgage lenders, correspondent mortgage lenders, residential mortgage brokers, qualified individual licensees and mortgage loan originators licensed under the Act and those whose activities require they be licensed.

History

Amended by R.1999 d.191, effective 6/21/1999 (operative July 21, 1999).
See: 30 N.J.R. 1658(a), 31 N.J.R. 1609(a).
In (a), changed New Jersey Licensed Lenders Act reference.
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote the section.
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
In (a), substituted "Residential Mortgage Lending" for "Licensed Lenders" and updated the N.J.S.A. reference; and rewrote (b).

N.J. Admin. Code § 3:15-1.2 Definitions

The following words and terms, when used in this chapter, shall have the following meaning unless the context clearly indicates otherwise.

"Accrual basis of accounting" means the accounting method by which expenses are recorded when incurred, whether paid or unpaid, and income is recorded when earned, whether received or not received.

"Act" means the "New Jersey Residential Mortgage Lenders Act,"N.J.S.A. 17:11C-51 et seq.

"Advertisement" means any announcement, statement, assertion, or representation that is placed before the public in a newspaper, magazine, or other publication or in the form of a notice, circular, pamphlet, letter or poster or over any radio or television station, by means of the internet or by other electronic means of distributing information, or in any other way.

"Alternate name" means an alternate name of a licensed person other than an individual registered pursuant to N.J.S.A. 14A:2-2.1(2) or 42:2B-4b.

"Application" means the document or documents or information, including the payment of any fees, that a particular lender or broker requires a borrower to submit for the purpose of having the lender or broker begin to process the mortgage loan document or documents to determine whether to grant or deny a loan.

"Application fee" shall have the meaning of that term in N.J.A.C. 3:1-16.2.

"Appraisal fee" shall have the meaning of that term in N.J.A.C. 3:1-16.2.

"Borrower" means any person applying for a loan from a lender licensed under the Act, whether or not the loan is granted, and any person who has actually obtained such a loan.

"Branch office" means any location where, in the regular course of business, applications for mortgage loans are distributed to or received from consumers, loan records are maintained, underwriting decisions are made, commitments or lock-in agreements are issued, or any fees or charges relating to the loan are received from consumers.

A home or place of business of a consumer shall not be considered a branch office.
A location shall not be considered a branch office merely because any or all of the following activities are conducted at the location:

i. Consumers receive information concerning available loan products from a computer terminal;

ii. Consumers are prequalified for a loan, so long as no additional fee is charged for this service; and

iii. Advertising materials are distributed to consumers so long as the materials do not in any way resemble an application for a loan.

A branch office of a licensee under the Act does not also constitute a branch office of another licensee merely because the first licensee distributes or receives applications of that other licensee at the branch office.
A licensed real estate office of a person licensed as a real estate broker or salesman pursuant to N.J.S.A. 45:15-1 et seq., does not constitute a branch office of a business licensee merely because the real estate broker or salesman distributes or receives an application of the business licensee at that office, or because a business licensee or a mortgage loan originator of that licensee who does not hold himself out to the public as performing mortgage lending or mortgage brokering there, and does not maintain an office or desk there, meets prospective borrowers at the office of the real estate broker as a convenience to the borrower and distributes or receives applications or fees there.

"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: the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; or 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. 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 a person can or will perform any of the activities of a licensee under the Act or of a person exempt from licensure pursuant to the Act or rules.

"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: 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 mortgage loan is under 36 months; or the amount of the installment payments may vary as a result of the change in the interest rate as permitted by the Act.

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Commitment" means a signed statement issued by a lender in which the lender promises to make a loan of specified terms to a specified borrower, and which is based on a satisfactory underwriting analysis of the appraisal, if an appraisal is required in connection with the loan, and satisfactory underwriting analysis of the credit report, if a credit report is required in connection with the loan, except that any document indicating approval of a loan application that is contingent on the approval of a party to whom the lender seeks to sell the loan shall not be deemed a commitment.

"Commitment fee" shall have the meaning of that term in N.J.A.C. 3:1-16.2.

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

"Correspondent mortgage lender" means a residential mortgage lender who:

In the regular course of business, does not hold mortgage loans in its portfolio, or service mortgage loans, for more than 90 days; and
Has shown to the Department's satisfaction an ability to fund mortgage loans through warehouse agreements, table funding agreements or otherwise.

"Credit report fee" shall have the meaning of that term in N.J.A.C. 3:1-16.2.

"Department" means the Department of Banking and Insurance.

"Depository institution" means a "depository institution" as defined in section 3 of the "Federal Deposit Insurance Act,"12 U.S.C. § 1813, and also means any credit union.

"Direct contact" means in-person contact, and contact by means of a telephone, computer terminal, Internet or other electronic means during which contact, in the regular course of business, applications for first mortgage loans or second mortgage loans are distributed to or received from consumers, underwriting decisions are made, commitments or lock-in agreements are issued, or any fees or charges relating to the loan are authorized.

"Discount point" shall have the meaning of that term in N.J.A.C. 3:1-16.2.

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

"First mortgage loan" means a residential mortgage loan secured in whole or in part by any interest in residential real estate which is not subject to any prior or superior mortgage lien.

"Immediate family member" means a spouse, domestic partner as defined in N.J.S.A. 26:8A-3, partner in a civil union couple as defined in N.J.S.A. 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, correspondent mortgage lender or a mortgage loan originator.

"Insolvent" means having negative tangible net worth, or being unable to pay debts when due.

"Lender" means a residential mortgage lender.

"License name" means any name listed on the license issued by the Department including the true name and any alternate or trade names.

"License or licensing period" means the one-year calendar period beginning January 1, 2011 and each succeeding calendar year.

"Licensee" means a legal entity or individual who is licensed under the Act.

"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 the Act or a person exempt from licensure.

"Lock-in agreement" means an agreement between the lender and the borrower whereby the lender guarantees until a specified date the availability of a specified rate of interest or time price differential or specified formula by which the rate of interest or time price differential will be determined and/or specific number discount points, provided the loan is approved and closed by the specified date. If a specified date is not determinable, the lender may fulfill the requirement of this provision by setting forth with specificity the method by which the duration of the lock-in period will be determined. The term "lock-in agreement" does not include an agreement to fix the rate executed three or fewer calendar days before closing where appropriate disclosures have been made under the provisions of this chapter and N.J.A.C. 3:1-16.2.

"Lock-in fee" shall have the meaning of that term in N.J.A.C. 3:1-16.2.

"Mortgage loan originator" or "originator" means any individual not exempt under section 5 of the Act and licensed pursuant to the provisions of the Act, and any individual who should be licensed pursuant to the provisions of the Act and this chapter 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. The term "mortgage loan originator" does not mean an individual:

Who is a qualified individual licensee for a residential mortgage lender or residential mortgage broker;
Engaged solely as a loan processor or underwriter, except as provided in section 4 of the Act; or
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. § 101(53D)).

"Nationwide Mortgage Licensing System and Registry" (NMLSR) or "nationwide 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 the 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. §§ 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:

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

"Originate" means to offer or commit to make a residential mortgage loan, or to close a residential mortgage loan in the name of the licensee.

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

"Prequalification" means the process whereby a licensee prior to application advises a person whether or not he or she qualifies for a loan product, subject to satisfactory appraisal and other contingencies.

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

"Qualified individual licensee" means an individual licensed as a residential mortgage lender or residential mortgage broker, who is required to be so licensed pursuant to the Act as a condition for a person to be issued or to hold a license as a business licensee, and who:

Meets, at a minimum, the licensing criteria applicable to a mortgage loan originator; and
Is an officer, director, partner, owner, or principal of the business licensee.

"Registered mortgage loan originator" means any individual who:

Is a mortgage loan originator and an employee of:

i. A depository institution;

ii. A subsidiary that is:

(1) Owned and controlled by a depository institution; and

(2) Regulated by a Federal banking agency; or

iii. 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. § 2241), or its successor; and

Is registered with, and maintains a unique identifier through the NMLSR.

"Residential mortgage broker" or "mortgage broker" or "broker" means any person, not exempt under section 5 of the Act and licensed pursuant to the provisions of the Act, and any person who should be licensed pursuant to the provisions of the 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. The term "residential mortgage broker" also means an individual who is a qualified individual licensee for a residential mortgage broker.

"Residential mortgage lender" or "mortgage lender" means any person, not exempt under this chapter and licensed pursuant to the Act and the provisions of this chapter, and any person who should be so licensed 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 chapter clearly indicate otherwise; and
With respect to an individual licensee, an individual who is a qualified individual licensee for a residential mortgage lender.

"Residential mortgage loan" or "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 one- to four-family dwelling, as defined in section 103(v) of the Truth in Lending Act, Pub. L. 90-321 (15 U.S.C. § 1602(v)), 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 one to four family dwelling as defined in section 103(v) of the Truth in Lending Act (15 U.S.C. § 1602(v)).

"RESPA" means the Federal Real Estate Settlement Procedures Act, 12 U.S.C. § 2607, regulations implementing RESPA, and any opinion regarding RESPA issued by the Department of Housing and Urban Development.

"Secondary mortgage loan" means a residential mortgage loan secured in whole or in part by a lien upon any interest in residential real estate, which is subject to one or more prior mortgage liens except that the following loans shall not be subject to the provisions of this chapter:

A loan that is to be repaid in 90 days or less;
A loan that is taken as security for a home repair contract executed in accordance with the provisions of the Home Repair Financing Act, N.J.S.A. 17:16C-62 et seq.; or
A loan that is the result of the private sale of a dwelling, if title to the dwelling is in the name of the seller and the seller has resided in the dwelling for at least one year, if the buyer is purchasing that dwelling for his or her own residence and, if the buyer, as a part of the purchase price, executes a secondary mortgage in favor of the seller.

"Settlement service" means any service provided in connection with a real estate settlement including, but not limited to, the following: title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or broker, and the handling of the processing, and closing or settlement.

"Substantial stockholder" means a person or entity owning 10 percent or more of the stock of a licensee.

"Table funding agreement" means an agreement between an investor and a licensee whereby the investor agrees to purchase specified mortgage loans from a licensee immediately after the closing of the mortgage loans, and which permits the licensee to close with funds of the investor.

"Tangible net worth" means net worth less the following assets:

That portion of any assets pledged to secure obligations of any person or entity other than that of the applicant;
Any asset (except construction loan receivables secured by first mortgages from related companies) due from officers or stockholders of the applicant or related companies in which the applicant's officers and/or stockholders have an interest;
That portion of the value of any marketable security (listed or unlisted) not shown at lower of cost or market, except for any shares of FNMA stock required to be held under a servicing agreement, which should be carried at cost;
Any amount in excess of the lower of the cost or market value of mortgages in foreclosures, construction loans, or foreclosed property acquired by the applicant through foreclosure;
Any investment shown on the balance sheet in the applicant's joint ventures, subsidiaries, affiliates and/or related companies that is greater than the value of said assets at equity;
Goodwill;
The value placed on insurance renewals or property management contract renewals or other similar intangibles of the applicant;

Organization costs of the applicant;

The value of any servicing contracts held by the applicant not determined in accordance with FASB Statement No. 65, "Accounting for Certain Mortgage Banking Activities," dated September 1982, as amended by FASB No. 122, "Accounting for Mortgage Servicing Rights," dated May 1995, or subsequent revisions thereto;

Any real estate held for investment where development will not start within two years from the date of its initial acquisition;

Any leasehold improvements not being amortized over the lesser of the expected life of the asset or the remaining term of the lease; and
Any commitment fees paid/collected that are not recoverable through the closing or selling of loans.

"Third party fees" shall have the meaning of that term in N.J.A.C. 3:1-16.2.

"Trade name" means an assumed name filed pursuant to N.J.S.A. 56:1-2.

"True name" means the legal name of the licensed entity and shall not include any alternate or trade name.

"Unique identifier" means a number or other identifier assigned by the NMLSR.

"Warehouse agreement" means an agreement to provide credit to a licensee to enable the licensee to have funds to close mortgage loans and hold those mortgage loans pending sale to permanent investors.

"Warehouse fee" shall have the meaning of that term in N.J.A.C. 3:1-16.2.

History

Amended by R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Added "Accrual basis of accounting", "Advertisement", "Application fee", "Appraisal fee", "Billing cycle", "Closed-end loan", "Commitment fee", "Controlling interest", "Credit report fee", "Depository institution", "Discount point", "Insolvent", "Lender", "Lock-in fee", "Mortgage loan", "Mortgage solicitor", "Open-end loan", "RESPA", "Settlement service", "Table funding agreement", "Tangible net worth", "Third party charges", "Time price differential", "Warehouse agreement", and "Warehouse fee".
Amended by R.1999 d.191, effective 6/21/1999 (operative July 21, 1999).
See: 30 N.J.R. 1658(a), 31 N.J.R. 1609(a).
In "Act", changed New Jersey Licensed Lenders Act reference; and in "Secondary mortgage loan", changed Home Repair Financing Act reference in 2.
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Added "Alternate name", "Biennial period", "License name", "Substantial stockholder", "Trade name", and "True name"; amended "Branch office", "Commitment", "Consumer loan", "Consumer loan business", "Direct contact", and "Secondary mortgage loan business".
Amended by R.2008 d.70, effective 4/7/2008.
See: 39 N.J.R. 4361(a), 40 N.J.R. 1826(b).
Deleted definition "Biennial period"; and added definitions "License or licensing period" and "Registration period".
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Rewrote definitions "Act", "Alternate name", "Application", "Branch office", "Closed-end loan", "Depository institution", "Direct contact", "First mortgage loan", "Lender", "License or licensing period", "Lock-in agreement", "Open-end loan", "Originate", "Person", "Primary market" and "Secondary mortgage loan"; deleted definitions "Authority", "Billing cycle", "Consumer lender", "Consumer loan", "Consumer loan business", "Licensed lender", "Liquid assets", "Mortgage banker", "Mortgage broker", "Mortgage loan", "Mortgage solicitor", "Registration period", "Sales finance company", "Secondary lender", "Secondary mortgage loan business" and "Time price differential"; added definitions "Business licensee", "Clerical or support duties", "Federal banking agency", "Immediate family member", "Individual", "Individual licensee", "Licensee", "Loan processor", "Mortgage loan originator", "Nationwide Mortgage Licensing System and Registry (NMLS&R)", "Nontraditional mortgage product", "Qualified individual licensee", "Registered mortgage loan originator", "Residential mortgage broker", "Residential mortgage lender", "Residential mortgage loan", "Residential real estate" and "Unique identifier"; substituted definition "Correspondent mortgage lender" for definition "Correspondent mortgage banker"; rewrote definition "Correspondent mortgage lender"; and substituted definition "Third party fees" for definition "Third party charges".

N.J. Admin. Code § 3:15-1.3 Office requirement

(a) A licensee shall maintain a principal office. The maintenance of a principal office at which there will be no direct contact with New Jersey consumers shall not relieve the licensee of the obligation to maintain the confidentiality of any financial information in accordance with all applicable Federal and state laws and rules. A principal office where the licensee has direct contact with New Jersey consumers regarding residential mortgage loan origination or brokering shall be in a suitable location as determined by the Commissioner.

The Commissioner shall consider the following factors in determining whether a location in New Jersey at which there is direct contact with New Jersey consumers as referenced in (a) above is suitable:

i. The location shall have a space that may only be utilized for the purposes of the licensee's business and by the licensee and its employees, structured in such a way as to ensure the maintenance of a consumer's right to privacy with respect to conversations and documents involving personal and financial information;

ii. The location shall conform to all local ordinances and zoning requirements;

iii. The location shall be reasonably accessible to the public;

iv. Any signage proposed for the location shall clearly identify the licensee;

v. The location shall be reasonably free of noise and other distractions so as to permit customers to give appropriate consideration to the loan transaction; and

vi. In addition, a location in a residence shall not be considered suitable unless the office is separate from the residential area and conveniently accessible to all consumers through a separate business entrance.

The Commissioner shall consider the following factors in determining whether an out-of-State location at which there is direct contact with New Jersey consumers as referenced in (a) above is suitable:

i. The location shall ensure the maintenance of a consumer's right to privacy with respect to conversations and documents involving personal and financial information; and

ii. The location of the out-of-State office shall comply with all applicable Federal, State and local laws in the state where the office is located.

Applicants for a business license shall certify, on a form as prescribed by the Commissioner, that the location of their principal office is in compliance with the requirements set forth in this subsection.

(b) A licensee may maintain more than one office and shall secure a license for each branch office as required by N.J.A.C. 3:15-2.4.

(c) Each licensee that maintains more than one licensed office shall identify one licensed office as its principal office. The designation of the principal office shall be made as part of the application for licensure as set forth in N.J.A.C. 3:15-2.2. Notice of a change in the location of the business licensee's principal office shall be entered into the NMLSR within 10 days of the effective date of the change. After the processing of the change has been completed, the Commissioner shall issue a new license reflecting the new designation.

(d) A business licensee changing its name or changing the address of the principal office or any branch office shall comply with N.J.A.C. 3:1-7.1 and 7.4, as applicable.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote (a); amended the N.J.A.C. reference in (b); and inserted "If the filing is complete, the" in the beginning of the last sentence in (c).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Rewrote (a) and (c); in (b), substituted the first occurrence of "office" for "place of business", deleted "such" preceding "branch" and updated the N.J.A.C. reference; in (d), inserted "business"; and deleted (e).

N.J. Admin. Code § 3:15-1.4 License name

(a) A business licensee may use alternate or trade names, and may change such name or names, in connection with business under the Act, following approval by the Commissioner and subject to the provisions of N.J.A.C. 3:1-7.1, 3:15-1.5 and 1.6, and N.J.S.A. 17:11C-75.

(b) The true name and all alternate or trade names shall appear on the license issued by the Department.

(c) A licensee may use its true name, any or all of its alternate or trade names, or any combination of them, in its advertising.

(d) In residential mortgage closing documents, a licensee shall use its true name plus the alternate or trade name that it used in its contacts with the consumer involved in the transaction.

History

New Rule, R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Former N.J.A.C. 3:15-1.4, Display of license, recodified to N.J.A.C. 3:15-1.7.
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
In (a), inserted "business" and "N.J.A.C. 3:1-7.1,", and updated the N.J.S.A. reference; and in (d), inserted "residential mortgage".

N.J. Admin. Code § 3:15-1.5 License names permitted

(a) The number of alternate or trade names that may be used by a licensee in this State shall not exceed three, unless:

The licensee provides evidence to the Commissioner that prohibiting it from using a fourth or subsequent alternate or trade name would produce a substantial and unreasonable hardship on the licensee beyond the mere ability to market under the new name, and the licensee can satisfy the Department that procedures have been established to assure that consumers will not be misled about the true identity of the licensee. The Commissioner shall not grant an exception to the limitation of three alternate or trade names under this paragraph except in extraordinary circumstances; or
The licensee has, prior to November 4, 2002, been approved to use four or more alternate or trade names, in which case, the licensee may continue to use those names, but shall not be approved to use an additional alternate or trade name until the total number of alternate or trade names being used by that licensee is two or fewer, unless a larger number is permitted pursuant to (a)1 above.

History

New Rule, R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Deleted former (a)1; recodified former (a)2 and (a)3 as (a)1 and (a)2; and in (a)2, deleted "or 2" preceding "above".

N.J. Admin. Code § 3:15-1.6 Grounds for denying use of alternate or trade names

(a) The Commissioner may deny an application to use an alternate or trade name if:

The name is lewd, offensive or otherwise inappropriate for the conduct of the licensed activity; or
The name would create a substantial risk of misleading or confusing consumers.

History

New Rule, R.2002 d.353, effective 11/4/2002.
See: 34 New Jersey Register 1775(a), 34 New Jersey Register 3795(a).

N.J. Admin. Code § 3:15-1.7 Display and availability of license

Each business licensee shall post its license conspicuously at its principal office location. Each business licensee shall make the licenses of its qualified individual licensee(s) and mortgage loan originators available for inspection at the licensed office from which they operate. Each branch office license shall be displayed at the branch office designated thereon.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Recodified from N.J.A.C. 3:15-1.4 by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Display of license". Rewrote the section.

N.J. Admin. Code § 3:15-1.8 Authority of the Commissioner to oversee implementation of the Act

(a) The Commissioner shall coordinate the processing of an applicant through the NMLSR with the State licensing of the applicant on any matters deemed necessary for participation in the nationwide system and registry, including, but not limited to, electronic filings, information sharing and other activities that facilitate the operation of the nationwide system and registry.

(b) The Commissioner may investigate or examine any mortgage lender, mortgage broker, mortgage loan originator, qualified individual licensee or other person as necessary to determine eligibility for licensure and compliance with the Act and orders, rules and regulations issued thereunder and take such action as he or she deems appropriate based upon the results of any such investigation or examination consistent with the provisions of the Act and this chapter.

(c) The Commissioner may require any mortgage lender, mortgage broker, mortgage loan originator, qualified individual licensee or other person as necessary to make or compile reports or prepare other information as directed by the Commissioner for the purposes of implementing the RMLA.

History

New Rule, R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).

Subchapter 2 LICENSING

N.J. Admin. Code § 3:15-2.1 Who must be licensed; exemptions

(a) The following provisions apply to mortgage lender and mortgage broker business licensees and to persons engaged in activity for which licensure as such is required:

Except as set forth in (e) below, no business entity shall act as a mortgage lender or mortgage broker without first obtaining a license;
A mortgage lender may act as a broker if proper disclosure is made; and
No person shall be licensed as a mortgage lender or mortgage broker unless one officer, director, partner, owner or principal is a qualified individual licensee of that same type.

(b) A qualified individual licensee licensed as a mortgage lender or mortgage broker may act as a mortgage loan originator without obtaining a separate license.

(c) A mortgage loan originator shall be employed as an originator by only one business licensee at a time and shall be subject to direct supervision and control by that business licensee.

(d) A loan processor or individual who is an independent contractor shall not act as a processor or underwriter unless licensed as a mortgage loan originator.

(e) The following persons shall be exempt from the licensure requirements:

Depository institutions, but subsidiaries and service corporations of these institutions shall not be exempt;
A registered mortgage loan originator who is registered under the Federal "Secure and Fair Enforcement for Mortgage Licensing Act of 2008," Title V of Pub. L. 110-289 (12 U.S.C. §§ 5101 et seq.);
A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a mortgage lender, mortgage broker or mortgage loan originator; and
A person licensed as a real estate broker or salesperson pursuant to N.J.S.A. 45:15-1 et seq. and not engaged in the business of a residential mortgage lender or residential mortgage broker. Any person holding a license under the Act as a mortgage lender or mortgage broker shall be exempt from the licensing and other requirements of N.J.S.A. 45:15-1 et seq. in the performance of those functions authorized by the Act, however:

i. With regard to the exemption set forth at N.J.S.A. 17:11C-55, a real estate broker or salesperson shall not be deemed to be engaged in the business of a mortgage lender or mortgage broker if:

(1) The real estate broker receives $ 250.00 or less at the closing of the mortgage loan for reimbursement of expenses incurred in providing specific mortgage related services in connection with a particular real estate sale or real estate brokerage service;

(2) The real estate broker itemizes in writing the specific services provided by the real estate broker or by the salesperson licensed with the broker and submits that itemized list to the mortgage lender prior to closing; and

(3) The real estate broker or salesperson receives a real estate commission in connection with the transaction.

ii. For the purposes of (e)4i above, expenses are deemed to be incurred in providing the specific mortgage related services only if the expenses are exclusively attributed to, and allocated to, those services and are not used to defer the general overhead expenses of the real estate broker, salesperson or office or to defer any cost attributable to the real estate business or any non-mortgage related business conducted by the real estate broker, salesperson or other office personnel. Expenses that are general overhead, and therefore not reimbursable, shall include, but not be limited to: mortgage or lease expenses, rent, utilities, insurance, depreciation and advertising; office equipment and supplies used for any purpose other than mortgage related services, and telephone expenses attributed to any purpose other than mortgage related services. Expenses for office equipment, supplies and telephone usage that are exclusively attributed to mortgage related services are not general overhead and are reimbursable within the $ 250.00 limit.

iii. For purposes of (e)4i above, the time spent by a real estate broker, real estate salesperson or a salaried employee of a real estate broker providing specific mortgage-related services is reimbursable provided that:

(1) The reimbursement shall be paid by the mortgage lender directly to the real estate broker;

(2) The reimbursement shall be in the amount itemized in the statement of reimbursable expenses submitted to the mortgage lender prior to closing;

(3) The rate used to determine the amount of the reimbursement for mortgage-related services personally provided by the real estate broker, or provided by a non-salaried salesperson employed or retained by the real estate broker, shall not substantially exceed the average rate of regular (non-overtime) compensation of the real estate broker's support staff;

(4) The rate used to determine the reimbursement for mortgage-related services provided by a salaried employee of the real estate broker shall not exceed that employee's regular (non-overtime) rate of compensation;

(5) Any reimbursement paid to the real estate broker for mortgage-related services provided by a non-salaried real estate salesperson shall be passed through in the full amount itemized on the statement of reimbursable expenses submitted to the mortgage lender prior to closing; and

(6) Any reimbursement passed through by the real estate broker to a non-salaried salesperson shall be in addition to any real estate commission generated by the sales transaction to which the specific mortgage services related and was paid to the salesperson.

iv. The mortgage lender shall give a copy of the itemized list of reimbursable services, that was received from the real estate broker pursuant to (e)4i(2) above, to the borrower prior to closing and shall retain a copy on file for at least three years following the closing of the loan;

Any employer, other than a mortgage lender, providing mortgage loans to employees as a benefit of employment which are at an interest rate which is not in excess of the usury rate in existence at the time the loan is made, as established in accordance with the law of this State, and on which the borrower has not agreed to pay, directly or indirectly, any charge, cost, expense or any fee whatsoever, other than that interest;
The State of New Jersey or a municipality, or agency or instrumentality thereof, which, in accordance with a housing element that has received substantive certification from the Council on Affordable Housing pursuant to the Fair Housing Act, P.L. 1985, c. 222 (N.J.S.A. 52:27D-301 et seq.), or in fulfillment of a regional contribution agreement with a municipality that has received a certification, employs or proposes to employ municipally generated funds, funds obtained through any State or Federal subsidy, or funds acquired by the municipality under a regional contribution agreement, to finance the provision of affordable housing by extending loans or advances, the repayment of which is secured by a lien, subordinate to any prior lien, upon the property that is to be rehabilitated; and
Any individual who offers or negotiates terms of a mortgage loan:

i. With or on behalf of an immediate family member of that individual; or

ii. Secured by a dwelling that serves as that individual's residence.

History

Amended by R.1999 d.191, effective 6/21/1999 (operative July 21, 1999).
See: 30 N.J.R. 1658(a), 31 N.J.R. 1609(a).
In (a), changed New Jersey Licensed Lenders Act reference; inserted new (b) through (d); and recodified former (b) as (e).
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote (a); added a new (d); recodified former (d) and (e) as (e) and (f).
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Substituted "all required documentation" for "the necessary fees" in (f).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Requirement to be licensed". Rewrote the section.

N.J. Admin. Code § 3:15-2.2 Application for a business license

(a) A person applying for a business license pursuant to the Act shall submit the following:

A completed application as prescribed by the Commissioner or the NMLSR which shall include the following:

i. The true name of the applicant conforming to N.J.S.A. 17:11C-75 and no more than three trade names or alternate names conforming to N.J.A.C. 3:15-1.4 and 1.5 to be utilized;

ii. The location of the principal office;

iii. Information regarding partners, members and managers of a limited liability company, corporate officers, directors, and stockholders owning 10 percent or more of the shares of a corporation as required by the NMLSR and the RMLA;

iv. The name and address of the applicant's registered agent in this State;

v. Information regarding incorporation, registration, and authorization to do business in this State; and

vi. The applicant's Federal Tax Identification Number or Social Security Number, as applicable;

Completion of criminal history record background check of all owners, principals, officers, directors, partners, members and managers of a limited liability company, shareholders owning 10 percent or more of the applicant and qualified individual licensees, which shall include:

i. An FBI criminal history record background check through the NMLSR and

ii. A New Jersey Division of State Police criminal history record background check;

The identification of at least one officer, director, partner, member, owner or principal to be a qualified individual licensee and who shall apply through the NMLSR for a qualified individual license of the same type as that sought by the business entity;
All applications for a mortgage lender or mortgage broker license shall include submission to the Department of an original executed bond, on bond forms issued by the Department, from a surety company authorized to do business in this State, which bond meets the requirements of N.J.A.C. 3:15-3.1.
All applications for a corporate, partnership, limited liability company or sole proprietorship license as a mortgage lender or mortgage broker shall include an unqualified audited financial statement prepared by a certified public accountant or a public accountant, in good standing, demonstrating proof of tangible net worth as specified in N.J.A.C. 3:15-5.3;
An application for a corporate license by a corporation organized under the laws of this State shall be accompanied by a copy of the applicant's Certificate of Incorporation as filed with the New Jersey Department of Treasury, Division of Revenue. A foreign corporation shall submit a copy of its Certificate of Incorporation from the state where it is incorporated, and a copy of its Certificate of Authority to do business in this State approved by the New Jersey Department of Treasury, Division of Revenue. If an alternate name is to be utilized, a copy of the registration of that name with the New Jersey Department of Treasury, Division of Revenue shall be provided;
An application for a sole proprietorship or partnership license where a trade name is to be used shall be accompanied by a trade name certificate filed with the County Clerk's office in the county in which the licensee is to be located, and any filing made with the New Jersey Department of Treasury, Division of Revenue. An application for a limited liability company license shall be accompanied by a copy of the applicant's Certificate of Formation as filed with the New Jersey Department of Treasury, Division of Revenue. A foreign limited liability company shall submit a copy of its formation document from the state where it was established. If an alternate name is to be utilized, a copy of the registration of that name with the New Jersey Department of Treasury, Division of Revenue shall be provided;
The non-refundable application fee as specified in N.J.A.C. 3:15-4.1; and
The certification referenced in N.J.A.C. 3:15-1.3(a) that the principal office is in compliance with the provisions of that rule.

(b) The applicant shall bear all costs including those associated with completion of the criminal history record background checks through the New Jersey Division of State Police and the FBI, the securing of a credit report and all fees and charges imposed by the NMLSR and the Department, including non-refundable application fees and costs.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Former section recodified to N.J.A.C. 3:15-2.6.
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote the section.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Section was "Application for an initial license". Substituted "a" for "an initial" in the introductory sentence in (a), deleted (a)9 and recodified (a)10 and (a)11 as (a)9 and (a)10; and added (d).
Amended by R.2008 d.70, effective 4/7/2008.
See: 39 N.J.R. 4361(a), 40 N.J.R. 1826(b).
Added (e).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Application for a license". Rewrote the section.

N.J. Admin. Code § 3:15-2.3 Application for licensure as a qualified individual licensee or mortgage loan originator

(a) An individual applying for a qualified individual license pursuant to the Act shall comply with the following conditions and provide the following submissions, as applicable:

A criminal history record background check in connection with an application, based upon information provided to and received from the Division of State Police, and provided to and received from or through the NMLSR, which does not contain any disqualifying information. The background check shall include a State criminal history record background check based upon an exchange of fingerprint data with the State Bureau of Identification in the Division of State Police, for which the Division shall promptly notify the Commissioner if the subject of the original criminal history record background check is arrested for a crime or offense in this State after the date the background check was performed, and a check of both criminal and non-criminal information as requested from and distributed to the Federal Bureau of Investigation and any other governmental agency through the NMLSR as follows:

i. Fingerprints, for submission to the FBI and any other governmental agency authorized to receive this information for a state, Federal, and international criminal history record background check, to determine whether the individual has been convicted of, or plead guilty or nolo contendere to, a felony in a domestic court, which in this State includes any crime of the fourth degree or higher punishable by a term of imprisonment of more than one year, or in a foreign or military court:

(1) During the seven-year period preceding the filing of the application, except that a conviction under this sub-subparagraph which is pardoned shall not be considered disqualifying information; or

(2) At any time preceding the filing of the application, if the felony involved an act of fraud, dishonesty, a breach of trust, or money laundering, except that a conviction under this sub-subparagraph which is pardoned shall not be considered disqualifying information; and

ii. Personal history and experience, collected in a form prescribed by the NMLSR, and with the permission of the applicant, in order for that nationwide system and registry and the Commissioner to obtain:

(1) An independent credit report from a consumer reporting agency described in section 603(p) of the Fair Credit Reporting Act, Pub. L. 91-508 (15 U.S.C. § 1681a(p)), for use in making a determination of character and fitness pursuant to (a)2 below; and

(2) Information related to any administrative, civil or criminal findings by any governmental jurisdiction, to determine whether the individual had a mortgage loan originator license revoked in any governmental jurisdiction, except that a subsequent, formal vacation of a revocation shall not be considered disqualifying information;

Evidence of good character and fitness whereby the applicant has demonstrated financial responsibility, character and general fitness to command the confidence of the community that the applicant will operate honestly, fairly and efficiently. Evidence that the applicant is not financially responsible includes disregard in the management of his or her own financial condition, which may include, but not be limited to:

i. Current outstanding judgments, except judgments solely as a result of medical expenses;

ii. Current outstanding tax liens or other government liens and filings;

iii. Foreclosures during the three-year period preceding the filing of the application; or

iv. A pattern of seriously delinquent accounts during the three-year period preceding the filing of the application;

Evidence of completion of pre-licensing education, passage of the written Federal and State law tests, and continuing education requirements, as applicable; and
Payment of required fees to the Commissioner and/or NMLSR, as set forth in this chapter or by the NMLSR, including non-refundable application fees.

History

New Rule, R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Former N.J.A.C. 3:15-2.3, Branch offices; branch licensing requirement; initial branch licensing application, recodified to N.J.A.C. 3:15-2.4.

N.J. Admin. Code § 3:15-2.4 Branch offices; branch licensing requirement; initial branch licensing application

(a) Applicants for branch office licenses shall certify on a form prescribed by the Commissioner that the location of the branch office is in compliance with the requirements of this section. A branch office location at which activity as a mortgage lender or broker is conducted but at which there is no direct contact with New Jersey consumers shall be licensed and shall comply with the requirement regarding the maintenance of the confidentiality of financial information set forth in N.J.A.C. 3:15-1.3(a) and this section, with the exception of the standards prescribed in (d) below regarding the suitability of office locations at which a licensee has direct contact with New Jersey consumers. Prior to conducting activities as a mortgage lender or mortgage broker from a branch office in this State or from a branch office outside this State that include direct contact with New Jersey consumers regarding origination or brokering, the licensee shall obtain a license for the branch office from the Department.

(b) The application for a branch office license shall include the following:

The true name of the licensed entity and no more than three trade names or alternate names conforming to N.J.A.C. 3:15-1.4 and 1.5;
The address of the principal office; and
The address of the branch to be licensed.

(c) A licensee does not need to obtain a branch office license for an attorney's office merely because loans are closed there and fees are received there incident to the loan closing.

(d) A proposed branch at which the licensee will have direct contact with New Jersey consumers shall be in a suitable location in accordance with the suitability criteria set forth in N.J.A.C. 3:15-1.3(a).

(e) Licenses shall run from the date of issuance to the end of the current licensing period.

(f) Branch office arrangements shall be restricted as follows:

A branch office shall not be a separate business entity. If an office of another entity is purchased by or merged into a licensed mortgage lender or mortgage broker, the licensee shall file for a branch office license. The filing shall include documentation evidencing the acquisition and/or merger of that entity into the surviving licensed entity;
A branch office shall not pay its own operating expenses. Operating expenses shall include, but are not limited to, compensation of branch office employees, and payments for equipment, furniture, office rent, and other similar expenses incurred in operating a mortgage lending business;
A branch office shall not maintain a banking account or accounts for the payment of expenses of that branch that is separate from the account or accounts of the licensee;
A branch office shall not maintain contractual relationships with vendors for items such as leases, telephones, utilities, and advertising in the name of the branch office;
A branch office shall not maintain lines of credit, warehouse agreements, or other investor agreements that are separate from those of the business licensee; and
A branch office shall not indemnify the mortgage lender or mortgage broker against damages incurred from any apparent, express, or implied agency representation by or through the branch office's actions.

(g) Application fees are nonrefundable.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Recodified from N.J.A.C. 3:15-2.4 and amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote the section. Former N.J.A.C. 3:15-2.3, Application for renewal of a license, recodified to N.J.A.C. 3:15-2.4.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Added "; and" at the end of (b)2, substituted a period for a semicolon at the end of (b)3 and deleted (b)4 and (b)5; and added (g).
Amended by R.2008 d.70, effective 4/7/2008.
See: 39 N.J.R. 4361(a), 40 N.J.R. 1826(b).
In (e), added the last sentence.
Recodified from N.J.A.C. 3:15-2.3 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Rewrote (a), (b)3 and (d); in (b)2, substituted "office" for "New Jersey place of business"; in (e), deleted the first sentence; in (f)1, inserted the first occurrence of "mortgage" and "or mortgage broker" and substituted "licensee" for "licensed lender"; in (f)5, inserted "business"; and in (f)6, substituted the first occurrence of "mortgage" for "licensed" and inserted "or mortgage broker". Former N.J.A.C. 3:15-2.4, Application for renewal of a license, recodified to N.J.A.C. 3:15-2.5.

N.J. Admin. Code § 3:15-2.5 Application for renewal of a business license

(a) A person who holds in good standing a license as a mortgage lender or mortgage broker who seeks to renew a license pursuant to this section shall submit the following in connection with the renewal application:

A completed renewal application as prescribed by the Commissioner or the NMLSR which shall include the following:

i. The name of the applicant;

ii. The location of the principal place of business of the applicant;

iii. A certification or other submissions as required by the NMLSR that the applicant has bond coverage as specified in N.J.A.C. 3:15-3.1, and tangible net worth as specified by N.J.A.C. 3:15-5.3.

(b) No license shall be renewed unless all assessments due and owing as of the expiration date of the current license have been paid.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Recodified from N.J.A.C. 3:15-2.3 and amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote the section. Former N.J.A.C. 3:15-2.4, Branch offices; branch licensing requirement; initial branch licensing application, recodified to N.J.A.C. 3:15-2.3.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Substituted a period for "; and" at the end of (a)1iii and deleted (a)1iv; and added (b).
Recodified from N.J.A.C. 3:15-2.4 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Application for renewal of a license". Rewrote the introductory paragraph of (a) and (a)1iii; and in the introductory paragraph of (a)1, deleted "form" following "application" and inserted "or the NMLS&R". Former N.J.A.C. 3:15-2.5, Branch offices; renewal of branch licenses, recodified to N.J.A.C. 3:15-2.6.

N.J. Admin. Code § 3:15-2.6 Branch offices; renewal of branch licenses

(a) A business licensee in good standing shall submit in connection with the branch renewal a completed renewal application as prescribed by the Commissioner or the NMLSR which shall include the following for each branch to be renewed:

The true name of the licensed entity and all trade names or alternate names conforming to N.J.A.C. 3:15-1.4 or 1.5 to be utilized;
The address of the principal New Jersey place of business; and
The address of each branch whose license is being renewed.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote (a); deleted (b) and (c).
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Substituted a period for "; and" in (a)1iii and deleted (a)2.
Recodified from N.J.A.C. 3:15-2.5 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Rewrote the section. Former N.J.A.C. 3:15-2.6, Late renewal of licenses; late filing fees; reinstatement fees, recodified to N.J.A.C. 3:15-2.7.

N.J. Admin. Code § 3:15-2.7 Late renewal of business and/or branch licenses; late filing fees; reinstatement fees

(a) A person who submits a renewal application for a business license after the expiration of the license, but no later than the last day of February immediately thereafter may renew by paying a penalty for late filing of $ 600.00 per license.

(b) A person who submits a renewal application for a branch after the expiration of the branch license but no later than the last day of February immediately thereafter may renew by paying a penalty for late filing of $ 500.00 per branch license.

(c) A person who submits a renewal application after the last day of February immediately following the expiration of the license shall be treated as a new licensee and be required to submit an application with a fee as specified in N.J.A.C. 3:15-4.

(d) Payment of penalties for late renewal filing shall be collected on behalf of the Commissioner through the NMLSR.

(e) The date of submission for this section shall be the date on which the electronically submitted complete renewal application was accepted for processing by the NMLSR.

(f) The fact that a person submits an application for renewal of a license following the expiration of the licensing period does not authorize that person to engage in any activity subject to licensure without having a properly renewed license. The Department may take administrative action, imposing fines and penalties against anyone who engages in a licensed activity without being properly licensed.

(g) Application fees are nonrefundable.

History

Recodified from N.J.A.C. 3:15-2.2 by R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote the section.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Deleted "paying the license fee as specified in N.J.A.C. 3:15-4.3 and" following "by" in (a); in the second sentence of (b), deleted "the license fee as specified in N.J.A.C. 3:15-4.3 and" following "by"; inserted "penalty for late filing of" and deleted "reinstatement fee" following "$ 700.00"; substituted "a fee" for "application and license fees" in (c); deleted (d); recodified former (e) through (g) as (d) through (f); inserted "or penalties" in (d); substituted "section" for "subsection" in (e); and added (g).
Recodified from N.J.A.C. 3:15-2.6 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Late renewal of licenses; late filing fees; reinstatement fees". In (a), inserted "for a business license", and substituted "the last day of February immediately thereafter" for "45 calendar days after such expiration," and "$ 600.00 per license" for "$ 500.00"; rewrote (b), (d) and (e); in (c), substituted "after the last day of February immediately" for "later than 90 days"; and in (f), inserted ", imposing fines and penalties against". Former N.J.A.C. 3:15-2.7, Inactive license status; application fee, recodified to N.J.A.C. 3:15-2.8.

N.J. Admin. Code § 3:15-2.8 Inactive license status; application fee

(a) A formerly licensed individual whose New Jersey license is not under suspension or revoked and who has not had a mortgage loan originator license or a qualified individual licensee license or its equivalent revoked in any other governmental jurisdiction may, for up to five years from the date on which the license was placed in inactive status, apply to reactivate the individual license pursuant to this chapter and in accordance with the format and standards of the NMLSR. The inactive individual licensee shall complete the continuing education requirements in effect for the last calendar year in which the individual was licensed as a requirement for reactivation.

(b) Application fees are nonrefundable.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote the section.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Section was "Inactive license status; fee". In (a) and (b), substituted "licensing" for "biennial" and deleted "by paying the appropriate fee and" following the first occurrence of "status"; deleted "biennial" following "three" in the introductory paragraph of (c), rewrote (c)1, deleted "biennial" preceding "licensing" in the last sentence of (c)2; in (d), inserted "application" and deleted ", a $ 200.00 reactivation fee" following "N.J.A.C. 3:15-4.3"; and added (e).
Recodified from N.J.A.C. 3:15-2.7 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Deleted former (a) through (c); recodified former (d) and (e) as (a) and (b); and rewrote (a). Former N.J.A.C. 3:15-2.8, Conversion of mortgage banking, correspondent mortgage banking, and mortgage brokering licenses, recodified to N.J.A.C. 3:15-2.9.

N.J. Admin. Code § 3:15-2.9 Conversion of mortgage lender and mortgage broker licenses

(a) A person licensed, in good standing, as a mortgage lender shall submit the following to convert from a mortgage lender to a correspondent mortgage lender, and a person licensed, in good standing, as a correspondent mortgage lender shall submit the following to convert from a correspondent mortgage lender to a mortgage lender:

The original license, the licenses of all branch offices, and the licenses of all qualified licensed individuals;
A completed conversion form, which shall include the name and address of the licensee, the requested date of conversion and a copy of the licensee's most recent annual report of tangible net worth filed pursuant to N.J.A.C. 3:15-6.1 2;
For a conversion from a mortgage lender to a correspondent mortgage lender, a signed affidavit from the president or other principal who owns, controls or votes 25 percent or more of the stock of the licensee, a general partner, a managing member or the sole proprietor stating that the licensee will not hold or service mortgage loans for more than 90 days in the regular course of business; and
For a conversion from a correspondent mortgage lender to a mortgage lender, an audited financial statement demonstrating the required tangible net worth.

(b) A licensee shall submit the following to convert from a mortgage lender or a correspondent mortgage lender to a mortgage broker, or from a mortgage broker to a mortgage lender or a correspondent mortgage lender:

The original license, the licenses of all branch offices, and the licenses of all qualified licensed individuals;
A completed conversion form, which shall include the name and address of the licensee, the requested date of conversion and a copy of the licensee's most recent annual report of tangible net worth filed pursuant to N.J.A.C. 3:15-6.1 2;
For a conversion from a mortgage lender or a correspondent mortgage lender to a mortgage broker, a signed affidavit from the president or other principal who owns, controls or votes 25 percent or more of the stock of the licensee, a general partner, a managing member or the sole proprietor stating that the licensee will not issue commitments or lock-ins in its name, will not close mortgage loans in its name, and will only charge borrowers application fees and discount points; and
For a conversion from a mortgage broker to a mortgage lender or to a correspondent mortgage lender, an audited financial statement demonstrating the required tangible net worth.

(c) The Department shall approve an application for conversion of a license that complies with (a) or (b) above so long as the licensee satisfies the tangible net worth requirement for the license sought, or the license sought has the same or a lesser tangible net worth requirement as the tangible net worth requirement of the license held by the licensee.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote (a) and (b).
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Added "; and" at the end of (a)2 and (b)2; substituted a period for "; and" at the end of (a)3 and (b)3; and deleted (a)4 and (b)4.
Recodified from N.J.A.C. 3:15-2.8 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Conversion of mortgage banking, correspondent mortgage banking, and mortgage brokering licenses". Substituted "lender" for "banker" throughout; in (a)1 and (b)1, inserted 'and" and following "offices,", inserted "qualified" and deleted "and the certificates of all registered mortgage solicitors" from the end; in (a)2 and (b)2, updated the N.J.A.C. reference and deleted "and" from the end; in (a)3, inserted "from a mortgage lender" and substituted "; and" for a period at the end; added (a)4 and (b)4; in the introductory paragraph of (b), substituted "lender or a correspondent mortgage lender" for "banker or a correspondent mortgage banker" twice; and in (b)3, inserted "from a mortgage lender or a correspondent mortgage lender" and substituted "; and" for a period at the end. Former N.J.A.C. 3:15-2.9, Examination for licensure as a mortgage banker, correspondent mortgage banker, mortgage broker or secondary lender, recodified to N.J.A.C. 3:15-2.10.

N.J. Admin. Code § 3:15-2.10 Pre-licensing education requirements for mortgage loan originators and qualified individual licensees

(a) An applicant for a new license as a mortgage loan originator or a qualified individual licensee shall complete, as a pre-licensing requirement, at least 20 hours of education from a provider approved by the NMLSR.

(b) The approved education courses shall include at a minimum, but not be limited to:

Three hours of instruction on Federal statutes and regulations;
Three hours of instruction on ethics, including instruction on fraud, consumer protection and fair lending issues;
Two hours of training related to lending standards for the nontraditional mortgage product marketplace; and
Four hours of instruction on State-specific statutes and rules.

(c) Pre-licensing education requirements of another state that were approved by the NMLSR and completed by an applicant for licensure as a New Jersey qualified individual licensee or mortgage loan originator shall be accepted as credit towards completion of the pre-licensing education requirements of this section.

History

The following annotation applies to N.J.A.C. 3:15-2.10 prior to its repeal by R.2010 d.129:
New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
The following annotations apply to N.J.A.C. 3:15-2.10 subsequent to its recodification from N.J.A.C. 13:39-5.9 by R.2010 d.129:
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote the section.
Recodified from N.J.A.C. 3:15-2.9 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Examination for licensure as a mortgage banker, correspondent mortgage banker, mortgage broker or secondary lender". Rewrote (a) and (b); and added (c). Former N.J.A.C. 3:15-2.10, No waiver of examination, repealed.

N.J. Admin. Code § 3:15-2.11 Licensing examination requirements for mortgage loan originators and qualified individual licensees

(a) An applicant for a new license as a mortgage loan originator or qualified individual licensee shall pass, as a pre-licensing requirement:

A national written test developed by the NMLSR and administered by a test provider approved by the NMLSR; and
A State-specific written test, developed by the NMLSR in consultation with the State, and administered by a test provider approved by the NMLSR.

(b) The national written test and State-specific test which shall examine, at a minimum, the applicant's knowledge of the topics listed below:

Federal and State statutes and regulations pertaining to mortgage loan origination;
Other Federal and State statutes and rules including those pertaining to fraud, consumer protection, fair lending issues, and the non-traditional marketplace;
Ethics; and
The test for licensure as a qualified individual shall also include questions relating to employee supervision, office management, licensing and regulatory compliance issues.

(c) An applicant shall achieve a test score on each test of not less than 75 percent correct answers to obtain a passing score.

An applicant who fails to pass the written test shall not take a subsequent, consecutive test until at least 30 calendar days after the applicant's preceding test date.
An applicant may take the written test up to three consecutive times.
An applicant who fails to pass the written test after three consecutive attempts shall not be permitted to retake the test for a period of at least six months from his or her last preceding test date.

(d) A mortgage loan originator or a qualified individual licensee who fails to maintain a valid license for a period of five years or longer shall be required to pass again a written national and state law test as a precondition to license reinstatement.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Repeal and New Rule, R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Failure to pass the examination".

N.J. Admin. Code § 3:15-2.12 Continuing education requirements for renewal as an mortgage loan originator or qualified individual licensee

(a) An applicant for renewal as a mortgage loan originator or qualified individual licensee shall, during the license term preceding renewal, complete at least 12 hours of continuing education from a provider approved by the NMLSR.

(b) The approved continuing education course(s) shall include at a minimum, but not be limited to:

Three hours of instruction on Federal statutes and regulations;

Two hours of instruction on ethics, including instruction on fraud, consumer protection and fair lending issues;

Two hours of training related to lending standards for the non-traditional mortgage product marketplace; and
Two hours of instruction on State-specific statutes and rules.

Only in the calendar year in which the course is taken; and
Provided that it is not the same approved course already taken in that calendar year or the immediately preceding calendar year.

(d) A licensee who is an approved instructor of an approved continuing education course may receive credit towards the individual's own continuing education requirements for the content of the course taught at the rate of two hours of credit for every hour of an approved continuing education course taught.

(e) Any continuing education requirements of another state reviewed and approved by NMLSR and completed in another state by the applicant for renewal shall be accepted as credit towards completion of the continuing education requirements in this State.

History

New Rule, R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Former N.J.A.C. 3:15-2.12, Responsibilities and replacement of the entity's licensed natural person, recodified to N.J.A.C. 3:15-2.13.

N.J. Admin. Code § 3:15-2.13 Responsibilities and replacement of a business licensee$DQ$s qualified individual licensee

(a) If a qualified individual licensee upon whom a corporation, partnership, association, limited liability company or other entity relies for its license has his or her qualified individual license revoked or suspended by any state, or allows the license to lapse, or for some other reason is no longer affiliated with the business licensee, the business licensee shall notify the Commissioner within 10 days of the event. In addition, the business licensee shall appoint another qualified individual licensee within 90 days of the effective date of the termination of the former qualified individual licensee's affiliation with the business licensee for any reason. The Department may extend the 90-day period for good cause upon written request of the business licensee.

(b) A qualified individual licensee shall satisfy all applicable requirements and shall be responsible to perform the following:

Supervise the operations of the licensed office(s) to ensure that the business is being conducted in compliance with all applicable State and Federal laws and regulations;
Supervise the prompt review and response to Department communications relating to consumer complaints and inquiries regarding the licensee's licensed activities;
Supervise the prompt review and response to Department communications relating to on-site examinations, including, but not limited to, requests for scheduling, responses to examination findings and responses to directives arising from examinations;
Ensure the proper completion and timely submission of the required licensee annual report filing as well as any other special reports or surveys that may, from time to time, be requested by the Department;
Ensure that license renewals and other licensing matters such as new branch office applications, changes of address, changes of name, change of control, and requests for additional licenses are submitted to the Department or NMLSR as applicable and accompanied by the required documentation;
Have and maintain sufficient knowledge of all applicable Federal and State statutes and rules; and
Ensure that all employees operating as mortgage loan originators are duly licensed and that copies of the licenses issued for all mortgage loan originators are available for inspection at the licensed office from which the mortgage loan originator operates.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
In (a), added the paragraph identifier and inserted "limited liability company" following "association"; added (b).
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Deleted "and fees" following "documentation" near the end of (b)5.
Recodified from N.J.A.C. 3:15-2.12 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Responsibilities and replacement of the entity's licensed natural person". Rewrote (a), the introductory paragraph of (b), and (b)7; and in (b)5, deleted "change of business style," following "control," and substituted "licenses" for "license authorities" and "or NMLS&R as applicable" for "on the appropriate forms". Former N.J.A.C. 3:15-2.13, Registration of mortgage solicitors, recodified to N.J.A.C. 3:15-2.14.

N.J. Admin. Code § 3:15-2.14 Requirements regarding licenses and renewal of the licenses of mortgage loan originators and qualified individual licensees

(a) When applying to renew a license pursuant to this section, a qualified individual licensee or mortgage loan originator in good standing shall submit a completed renewal application as may be required by the Commissioner or NMLSR and which shall include at a minimum the following:

Payment of any required fees to the NMLSR; and
Evidence of completion of continuing education requirements.

(b) The license shall contain the name of the mortgage loan originator, the name of the employing licensee, and the address of the office location of the employing licensee from which the mortgage loan originator operates. The employing licensee shall make available for inspection the licenses at the licensed office from which the mortgage loan originator operates.

(c) Within five calendar days after a mortgage loan originator ceases his or her affiliation with a business licensee, the employing licensee shall return the license to the Department. It is not necessary for an employing licensee to return the license of a mortgage loan originator who changes from one branch location of the employing licensee to another branch office of that licensee.

(d) Within 10 calendar days after a qualified individual licensee ceases to be affiliated with a business licensee in that capacity, the qualified individual licensee shall return the license to the Department.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote (a); in (b)2, rewrote the first sentence, substituted "$ 100.00" for "$ 50.00" throughout, substituted "$ 15.00" for "$ 10.00" in the last sentence, and added 3; in (c), inserted "for each solicitor" following "registration certificate" in the first sentence and inserted a third sentence.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
In (b)2, inserted "his or her", substituted "banker" for "broker" and deleted the last sentence; in (c), substituted "2007" for "1997" and "2009" for "1999" and deleted the last sentence; and added (g).
Amended by R.2008 d.70, effective 4/7/2008.
See: 39 N.J.R. 4361(a), 40 N.J.R. 1826(b).
In (b)2, deleted "two-year" following "within the" and substituted "an additional" for "the"; and in (c), inserted ", upon renewal," and "in accordance with the registration period", and inserted the last sentence.
Recodified from N.J.A.C. 3:15-2.13 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Registration of mortgage solicitors". Rewrote the section. Former N.J.A.C. 3:15-2.14, Change of control, recodified to N.J.A.C. 3:15-2.16.

N.J. Admin. Code § 3:15-2.15 Late renewal of an individual license; late filing fees

(a) An individual who submits a renewal application after the expiration of the license, but no later than the last day of February immediately thereafter, may renew by paying a penalty for late filing as follows:

Qualified individual license - $ 250.00; and
Mortgage loan originator - $ 75.00.

(b) An individual who submits a renewal application after the last day of February following the expiration of the license shall be treated as a new licensee and be required to submit an application with a fee as specified in N.J.A.C. 3:15-4.

(d) The date of submission shall be the date on which the electronically submitted complete renewal application was accepted by the NMLSR.

History

New Rule, R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Former N.J.A.C. 3:15-2.15, Discontinuation of licensed lender business activity, recodified to N.J.A.C. 3:15-2.17.

N.J. Admin. Code § 3:15-2.16 Sale or transfer or change of control of business licensee

(a) A business licensee shall file a completed application for approval whenever a change of control of ownership of 25 percent or more of the licensee is planned. The change of control request shall be submitted at least 90 days prior to the anticipated sale date and shall include:

A fully executed change of control form as prescribed by the Commissioner;
A copy of the executed stock purchase agreement or other agreement evidencing the proposed sale;
A copy of the corporate resolution providing that existing officers and/or directors cease to hold positions and that new officers or directors are appointed, if applicable; and
Each new officer, partner, member or manager of an LLC, director and any other individual who, as a result of the sale, transfer, or change of control owns at least 10 percent of the business shall satisfy the requirements of N.J.A.C. 3:15-2.2.

(b) The Commissioner shall approve the sale or transfer or change of control unless, after an opportunity for a hearing, it is determined that there are sufficient grounds to deny the application. Unless the Commissioner issues a preliminary denial of the application and affords the applicant an opportunity for a hearing within 90 days of the Commissioner's receipt of the completed application, the application shall be deemed approved.

History

New Rule, R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Deleted former (a)3, and recodified (a)4 and (a)(5) as (a)3 and (a)(4).
Recodified from N.J.A.C. 3:15-2.14 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Change of control". In the introductory paragraph of (a), inserted "business", substituted "completed application" for "request" and "90" for "60", and deleted "direct" preceding "ownership"; rewrote (a)4; and added (b). Former N.J.A.C. 3:15-2.16, Licensee notification requirements, recodified to N.J.A.C. 3:15-2.18.

N.J. Admin. Code § 3:15-2.17 Discontinuation of lender or broker business activity

(a) When a mortgage lender or mortgage broker discontinues its licensed business operations in New Jersey, the business licensee shall:

Surrender the entity's current license(s) as well as the license of each qualified individual licensee, branch office, and mortgage loan originator;
Identify, in writing, if there are any New Jersey residential mortgage loans being processed and provide the total number of any such loans together with the consumer's names and addresses and the property address for each loan;
Identify, in writing, the number of New Jersey residential mortgage loans being processed that have scheduled closing dates and such dates and provide the consumers' names and addresses and the property address for each loan;
Identify, in writing, the location of the loan files of pending New Jersey residential loan applications;
Identify, in writing, the location of other loan files required to be maintained under New Jersey law and regulations;
Identify, in writing, any arrangements that have been made to have other entities take over loan files together with complete information on the name, address, telephone number, and contact person of entities involved in such arrangements;
Identify, in writing, the name and telephone number of person(s) within the licensee's operation designated to handle consumer problems that may arise;

Satisfy all outstanding obligations owed to the Department;

Satisfy all filing requirements including the final annual report which report shall be for the year in which the licensed lender discontinues its licensed business operations in New Jersey;
Pay all assessments due and owing and prepay the base assessment for the year of the discontinuance by paying the amount of the most recently billed base assessment within 15 days after ceasing business or upon being acquired. In the event that the said amounts are not paid, the Department shall proceed against the bond. Adjustments to the base assessment, if any, and the final volume assessment for the year of discontinuance will be billed in the year following the discontinuance. In the event of an acquisition, the amount carried forward shall be paid by the acquiring entity; and
Identify, in writing, the name, address and phone number of the person within the licensee's operation responsible for the payment of assessments.

History

New Rule, R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Deleted "and" from the end of (a)8, substituted a semicolon for a period at the end of (a)9; and added (a)10 and (a)11; and rewrote (b)6, substituted "; and" for a period at the end of (b)7 and added (b)8.
Recodified from N.J.A.C. 3:15-2.15 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Discontinuation of licensed lender business activity". Rewrote the introductory paragraph of (a) and (a)1; in (a)10, inserted the second sentence; and deleted (b).

N.J. Admin. Code § 3:15-2.18 Licensee notification requirements

(a) A licensee shall notify the Department in writing within 15 days of the occurrence of any of the following:

Upon each arrest, indictment or conviction of the licensee, or of any officer, director, partner, member, owner or substantial stockholder of the licensee in this State, in another state, or in any Federal jurisdiction for any offense, crime or misdemeanor, except for a motor vehicle violation;
Upon each revocation, denial, suspension or restraint of a business or professional license, registration, certificate or other right to engage in business issued to the licensee, or to any officer, director, partner, member, owner or substantial stockholder of the licensee, or to any affiliate thereof, by this State, by another state, by the Federal government, or by any agency or instrumentality thereof;
Upon filing a petition of bankruptcy or reorganization by the licensee, or by any officer, director, partner, member, owner or substantial stockholder of the licensee, or by any affiliate thereof;
Upon the fining, penalizing or disciplining of the licensee, or any affiliates, by this State, by another state, by the Federal government, or by any agency or instrumentality thereof;
Upon the involvement of the licensee, or any officer, director, partner, member, owner or substantial stockholder of the licensee, or any affiliate thereof, in any activity that may have a substantial impact on the ability of a licensee to engage in the licensed activity in a prudent or worthy manner;
The entry of any final judgment in a civil or administrative action against the licensee upon the grounds of fraud, misrepresentation or deceit; and
Failure to demonstrate financial responsibility through disregard in the management of the licensee's own financial condition. Occurrences which indicate a disregard in the management of the licensee's financial condition shall include, but not be limited to:

i. The entry of any civil judgment against the licensee which is not appealed and remains unsatisfied except judgments solely as a result of medical expenses;

ii. The issuance to the licensee of a tax lien or other government lien;

iii. The entry against the licensee of a judgment of foreclosure; or

iv. The receipt of notifications within a six-month period that two or more of the licensee's accounts with creditors are 90 or more days in arrears.

History

New Rule, R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Recodified from N.J.A.C. 3:15-2.16 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
In (a)4, deleted "and" from the end; in (a)5, substituted a semicolon for a period at the end; and added (a)6 and (a)7.

Subchapter 3 BONDING

N.J. Admin. Code § 3:15-3.1 Bond requirements

(a) A person who seeks an initial license as a mortgage lender or mortgage broker shall obtain a surety bond in the amount of $ 150,000, which shall be applicable to the first $ 50,000,000 of closed loan volume.

(b) Following the submission of each annual report, a mortgage lender or mortgage broker shall, if necessary, increase the amount of the surety bond based on the following closed loan volumes and provide proof thereof to the Department within 30 days of the submission of the report.

| 1. | Closed loan volume: $ 0 to $ 50,000,000 | $ 150,000; | | --- | --- | --- | | 2. | Closed loan volume: $ 50,000,001 to $ 75,000,000 | $ 200,000; | | 3. | Closed loan volume: $ 75,000,001 to $ 100,000,000 | $ 250,000; | | 4. | Closed loan volume: $ 100,000,001 and over | $ 300,000. |

History

Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote the section.
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Rewrote the introductory paragraph of (a); deleted (a)1 and (a)2; in the introductory paragraph of (b), substituted "a mortgage lender or mortgage broker" for "licensed lenders with authority as a mortgage banker, correspondent mortgage banker or secondary lender" and inserted ", if necessary,", rewrote the table in (b); and deleted (c).
Petition for Rulemaking.
See: 46 N.J.R. 1719(a), 1908(a), 2377(a).

N.J. Admin. Code § 3:15-3.2 Beneficiaries of bond coverage

The bond shall run to the State, pro rata, for the benefit of consumers injured by the wrongful act, omission, default, fraud or misrepresentation of the mortgage lender, mortgage broker, qualified individual licensee or mortgage loan originator in the course of activity authorized by the license, and for the benefit of the Department for unpaid examination bills, unpaid penalties, unpaid assessments and any other unpaid obligations of the mortgage lender or mortgage broker to the Department, including, but not limited to, returned items submitted to the Department in payment of bills, penalties, charges, assessments or fees.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Rewrote the section.

N.J. Admin. Code § 3:15-3.3 Coverage of the bond; compensable claims

(a) The surety company shall pay consumers claims based on the damages directly incurred by the wrongful act, default, fraud or misrepresentation of the business licensee or any employee of such licensee.

(b) Attorney's fees, pre- or post-judgment interest, court costs and similar charges are not recoverable through the bond, unless such charges are included in a final judgment against the licensee and the surety company was given prior notice of the court action and an opportunity to respond.

(c) A consumer may not recover third party charges for services that are necessary and transferable for future mortgage loan applications.

(d) The bond shall not be payable for claims made by business creditors.

(e) The bond shall not be payable for treble damage claims pursuant to the Consumer Fraud Act or any other State or Federal law.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
In (a), substituted "business licensee or any employee of such licensee" for "mortgage banker, correspondent mortgage banker, mortgage broker or secondary lender"; deleted former (b); recodified former (c) through (f) as (b) through (e); and in (b), substituted "licensee" for "mortgage banker, correspondent mortgage banker, mortgage broker or secondary lender".

N.J. Admin. Code § 3:15-3.4 Original bond or rider required; changes in surety companies or bonds

A mortgage lender or broker shall submit to the Department the original executed surety bond or the original rider to the original executed surety bond. If the business licensee changes its surety company or the bond is otherwise amended, the business licensee shall immediately provide the Department with the amended original executed surety bond or the amended original rider to the original executed surety bond.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Deleted "banker, correspondent mortgage banker, mortgage broker or secondary" following the first occurrence of "mortgage", inserted "or broker", and substituted "business licensee" for "mortgage banker, correspondent mortgage banker, mortgage broker or secondary lender" twice.

N.J. Admin. Code § 3:15-3.5 Notice to Department required before cancelling bond coverage

A surety company shall not cancel a bond for any cause unless written notice of its intention to cancel is filed with the Department at least 30 days before the day upon which cancellation shall take effect, and cancellation without such notice shall not be effective.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 New Jersey Register 1489(a), 29 New Jersey Register 2641(a).

N.J. Admin. Code § 3:15-3.6 Surety companies to notify Department of claims; claims payable only at the direction of the Department

When a person submits a claim with a surety company against the bond of a business licensee, the surety company shall immediately notify the Department and shall not pay any claim unless and until it receives direction to do so from the Department.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Substituted "business licensee" for "mortgage banker, correspondent mortgage banker, mortgage broker or secondary lender".

N.J. Admin. Code § 3:15-3.7 Publication of notices of bond claims by the Department

When the Department receives notice from a surety company of a claim against a business licensee that appears valid, a consumer is unable to obtain payment of a court judgement that was obtained against the licensee, or the Department in its sole discretion otherwise determines it is necessary and proper to do so, the Department shall cause a notice to be published once a week for three successive weeks in a newspaper having general circulation in the area where the business licensee conducts or conducted business advising consumers of their right to file claims against the bond. The Department is not required to publish notice when it has a claim against the bond for an examination charge, assessment or any other fee, charge or penalty if there are no consumer claims or complaints that appear valid and that may require payment from the bond. If the Department determines a notice is necessary, the notice shall be in the following form:

| NOTICE TO CONSUMERS | | --- | | TO ANY CONSUMER HAVING CLAIMS AGAINST | | (Name of Licensee), (Type of licensed activity, i.e., residential mortgage lender, residential mortgage broker, qualified individual licensee,mortgage loan originator) | | TAKE NOTICE that in order to provide a procedure for the orderly | | resolution of claims against the bond obtained by (Name of Business Licensee) | | for the benefit of any consumer injured by the wrongful act, default, fraud or misrepresentation of (Name of Licensee), you are hereby required to present your claims against (Name of Licensee) at the following address: | | N.J. Department of Banking and Insurance | | Division of Banking | | Office of Consumer Finance | | 20 West State Street, PO Box 040 | | Trenton, NJ 08625-0040 | | Each claim shall be presented in writing, specifying the amount claimed and the particulars of the claim, and shall be duly verified under oath or affirmation. | | TAKE FURTHER NOTICE that each person having claims against (Name of Licensee) should file a claim no later than (one month after last notice) or risk losing the opportunity to file a claim. | | _________________________________ | | Commissioner of Banking and Insurance |

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Substituted "business licensee" for "mortgage banker, correspondent mortgage banker, mortgage broker or secondary lender" twice, deleted "mortgage banker, correspondent mortgage banker, mortgage broker or secondary lender for activities undertaken as a" preceding the second occurrence of "licensee" and inserted ", assessment"; and in "Type of licensed activity" parenthetical of the notice, substituted "residential mortgage lender, residential mortgage broker, qualified individual licensee, mortgage loan originator" for "mortgage banker, correspondent mortgage banker, mortgage broker, or secondary lender"; and in the "TAKE NOTICE" paragraph of the notice, inserted "Business" preceding the first occurrence of "Licensee".

N.J. Admin. Code § 3:15-3.8 Priority of claims against bonds

The Department shall review all timely claims made against the bond of a business licensee and shall decide which claims are valid. All consumers with timely valid claims shall share pro rata in their claims against the bond. The Department shall then submit claims it has against the licensee for unpaid examination charges or for other unpaid penalties, charges, assessments or fees to the surety company for payment. Consumers submitting claims after the filing date set forth in the published notice but before the expiration of the applicable statute of limitations period shall recover next against the bond in the order that the claims are submitted.

History

New Rule, R.1997 d.257, effective 6/16/1997.
See: 29 N.J.R. 1489(a), 29 N.J.R. 2641(a).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Substituted "business licensee" for the first occurrence of "mortgage banker, correspondent mortgage banker, mortgage broker or secondary lender" and the second occurrence of "licensee" for the second occurrence of "mortgage banker, correspondent mortgage banker, mortgage broker or secondary lender", and inserted "unpaid" and ", assessments".

Subchapter 4 FEES

N.J. Admin. Code § 3:15-4.1 Fees associated with licensing

(a) All fees associated with licensing shall be paid electronically to the NMLSR for administration of the nationwide database and collection of fees payable to the Department and the NMLSR according to the manner prescribed by the NMLSR.

(b) A person who is applying for an initial individual or business license under the Act shall pay a non-refundable application fee as follows:

Business license - $ 1,200;
Each branch office - $ 1,000;
Qualified individual licensee - $ 500.00;
Mortgage loan originator - $ 150.00;
Change of affiliation by mortgage loan originator - $ 50.00; and
Change of affiliation by qualified individual licensees - $ 250.00.

(c) Business licensees licensed under the Licensed Lenders Act who apply to transition by July 31, 2010 to business licensees under the Act shall pay a fee of $ 600.00 plus $ 100.00 for each existing branch.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Fee--general". Inserted designation (a); rewrote (a); and added (b) and (c).

N.J. Admin. Code § 3:15-4.2 Reserved

History

Recodified from N.J.A.C. 3:15-4.3 by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Former N.J.A.C. 3:15-4.2, One-time administrative fee, repealed.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Section was "Application fee for an initial license". In the introductory paragraph of (a), substituted "a" for "an initial", deleted "for a principal office" following "license" and substituted "as follows" for "in the amount of $ 300.00 regardless of the number of authorities requested in the application.", added (a)1 through (a)4; deleted former (b); recodified former (c) and (d) as (b) and (c); and inserted "of $ 300.00 per authority for each individual and/or company" near the end of present (b).
Amended by R.2007 d.306, effective 10/1/2007.
See: 39 N.J.R. 2299(a), 39 N.J.R. 4111(a).
Section was "Application fee". Rewrote (a) and (b).
Repealed by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Application fees".

N.J. Admin. Code § 3:15-4.3 Reserved

History

Repealed by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a)
Section was "License fees".

Subchapter 5 TANGIBLE NET WORTH, INSOLVENCY

N.J. Admin. Code § 3:15-5.1 Applicability of provisions

The requirements of this subchapter shall apply to each business licensee or applicant for a business license, and shall not apply to qualified individual licensees or mortgage loan originators.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Rewrote the section.

N.J. Admin. Code § 3:15-5.2 Accounting method for determining tangible net worth

Tangible net worth shall be computed on the accrual basis of accounting.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Deleted "and net worth" preceding "shall".

N.J. Admin. Code § 3:15-5.3 Requirement to demonstrate and maintain tangible net worth

(a) Each applicant for a business license as a mortgage lender or mortgage broker shall demonstrate tangible net worth of at least the following amounts:

Residential mortgage lender - $ 250,000;
Correspondent mortgage lender - $ 150,000; and
Residential mortgage broker - $ 50,000.

(b) As appropriate for the type of license they hold, business licensees shall maintain tangible net worth of at least the amounts set forth in (a) above.

(c) Applicants for business licenses and business licensees may be required by the Department to demonstrate adequate means to fund loans through lines of credit or otherwise.

History

Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote the section.
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Requirement to achieve and maintain tangible net worth, net worth and liquid assets". Rewrote (a); and added (a)1 through (a)3, and (b) and (c).

N.J. Admin. Code § 3:15-5.4 Failure to maintain tangible net worth; action by the Department

(a) If the tangible net worth of a business licensee falls below the amounts required by N.J.A.C. 3:15-5.3 or if the business licensee is insolvent, the Department may take such action as it deems appropriate and necessary to protect the public. The action may include requiring the business licensee to operate pursuant to a Memorandum of Understanding, or directing the business licensee to submit and comply with a capital plan within a time frame established by the Department to attain the tangible net worth required by N.J.A.C. 3:15-5.3.

(b) When considering whether to suspend, revoke or refuse to renew the license of a business licensee who does not have the required tangible net worth, the Commissioner shall consider the following factors:

How far the business licensee is below the required level of tangible net worth;
The size of any warehouse line or table funding agreement, the institution(s) providing this credit, and any correspondent relationship that a business licensee may have with another financial institution;
The number and amount of loans typically made or brokered by the business licensee;
The history of consumer complaints received by the Department concerning the business licensee;
Whether the mortgage lender has committed to make loans that it has been unable to fund; and
Any other factors reflecting on the ability and fitness of the business licensee to transact business in its licensed capacity.

History

Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote (a).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Failure to maintain tangible net worth, net worth or liquid assets; action by the Department". Substituted "business licensee" for "mortgage banker, correspondent mortgage banker, mortgage broker, secondary lender or consumer lender" throughout; in (a), substituted the first occurrence of "business licensee" for "mortgage banker, correspondent mortgage banker, or mortgage broker, or if the net worth or liquid assets of a secondary lender or consumer lender", "N.J.A.C. 3:15-5.3" for "N.J.S.A. 17:11C-14, 15 and 16" and "N.J.A.C. 3:15-5.3" for "the Act", and deleted ", net worth or liquid assets" following "tangible net worth"; in the introductory paragraph of (b), and in (b)1, deleted ", net worth or liquid assets required by the Act" following "tangible net worth"; in the introductory paragraph of (b), inserted "required" preceding "tangible"; and in (b)5, substituted "lender" for "banker, correspondent mortgage banker, secondary lender or consumer lender".

Subchapter 6 BOOKS AND RECORDS; EXAMINATIONS; ANNUAL REPORTS

N.J. Admin. Code § 3:15-6.1 Methods and accounting for business licensees

(a) Each licensee shall maintain books and records in accordance with recognized accounting principles.

(b) If a person licensed to act as a mortgage lender or mortgage broker maintains books and records on a basis other than the accrual method of accounting, that licensee shall also maintain books and records on the accrual basis of accounting which states the tangible net worth of the licensee.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Methods of accounting". In (b), substituted "lender or mortgage broker" for "banker, correspondent mortgage banker, mortgage broker, secondary lender or consumer lender" and deleted "or net worth" following "tangible net worth" and ", as applicable" following "licensee".

N.J. Admin. Code § 3:15-6.2 Reproduction of documents

A licensee may reproduce documents and records relating to the operation of its business for the purpose of complying with this subchapter and may substitute the copy for the original.

N.J. Admin. Code § 3:15-6.3 Location of books, records, accounts and other documents pertaining to a business; records retention

(a) Each business licensee shall notify the Department of the place of business in which the books, records, accounts and other business documents of its activity as a mortgage lender or mortgage broker are kept. If the licensee moves the books, records, accounts or other business documents, the licensee shall notify the Department prior to the move.

(b) A business licensee may keep its records at:

A licensed office in this State;
An unlicensed site in or out of this State, provided that the licensee secures the prior approval of the Department pursuant to (c) below; or
A licensed office outside of this State, provided that the licensee secures the prior approval of the Department pursuant to (c) below.

(c) The approval of the Department to keep records at a site or office specified in (b)2 and 3 above shall be given only if the licensee enters into an agreement with the Department governing the maintenance and production of records at the site. The provisions of the agreement shall include, but shall not be limited to, the designation of the site where the records will be maintained, the fees and expenses chargeable by the Department for conducting examinations and investigations, if any, and the right of the Department to rescind the agreement.

(d) Business licensees operating more than one licensed office may maintain the general ledger at their principal office. The trial balance or balance sheet and profit and loss statement of the licensed office shall be made available upon request to the examiner or investigator at the office where the general ledger is kept.

(e) The books, accounts and records which pertain to each business activity conducted by a licensee under the Act shall be maintained separate and apart from the books, accounts and records of all non-licensed lines of business conducted by the licensee and shall be maintained so that an examiner or investigator can efficiently examine the various types of licensed activities.

(f) Business licensees shall preserve all books, records, accounts and documents related to the business for at least three years after making the final entry on any application or loan.

(g) The denial or withdrawal of an application shall constitute the final entry for an application which is denied or withdrawn.

(h) The assignment or sale of a loan shall constitute the final entry for a loan which is sold or assigned.

(i) In the case of an open-end loan, the licensee shall preserve the books, accounts and records for at least three years after each entry.

(j) All books, records, accounts and documents may be stored electronically so long as the electronically stored information can be produced in electronic format upon request by the Department or reproduced on paper and delivered to the Department within five days of the business licensee's receipt of a request from the Department to produce the records.

(k) In the case of a business licensee that ceases to do business, the Commissioner may move and store abandoned books, accounts and records in whatever form and make a claim against the bond for costs of moving and storage.

History

Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Inserted "if any" in the last sentence of (c).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Location of books and records". Rewrote (a); in the introductory paragraph of (b), inserted "business", in (b)1, deleted "principal or branch" following "licensed"; in (b)2, inserted "or"; in (b)3, deleted "branch" following "licensed" and substituted a period for "; or" at the end; deleted (b)4; rewrote (d); and added (f) through (k).

N.J. Admin. Code § 3:15-6.4 Loan application recordkeeping requirements for business licensees

(a) Each person licensed as a business licensee shall maintain a loan application system containing the following information for each application for a first mortgage loan:

The case number;
The application date;
The applicant's name;
The property address;
The disposition;
The type of loan; and
The amount of the loan.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Loan application recordkeeping requirements for mortgage bankers, correspondent mortgage bankers and mortgage brokers". In the introductory paragraph of (a), substituted "business licensee" for "mortgage banker, correspondent mortgage banker or mortgage broker".

N.J. Admin. Code § 3:15-6.5 Loan documentation file requirements for business licensees

(a) Each person licensed as a business licensee shall maintain for each first mortgage loan application the following data, if utilized by the licensee in connection with the first mortgage loan application:

The loan application;
The loan commitment;
The Truth-in-Lending disclosure statement;
All disclosures required by RESPA;
All other written disclosures required in connection with the loan transaction by State or Federal law;
The loan closing statement;
A copy of mortgage note or bond;
The adverse action or rejection of application letter;
The appraisal report; and
The credit report.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Loan documentation file requirements for mortgage bankers, correspondent mortgage bankers and mortgage brokers". In the introductory paragraph of (a), substituted "business licensee" for "mortgage banker, correspondent mortgage banker or mortgage broker".

N.J. Admin. Code § 3:15-6.6 Documentation requirement related to the charging of certain fees by business licensees

(a) Each person licensed as a business licensee shall maintain a recordkeeping system that shall document each of the following fees if charged to first mortgage loan applicants by the licensee:

Appraisal fees;
Credit report fees;
Application fees;
Commitment fees;
Warehouse fees; and
Third party charges.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Documentation requirement related to the charging of certain fees by mortgage bankers, correspondent mortgage bankers and mortgage brokers". In the introductory paragraph of (a), substituted "business licensee" for "mortgage banker, correspondent mortgage banker or mortgage broker".

N.J. Admin. Code § 3:15-6.7 Ledger card and document retention requirement for mortgage lenders making secondary mortgage loans

(a) Each mortgage lender shall maintain an individual record or ledger card for each secondary mortgage loan, which shall include the following information:

The account number;
The name and address of borrower (mortgagor);
The address and physical description of mortgaged property;
The date of the secondary mortgage loan;
The amount of the secondary mortgage loan;
The appraisal or inspection fee;
The credit investigation fee;
The title search fee;
Legal fees;
Recording and filing fees;
Insurance premiums and types of coverage;
The interest charge;
The full amount of the secondary mortgage loan;
The terms by which the secondary mortgage loan is to be repaid;

The amount and to whom any commissions, fees or points, if any, were paid by the licensee and the form of disbursement (for example, cash or check);

A record of the computation of any rebate upon prepayment of the secondary mortgage loan in full before maturity;
A record of the computation of any refund of unearned insurance premium charge upon prepayment of the secondary mortgage loan in full before maturity; and
The name and address of any subsequent holder of the secondary mortgage loan obligation if it is sold or assigned.

(b) Each person licensed as a mortgage lender shall maintain an original or true copy of the following instruments, documents, accounts, books and records for each secondary mortgage loan:

Promissory note evidencing each borrower's secondary mortgage loan indebtedness;
Mortgage indenture or any other similar instrument or document that creates a lien on the real property that is taken as security for a secondary mortgage loan;
Credit life and accident and health insurance policy or a certificate of insurance when such insurance is obtained in accordance with N.J.S.A. 17:11C-21;
Closing statement for each secondary mortgage loan;
Appraisal or search, where utilized;
Individual ledger card or any other form or record which shows all installment payments made by the borrower and all other charges or credits to the borrower's account;
Individual file in which the borrower's application for a loan and any correspondence, including collection letters, memorandums, notes or any other written information pertaining to the borrower's account, shall be kept; and
General ledger cash receipts and disbursements register, checkbook canceled checks and such other accounts, books or records as shall be required by the Commissioner in order to ascertain whether the licensee has been conducting secondary mortgage loan business in full compliance with the provisions of N.J.S.A. 17:11C-51 et seq.

History

Amended by R.1999 d.191, effective 6/21/1999 (operative July 21, 1999).
See: 30 N.J.R. 1658(a), 31 N.J.R. 1609(a).
Added (b).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Ledger card and document retention requirement for secondary lenders". In the introductory paragraph of (a), substituted "mortgage" for "person licensed as a secondary"; in the introductory paragraph of (b), substituted "mortgage" for "secondary", deleted "at his place of business in this State" following "maintain" and inserted "for each secondary mortgage loan"; and in (b)8, deleted "his" following "conducting" and updated the N.J.S.A. reference.

N.J. Admin. Code § 3:15-6.8 Documentation

(a) The borrower, or an agent applying on behalf of a borrower, shall sign each loan application. If more than one borrower applies, each borrower and each agent applying on behalf of a borrower shall sign the application.

(b) Each credit report for which an applicant is charged a separate fee shall be memorialized in a written memorandum or other written documentation. The memorandum or documentation shall indicate that the credit history of the applicant was investigated and by whom.

(c) Each appraisal report for which an applicant for a first mortgage loan or a second mortgage loan is charged a separate fee shall be memorialized in a written memorandum or other written documentation. The memorandum or documentation shall indicate that the value of the property was evaluated and by whom.

(d) Each person licensed as a mortgage lender shall maintain a trustee account and ledger detailing receipts and disbursement of all funds deposited by the borrower or seller with the licensee in connection with the origination or closing of any loan. The funds shall be held in accordance with the terms of a written agreement between the mortgage lender and such borrower or seller, which provides that upon the occurrence of a specific condition or event, the funds or a portion thereof shall be disbursed to the borrower or seller. All such trust accounts shall be reconciled at least quarterly. This subsection shall not apply to escrows collected or held by the mortgage lender for taxes or insurance.

History

Recodified from N.J.A.C. 3:15-6.9 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
In (d), deleted "banker, correspondent mortgage banker, or secondary" preceding "lender" throughout. Former N.J.A.C. 3:15-6.8, Loan numbering, original document envelope, and index requirement for consumer lenders, repealed.

N.J. Admin. Code § 3:15-6.9 Retention of advertisements

One copy of each advertisement, including radio and television scripts, and any materials disseminated over the Internet or by any other electronic means, shall be kept on file in the business licensee's office for at least two years after the last date on which any such advertisement was utilized, said date to be noted on each such advertisement.

History

Recodified from N.J.A.C. 3:15-6.12 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Substituted "Internet" for "internet" and inserted "business". Former N.J.A.C. 3:15-6.9, Documentation, recodified to N.J.A.C. 3:15-6.8.

N.J. Admin. Code § 3:15-6.10 Copy of examination reports to licensee

The official report of examination shall be submitted to the business licensee or to a representative of the licensee which has been designated by the licensee for such purpose.

History

Recodified from N.J.A.C. 3:15-6.14 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Inserted "business". Former N.J.A.C. 3:15-6.10, Judgment records requirement for consumer lenders and sales finance companies, repealed.

N.J. Admin. Code § 3:15-6.11 Charges for investigations

For any person not licensed by the Department, the Department may charge for investigations at the rate of $ 50.00 per hour. For the purposes of this section, investigations for which the Department may charge shall not include routine efforts by the consumer services unit to research or resolve consumer complaints.

History

Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
In the first sentence, substituted "For any person not licensed or registered by the Department, the" for "The" and "may" for "shall"; deleted "of licensees" following "examinations".
Recodified from N.J.A.C. 3:15-6.15 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Rewrote the section. Former N.J.A.C. 3:15-6.11, Motor vehicle lien requirement for consumer lenders, repealed.

N.J. Admin. Code § 3:15-6.12 Reports to the Department

Each business licensee under the Act shall file a report with the Department annually on or before May 1 of each year. The report shall be submitted on forms provided by the Department and shall indicate the tangible net worth of the licensee. The report shall indicate the warehousing lines available and outstanding. In accordance with N.J.A.C. 3:1-7.6, the Department shall assess a penalty against any business licensee for each annual report filed late.

History

Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Substituted "In accordance with N.J.A.C. 3:1-7.6, the" for "The mortgage banker, correspondent mortgage banker, mortgage broker, secondary lender, consumer lender or sales finance company shall remit with each such report a $ 100.00 filing fee. The" and deleted "$ 50.00" preceding "penalty".
Recodified from N.J.A.C. 3:15-6.16 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Rewrote the section. Former N.J.A.C. 3:15-6.12, Retention of advertisements, recodified to N.J.A.C. 3:15-6.9.

N.J. Admin. Code § 3:15-6.13 Reserved

History

Repealed by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Records retention".

N.J. Admin. Code § 3:15-6.14 Reserved

History

Recodified to N.J.A.C. 3:15-6.10 by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Copy of examination reports to licensee".

N.J. Admin. Code § 3:15-6.15 Reserved

History

Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
In the first sentence, substituted "For any person not licensed or registered by the Department, the" for "The" and "may" for "shall"; deleted "of licensees" following "examinations".
Recodified to N.J.A.C. 3:15-6.11 R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Charges for investigations".

N.J. Admin. Code § 3:15-6.16 Reserved

History

Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Substituted "In accordance with N.J.A.C. 3:1-7.6, the" for "The mortgage banker, correspondent mortgage banker, mortgage broker, secondary lender, consumer lender or sales finance company shall remit with each such report a $ 100.00 filing fee. The" and deleted "$ 50.00" preceding "penalty".
Recodified to N.J.A.C. 3:15-6.12 R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Reports to the Department".

Subchapter 7 INSURANCE

N.J. Admin. Code § 3:15-7.1 Insurance matters for mortgage lenders

(a) Mortgage lenders are subject to the provisions concerning insurance set forth in N.J.S.A. 17:11C-73.

(b) If insurance is lawfully required or obtained in connection with a loan, the insurance shall be written or obtained by or through an insurance producer who is licensed in good standing in this State, and written by an insurance company authorized to do business in this State.

(c) It shall be the responsibility of the mortgage lender to explain clearly to each borrower the benefits and limitations of any credit life insurance, credit health or disability insurance, or credit involuntary unemployment insurance which the borrower contemplates getting in connection with a loan.

(d) Each mortgage lender shall keep a record of all policies for credit life insurance, credit health or disability insurance, or credit involuntary unemployment insurance sold to a borrower in connection with a loan, all premiums collected in connections with such loans, all refunds of unearned premiums caused by payment in full of an amount or by renewal, and a detailed record of all claims paid by the insurer.

(e) If a mortgage lender collects a premium from a borrower for credit life insurance, credit health or disability insurance, or credit involuntary unemployment insurance, and such insurance does not become effective, the mortgage lender shall immediately give written notice to the borrower and shall promptly refund to or credit to the account of the borrower the amount collected from him or charged to him for such insurance.

(f) If a credit life policy issued in connection with a loan contains no provision for designation of a second beneficiary, it shall be handled under the usual procedure contained in a facility of payment clause authorizing the insurance company to pay any insurance in excess of the unpaid balance of the indebtedness to the estate, wife, husband, children or other blood relative or person equitably entitled thereto as determined by the insurance company.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Insurance matters for mortgage bankers, correspondent mortgage bankers, secondary lenders and consumer lenders". Deleted "bankers, correspondent mortgage bankers, secondary lenders and consumer" preceding "lender" throughout; in (a), updated the N.J.S.A. reference.

N.J. Admin. Code § 3:15-7.2 Insurance provisions applicable to mortgage lenders on secondary mortgage loans

(a) When a secondary mortgage loan is repaid in full or renewed, or if the insurance is terminated prior to the scheduled maturity date of a secondary mortgage loan, the mortgage lender shall refund to the borrower any unearned insurance premiums.

(b) If a borrower has repaid a secondary mortgage loan in full, or if a beneficiary named in a policy under a claim is due a refund of unearned premiums and the mortgage lender is unable to locate the borrower or beneficiary after due diligence, but in no event longer than 180 days, the licensee shall return all unearned premiums to the insurer, stating the reason therefor. The lender shall file evidence in the borrower's file of his or her efforts to locate the borrower.

(c) All refunds and credits made by mortgage lenders pursuant to this section shall be computed by the "Sum of Digits Method" commonly known as the "Rule of 78ths." These are rules for computing refunds of unearned finance charges on early payment of a loan so that the refund is proportional to the monthly unpaid balance. Tables for calculating refunds and credits according to this methodology can be obtained from Financial Publishing Company, 82 Brookline Drive, Brookline, MA 02212, (617) 262-4040, http://www.financial-publishing.com. When the refund or credit of the unearned insurance premium is less than $ 1.00, no refund is required.

(d) If a borrower has credit life insurance, interest charges shall cease accruing on the account at the death of the insured.

(e) If a secondary mortgage loan contract contains credit life insurance, the mortgage lender, shall file a death claim with the insurer upon receipt of notice of the death of the insured. The death claim filed by a mortgage lender with an insurer shall be made for the full amount of the coverage held at death by the insured.

(f) A policy for credit life insurance, credit health or disability insurance, or credit involuntary unemployment insurance may provide for the insurance of more than one person. If the policy is silent regarding whether the insurance covers more than one person, the person whose signature appears on the first line of the lines provided for the signatures on the loan contract shall be considered as the only borrower insured by the policy and the mortgage lender shall disclose to the borrower in writing the effect of the order of signing the loan contract.

History

Amended by R.2008 d.70, effective 4/7/2008.
See: 39 N.J.R. 4361(a), 40 N.J.R. 1826(b).
In (c), inserted ", (617) 262-4040, www.financial-publishing.com".
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Insurance provisions applicable to secondary lenders and consumer lenders". Rewrote the section.

Subchapter 8 ADVERTISING

N.J. Admin. Code § 3:15-8.1 Advertising and insurance costs

If a mortgage lender requires a borrower to insure the collateral assigned as security for a loan, the licensee shall not advertise that there are "no other costs," or use words of similar meaning, unless the terms represented in the advertisement include the cost of the insurance or unless the advertisement states that an additional charge for insurance is required.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Deleted "banker, correspondent mortgage banker, secondary lender or consumer" following "If a mortgage".

N.J. Admin. Code § 3:15-8.2 Information required to be included in all advertisements

(a) All solicitations and advertisements by licensees, whether in print, broadcast or electronically transmitted, shall include, in a conspicuous manner, the unique identifier assigned to the licensee by the NMLSR. Business cards shall be considered advertisements.

(b) Each verbal advertisement for a loan, which a licensee makes or authorizes to be broadcast or disseminated by radio, television, Internet or other electronic means, shall include a statement indicating whether the advertisement is for a first mortgage or second mortgage loan. The statement may be made by either verbal or visual means, provided that, if visual means are used, the statement shall appear for the entire time the advertisement is broadcast or disseminated.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Verbal advertisements". Added (a); inserted designation (b); and in (b), substituted "Internet" for "internet", the fourth occurrence of "or" for "loan,", and deleted ", consumer loan, retail installment contract, or retail charge account" from the end of the first sentence.

N.J. Admin. Code § 3:15-8.3 Prohibited types of advertising; exceptions

(a) No advertisement shall contain false, misleading or deceptive claims or misrepresentations. In all advertisements which make express or implied claims that are likely to be misleading in the absence of certain qualifying information such qualifying information, shall be disclosed in the advertisement in a clear and conspicuous manner. The use of any of the following types of advertising shall be deemed to be misleading or deceptive:

A form which has the appearance of a check, money order, draft or other instrument that is normally used for the transfer of funds;
Reference to loans by terms such as savings, thrift, share passbook, account, deposit, certificate or any other word or phrase of similar meaning, used individually or collectively; or
The placing by a business licensee of a supply of blank notes, chattel mortgages, security agreements, applications or other similar forms in any place other than a licensed office.

(b) Nothing in this section shall preclude the use of the term "mortgage banker" or "correspondent mortgage banker" by duly licensed mortgage lenders or correspondent mortgage lenders.

(c) A person who is not licensed or exempt under the Act or this chapter shall not offer residential mortgage loans in this State through direct or indirect solicitation or advertisement in print, electronic or any other medium.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Prohibited types of advertising". In the introductory paragraph of (a), inserted the first two sentences; in the introductory paragraph of (a)1, substituted a semicolon for ", except that a consumer lender may use such an instrument if:"; deleted (a)1i through (a)iv; in (a)2, substituted "; or" for a period at the end; in (a)3, substituted "The placing by a business licensee of" for "No mortgage banker, correspondent mortgage banker, mortgage broker, secondary lender, or consumer lender shall permit", and deleted "to be placed" following "forms"; and added (b) and (c).

Subchapter 9 PERMISSIBLE FEES

N.J. Admin. Code § 3:15-9.1 Fees permitted to be charged by mortgage lenders, correspondent mortgage lenders, and mortgage brokers

(a) Mortgage lenders, correspondent mortgage lenders and mortgage brokers may charge the following fees:

The fees specified in N.J.S.A. 17:11C-74 and in N.J.A.C. 3:1-16.2 and 16.10, as applicable. Correspondent mortgage lenders may charge any fee that may be charged by mortgage lenders; and

Pursuant to N.J.S.A. 17:11C-82 and 46:18-11.2, the fee charged by the county recording officer to cancel the mortgage, plus an additional service fee not to exceed $ 25.00, providing that the borrower has received prior notice of the fees required by the mortgage lender or correspondent mortgage lender, and providing further that if the mortgage lender or correspondent mortgage lender collects the service fee at the time of the mortgage transaction and transfers the servicing rights prior to cancellation, the mortgage lender shall refund the service fee to the borrower.

(b) No mortgage lender, correspondent mortgage lender or mortgage broker shall give, authorize the giving of, or accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a mortgage loan shall be referred to any person, except as otherwise permitted by State or Federal law.

History

Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Deleted (a); recodified former (b) as (a) and former (c) as (b).
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Fees permitted to be charged by mortgage bankers, correspondent mortgage bankers, and mortgage brokers". In the introductory paragraph of (a) and in (a)1, substituted "lenders" for "bankers"; in (a)1 and (a)2, updated the N.J.S.A. reference; and in (a)2 and (b), substituted "lender" for "banker" throughout.

N.J. Admin. Code § 3:15-9.2 Fees permitted to be charged for secondary mortgage loans

(a) A mortgage lender may charge a borrower, incident to a secondary mortgage loan, only the following:

The fees specified in N.J.S.A. 17:11C-80; and
Pursuant to N.J.S.A. 17:11C-82 and 46:18-11.2, the fee charged by the county recording officer to cancel the mortgage, plus an additional service fee not to exceed $ 25.00, providing that the borrower has received prior notice of the fees required by the lender, and providing further that if the lender collects the service fee at the time of the mortgage transaction and transfers the servicing rights prior to cancellation, the lender shall refund the service fee to the borrower.

(b) Nothing contained in this section shall limit a mortgage lender's ability to impose reasonable charges upon foreclosure.

A mortgage lender on a secondary mortgage loan shall not charge a borrower attorney fees if the attorney to whom the fee is to be paid is an employee, partner, officer, director or stockholder of the licensee. For purposes of this subsection, "stockholder" means and includes a person who directly, indirectly or acting through one or more other persons owns, controls or has power to vote 10 percent or more of any class of voting securities of a corporate licensee.
An attorney, who is providing legal service in accordance with N.J.S.A. 17:11C-80, shall not compensate any of the following persons for the preparation of documents or for any other services performed for on or behalf of the attorney:

i. A mortgage lender;

ii. An employee, partner, officer, director or stockholder of a mortgage lender; or

iii. Any other person in which a mortgage lender is an employee, partner, officer, member, director or stockholder.

No person listed in (c)2 above shall receive compensation for the preparation of documents or for any other services performed for or on behalf of an attorney who is providing legal service in accordance with N.J.S.A. 17:11C-80.
Any mortgage lender who requires a borrower to pay an attorney fee shall, at least four days prior to the closing of the loan, inform the borrower in writing of such requirement.
In order to receive reimbursement from the borrower at closing for attorney fees charged to the mortgage lender in connection with a secondary mortgage loan, the mortgage lender shall issue to the borrower at or before the closing of a secondary mortgage loan an itemized listing, prepared by the attorney, of the specific legal services performed by the attorney for and on behalf of the lender and the charge to the lender for each such service. All services charged by the attorney shall be listed irrespective of whether they are less than $ 100.00.

A mortgage lender shall provide the following to the borrower at or before closing:

i. A copy of the itemized listing of attorney fees prepared by the attorney pursuant to (c)5 above;

ii. A closing statement of all legal and other expenses to be paid by the borrower setting forth the net proceeds of the loan, itemized fees incurred or disbursed, interest charges, full amount of the loan and the terms by which the loan is to be repaid. Each expense item shall be separately listed with the corresponding dollar amount if the amount charged for that item exceeds $ 100.00.

Proof of compliance with this subsection shall be included in the licensee's loan file.

History

Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
Rewrote the section.
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Fees permitted to be charged by secondary lenders". Substituted "mortgage" for "secondary" preceding "lender" throughout; in (a)1, (a)2, the introductory paragraph of (c)2, and in (c)3, updated the N.J.S.A. references; in (a)2, deleted "secondary" preceding "lender" three times; in the introductory paragraph of (c), substituted "on" for "by" and "mortgage loans" for "lenders"; in (c)1, inserted "on a secondary mortgage loan"; in (c)2iii, inserted "member,"; in (c)5, deleted "secondary" preceding the third occurrence of "lender"; and in (c)6ii, deleted "by the secondary lender" following "statement".

Subchapter 10 CHARACTERISTICS OF LOANS

N.J. Admin. Code § 3:15-10.1 Provisions applicable to all licensees

(a) No licensee shall charge an interest rate that is in excess of the rate permitted by N.J.S.A. 2C:21-19.

(b) A borrower may repay a mortgage loan at any time without penalty.

(c) A licensee may only compute interest accrued between monthly payments using the 365/365 method (actual number of days between payments) or the 360/360 method (each month assumed to be 30 days).

(d) A borrower shall be given a copy of every document he or she is required to sign.

(e) Where any disclosure is required pursuant to this chapter that is also required by any Federal law or regulation, compliance with such Federal law or regulation shall be deemed to be compliance with this subchapter.

(f) No licensee shall require, as a precondition for the granting of credit, or for any other benefit or consideration from the licensee in connection with a loan, that the borrower engage in any other business activity with the licensee. Nothing in this subsection shall prohibit a licensee from offering to a borrower other services or products in connection with a loan.

(g) A licensee shall not require, nor receive, from a borrower a rebate of any portion of the proceeds of a loan that is not a permissible fee.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
In (b), deleted "first" preceding "mortgage" and ", second mortgage loan or consumer loan" following "loan"; and in (c), deleted the last sentence.

N.J. Admin. Code § 3:15-10.2 Secondary mortgage loans

(a) A mortgage lender shall not require or accept from a borrower any collateral or security for a secondary mortgage loan other than a mortgage, indenture or any other similar instrument or document that creates a lien upon any real property or an interest in real property including, but not limited to, shares of stock in a cooperative corporation.

(b) For purposes of (a) above, the co-signature of a person, other than a spouse or other person having an interest in the real property used as security for the loan, shall constitute prohibited collateral or security unless the co-signer is a joint borrower.

(c) A person not having an interest in the real property used as security for the loan shall be considered a joint borrower if:

The borrowers sign an affidavit affirming their agreement to be jointly liable and to share in the proceeds of the secondary mortgage loan; and
The mortgage lender issues the proceeds check or checks in all borrowers' names. If borrowers may access a line of credit by writing checks or otherwise, this requirement will be satisfied if all borrowers have the authority to draw against the account.

(d) A mortgage lender shall not be made a beneficiary of an insurance policy purchased by the borrower from the mortgage lender except as otherwise permitted by law.

History

Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
In (a), (c)2 and (d), substituted "mortgage" for "secondary" throughout; and deleted (e).

N.J. Admin. Code § 3:15-10.3 First mortgage loans

A mortgage lender shall not require or accept from a borrower as collateral or security for a first mortgage loan household or personal goods, such as furniture, electronic equipment, motor vehicles, appliances, and jewelry.

History

The following annotation applies to N.J.A.C. 3:15-10.3 prior to its repeal by R.2010 d.129:
Amended by R.2002 d.353, effective 11/4/2002.
See: 34 N.J.R. 1775(a), 34 N.J.R. 3795(a).
In (d), substituted "$ 50,000" for "$ 15,000" throughout.
The following annotations apply to N.J.A.C. 3:15-10.3 subsequent to its recodification from N.J.A.C. 3:15-10.4 by R.2010 d.129:
New Rule, R.2002 d.353, effective 11/4/2002.
Amended by R.2006 d.35, effective 1/17/2006.
See: 36 N.J.R. 5604(a), 38 N.J.R. 481(a).
Rewrote the section.
Recodified from N.J.A.C. 3:15-10.4 and amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Deleted "first" preceding "mortgage". Former N.J.A.C. 3:15-10.3, Consumer loans, repealed.

N.J. Admin. Code § 3:15-10.4 Reserved

History

Recodified to N.J.A.C. 3:15-10.3 by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "First mortgage loans".

Subchapter 12 IMPOSITION OF ADMINISTRATIVE PENALTIES

N.J. Admin. Code § 3:15-12.1 Initiation of action

(a) Before an administrative penalty is imposed, the Department shall direct a notice by certified mail and regular mail, or by personal delivery, to the last known business or mailing address of the alleged violator. The notice shall include.

A reference to the statute, rule and/or administrative order alleged to be violated;
A concise statement of the facts on which the violation is based;

A statement of the administrative penalty, penalties or other relief sought to be imposed; and

A statement advising the alleged violator of the right to a hearing and the procedure for requesting a hearing.

(b) The notice may describe more than one violation, or more than one specific penalty or other relief for each violation. A single form of notice may be used to notify several alleged violators, so long as all are named and served with a copy of the notice in conformity with the provisions of (c) below.

(c) The notice shall be served by personal delivery, or by certified mail and regular mail to the alleged violator's last known business or mailing address, according to the files maintained by the Department. Service in this manner shall be considered lawful service on the alleged violator.

N.J. Admin. Code § 3:15-12.2 Failure to respond to notice

(a) The alleged violator's failure to respond, as required by the notice, within the time provided in the notice, shall be deemed to be an admission of all of the allegations, charges and conclusions contained in the notice, and no further proceeding shall be required prior to the execution of a final order that imposes the administrative penalty, penalties or other relief described in the notice.

(b) If no response is received within the time provided in any notice to suspend or revoke a license or authority to conduct any activity regulated by N.J.S.A. 17:1-1 et seq., the Department shall prepare a final order suspending or revoking the license or authority to conduct such activity, and mail a copy of the order to the violator at his or her last known business address on file with the Department.

(c) If the notice issued pursuant to this section provided for the payment of any fine, restitution or reimbursement to the Department for investigative or examination cost, and payment or proof of payment has not been received, the Department may proceed without further notice to suspend or revoke the license or authority of the violator as provided in N.J.S.A. 17:11C-53.

N.J. Admin. Code § 3:15-12.3 Consent to an administrative penalty

(a) In order for matters set forth in a notice to be deemed concluded by means of a consent by the alleged violator to the imposition of the administrative penalty or other relief described in the notice, the Department may require any or all of the following:

That the licensee return his or her license to the Department for cancellation;
The payment of a monetary penalty;
The reimbursement to the Department of the costs of investigation and examination;
The restitution of moneys owed any person; and
The execution of an administrative order that may include admissions of material facts, conclusions of law, and such other terms and conditions as the Commissioner, or his or her authorized designee may deem to be necessary and appropriate under the circumstances.

N.J. Admin. Code § 3:15-12.4 Request for a hearing

(a) An alleged violator shall have 20 calendar days from service of the notice of intent to impose an administrative penalty within which to deliver a written request for a hearing to: Chief of Investigations, Enforcement Bureau, New Jersey Department of Banking and Insurance, PO Box 040, Trenton, New Jersey 08625-0040.

(b) A request for a hearing shall include:

The name, address and daytime telephone number of the alleged violator;
A copy of the notice;
A statement requesting a hearing;
A specific admission, denial or explanation of each fact alleged in the notice, or a statement that the person is without knowledge thereof; and
A concise statement of the facts or principles of law asserted to constitute any factual or legal defense.

(c) If a hearing request fails to include a specific admission, denial or explanation of each fact alleged, or a statement that the person is without knowledge thereof, the facts alleged in the notice shall be deemed to have been admitted.

(d) If a hearing request lacks any of the elements in (b) above, the Department shall, by certified mail and regular mail, or by personal delivery, advise the person of the deficiencies and provide an additional 10 calendar days from the issuance of the deficiency letter to correct them. If no reply correcting the deficiencies is received by the Department within 10 calendar days, the Department may issue a final order without granting a hearing.

(e) Upon receipt of a properly completed request for a hearing, the Chief of Enforcement or such other Department personnel as may be designated by the Commissioner, shall examine the request and may conduct or direct such further proceedings as may be appropriate, including, but not limited to, an interview with the alleged violator.

(f) Not later than 60 days after the receipt of a properly completed request for a hearing, the Chief of Enforcement, or such other Department personnel as may be designated by the Commissioner, shall advise the alleged violator of the manner of disposition, which may be as follows:

Terminated with or without prejudice;
Resolved by consent order, which may provide for a lesser or different administrative penalty; or
A finding that the matter constitutes a contested case, pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. In such a case, the Department shall transmit the matter to the Office of Administrative Law for a hearing consistent with the Uniform Administrative Practice Rules, N.J.A.C. 1:1.

History

Amended by R.1999 d.191, effective 6/21/1999 (operative July 21, 1999).
See: 30 New Jersey Register 1658(a), 31 New Jersey Register 1609(a).

Chapter 16 PAWNBROKING LAW REGULATIONS

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:16-1.1 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Act" means the Pawnbroker Act, N.J.S.A. 45:22-1 et seq.

"Commercially reasonable manner" means that display and sale of goods shall be made in keeping with prevailing trade practices among reputable and responsible business and commercial enterprises engaged in the same or similar businesses.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Department" means the New Jersey Department of Banking and Insurance.

"Licensee" means a licensee under the Act.

"Substantial stockholder" means any person who beneficially owns or controls more than 10 percent of the outstanding voting shares of an applicant or a licensee.

"Unredeemed pledge" means an item of personal property on which the licensee has loaned a sum of money to a pledgor for a specified time period, and which, after proper notice, the pledgor has failed to redeem.

History

Amended by R.2001 d.213, effective 7/2/2001.
See: 33 New Jersey Register 930(a), 33 New Jersey Register 2279(a).

N.J. Admin. Code § 3:16-1.2 Licensing

(a) No person shall engage in the business of a pawnbroker in this State without first obtaining a license.

(b) A person is engaged in the business of a pawnbroker if such person:

Advertises, causes to be advertised, solicits, negotiates, offers to make or makes a loan on deposit or pledge of personal property;
Does business as a furniture storage warehouseman and lends money on goods, wares or merchandise pledged or deposited as collateral security; or
Purchases property on condition of selling it back at a stipulated price.

(d) An applicant for a license shall apply on a form supplied by the Commissioner, which shall require the following information:

The full name and residence address of each owner, substantial stockholder, officer, director, member, partner and manager of the business to be licensed;
The location of the place or places of business;
The application fee of $ 500.00;
A statement of net worth;
An original surety bond as required by this subchapter;
A copy of the insurance policy as required by this subchapter;

For corporate applicants, a copy of the certificate of incorporation showing the filing or recording stamp of the New Jersey Department of the Treasury, Division of Revenue, and identifying the registered agent for service of process; and

Any other information or supporting documentation which the Commissioner may require.

(e) Application fees are not refundable.

History

Amended by R.2001 d.213, effective 7/2/2001.
See: 33 N.J.R. 930(a), 33 N.J.R. 2279(a).
In (d)3, inserted "of $ 400.00"; in (d)7, substituted "Department of the Treasury, Division of Revenue" for "Secretary of State".
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
In (d)3, substituted "application" for "license" and "$ 500.00" for "$ 400.00"; and added "(e)".
Amended by R.2006 d.408, effective 12/4/2006.
See: 38 N.J.R. 2771(a), 38 N.J.R. 5009(b).
In (d)1, inserted "member,".

N.J. Admin. Code § 3:16-1.3 Posting requirements

The licensee shall post and at all times display in a conspicuous place on the premises the license and the schedule of fees to be charged. The fee schedule shall be printed in bold type, in both English and Spanish, except where the Department deems it necessary that a different or additional language be used.

N.J. Admin. Code § 3:16-1.4 Surety bond

(a) An applicant shall file with the Commissioner a surety bond in the amount of $ 1,000 for each place of business in this State. The surety bond shall be obtained from an insurance company authorized to do business in New Jersey.

(b) The bond shall run to the State, pro rata, for the benefit of the Department and for the benefit of all consumers injured by the wrongful act, omission, default, fraud or misrepresentation of the pawnbroker in the course of activity as a licensee. The bond shall not be payable for claims made by business creditors.

N.J. Admin. Code § 3:16-1.5 Insurance

(a) A licensee shall maintain adequate fire and liability insurance to cover any pledge in the event of loss by fire, theft, burglary or otherwise, or his liability to the pledgor resulting from the licensee's failure to exercise reasonable care. The burden of proof to establish reasonable care shall be on the pawnbroker.

(b) A licensee shall include a statement, printed on every pledge ticket, which informs the pledgor that the licensee's insurance may not cover the replacement value of the pledged article.

N.J. Admin. Code § 3:16-1.6 Change of location; change of name

A licensee shall notify the Commissioner in writing of a change in name or the location of any licensed place of business, at least 10 days prior to the move or name change.

Subchapter 2 CONDUCT OF BUSINESS; RECORDKEEPING; EXAMINATIONS

N.J. Admin. Code § 3:16-2.1 Recordkeeping; reporting

(a) In addition to the records required to be maintained by the Act, a licensee shall maintain a cash book and general ledger. The cash book shall be a record of each amount paid out and the purpose for which it was paid, and each amount received and on what account it was received. The cash book shall be balanced daily.

(b) A licensee shall file an annual report with the Commissioner on or before March 1 of every year on a form supplied by the Commissioner. The annual report shall supply the following:

The number and amount of loans made during the preceding year;

The range of interest rates charged;

The number of pledges redeemed;
The number of pledges unredeemed;
The date(s) of sales of unredeemed pledges;
The number of pledges sold at each public auction;
The number of pledges sold at each private sale;
The number of purchases made during the preceding year at public auction;
The number of purchases made during the preceding year on condition of resale at a stipulated price;
Balance sheets and income statements for the year addressed in the report; and
A notarized certification by the licensee that he or she is in compliance with N.J.S.A. 45:22-34, which requires a daily reporting to the police.

(c) In accordance with N.J.A.C. 3:1-7.6, the Department shall assess a penalty against any licensee for each report the licensee files late.

(d) A licensee shall maintain its records on the licensed premises available for inspection by the Department or the police. Records shall be retained on file for five years.

History

Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Recodified the second occurrence of (b) as (c) and former (c) as (d); and in present (c), substituted "In accordance with N.J.A.C. 3:1-7.6, the" for "The licensee shall remit a fee of $ 100.00 for each such report filed. The" and deleted "$ 50.00" preceding "penalty".
Amended by R.2006 d.408, effective 12/4/2006.
See: 38 N.J.R. 2771(a), 38 N.J.R. 5009(b).
Inserted new (b)7; recodified former (b)7 through (b)10 as new (b)8 through (b)11; in (b)8 and (b)9, substituted "of" for "or"; and in b(10), substituted "year addressed in the report" for "current year".

N.J. Admin. Code § 3:16-2.2 Display of merchandise; inspection; prohibition

(a) A licensee shall make available for inspection by the Department all pledged and purchased items, including those items which the licensee has acquired as the result of a sale of unredeemed pledges. A licensee shall allow inspection by all law enforcement authorities of all pledged and purchased items upon reasonable suspicion that one of the items listed in the report filed under N.J.S.A. 45:22-34 is stolen or other evidence of a crime. If the licensee fails to file a report as required by N.J.S.A. 45:22-34, law enforcement authorities may inspect all pledged and purchased items, including those items which the licensee has acquired as the result of unredeemed pledges.

(b) A licensee shall conduct his business in a commercially reasonable manner.

N.J. Admin. Code § 3:16-2.3 Advertising

(a) No licensee shall make, publish disseminate, circulate or place before the public, or cause directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, computer modem, or in any other way, an advertisement, announcement or statement containing any assertion, representation or statement which is inaccurate, untrue, deceptive or misleading.

(b) A licensee is prohibited from using on his stationery, records, forms literature or advertising the words "bank" or "banking," or any other words which might imply that the licensee is a bank or is engaged in the banking business.

(c) An advertisement for public auction of unredeemed pledges shall be placed in three consecutive issues of a daily or weekly newspaper of general circulation in the city or county where the pawnbroker's business is conducted. In addition, the licensee may place advertisements in such other publications as he or she deems appropriate. Each advertisement shall include notice of the time and site of the public auction. Copies of all advertisements shall be retained for examination by the Department.

(d) The licensee shall conspicuously post a list of items available for sale on the licensee's principal business premises at least three days prior to the date of public auction, and the licensee shall make the list available to members of the public upon request.

History

Amended by R.2006 d.408, effective 12/4/2006.
See: 38 N.J.R. 2771(a), 38 N.J.R. 5009(b).
In (d), substituted "public auction" for the second occurrence of "sale".

N.J. Admin. Code § 3:16-2.4 Public auction or private sale; notice

(a) A licensee shall obtain the name and address of each person who makes a purchase as a result of a public auction or private sale. The purchasers' names and addresses shall be retained for examination by the Department and the police.

(b) A licensee shall prepare and maintain a list containing a description of each item which the licensee acquires as a result of a public auction or private sale of unredeemed pledges.

(c) A licensee shall allow public inspection of all unredeemed pledges at the site of the public auction for not less than one hour prior to the commencement of the auction.

(d) A licensee shall mail a notice of public auction or private sale to each pledgor of record of items to be sold at least 20 days prior to the auction or sale.

History

Amended by R.2006 d.408, effective 12/4/2006.
See: 38 N.J.R. 2771(a), 38 N.J.R. 5009(b).
Section was "Public auction; notice". In (a) and (b), substituted "a public" for "an" and inserted "or private sale". In (d), inserted "or private sale" and "at least 20 days prior to the auction or sale".

N.J. Admin. Code § 3:16-2.5 Service charges

On loans secured by the pledge of articles, a licensee may levy a service charge equal to eight percent of the amount of the loan, but such service charge shall not exceed $ 4.00. The service charge shall not be levied on the renewal of a pledge more than once during any 12-month period following the date of the initial pledge. A licensee shall levy a service charge only with the knowledge and consent of the pledgor.

History

Amended by R.1998 d.202, effective 4/20/1998.
See: 30 N.J.R. 261(a), 30 N.J.R. 1402(a).
Increased the service charge limit from $ 3.00 to $ 4.00 in the first sentence.

N.J. Admin. Code § 3:16-2.6 Lost, stolen or destroyed pledge tickets; fees

A licensee may charge a fee for services provided in connection with a lost, stolen or destroyed pledge ticket, not to exceed $ 5.00.

History

New Rule, R.1998 d.202, effective 4/20/1998.
See: 30 N.J.R. 261(a), 30 N.J.R. 1402(a).

N.J. Admin. Code § 3:16-2.7 Examinations of licensees

(a) The Commissioner may at any time investigate the business of all licensees.

(b) The Commissioner, or his or her designee, shall have free access, during the licensee's usual business hours, to the licensee's place of business, and to the books, papers, records, safes and vaults pertaining to, or used in the course of the business of the licensee, wherever located, and shall also have the authority to examine, under oath, any person whose testimony he or she may require relative to the business of the licensee.

(c) The examination conducted by the Department shall be "exception-based." All apparent failures to comply with statutes or rules shall be noted. The examination shall include reviews of the licensee's books, records, bonding and insurance policies, and shall cover all matters referenced in the "Report of Examination" form on file with the Department.

History

New Rule, R.2006 d.408, effective 12/4/2006.
See: 38 N.J.R. 2771(a), 38 N.J.R. 5009(b).

Subchapter 3 LAWSUITS; CLAIMS; REPORTING

N.J. Admin. Code § 3:16-3.1 Reports of legal actions

(a) A licensee shall provide the Commissioner with a copy of every legal process bringing a lawsuit, claim or suit upon a surety bond, which involves the licensee's pawnbroker business, not later than 10 days from the time of service upon the licensee.

(b) A licensee shall report to the Commissioner in writing within three days the disposition of a lawsuit, claim or suit upon a bond, whether by settlement, judgment or court order, involving the licensee's pawnbroker business. The licensee shall provide the Commissioner with a copy of the settlement agreement, judgment or court order.

Subchapter 4 REVOCATION OR SUSPENSION OF LICENSE

N.J. Admin. Code § 3:16-4.1 Revocation; causes

(a) The Commissioner may revoke or suspend a license if, after notice and hearing pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1, the Commissioner determines that the licensee:

Has violated any provision of N.J.S.A. 45:22-1 et seq., or any order, rule or regulation made or issued pursuant thereto, or has violated any other law in connection with the operation of the pawnbroker business;
Has failed to pay any fee imposed by the Commissioner;
Has withheld information from the police or from the Department, or has made a material misstatement in the application for the license, or any other submission to the Department;
Has been convicted of an offense involving breach of trust, moral turpitude or fraudulent or dishonest dealing, or has had a final judgment entered against him in a civil action upon grounds of fraud, misrepresentation or deceit;
Has become insolvent or has acted in a way that indicates the licensee's business is not being operated in a financially responsible manner;
Has demonstrated unworthiness, incompetence, bad faith or dishonesty in transacting business or otherwise; or
Has engaged in any other conduct which would be deemed by the Commissioner to be grounds to deny, revoke or suspend a license.

Chapter 17 CONSUMER LENDERS AND SALES FINANCE COMPANIES

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:17-1.1 Purpose and scope

(a) This chapter implements the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 et seq., and the Retail Installment Sales Act of 1960, N.J.S.A. 17:16C-1 et seq.

(b) This chapter shall apply to all consumer lender and/or sales finance companies whose activities require that they be licensed.

N.J. Admin. Code § 3:17-1.2 Definitions

The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise.

"Accrual basis of accounting" means the accounting method by which expenses are recorded when incurred, whether paid or unpaid, and income is recorded when earned, whether received or not received.

"Act" means the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 et seq. and, as applicable, the Retail Installment Sales Act of 1960, N.J.S.A. 17:16C-1 et seq.

"Advertisement" means any announcement, statement, assertion, or representation that is placed before the public in a newspaper, magazine, or other publication or in the form of a business card, notice, circular, pamphlet, letter or poster or over any radio or television station, by means of the internet or by other electronic means of distributing information, or in any other way.

"Alternate name" means an alternate name registered pursuant to N.J.S.A. 14A:2-2.1(2) or 42:2B-4b.

"Billing cycle" means the time interval between periodic billing dates. A billing cycle shall be considered monthly if the closing date of the cycle is the same date each month or does not vary by more than four days from such date.

"Borrower" means any individual applying for a consumer loan from a lender licensed under the Act, whether or not the loan is granted, and any individual who has actually obtained such a loan.

"Branch office" means any location where, in the regular course of business, applications for consumer loans or sales finance contracts are distributed to or received from consumers, loan records are maintained, underwriting decisions are made, or any fees or charges relating to the loan are received from consumers.

A home or place of business of a consumer shall not be considered a branch office.
A location shall not be considered a branch office merely because any or all of the following activities are conducted at the location:

i. Consumers receive information concerning available loan products from a computer terminal;

ii. Consumers are prequalified for a loan, so long as no additional fee is charged for this service; and

iii. Advertising materials are distributed to consumers so long as the materials do not in any way resemble an application for a loan.

A branch office of a licensee under the Act does not also constitute a branch office of another licensee merely because the first licensee distributes or receives applications of that other licensee at the branch office.

"Closed-end loan" means a consumer loan pursuant to which the 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 and which meets the requirements of the Act.

"Commissioner" means the Commissioner of Banking and Insurance.

"Consumer lender" means a person licensed, or a person who should be licensed, under the Act to engage in the consumer loan business.

"Consumer loan" means a loan of $ 50,000 or less made by a consumer lender, payable in one or more installments, pursuant to the terms of the Act and not a residential mortgage loan as defined by N.J.S.A. 17:11C-53.

"Consumer loan business" means the business of making loans of money, credit, goods or things in action which are to be used primarily for personal, family or household purposes in the amount of value of $ 50,000 or less and charging, contracting for, or receiving a greater rate of interest, discount or consideration therefor than the lender would be permitted by law to charge if he or she were not a licensee hereunder, except as authorized by the Act and without first obtaining a license from the Commissioner. Any person directly or indirectly engaging in the business of soliciting or taking applications for such loans of $ 50,000 or less, or in the business or negotiating or arranging or aiding the borrower or lender in procuring or making such loans of $ 50,000 or less, or in the business of buying, discounting or endorsing notes, or of furnishing, or procuring guarantee or security for compensation in amounts of $ 50,000 or less, shall be deemed to be engaging in the consumer loan business.

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

"Department" means the Department of Banking and Insurance.

"Direct contact" means in-person contact, and contact by means of a telephone, computer terminal, Internet or other electronic means during which contact, in the regular course of business, applications for consumer loans or sales finance contracts are distributed to or received from consumers, underwriting decisions are made, or any fees or charges relating to the loan are authorized.

"Individual" means a natural person.

"Insolvent" means having negative net worth, or being unable to pay debts when due.

"License name" means any name listed on the license issued by the Department including the true name and any alternate or trade names.

"License or licensing period" means the two-year period beginning on July 1 of each odd numbered year and ending on June 30 of the next odd numbered year.

"Licensee" means a person who is licensed under the Act or who should be so licensed.

"Liquid assets" means cash, marketable securities, and accounts receivable.

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

The consumer lender may permit the borrower to obtain advances of money from the consumer lender from time to time or the consumer lender may advance money on behalf of the borrower from time to time as directed by the borrower;
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;
Interest is computed on the unpaid principal balance or balances of the account from time to time; and
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.

"Sales finance company" shall have the meaning ascribed to that term in the Act.

"Substantial stockholder" means a person or entity owning 10 percent or more of the stock of a licensee.

"Time price differential" shall have the meaning of that term in N.J.S.A. 17:16C-1(l) and shall be computed as provided in N.J.S.A. 17:16C-41.

"Trade name" means an assumed name filed pursuant to N.J.S.A. 56:1-2.

"True name" means the legal name of the licensed entity and shall not include any alternate or trade name.

N.J. Admin. Code § 3:17-1.3 Suitable location for office

(a) A licensee shall maintain a principal office. The maintenance of a principal office at which there will be no direct contact with New Jersey consumers shall not relieve the licensee of the obligation to maintain the confidentiality of any financial information in accordance with all applicable Federal and State laws and rules. A principal office where the licensee has direct contact with New Jersey consumers shall be in a suitable location as determined by the Commissioner.

The Commissioner shall consider the following factors in determining whether a location in New Jersey at which there is direct contact with New Jersey consumers as referenced in (a) above is suitable:

ii. The location shall conform to all local ordinances and zoning requirements;

iii. The location shall be reasonably accessible to the public;

iv. Any signage proposed for the location shall clearly identify the licensee;

v. The location shall be reasonably free of noise and other distractions so as to permit customers to give appropriate consideration to the loan transaction; and

vi. A location in a residence shall not be considered suitable unless the office is separate from the residential area and conveniently accessible to all consumers through a separate business entrance.

The Commissioner shall consider the following factors in determining whether an out-of-State location at which there is direct contact with New Jersey consumers as referenced in (a) above is suitable:

i. The location shall ensure the maintenance of a consumer's right to privacy with respect to conversations and documents involving personal and financial information; and

ii. The location of the out-of-State office shall comply with all applicable Federal, state and local laws in the state where the office is located.

Applicants for a license shall certify, on a form as prescribed by the Commissioner, that the location of their principal office is in compliance with the requirements set forth in this subsection.

(b) A licensee may maintain more than one place of business and shall secure a license for every branch office as required by N.J.A.C. 3:17-2.3.

(c) Each licensee that maintains more than one licensed office shall designate one licensed office as the principal office. The designation of the principal office shall be filed with the Commissioner. Any change in the designation shall be filed within 10 days of the effective date of the change. If the filing is complete, the Commissioner shall issue a new license reflecting the new designation.

(d) A licensee changing its name or changing the address of the principal office or any branch office shall comply with N.J.A.C. 3:1-7.1 and 7.4, as applicable.

N.J. Admin. Code § 3:17-1.4 License name

(a) A licensee may use alternate or trade names, and may change such name or names, in connection with business under the Act, following approval by the Commissioner and subject to the provisions of N.J.A.C. 3:17-1.5 and 1.6.

(b) The true name and all alternate or trade names shall appear on the license issued by the Department.

(c) A licensee may use its true name, any or all of its alternate or trade names, or any combination of them, in its advertising.

(d) In closing documents, a licensee shall use its true name plus the alternate or trade name that it used in its contacts with the consumer involved in the transaction.

N.J. Admin. Code § 3:17-1.5 License names permitted

(a) The number of alternate or trade names that may be used by a licensee in this State shall not exceed three, unless:

The licensee provides evidence to the Commissioner that prohibiting it from using four or more alternate or trade name would produce a substantial and unreasonable hardship on the licensee beyond the mere inability to market under the new name, and the licensee can satisfy the Department that procedures have been established to assure that consumers will not be misled about the true identity of the licensee. The Commissioner shall not grant an exception to the limitation of three alternate or trade names under this paragraph except in extraordinary circumstances; or
The licensee has, prior to November 4, 2002, been approved to use four or more alternate or trade names, in which case the licensee may continue to use those names, but shall not be approved to use an additional alternate or trade name until the total number of alternate or trade names being used by that licensee is two or fewer, unless a larger number is permitted pursuant to (a)1 above.

N.J. Admin. Code § 3:17-1.6 Grounds for denying use of alternate or trade names

(a) The Commissioner may deny an application to use an alternate or trade name if:

The name is lewd, offensive or otherwise inappropriate for the conduct of the licensed activity; or
The name would create a substantial risk of misleading or confusing consumers.

N.J. Admin. Code § 3:17-1.7 Display of license

The consumer lender or sales finance company license shall state the name of the licensee and the licensee's place of business or businesses, as applicable. No licensee shall transact business regulated by the Act under any name other than that reflected in the license. The license shall be posted conspicuously in the place or places of business of the licensee. A licensee or any other person shall not photocopy of otherwise reproduce the license except for legitimate business purposes.

Subchapter 2 LICENSING

N.J. Admin. Code § 3:17-2.1 Requirement to be licensed

(a) Unless exempt under N.J.S.A. 17:11C-6, no person shall engage in business as a consumer lender or sales finance company without first obtaining a license pursuant to the Act.

(b) The Department shall issue a license which shall specify whether the licensee may act as a consumer lender or a sales finance company. A licensee may not engage in a licensed activity under the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 et seq., or the Retail Installment Sales Act of 1960, N.J.S.A. 17:16C-1 et seq., unless the license issued by the Department specifies that the licensee may engage in that licensed activity.

N.J. Admin. Code § 3:17-2.2 Application for a license

(a) A person applying for a license pursuant to the Act who does not already hold a license pursuant to the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 et seq., or the Retail Installment Sales Act of 1960, N.J.S.A. 17:16C-11 et seq., or a business license pursuant to the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq., shall submit the following:

A completed form as prescribed by the Commissioner which shall include the following:

i. The true name of the applicant and no more than three trade names or alternate names conforming to N.J.A.C. 3:17-1.4 and 1.5 to be utilized;

ii. The location of the principal office;

iii. Information regarding officers and stockholders;

iv. The name and address of the applicant's registered agent in this State;

v. Information regarding incorporation, registration, and authorization to do business in this State and, if applicable, to use the trade name(s) or alternate name(s) included in the application; and

vi. The applicant's Federal Tax Identification Number or Social Security Number, as applicable;

Personal certifications permitting the Department to make inquiries to the New Jersey State Police as to any information it may have on file with respect to the applicant, that is, the person, sole proprietor, partners, members and managers of a limited liability company, corporate officers, directors and shareholders owning 10 percent or more of the shares of the corporation, including a criminal history record background check of the applicant, based upon information provided to and received from the Division of State Police. The background check shall include a State criminal history record background check based upon an exchange of fingerprint data with the State Bureau of Identification in the Division of State Police, for which the Division shall promptly notify the Commissioner if the subject of the original criminal history record background check is arrested for a crime or offense in this State after the date the background check was performed, and a check of both criminal and non-criminal information as requested from and distributed to the Federal Bureau of Investigation and any other governmental agency. The Department may make such inquiries on the basis of answers to questions in the application or on the basis of any other information which the Department receives that would make such an inquiry relevant to the decision on the application;

An unqualified audited financial statement prepared by a certified public accountant or public accountant, in good standing, demonstrating proof of net worth and liquid assets for the applicant as specified in N.J.S.A. 17:11C-16;
An application for a corporate license by a corporation organized under the laws of this State shall be accompanied by a copy of the applicant's Certificate of Incorporation as filed with the New Jersey Department of the Treasury, Division of Revenue. A foreign corporation shall submit a copy of its Certificate of Incorporation from the state where it is incorporated, and a copy of its Certificate of Authority to do business in this State approved by the New Jersey Department of the Treasury, Division of Revenue. If an alternate name is to be utilized, a copy of the registration of that name with the New Jersey Department of the Treasury, Division of Revenue shall be provided;
An application for a sole proprietorship or partnership license where a trade name is to be used shall be accompanied by a copy of a trade name certificate filed with the County Clerk's office in the county in which the licensee is to be located, and any filing made with the New Jersey Department of the Treasury, Division of Revenue. An application for a limited liability company license shall be accompanied by a copy of the applicant's Certificate of Formation as filed with the New Jersey Department of the Treasury, Division of Revenue. A foreign limited liability company shall submit a copy of its formation document from the state where it was established. If an alternate name is to be utilized, a copy of the registration of that name with the New Jersey Department of the Treasury, Division of Revenue shall be provided;
The application fee as specified in N.J.A.C. 3:17-3.2; and
A completed branch office application as specified in N.J.A.C. 3:17-2.3, if applicable.

(b) A person applying for a license pursuant to the Act who holds a license pursuant to the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 et seq., or the Retail Installment Sales Act of 1960, N.J.S.A. 17:16C-1 et seq.; or a business license pursuant to the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq., shall submit the following:

Any information required in (a) above which has changed since the initial application;
A certification on a form prescribed by the Commissioner that the information previously submitted to the Department is current and correct; and

The application fees prescribed by N.J.A.C. 3:17-3.2 which shall be non-refundable.

N.J. Admin. Code § 3:17-2.3 Branch offices; branch licensing requirement; initial branch licensing application

(a) Applicants for branch office licenses shall certify on a form prescribed by the Commissioner that the location of the branch office is in compliance with the requirements of this section. A branch office location at which activity as a consumer lender or sales finance company is conducted but at which there is no direct contact with New Jersey consumers shall be licensed and shall comply with the requirement regarding the maintenance of the confidentiality of financial information set forth in N.J.A.C. 3:17-1.3(a)1 for in-State offices or N.J.A.C. 3:17-1.3(a)2 for out-of-State offices and this section, with the exception of the standards prescribed in (e)2 through 5 below regarding the suitability of office locations at which a licensee at an instate location has face to face contact with New Jersey consumers. Prior to conducting activities as a consumer lender or sales finance company that include direct contact with New Jersey consumers regarding origination from a branch office in this State or from a branch office outside this State, the licensee shall obtain a license for the branch office from the Department.

(b) The application for a branch office license shall include the following:

The true name of the licensed entity and no more than three trade names or alternate names conforming to N.J.A.C. 3:17-1.4 and 1.5;
The address of the principal office;
The address of the branch to be licensed; and
The application fee prescribed by N.J.A.C. 3:17-3.2 which shall be non-refundable.

(c) A proposed branch at which the licensee will have direct contact with New Jersey consumers shall be in a suitable location in accordance with the applicable suitability criteria set forth in N.J.A.C. 3:17-1.3(a).

(d) If an applicant for a branch license meets the requirements of this section and N.J.S.A. 17:11C-9, the Commissioner shall issue the branch license which shall run from the date of issuance to the end of the current licensing period.

(e) Branch office arrangements shall be restricted as follows:

A branch office shall not be a separate business entity. If an office of another entity is purchased by or merged into a licensee, the licensee shall file for a branch office license. The filing shall include documentation evidencing the acquisition and/or merger of that entity into the surviving licensed entity;
A branch office shall not pay its own operating expenses. Operating expenses shall include, but are not limited to, compensation of branch office employees, and payments for equipment, furniture, office rent, and other similar expenses incurred in operating a consumer lending business;

A branch office shall not maintain a bank account or accounts for the payment of expenses of that branch that is separate from the account or accounts of the licensee;

A branch office shall not maintain contractual relationships with vendors for items such as leases, telephones, utilities, and advertising in the name of the branch office; and

A branch office shall not indemnify the licensee against damages incurred from any apparent, express, or implied agency representation by or through the branch office's actions.

N.J. Admin. Code § 3:17-2.4 Application for renewal of a license

(a) A person who holds in good standing a license as a consumer lender or sales finance company who seeks to renew a license pursuant to this section shall submit the following in connection with the renewal application:

A completed renewal application form as prescribed by the Commissioner which shall include the following:

i. The name of the applicant;

ii. The location of the principal place of business of the applicant; and

iii. A certification that the applicant has net worth and liquid assets as specified in N.J.S.A. 17:11C-16, in the case of a consumer lender.

(b) No license shall be renewed unless all assessments due and owing as of the expiration date of the current license and any late fees accrued have been paid.

N.J. Admin. Code § 3:17-2.5 Branch offices; renewal of branch licenses

(a) A licensee in good standing who holds a license for a branch or branches for the conduct of the business of a consumer lender or sales finance company who wishes to renew a branch license pursuant to this section shall submit the following in connection with the renewal application:

A completed renewal application form as prescribed by the Commissioner which shall include the following information for each branch to be renewed:

i. The true name of the licensed entity and all trade names or alternate names conforming to N.J.A.C. 3:17-1.4 or 1.5 to be utilized;

ii. The address of the principal New Jersey place of business; and

iii. The address of each branch whose license is being renewed.

N.J. Admin. Code § 3:17-2.6 Late renewal of licenses; late filing fees; reinstatement fees

(a) A person who submits a renewal application after the expiration of the license, but no later than 30 calendar days after such expiration, may renew by paying a penalty for late filing of $ 500.00.

(b) A person who submits a renewal application later than 30 but no more than 60 calendar days following the expiration of the license shall be required to submit an application for reinstatement of the license. Such application for reinstatement shall be on a form as prescribed by the Commissioner and shall be accompanied by a penalty for late filing of $ 700.00 per license.

(c) A person who submits a renewal application later than 60 days following the expiration of the license shall be required to submit an application with the non-refundable application fee as specified in N.J.A.C. 3:17-3.

(d) Payment of the fees or penalties under (a), (b) and (c) above shall be submitted in the form of a check made payable to "Treasurer--State of New Jersey."

(e) The date of submission for this section shall be the date on which the electronically submitted complete renewal application was accepted for processing.

(f) Submission of an application for renewal of a license following the expiration of a licensing period does not authorize the formerly licensed person or entity to engage in any activity subject to licensure prior to the renewal of their license. The Department may take administrative action against anyone who engages in a licensed activity without being properly licensed.

N.J. Admin. Code § 3:17-2.7 Change of control

(a) A licensee shall file a completed application for approval whenever a change of control of ownership of 25 percent or more of the licensee is planned. The change of control request shall be submitted at least 90 days prior to the anticipated sale date and shall include:

A fully executed change of control form as prescribed by the Commissioner;
A copy of the executed stock purchase agreement or other agreement evidencing the proposed sale; and
A copy of the corporate resolution providing that existing officers and/or directors cease to hold positions and that new officers or directors are appointed, if applicable; and personal certifications permitting the Department to make inquiries to the New Jersey State Police as to any information it may have on file with respect to the applicant, that is, the person, sole proprietor, partners, members and managers of a limited liability company, corporate officers, directors and shareholders owning 10 percent or more of the shares of the corporation, including a criminal history record background check of the applicant, based upon information provided to and received from the Division of State Police. The background check shall include a State criminal history record background check based upon an exchange of fingerprint data with the State Bureau of Identification in the Division of State Police, for which the Division shall promptly notify the Commissioner if the subject of the original criminal history record background check is arrested for a crime or offense in this State after the date the background check was performed, and a check of both criminal and non-criminal information as requested from and distributed to the Federal Bureau of Investigation and any other governmental agency. The Department may make such inquiries on the basis of answers to questions in the application or on the basis of any other information which the Department receives that would make such an inquiry relevant to the decision on the application.

(b) The Commissioner shall approve the change of control unless, after an opportunity for a hearing, it is determined that there are sufficient grounds to deny the application. Unless the Commissioner issues a preliminary denial of the application and affords the applicant an opportunity for a hearing within 90 days of the Commissioner's receipt of the completed application, the application shall be deemed approved.

N.J. Admin. Code § 3:17-2.8 Discontinuation of business activity

(a) When a consumer lender or sales finance company discontinues its licensed business operations in New Jersey, the licensee shall:

Surrender the entity's current license as well as the license of each branch office;
Identify, in writing, if there are any New Jersey consumer loan retail installment sales contracts or retail charge account agreements being processed and provide the total number of any such transactions together with the consumers' names and addresses for each transaction;
Identify, in writing, the location of loan or agreement files required to be maintained under New Jersey law and regulations;
Identify, in writing, any arrangements that have been made to have other entities take over consumer loan or retail charge account agreement files together with complete information on the name, address, telephone number, and contact person of entities involved in such arrangements;
Identify, in writing, the name and telephone number of person(s) within the licensee's operation designated to handle any consumer problems that may arise;
Satisfy all outstanding obligations owed to the Department including all assessments due and owing and prepay the dedicated funding base assessment for the year of the discontinuance by paying the amount of the most recently billed base assessment within 15 days after ceasing business or upon being acquired. Adjustments to the base assessment, if any, and the final volume assessment for the year of discontinuance will be billed in the year following the discontinuance;
Satisfy all filing requirements including submitting a final annual report for the year in which the licensee discontinues its licensed business operations in New Jersey; and
Identify, in writing, the name, address, and phone number of the person within the licensee's operation responsible for the payment of assessments.

N.J. Admin. Code § 3:17-2.9 Licensee notification requirements

(a) A licensee shall notify the Department in writing within 15 days of the occurrence of any of the following:

Upon each arrest, indictment or conviction of the licensee, or of any officer, director, partner, member, owner or substantial stockholder of the licensee in this State, in another state, or in any Federal jurisdiction for any offense, crime or misdemeanor, except for a motor vehicle violation;
Upon each revocation, denial, suspension or restraint of a business or professional license, registration, certificate or other right to engage in business issued to the licensee, or to any officer, director, partner, member, owner or substantial stockholder of the licensee, or to any affiliate thereof, by this State, by another state, by the Federal government, or by any agency or instrumentality thereof;
Upon filing a petition of bankruptcy or reorganization by the licensee, or by any officer, director, partner, member, owner or substantial stockholder of the licensee, or by any affiliate thereof;
Upon the fining, penalizing or disciplining of the licensee, or any affiliates, by this State, by another state, by the Federal government, or by any agency or instrumentality thereof; and

Upon the involvement of the licensee, or any officer, director, partner, member, owner or substantial stockholder of the licensee, or any affiliate thereof, in any activity that may have a substantial impact on the ability of a licensee to engage in the licensed activity in a prudent or worthy manner.

Subchapter 3 FEES

N.J. Admin. Code § 3:17-3.1 Fees-general

All fees shall be paid by a check made payable to "Treasurer--State of New Jersey."

N.J. Admin. Code § 3:17-3.2 Application fees

(a) An applicant for a new license or a branch office license for a consumer lender or a sales finance company shall pay an application fee for a company or branch office license under the Act to the Department as follows:

On an application for one license set forth in (a) above for either a consumer lender or a sales finance company: $ 700.00; and

On an application for one license set forth in (a) above for both a consumer lender and a sales finance company: $ 1,000.

(b) A licensee who applies for a license in addition to their existing consumer lender license or sales finance license shall pay an application fee for each such application of $ 300.00 per company or branch license.

Subchapter 4 NET WORTH, LIQUID ASSETS AND INSOLVENCY

N.J. Admin. Code § 3:17-4.1 Applicability of provisions

The requirements of this subchapter shall apply to each corporation, partnership, limited liability company, or sole proprietorship that is licensed as a consumer lender or that is an applicant for a license as a consumer lender.

N.J. Admin. Code § 3:17-4.2 Accounting method for determining net worth

Net worth shall be computed on the accrual basis of accounting.

N.J. Admin. Code § 3:17-4.3 Requirement to achieve and maintain net worth and liquid assets

Each applicant for a license as a consumer lender shall achieve and maintain the net worth and liquid assets as required by N.J.S.A. 17:11C-16.

N.J. Admin. Code § 3:17-4.4 Failure to maintain net worth or liquid assets; action by the Department

(a) If the net worth or liquid assets of a consumer lender falls below the amounts required by N.J.S.A. 17:11C-16, or if the consumer lender is insolvent, the Department may take such action as it deems appropriate and necessary to protect the public. The action may include requiring the consumer lender to operate pursuant to a memorandum of understanding, or directing the consumer lender to submit and comply with a capital plan within a time frame established by the Department to attain the net worth or liquid assets required by the Act.

(b) When considering whether to suspend, revoke or refuse to renew the license of a consumer lender who does not have the net worth or liquid assets required by the Act, the Commissioner shall consider the following factors:

How far the consumer lender is below the level of net worth or liquid assets required by the Act;

The correspondent relationship that a consumer lender may have with another financial institution;
The number and amount of loans typically made by the consumer lender;
The history of consumer complaints received by the Department concerning the consumer lender;
Whether the consumer lender has committed to make loans that it has been unable to fund; and
Any other factors reflecting on the ability and fitness of the consumer lender to transact business in its licensed capacity.

Subchapter 5 BOOKS AND RECORDS; EXAMINATIONS; ANNUAL REPORTS

N.J. Admin. Code § 3:17-5.1 Methods and accounting

(a) Each licensee shall maintain books, records, accounts and documents related to the business in accordance with recognized accounting principles.

(b) If a person licensed to act as a consumer lender maintains books and records on a basis other than the accrual method of accounting, that licensee shall also maintain books and records on the accrual basis of accounting which states the net worth of the licensee.

(c) Licensees shall preserve all books, records, accounts and documents related to the business for at least three years after making the final entry on any application or loan.

(d) The denial or withdrawal of an application shall constitute the final entry for an application which is denied or withdrawn.

(e) The assignment or sale of a loan shall constitute the final entry for a loan which is sold or assigned.

(f) In the case of an open-end loan, the licensee shall preserve the books, accounts and records for at least three years after each entry.

(g) All books, records, accounts and documents may be stored electronically so long as the electronically stored information can be produced in electronic format upon request by the Department or reproduced on paper and delivered to the Department within five days of the licensee's receipt of a request from the Department to produce the records.

(h) In the case of a licensee that ceases to do business, the Commissioner may move and store abandoned books, accounts and records in whatever form and make a claim against the bond for costs of moving and storage.

N.J. Admin. Code § 3:17-5.2 Reproduction of documents

A licensee may reproduce documents and records relating to the operation of its business for the purpose of complying with this subchapter and may substitute the copy for the original.

N.J. Admin. Code § 3:17-5.3 Location of books and records

(a) Each licensee shall notify the Department of the office in which the books and records are kept. If the licensee moves the books and records, the licensee shall notify the Department prior to the move.

(b) A licensee may keep its records at:

A licensed principal or branch office in or out of this State;
An unlicensed site in or out of this State, provided that the licensee secures the prior approval of the Department pursuant to (c) below; or
A licensed branch office outside of this State, provided that the licensee secures the prior approval of the Department pursuant to (c) below.

(d) Licensees operating more than one licensed office may maintain the general ledger at their principal office. The trial balance or balance sheet and profit and loss statement of the licensed office shall be made available upon request to the examiner or investigator at the office where the general ledger is kept.

(e) The books, accounts and records of a licensee who holds both a consumer lender and a sales finance company license shall maintain separate books, accounts and records for each of those licensed activities and those records shall be maintained separate and apart from the books, accounts and records of all non-licensed lines of business conducted by the licensee and shall be maintained so that an examiner or investigator can efficiently examine the various types of licensed activities.

N.J. Admin. Code § 3:17-5.4 Loan numbering, original document envelope, and index requirement for consumer lenders

(a) Each consumer loan made shall have its proper consecutive or individual number and all instruments evidencing or securing any consumer loan shall bear the respective loan number.

(b) Each consumer lender shall maintain an alphabetical index of all borrowers, comakers, endorsers, guarantors and sureties that shall show the name of the borrower, loan number, date of loan and amount of loan.

(c) Each consumer lender shall maintain an envelope or other file for each loan in which shall be kept all the original notes, security agreements or other evidences of indebtedness or security, which have been signed by the borrower.

N.J. Admin. Code § 3:17-5.5 Documentation

N.J. Admin. Code § 3:17-5.6 Judgment records requirement for consumer lenders and sales finance companies

(a) When a consumer lender or sales finance company has reduced a note to judgment, the licensee shall maintain a file containing the following information:

The date of judgment;

The judgment debtor's name and address;

The date suit was filed;
The nature of the suit;
The name and location of the court;
The amount of judgment, showing the separate items comprised in the judgment as follows:

i. Principal;

ii. Interest;

iii. Attorney's fees;

iv. Court cost (itemized); and

v. Total amount of judgment; and

A description of the legal procedures followed to enforce the judgment.

(b) Consumer lenders and sales finance companies shall maintain records of nonjudicial foreclosures of security, such as repossession pursuant to the terms of the contract.

N.J. Admin. Code § 3:17-5.7 Motor vehicle lien requirement for consumer lenders

Whenever a consumer loan or retail installment contract is secured by a lien on a motor vehicle, it shall be the responsibility of the consumer lender or sales finance company to see that the title to the motor vehicle is in the name of the borrower. If the motor vehicle used as security is the property of a comaker, surety or guarantor, then the title of such motor vehicle shall be in the name of the comaker, surety or guarantor.

N.J. Admin. Code § 3:17-5.8 Retention of advertisements

One copy of each advertisement, including radio and television scripts, and any materials disseminated over the Internet or by any other electronic means, shall be kept on file in the licensee's office for at least two years after the last date on which any such advertisement was utilized, said date to be noted on each such advertisement.

N.J. Admin. Code § 3:17-5.9 Copy of examination reports to licensee

The official report of examination shall be submitted to the licensee or to a representative of the licensee which has been designated by the licensee for such purpose.

N.J. Admin. Code § 3:17-5.10 Charges for investigations

N.J. Admin. Code § 3:17-5.11 Reports to the Department

Each consumer lender and sales finance company shall file a report with the Department annually on or before May 1 of each year. The report shall be submitted on forms provided by the Department and shall indicate the net worth and liquid assets of the consumer lender, as required. In accordance with N.J.S.A. 17:11C-43, the Department shall assess a penalty against any consumer lender or sales finance company for each annual report filed late up to $ 100.00 per day.

Subchapter 6 INSURANCE

N.J. Admin. Code § 3:17-6.1 Insurance matters for consumer lenders

(a) Consumer lenders are subject to the provisions concerning insurance set forth in N.J.S.A. 17:11C-21.

(c) It shall be the responsibility of the consumer lender to explain clearly to each borrower the benefits and limitations of any credit life insurance, credit health or disability insurance, or credit involuntary unemployment insurance which the borrower contemplates obtaining in connection with a loan.

(d) Each consumer lender shall keep a record of all policies for credit life insurance, credit health or disability insurance, or credit involuntary unemployment insurance sold to a borrower in connection with a loan, all premiums collected in connection with such loans, all refunds of unearned premiums caused by payment in full of an amount or by renewal, and a detailed record of all claims paid by the insurer.

(e) If a consumer lender collects a premium from a borrower for credit life insurance, credit health or disability insurance, or credit involuntary unemployment insurance, and such insurance does not become effective, the consumer lender shall immediately give written notice to the borrower and shall promptly refund to or credit to the account of the borrower the amount collected from him or her or charged to him or her for such insurance.

N.J. Admin. Code § 3:17-6.2 Insurance provisions applicable to consumer lenders

(a) When a consumer loan is repaid in full or renewed, or if the insurance is terminated prior to the scheduled maturity date of a consumer loan, the consumer lender shall refund to the borrower any unearned insurance premiums.

(b) If a borrower has repaid a consumer loan in full, or if a beneficiary named in a policy under a claim is due a refund of unearned premiums and the consumer lender is unable to locate the borrower or beneficiary after due diligence, but in no event longer than 180 days, the licensee shall return all unearned premiums to the insurer, stating the reason therefor. The consumer lender shall file evidence in the borrower's file of his or her efforts to locate the borrower.

(c) All refunds and credits made by consumer lenders pursuant to this section shall be computed by the "Sum of Digits Method" commonly known as the "Rule of 78ths." These are rules for computing refunds of unearned finance charges on early payment of a loan so that the refund is proportional to the monthly unpaid balance. Tables for calculating refunds and credits according to this methodology can be obtained from Financial Publishing Company, 82 Brookline Drive, Brookline, MA 02212, (617) 262-4040, http://www.financial-publishing.com. When the refund or credit of the unearned insurance premium is less than $ 1.00, no refund is required.

(d) If a borrower has credit life insurance, interest charges shall cease accruing on the account at the death of the insured.

(e) If a consumer loan contract contains credit life insurance, the consumer lender shall file a death claim with the insurer upon receipt of notice of the death of the insured. The death claim filed by a consumer lender with an insurer shall be made for the full amount of the coverage held at death by the insured.

(f) A policy for credit life insurance, credit health or disability insurance, or credit involuntary unemployment insurance may provide for the insurance of more than one person. If the policy is silent regarding whether the insurance covers more than one person, the person whose signature appears on the first line of the lines provided for the signatures on the loan contract shall be considered as the only borrower insured by the policy and the consumer lender shall disclose to the borrower in writing the effect of the order of signing the loan contract.

Subchapter 7 ADVERTISING

N.J. Admin. Code § 3:17-7.1 Advertising and insurance costs

If a consumer lender requires a borrower to insure the collateral assigned as security for a loan, the licensee shall not advertise that there are "no other costs," or use words of similar meaning, unless the terms represented in the advertisement include the cost of the insurance or unless the advertisement states that an additional charge for insurance is required.

N.J. Admin. Code § 3:17-7.2 Verbal advertisements

Each verbal advertisement for a loan, which a licensee makes or authorizes to be broadcast or disseminated by radio, television, Internet or other electronic means, shall include a statement indicating whether the advertisement is for a consumer loan, retail installment contract, or retail charge account. The statement may be made by either verbal or visual means, provided that, if visual means are used, the statement shall appear for the entire time the advertisement is broadcast or disseminated.

N.J. Admin. Code § 3:17-7.3 Prohibited types of advertising

(a) No advertising shall contain false, misleading or deceptive claims or misrepresentations. In all advertisements that make express or implied claims that are likely to be misleading in the absence of certain qualifying information, such qualifying information shall be disclosed in the advertisement in a clear and conspicuous manner.

(b) The use of any of the following types of advertising shall be deemed to be misleading or deceptive:

A form which has the appearance of a check, money order, draft or other instrument that is normally used for the transfer of funds, except that a consumer lender may use such an instrument if:

i. The consumer lender sends this type of solicitation only to current or prior customers of the consumer lender, including customers of consumer credit affiliates of the consumer lender;

ii. Each such solicitation allows the customer an option not to receive future solicitations of this type;

iii. The instrument is negotiable for not more than six months, and the consumer is advised to destroy the instrument if it is not going to be negotiated; and

iv. The solicitation contains the following statement in a prominent place in a 10-point print: "THIS IS A SOLICITATION FOR A LOAN. READ THE ENCLOSED DISCLOSURES BEFORE SIGNING THIS CHECK!"; and

Reference to loans by terms such as savings, thrift, share passbook, account, deposit, certificate or any other word or phrase of similar meaning, used individually or collectively.

(c) No consumer lender shall permit a supply of blank notes, chattel mortgages, security agreements, applications or other similar forms to be placed in any place other than a licensed office.

(d) A person who is not licensed or exempt under the Act and these rules shall not offer to act as a consumer lender or sales finance company in this State through direct or indirect solicitation or advertisement in print, electronic or any other medium.

Subchapter 8 CHARACTERISTICS OF LOANS

N.J. Admin. Code § 3:17-8.1 Provisions applicable to all licensees

(a) No licensee shall charge an interest rate that is in excess of the rate permitted by N.J.S.A. 2C:21-19.

(b) No licensee shall charge any fee other than those permitted by N.J.S.A. 17:11C-33.

(d) A licensee may only compute interest accrued between monthly payments using the 365/365 method (actual number of days between payments) or the 360/360 method (each month assumed to be 30 days). Sales finance companies may charge a time price differential on retail charge accounts rather than interest.

(e) A borrower shall be given a copy of every document he or she is required to sign.

(f) Where any disclosure is required pursuant to this chapter that is also required by any Federal law or regulation, compliance with such Federal law or regulation shall be deemed to be compliance with this subchapter.

(g) No licensee shall require, as a precondition for the granting of credit, or for any other benefit or consideration from the licensee in connection with a loan, that the borrower engage in any other business activity with the licensee. Nothing in this subsection shall prohibit a licensee from offering to a borrower other services or products in connection with a loan.

(h) A licensee shall not require, nor receive, from a borrower a rebate of any portion of the proceeds of a loan that is not a permissible fee under N.J.S.A. 17:11C-33.

N.J. Admin. Code § 3:17-8.2 Consumer loans

(a) All consumer loans, except variable rate loans permitted pursuant to N.J.S.A. 17:11C-32, shall be repaid in substantially equal monthly installments of principal and interest computed on unpaid balances sufficient to liquidate the principal thereof, except as provided in subsection (b) below.

(b) In fixing the date of the first installment beyond one month, the number of days in excess of one month, but not in excess of 15 days, shall be counted after the expiration of one month from the date of the loan. The amount of the first installment may be increased by the amount of interest for the number of days in excess of one month.

(c) A consumer lender shall not knowingly grant a loan in one office to any borrower who already has a loan in another office operated by the same entity or by an affiliate, parent, subsidiary or under the same ownership, management or control, whether partial or complete.

(d) When a consumer lender knows or has reason to know that the proceeds of loan of $ 50,000 or less are to be delivered by the borrower to an individual already indebted to such consumer lender on a loan of $ 50,000 or less, then such loans shall be construed as a single loan to such individual for the purpose of interest computations. If the aggregate of such loans ever exceeds $ 50,000, interest on such accounts earned from the date such excess occurred shall be restricted to the rate on unpaid balances authorized by the Interest and Usury Law, N.J.S.A. 31:1-1 et seq., and its implementing rule set forth at N.J.A.C. 3:1-1.1.

(e) Whenever a consumer lender has placed an account in the hands of an attorney or other agent for collection, all payments thereafter received by the consumer lender or by such attorney or agent, prior to entry of judgment on such account, shall be credited by the consumer lender to the account as of the date of receipt of such payment to the licensee or to such attorney or agent, and any such attorney or agent shall notify the consumer lender of the day any such payment is received.

(f) All out-of-State loans purchased shall be reported as a separate item in the consumer lender's annual report to the Commissioner.

(g) The required information concerning the amount of interest payable over the term of the loan shall be given on the assumption that the contract will be paid in accordance with the terms originally agreed upon. A variance tolerance of $ 1.00 in the total amount of interest set forth in the loan contract is hereby authorized.

Subchapter 9 OTHER PERMISSIBLE LINES OF BUSINESS FOR CONSUMER LENDERS

N.J. Admin. Code § 3:17-9.1 All activities prohibited except as authorized by this subchapter

No consumer lender shall conduct any business activities in its office except activities authorized under the consumer lending license, activities specified in N.J.A.C. 3:17-9.2, and activities for which the consumer lender has obtained specific approval from the Commissioner as provided in N.J.A.C. 3:17-9.2.

N.J. Admin. Code § 3:17-9.2 Approved business activities for consumer lenders

(a) A consumer lender may engage in the activities related to that license without securing specific approval from the Commissioner. The activities may be conducted in the same office, room or place of business where the consumer lender conducts the business of making consumer loans.

Any licensed activity permitted under the Act provided that the consumer lender secures proper licensing from the Department;
Mortgage loan business. Any such business shall be conducted in accordance with the provisions of the New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq., provided that the consumer lender secures proper licensing from the Department;
The home repair financing agency business. Any such business shall be conducted in accordance with the provisions of N.J.S.A. 17:16C-62 et seq., the Home Repair Financing Act;
The insurance premium finance company business. Any such business shall be conducted in accordance with the provisions of N.J.S.A. 17:16D-1 et seq., the Insurance Premium Finance Company Act;
The making of business or commercial loans;
The financing of installment contracts involving the time sale of goods or services that are to be utilized by the buyer for business or commercial purposes;
The leasing of personal property for business or commercial purposes;
Income tax preparation service;
First lien loans on non-residential real property provided that such business is conducted in accordance with the provisions of N.J.S.A. 31:1-1 et seq., N.J.A.C. 3:1 or Sections 501 et seq., of the Federal Depository Institutions Deregulation and Monetary Control Act of 1980, P.L. 96-221; and
Purchase of owner originated second mortgages under such reasonable terms and conditions as may be agreed to between the consumer lender and the mortgagee.

(b) A consumer lender who wishes to engage in the same office, room or place of business in an activity related to the financial services business not authorized by the consumer lending license or specified in (a) above, may apply to the Commissioner for approval to engage in such activity. Such application shall:

Be in writing;
Identify that it is an application by a consumer lender to engage in an activity pursuant to N.J.A.C. 3:17-9.2;
Describe in detail how the activity in which the consumer lender wishes to engage is related to the financial services business;
Include a statement that the consumer lender will not require that a borrower engage in the activity as a precondition for granting a consumer loan; and
Include a statement that the consumer lender will conduct the activity in conformity with all applicable law and regulations.

(c) The Commissioner shall approve or deny an application submitted pursuant to (b) above within 90 days of receipt. If the Commissioner does not, within 90 days of receipt, deny a consumer lender's application submitted pursuant to (b) above, the application shall be deemed approved.

(d) Consumer lenders who obtained, prior to July 1, 1997, approval from the Commissioner to engage in an activity not specified in N.J.A.C. 3:17-9.2 shall be deemed to be approved to engage in that activity under the Act.

N.J. Admin. Code § 3:17-9.3 Suspensions or revocations of approved business activities

The Commissioner may, by written directive and after the licensee has been provided with notice and an opportunity to be heard, suspend or revoke a licensee's approval to engage in any of the business activities specified in N.J.A.C. 3:17-9.2 if it is determined that the licensee has violated the Act or this chapter.

Subchapter 10 IMPOSITION OF ADMINISTRATIVE PENALTIES

N.J. Admin. Code § 3:17-10.1 Administrative penalties

(a) The Commissioner may refuse to issue and may revoke, suspend or refuse to renew a license, or impose a penalty pursuant to the Act, if the Commissioner finds, after notice and an opportunity for a hearing in accordance with the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., that any person, applicant for or holder of the license has:

Violated any of the provisions of the Act or any order, rule or regulation made or issued pursuant to the Act;
Failed at any time to meet the requirements for licensure, or withheld information or made a material misstatement in an application for a license;

Been convicted of an offense involving breach of trust, moral turpitude or fraudulent or dishonest dealing, or had a final judgment entered against the person in a civil or administrative action upon grounds of fraud, misrepresentation, or deceit, or failure to maintain books, accounts, records and other documents as required by N.J.S.A. 17:11C-19 or N.J.A.C. 3:17-5;

Become insolvent, or failed to attain or maintain the required net worth;
Demonstrated unworthiness, incompetence, bad faith or dishonesty in the transaction of business as a licensee; or
Engaged in any other conduct which would be deemed by the Commissioner to be the cause for denial, revocation, suspension, or refusal of the license or license renewal.

(b) A license may be suspended, revoked, or not renewed by the Commissioner if any officer, director, partner, or owner of the licensee has committed any act which would be cause for suspending, revoking or not renewing a license if issued to that person as an individual.

(c) If the license is suspended or revoked pursuant to (b) above, the license shall remain suspended or revoked, unless within the time fixed by the Commissioner, in the case of a partnership, the connection therewith of the offending individual shall be severed and that individual's interest in the partnership and share in its activities brought to an end, or in the case of an association, corporation, or other legal entity, the offending individual shall be discharged and shall have no further participation in the legal entity's activities. In the case of an offending individual who is an officer or director of the corporation or other legal entity, that individual shall be required to fully divest himself or herself of all ownership in the entity including any stock, bonds or other corporate holdings.

(d) The Commissioner may access and examine books, accounts, records and other documents maintained by a consumer lender or sales finance company licensee pursuant to N.J.S.A. 17:11C-19.

(e) The Commissioner may conduct investigations, which may include the subpoenaing of witnesses and documents, pursuant to N.J.S.A. 17:11C-42.

(f) Whenever it appears to the Commissioner that any person has engaged, is engaging, or is about to engage, in any practice or transaction prohibited by Act, the Commissioner may, in addition to any other remedy available, bring a summary action in a court of competent jurisdiction against the person, and any other person concerned or in any way participating in or about to participate in a practice or transaction in violation of the Act to enjoin the person from continuing the practice or transaction engaged in, or from engaging in the practice or transaction, or doing any act in furtherance of engaging in the practice or transaction.

(g) The Commissioner may impose a civil penalty not exceeding $ 25,000 on any person for a violation of the Act. Each violation of the Act, including any order, rule or regulation made or issued pursuant to the Act, shall constitute a separate offense. Additionally, each violation which constitutes a knowing violation shall be considered a crime of the third degree.

(h) The Commissioner may order that any person who has been found to have knowingly violated any provision of the Act and has thereby caused financial harm to consumers, be barred for a term not exceeding 10 years from acting as a consumer lender or sales finance company, or a stockholder, or an officer, director, partner or other owner, or an employee of a consumer lender or sales finance company licensee, or acting in any other capacity pursuant to the Act. Pursuant to N.J.S.A. 17:11C-18, violation of any such final order shall be considered a crime of the third degree.

N.J. Admin. Code § 3:17-10.2 Initiation of action

A reference to the statute, rule and/or administrative order alleged to be violated;
A concise statement of the facts on which the violation is based;

A statement of the administrative penalty, penalties or other relief sought to be imposed; and

A statement advising the alleged violator of the right to a hearing and the procedure for requesting a hearing.

N.J. Admin. Code § 3:17-10.3 Failure to respond to notice

(b) If no response is received within the time provided in any notice to suspend or revoke a license or authority to conduct any activity regulated by the Act, the Department shall prepare a final order suspending or revoking the license or authority to conduct such activity, and mail a copy of the order to the violator at his or her last known business address on file with the Department.

N.J. Admin. Code § 3:17-10.4 Consent to an administrative penalty

That the licensee return his or her license to the Department for cancellation;
The payment of a monetary penalty;
The reimbursement to the Department of the costs of investigation and examination;
The restitution of moneys owed any person; and
The execution of an administrative order that may include admissions of material facts, conclusions of law, and such other terms and conditions as the Commissioner, or his or her authorized designee, may deem to be necessary and appropriate under the circumstances.

N.J. Admin. Code § 3:17-10.5 Request for a hearing

(b) A request for a hearing shall include:

The name, address and daytime telephone number of the alleged violator;
A copy of the notice;
A statement requesting a hearing;
A specific admission, denial or explanation of each fact alleged in the notice, or a statement that the person is without knowledge thereof; and
A concise statement of the facts or principles of law asserted to constitute any factual or legal defense.

(e) Upon receipt of a properly completed request for a hearing, the Chief of Enforcement, or such other Department personnel as may be designated by the Commissioner, shall examine the request and may conduct or direct such further proceedings as may be appropriate, including, but not limited to, an interview with the alleged violator.

Terminated with or without prejudice;
Resolved by consent order, which may provide for a lesser or different administrative penalty; or
A finding that the matter constitutes a contested case, pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. In such a case, the Department shall transmit the matter to the Office of Administrative Law for a hearing consistent with the Uniform Administrative Practice Rules, N.J.A.C. 1:1.

Chapter 18 FORECLOSURE CONSULTANTS

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:18-1.1 Purpose and scope

(a) This chapter sets forth requirements applicable to the licensure and operations of foreclosure consultants pursuant to the provisions of N.J.S.A. 46:10B-53 et seq.

(b) This chapter applies to all persons who act as, offer to act as, or hold themselves out as being foreclosure consultants in this State.

N.J. Admin. Code § 3:18-1.2 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Act" means the Foreclosure Rescue Fraud Prevention Act, N.J.S.A. 46:10B-53 et seq.

"Business entity" 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.

"Business licensee" means a business entity licensed as a foreclosure consultant.

"Conventional mortgage rate" means the highest mortgage rate published for the relevant loan product on the website of any generally accepted industry provider of such information, applicable to the week preceding the transaction.

"Distressed property" means residential real property consisting of from one to four dwelling units, at least one of which is occupied by the owner as a primary residence, and which is the subject of a mortgage foreclosure proceeding or whose owner is more than 90 days delinquent on any loan that is secured by the property.

"Distressed property conditional conveyance" means a transaction involving any participation by, or any distressed property service or other service or other assistance provided by, a foreclosure consultant, in which a distressed property owner transfers an interest in fee, or a beneficial interest created through a trust document, in the distressed property; the acquirer of the property allows the distressed property owner to occupy the property; and the acquirer of the property or a person acting in participation with the acquirer of the property conveys or promises to convey an interest in fee back to the owner or gives the owner an option to purchase the property at a later date.

"Distressed property conveyance" means a transaction involving any participation by, or any distressed property service or other service or other assistance provided by, a foreclosure consultant, in which a distressed property owner transfers an interest in fee in a distressed property.

"Distressed property owner" means the owner of record of the title to a distressed property.

"Distressed property owner's current verified monthly income" means the monthly average of the owner's most recent six months of wage receipts or pay stubs or, if the owner has non-wage income, by a verified statement of profit and loss or income from a certified public accountant who has reviewed the owner's income.

"Distressed property purchaser" means a person who acquires an interest in a distressed property through a distressed property conditional conveyance or a distressed property conveyance, or a person who participates in a joint venture or joint enterprise involving a distressed property conditional conveyance or a distressed property conveyance. The term "distressed property purchaser" does not mean a Federally insured financial institution or a person who acquires distressed property through a deed in lieu of foreclosure or a person acting in participation with any person who acquires distressed property through a deed in lieu of foreclosure, provided that person does not promise to convey an interest in fee back to the distressed property owner or does not give the owner an option to purchase the property at a later date.

"Distressed property relief" or "relief" means, in connection with a foreclosure consultant, any of the following:

Saving the distressed property owner's property from foreclosure;
Postponing the foreclosure sale;
Obtaining a forbearance from the mortgagee;
Securing the right to exercise the right to reinstatement;
Obtaining an extension of the period within which the distressed property owner may reinstate his or her mortgage obligation;
Obtaining a waiver of an acceleration clause;
Obtaining a modification of a mortgage;
Assisting the distressed property owner in obtaining a loan or advance of funds; or
Avoiding the impairment of the distressed property owner's credit.

"Distressed property service" or "service" means, without limitation, in connection with a distressed property conditional conveyance or a distressed property conveyance, any of the following:

Debt, budget, or financial counseling of any type;
Receiving money for the purpose of distributing it to creditors in payment or partial payment of any obligation secured by a mortgage or other lien on a distressed property;
Contacting creditors on behalf of a distressed property owner;
Arranging or attempting to arrange for an extension of the period within which the distressed property owner may cure the owner's default and reinstate a debt obligation;
Arranging or attempting to arrange for a delay or postponement of the time of sale of the distressed property;
Advising with respect to the filing of any document or assisting in any manner in the preparation of any document for filing with any court;
Giving advice, explanation, or instruction to a distressed property owner that in any manner relates to the cure of a default or forfeiture or to the postponement or avoidance of a sale of the distressed property; or
Recording the foreclosure consultant contract as required by N.J.S.A. 46:10B-56.g.

"Foreclosure consultant" means any person, located out-of-State or within the State, who, directly or indirectly, for compensation from a distressed property owner, makes any solicitation, representation, or offer to perform, or who performs, any distressed property service that the person represents will in any manner do any of the following in relation to the owner's distressed property:

Prevent or postpone the foreclosure sale of the property;
Obtain any forbearance from any mortgagee;
Assist the distressed property owner in exercising any right of reinstatement or right of redemption;
Obtain any extension of the period within which the distressed property owner may reinstate the distressed property owner's rights with respect to the property;
Obtain any waiver of an acceleration clause contained in any promissory note, contract, or mortgage evidencing or securing a debt in relation to the property;
Assist the distressed property owner in obtaining a loan or advance of funds other than to pay off the promissory note, contract, or mortgage evidencing or securing a debt in relation to the property, except that, for the purposes of this paragraph 6, a foreclosure consultant shall not assist a distressed property owner by:

i. Providing any service that would require licensure under the Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq., without first obtaining such license;

ii. Providing any service that would require licensure under the Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 et seq., without first obtaining such license; or

iii. Providing any such service that would require licensure, registration, or other credential under any other law or regulations of this State, another State or the United States, without first obtaining the requisite authorization; or

Avoid or ameliorate the impairment of the distressed property owner's credit resulting from default on the promissory note, contract, or mortgage, or the conduct of a foreclosure sale or offer to repair the distressed property owner's credit.

"Foreclosure consultant agreement" or "foreclosure consultant contract" means the written document memorializing the terms of the contractual agreement between a foreclosure consultant and a distressed property owner.

"Individual" means a natural person.

"Individual licensee" means a natural person licensed as a foreclosure consultant employed by a business licensee.

"Licensee" means a business licensee or an individual who is licensed under the Act.

"Reasonable ability to pay" means that the distressed property owner's current verified monthly income is adequate to service a 30-year fixed rate loan at the conventional mortgage rate together with actual property taxes, homeowner's insurance, condominium or association fees, if applicable, and reasonable and necessary living expenses.

"Reasonable and necessary living expenses" means not less than the average utility costs over the last 12 months, or if that figure is unavailable, $ 200.00, and transportation, food, clothing, and other expenses equal to an amount not less than the Collection Financial Standards set forth by the Internal Revenue Service for transportation, food, clothing, and other items and out-of-pocket health care costs.

"Residual income" means a distressed property owner's net income available to meet living expenses after the payment of all ordinary and necessary debt, including payments under an option to purchase back the distressed property owner's property transferred in a distressed property conditional conveyance.

N.J. Admin. Code § 3:18-1.3 Location

(a) An application for a license as a business licensee shall specify the address of the principal location from which the business licensee shall conduct foreclosure consulting activity and at which it may be contacted by the Department as referenced in N.J.A.C. 3:18-2.2(a) and (b).

(b) A business licensee changing its name, the address of its principal office, or its email address shall comply with N.J.A.C. 3:1-7.1 and 7.4, as applicable.

Subchapter 2 LICENSE REQUIREMENTS

N.J. Admin. Code § 3:18-2.1 License required

(a) No person shall act as, offer to act as, or hold himself or herself out to be, a foreclosure consultant or use the designation foreclosure consultant, foreclosure consultant specialist, or similar designation in this State unless licensed by the Commissioner as set forth in the Act.

(b) "Foreclosure consultant" shall not include any of the following:

A housing counseling agency certified by the United States Department of Housing and Urban Development to provide counseling;
A person who holds or is owed an obligation secured by a lien on any distressed property in situations in which the person performs services in connection with the obligation or lien, provided the obligation or lien did not arise as the result of, or as part of, a proposed distressed property conditional conveyance or a distressed property conveyance;
A licensed attorney who negotiates the terms of a distressed property conveyance on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney receives, directly or indirectly, any compensation, benefit, or gain for the attorney's services from a foreclosure consultant business licensee or any individual or entity who should be licensed as a foreclosure consultant;
An entity which is licensed pursuant to P.L. 1979, c. 16 (N.J.S.A. 17:16G-1 et seq.) or an successor statute;
A municipality which has a tax lien on distressed property;
An assignee or a purchaser of a municipal tax lien from a tax sale;
A sponsor which is certified by the Commissioner of Community Affairs to participate in the New Jersey Housing Assistance and Recovery Program established pursuant to sections 8 through

14 of P.L. 2008, c. 127 (N.J.S.A. 55:14K-88 et seq.);

A bank, savings bank, savings and loan association, credit union, or other Federally insured financial institution, or insurance company, or affiliate or subsidiary thereof, organized, chartered, licensed, or holding a certificate of authority to do business under the laws of this State or any other state or under the laws of the United States;
A person licensed as a real estate broker, broker-salesperson, or salesperson pursuant to N.J.S.A. 45:15-1 et seq., while acting under the authority of that license;
A person licensed as a title insurance producer pursuant to the New Jersey Insurance Producer Licensing Act of 2001, P.L. 2001, c. 210 (N.J.S.A. 17:22A-26 et seq.) while acting under the authority of that license or conducting the business of title insurance pursuant to P.L. 1975, c. 106 (N.J.S.A. 17:46B-1 et seq.);
A mediator duly authorized pursuant to and acting under the authority of the Judiciary's Foreclosure Mediation Program; or
A person licensed pursuant to the New Jersey Residential Mortgage Lending Act, P.L. 2009, c. 53 (N.J.S.A. 17:11C-51 et seq.), while acting under the authority of that license.

(c) An individual licensee shall only engage in foreclosure consultant activity while employed by a business licensee. An individual licensee shall not be employed by more than one business licensee at any given time.

An individual licensee shall only receive compensation for the performance of foreclosure consulting activity from the business licensee by which he or she is employed.
Other than compensation payable to the business licensee, an individual licensee shall not receive or solicit any compensation for foreclosure consulting directly from or on the behalf of, a distressed property owner.

(d) A business licensee shall be responsible for all of the foreclosure consulting activity of all individual licensees employed by it.

N.J. Admin. Code § 3:18-2.2 Application for a license

A complete application as prescribed by the Commissioner which shall include the following:

i. The legal name of the applicant, any trade or alternate name in which the applicant intends to operate, the official e-mail address of the applicant, and the business address of the principal office from which the applicant will conduct foreclosure consulting activity and at which the applicant may be contacted by the Department;

ii. The identification of any additional locations at which the applicant will engage in the business of foreclosure consulting on an ongoing basis. All such locations shall conform to all applicable local laws and ordinances and shall be conducive to the maintenance of the confidentiality of the personal identification and financial information of all consumers to whom the applicant provides any distressed property services, in accordance with all applicable Federal and State laws and rules;

iii. If different from the principal business location referenced in (a)1i above, the primary contact location of the applicant, including its mailing and e-mail addresses;

iv. A designation of the location at which the records of the applicant shall be maintained;

v. If the applicant is a business entity other than a sole proprietorship, information identifying all partners, all members and managers of a limited liability company, corporate officers, directors, and stockholders owning 10 percent or more of the shares of a corporation, and a personal certification from all such individuals.

vi. The name and address of the applicant's registered agent in this State; and

vii. The applicant's Federal Tax Identification Number or Social Security Number, as applicable;

Evidence of submission to a criminal history record background check by all owners, principals, officers, directors, partners, members, and managers of a limited liability company, shareholders owning 10 percent or more of the applicant, and by all employees requiring individual licensure as foreclosure consultants, which shall include:

i. An FBI criminal history record background check; and

ii. A New Jersey Division of State Police criminal history record background check, including fingerprinting in the manner currently required by the New Jersey State Police or their authorized representative;

Disclosure of the revocation, denial, or suspension of, and any restraint upon, any business or professional license, registration, certificate, or other credential authorizing the person to engage in business issued to or sought by the applicant, or any officer, director, partner, member, owner, or stockholder holding 10 percent or more of the company of the applicant, or any parent, subsidiary, or affiliate of the applicant, by this State, another state, the Federal government, or by any agency or instrumentality thereof;
The submission to the Department of an original executed bond, on a bond form provided by the Department on its website, from a surety company authorized to do business in this State, which bond meets the requirements of N.J.A.C. 3:18-3;
An unqualified audited financial statement prepared by a certified public accountant or a public accountant, in good standing;
An application for a business license by a corporation organized under the laws of this State shall be accompanied by a copy of the applicant's Certificate of Incorporation as filed with the New Jersey Department of Treasury, Division of Revenue. A foreign corporation shall submit a copy of its Certificate of Incorporation from the state in which it is incorporated, and a copy of its Certificate of Authority to do business in this State approved by the New Jersey Department of Treasury, Division of Revenue. If an alternate name is to be utilized, a copy of the registration of that name with the New Jersey Department of Treasury, Division of Revenue shall be provided;
An application for a business license from a sole proprietorship or partnership where a trade name is to be used shall be accompanied by a trade name certificate filed with the county clerk's office in the county in which the licensee is to be located, and any filing made with the New Jersey Department of Treasury, Division of Revenue;
An application for a business license from a limited liability company shall be accompanied by a copy of the applicant's Certificate of Formation as filed with the New Jersey Department of Treasury, Division of Revenue and a copy of its operating agreement. A foreign limited liability company shall submit a copy of its formation document from the state where it was established, a copy of its Certificate of Authority to do business in this State approved by the New Jersey Department of the Treasury, Division of Revenue, and a copy of its operating agreement. If an alternate name is to be utilized, a copy of the registration of that name with the New Jersey Department of Treasury, Division of Revenue shall be provided;
The non-refundable application fee as specified at N.J.A.C. 3:23-2.1(b)
A certification that the personal identification and financial information of all clients of the business shall be maintained in accordance with all Federal and State laws and rules applicable to personal identification and financial information privacy; and
A certification that the principal office is in compliance with all applicable local laws and ordinances.

(b) If the applicant is a natural person who will be employed by a business entity as a foreclosure consultant, such an applicant shall submit the following: a complete application, a non-refundable application fee as specified in N.J.A.C. 3:23-2.1(b), evidence of submission to criminal history record background checks through fingerprinting in the manner currently required by the New Jersey State Police or their authorized representative, a personal certification, and the application fee.

(c) The applicant shall bear all costs, including those associated with completion of the criminal history record background checks through the New Jersey Division of State Police and the FBI, and all fees and charges imposed by the Department, including non-refundable application fees.

History

Amended by 53 N.J.R. 2135(d), effective 12/20/2021

N.J. Admin. Code § 3:18-2.3 Terms of licenses

Beginning July 1, 2013, the term for foreclosure consultant licenses shall be two years. The term shall begin on July 1 of each odd numbered year and end on June 30 of the next odd numbered year as set forth in N.J.A.C. 3:23-2.2(b). All renewed licenses and all licenses initially issued or reinstated during a license term shall expire on June 30 of the year in which that license term will terminate.

N.J. Admin. Code § 3:18-2.4 Application for renewal of a license

(a) In order to apply to renew a license, a person who holds in good standing a license as a foreclosure consultant shall submit a completed renewal application which shall include the following:

The name of the applicant;
The location of the principal place of business of the applicant;

Confirmation that the applicant has bond coverage as specified in N.J.A.C. 3:18-3; and

A certification that all information on the original application for licensure, and any information subsequently changed by the applicant in accordance with N.J.A.C. 3:18-2.2 is currently in effect.

(b) No license shall be renewed unless all assessments made upon the licensee in accordance with N.J.A.C. 3:5 that were due and owing as of the expiration date of the current license have been paid.

(c) No license shall be renewed if it is established that grounds for the non-renewal of the license as set forth in N.J.S.A. 46:10B-55.b exist.

History

Amended by 53 N.J.R. 2135(d), effective 12/20/2021

N.J. Admin. Code § 3:18-2.5 Late renewal of licenses; late renewal fees; reinstatement fees; no authority after expiration

(a) Initial license terms shall run from the date of issue until June 30 of the following odd numbered year ("renewal year").

(b) A person who submits a renewal application for a business or individual license after the expiration of the license, but no later than the last day of July following license expiration, may be renewed upon payment of a late renewal fee of $ 50.00 per license.

(c) An individual or a business licensee who wishes to apply for reinstatement after the last day of July of the year in which their unrenewed license expired shall be required to file a reinstatement application. Expired business licensees shall submit a reinstatement application fee of $ 250.00 and expired individual licensees shall submit a reinstatement application fee of $ 50.00. Reinstatement applications will be accepted for a period of six months following the expiration of the last license held, after which the person shall be treated as a new license applicant and required to submit a complete new application and application fee.

(d) The submission of an application for late renewal or for reinstatement of a license does not authorize an individual licensee or a business licensee and any individual licensees employed by it to engage in any activity subject to licensure prior to the issuance of a properly renewed or reinstated license. A formerly licensed person who engages in activity as a foreclosure consultant without a renewed or reinstated license shall be subject to fines and other penalties as set forth in N.J.A.C. 3:18-9.1.

(e) The license of an individual licensee shall not be renewed or reinstated, notwithstanding the timely application of the individual licensee for renewal, until the business licensee by which he or she is employed is renewed or reinstated.

(f) Late renewal and reinstatement application fees are nonrefundable.

N.J. Admin. Code § 3:18-2.6 Discontinuation of foreclosure consulting activity

(a) When a foreclosure consultant business licensee discontinues foreclosure consultant activity in New Jersey, the business licensee shall surrender the entity's current license as well as the license of each individual licensee employed by the business licensee. The business licensee shall also provide written notice of the discontinuation of the business license to each individual licensee employed by the business licensee and to each consumer who is a party to an existing foreclosure consultant agreement with the business licensee. The written notice to such consumers shall identify any entity that has agreed to complete the providing of foreclosure consultant services to such consumers under the terms of the business licensee's pending foreclosure consultant contract and set forth the consumer's option to continue with the new designated entity or to terminate the agreement. The business licensee shall furnish proof to the Department of having made the notifications and also provide written notification to the Department of the following:

Any foreclosure consultant agreements being processed as of the date of the notice and provide the total number of any such agreements together with consumer names and addresses and the property address for each agreement;
The location of the files of pending foreclosure consultant agreements;
The location of records required to be maintained under New Jersey law and regulations;
Any arrangements that have been made to have other entities complete the providing of foreclosure consulting services on any such agreements, together with complete information on the name, address, telephone number, and contact person of entities involved in such arrangements;
Copies of any filed and unfiled discharges of recorded foreclosure consultant contracts that have been fully performed with an indication of whether the discharge has been received by the distressed property owner; and
The name and telephone number of person(s) within the licensee's operation designated to handle consumer inquiries and problems that may arise.

(b) A business licensee discontinuing foreclosure consultant activity shall also:

Satisfy all filing requirements including the final annual report for the portion of the calendar year in which the foreclosure consultant discontinues its licensed business operations in New Jersey;
Pay all assessments due and owing and prepay the base assessment for the year of the discontinuance by paying the amount of the most recently billed base assessment within 15 days after ceasing business or upon being acquired. In the event that the said amounts are not paid, the Department shall proceed against the bond. Adjustments to the base assessment, if any, and the final volume assessment for the year of discontinuance will be billed in the year following the discontinuance. In the event of an acquisition, the amount carried forward shall be paid by the acquiring entity; and
Identify, in writing, the name, address, and phone number of the person within the licensee's operation responsible for the payment of assessments and satisfying all outstanding obligations owed to the Department.

(c) An individual licensee whose relationship with a business licensee has been terminated, either by the individual licensee or the business licensee, shall not engage in foreclosure consulting activity until their application for licensure with another business licensee has been approved by the Department.

(d) When an individual licensee discontinues foreclosure consultant activity in New Jersey, the licensee shall notify the business licensee by which he or she is employed of the discontinuation in writing and shall forward to the Department proof of such written notification along with a certification attesting to their discontinuance of foreclosure consultant activity in New Jersey.

(e) To be licensed as a foreclosure consultant after termination of a relationship with an employing business licensee, an individual licensee shall complete an application that shall include the name of the new business licensee by whom they will be employed, a certification stating that their employment with their former business licensee has been terminated, and a certification from the new business licensee stating that it will employ the individual as a foreclosure consultant upon approval of the application.

N.J. Admin. Code § 3:18-2.7 Notifications to the Department

(a) Within 20 days after a change of any information required by N.J.S.A. 46:10B-55 and this subchapter to be supplied with an initial license application, a foreclosure consultant shall notify the Department in writing of any fact or circumstance affecting its qualifications for licensure including, but not limited to, a change in name, new or revised standard contracts, additions or deletions to the list of locations at which the licensee conducts ongoing business, and a change in its ownership or control as the result of a sale, transfer, or change of control of at least 10 percent of the business.

(b) For any individual who, as a result of the sale, transfer, or change of control owns at least 10 percent of the foreclosure consultant business and for each new officer, director and partner, a business licensee shall submit evidence of submission to a criminal history record background check as set forth in N.J.S.A. 46:10B-55 and N.J.A.C. 3:18-2.2(a)2. The background check shall include a State criminal history record background check based upon an exchange of fingerprint data with the State Bureau of Identification in the Division of State Police and a check of criminal information as requested from and distributed to the Federal Bureau of Investigation and any other governmental agency as follows:

Fingerprints, for submission to the FBI and any other governmental agency authorized to receive this information for a state, Federal, and international criminal history record background check, to determine an applicant's fitness for licensure under N.J.S.A. 46:10B-55.b(2).

(c) The notification of change and the evidence of submission of request for criminal history record background check shall be provided to the Department at: New Jersey Department of Banking and Insurance

Licensing Services

PO Box 473

Trenton, NJ 08625-0473

(d) A business licensee shall notify the Department in writing within 15 days of the occurrence of any of the following:

The arrest, indictment, or conviction of the business licensee, or of any officer, director, partner, member, owner, or stockholder holding 10 percent or more of the company of the business licensee in this State, in another state, or in any Federal jurisdiction for any offense, crime, or misdemeanor, except for a motor vehicle violation;
The revocation, denial, suspension, or restraint of a business or professional license, registration, certificate, or other right to engage in business issued to the licensee, or to any officer, director, partner, member, owner, or stockholder holding 10 percent or more of the company of the licensee, or to any affiliate thereof, by this State, by another state, by the Federal government, or by any agency or instrumentality thereof;
The filing of a petition for bankruptcy or reorganization by the licensee, or by any officer, director, partner, member, owner, or stockholder holding 10 percent or more of the company of the licensee, or by any affiliate thereof;
The fining, penalizing, or disciplining of the licensee, or any affiliates, by this State, by another state, by the Federal government, or by any agency or instrumentality thereof; and
The entry of any final judgment in a civil or administrative action against the licensee upon the grounds of fraud, misrepresentation, deceit, or breach of contract.

(e) An individual licensee shall notify the Department in writing within 15 days of the occurrence of any of the following:

The arrest, indictment, or conviction of the licensee in this State, in another state, or in any Federal jurisdiction for any offense, crime or misdemeanor, except for a motor vehicle violation;
The revocation, denial, suspension, or restraint of a business or professional license, registration, certificate, or other right to engage in business issued to the licensee by this State, by another state, by the Federal government, or by any agency or instrumentality thereof;
The fining, penalizing, or disciplining of the licensee by this State, by another state, by the Federal government, or by any agency or instrumentality thereof; and
The entry of any final judgment in a civil or administrative action against the licensee upon the grounds of fraud, misrepresentation, deceit, or breach of contract.

Subchapter 3 BONDING

N.J. Admin. Code § 3:18-3.1 Bond requirements

(a) Business licensees shall provide a blanket bond covering the business licensee and all individual foreclosure licensees employed by the business licensee and all other persons employed by the business licensee.

(b) A business entity that seeks an initial license as a foreclosure consultant shall obtain a surety bond in the amount of $ 75,000.

(c) The Department may require at any time an increase in the amount of a bond to an amount not to exceed $ 250,000 if, after evaluating the level of foreclosure consulting activity of the business licensee in this State, including the number of individual licensees employed by the business licensee, the results of examinations, any violations of the Act, any claims paid on the bond, the volume of foreclosure consulting agreements entered into by the business licensee, and the amount of compensation received by the business licensee for having rendered distressed property services, the Department determines that the amount of the bond is insufficient to protect the beneficiaries of the bond.

(d) Use of the bond form posted on the Department's website at www.dobi.nj.gov in the amount specified at (b) above or an amount adjusted as set forth at (c) above and issued by a surety company authorized to write such bonds in New Jersey shall, subject to all other applicable requirements, be considered sufficient for approval.

History

Amended by 53 N.J.R. 2135(d), effective 12/20/2021

N.J. Admin. Code § 3:18-3.2 Beneficiaries of bond coverage

The bond shall run to the State of New Jersey, pro rata, for the benefit of New Jersey consumers injured by the wrongful act, omission, default, fraud, or misrepresentation of the foreclosure consultant in the course of activity authorized by the license, and for the benefit of the Department for unpaid penalties, unpaid assessments, and any other unpaid obligations of the foreclosure consultant to the Department, including, but not limited to, returned items submitted to the Department in payment of penalties, charges, assessments, or fees.

N.J. Admin. Code § 3:18-3.3 Coverage of the bond; compensable claims

(a) The surety company shall pay consumers' claims based on the damages directly incurred as a result of the wrongful act, default, fraud, or misrepresentation of the business licensee or any employee of such licensee.

(b) Attorney's fees, pre- or post-judgment interest, court costs, and similar charges are not recoverable through the bond, unless such charges are included in a final judgment against the licensee and the surety company was given prior notice of the court action and an opportunity to respond.

(d) The bond shall not be payable for treble damage claims pursuant to the Consumer Fraud Act or any other State or Federal law.

N.J. Admin. Code § 3:18-3.4 Original bond or rider required; changes in surety companies or bonds

A business licensee shall submit to the Department the original executed surety bond or the original rider to the original executed surety bond. If the business licensee changes its surety company or the bond is otherwise amended, the business licensee shall immediately provide the Department with the amended original executed surety bond or the amended original rider to the original executed surety bond.

N.J. Admin. Code § 3:18-3.5 Notice to Department required before cancelling bond coverage

A surety company shall not cancel a bond for any cause unless written notice of its intention to cancel is filed with the Department at least 30 days before the day upon which cancellation shall take effect. Cancellation without such notice shall not be effective.

N.J. Admin. Code § 3:18-3.6 Surety companies to notify department of claims; claims payable only at the direction of the Department

When a person submits a claim to a surety company against the bond of a business licensee, the surety company shall immediately notify the Department and shall not pay any claim unless and until directed to do so by the Department.

N.J. Admin. Code § 3:18-3.7 Publication of notices of bond claims by the Department

When the Department receives notice from a surety company of a claim against a business licensee that appears valid, a consumer is unable to obtain payment of a court judgment that was obtained against the licensee, or the Department, in its sole discretion, otherwise determines it is necessary and proper to do so, the Department shall cause a notice to be published once a week for three successive weeks in a newspaper having general circulation in the area where the business licensee conducts or conducted business in this State and on the Department's website advising consumers of their right to file claims against the bond. The Department is not required to publish notice when it has a claim against the bond for an assessment or any other fee, charge, or penalty if there are no consumer claims or complaints that appear valid and that may require payment from the bond. If the Department determines a notice is necessary, the notice shall be in the following form:

NOTICE TO CONSUMERS

TO ANY CONSUMER HAVING CLAIMS AGAINST

(Name of Licensee), (Type of licensed activity, i.e., foreclosure consultant)

TAKE NOTICE that in order to provide a procedure for the orderly resolution of claims against the bond obtained by (Name of Business Licensee) for the benefit of any consumer injured by the wrongful act, default, fraud or misrepresentation of (Name of Licensee) in the providing of foreclosure consultant services, you are hereby required to present your claims against (Name of Licensee) at the following address:

N.J. Department of Banking and Insurance

Division of Banking

Office of Consumer Finance

20 West State Street, PO Box 040

Trenton, NJ 08625-0040

Each claim shall be presented in writing, specifying the amount claimed and the particulars of the claim, and shall be duly verified under oath or affirmation.

TAKE FURTHER NOTICE that each person having claims against (Name of Licensee) should file a claim no later

than (one month after last notice) or risk losing the opportunity to file a claim.

Commissioner of Banking and Insurance

N.J. Admin. Code § 3:18-3.8 Priority of claims against bonds

The Department shall review all timely consumer claims made against the bond of a business licensee and decide which claims are valid. The Department shall submit all timely valid claims to the surety company to share pro rata in the proceeds of the bond. The Department shall then submit to the surety company for the payment claims it has against the licensee for other unpaid penalties, charges, assessments, or fees. Consumers submitting claims after the filing date set forth in the published notice but before the expiration of the applicable statute of limitations period shall recover next against the bond in the order that the claims are submitted.

Subchapter 4 DISTRESSED PROPERTY PURCHASER DISCLOSURES

N.J. Admin. Code § 3:18-4.1 Distressed property purchaser required disclosures

(a) Prior to the completion of a distressed property conveyance, a licensee shall notify a distressed property owner in writing that, pursuant to N.J.S.A. 46:10B-64.d, a distressed property purchaser is required to provide to that owner a disclosure statement setting forth in at least 14-point type all costs and fees that the owner will incur in connection with the conveyance.

The licensee shall maintain, as a business record, proof of having provided the written notification referenced in (a) above to the distressed property owner.
A distressed property purchaser shall provide a disclosure statement in the form available on the Department's website at www.dobi.nj.gov.

(b) Prior to the completion of a distressed property conditional conveyance, a licensee shall notify a distress property owner in writing that, pursuant to N.J.S.A. 46:10B-63.a, a distressed property purchaser is required to provide to the owner a disclosure statement in at least 14-point type setting forth all costs that the owner will incur in connection with the conditional conveyance and in connection with any option for the distressed property owner to repurchase the property, including a schedule of monthly and annual payments, closing costs, and any additional costs and fees related to the distressed property conditional conveyance.

The licensee shall maintain, as a business record, proof of having provided the written notification referenced in (b) above to the distressed property owner.
A purchaser in a distressed property conditional conveyance shall provide the required conveyance in the form available on the Department's website at www.dobi.nj.gov.

History

Amended by 53 N.J.R. 2135(d), effective 12/20/2021

Subchapter 5 BOOKS AND RECORDS; CONTRACT REQUIREMENTS

N.J. Admin. Code § 3:18-5.1 Methods of accounting for business licensees

(a) Each business licensee shall maintain books and records in accordance with recognized accounting principles.

(b) Each business licensee shall retain copies of foreclosure consultant contracts in compliance with N.J.A.C. 3:18-5.3.

N.J. Admin. Code § 3:18-5.2 Reproduction of documents

A business licensee may reproduce documents and records relating to the operation of its business for the purpose of complying with this subchapter and may substitute the copy for the original.

N.J. Admin. Code § 3:18-5.3 Location of books, records, accounts, and other documents pertaining to a business; records retention

(a) Each business licensee shall notify the Department of the location where the books, records, accounts, foreclosure consultant agreements, filed and unfiled notices discharging of record, previously recorded foreclosure consultant agreements, and other business documents relating to its activity as a foreclosure consultant are stored and maintained as confidential in accordance with applicable Federal and State law and rules. If the licensee proposes to relocate such business records, the licensee shall notify the Department prior to the move.

(b) All of the books, accounts, and records referenced in (a) above which pertain to the business activity conducted by a licensee under the Act shall be maintained in a manner that preserves the confidentiality of the financial and identity information provided to the licensee by consumers, shall be kept separate and apart from the books, accounts, and records of all other types of business conducted by the licensee, and be maintained in such a manner as to enable a prompt and efficient examination of the licensed activities.

(c) Business licensees shall preserve all books, records, accounts, agreements, and documents related to the business for a minimum of three years after entry into a foreclosure consultant agreement on which no compensation was received by the licensee. After having rendered distressed property services in accordance with the Act and this chapter, and having received compensation, the business licensee shall preserve the materials referenced above for three years from the licensee's receipt of the compensation.

(d) All books, records, accounts, agreements, and other documents may be stored electronically so long as the electronically stored information can be produced in electronic format upon request by the Department or reproduced on paper and delivered to the Department within five days of the business licensee's receipt of a request from the Department to produce the records.

N.J. Admin. Code § 3:18-5.4 Foreclosure consultant contract

(a) A foreclosure consultant contract shall be written in plain language and shall fully disclose:

Each and every distressed property service to be performed;
All the foreclosure consultant's representations;
The distressed property relief to be secured;
The term of the contract, which shall not exceed 18 months from the date on which the contract is fully executed;
The name and address of the foreclosure consultant to which the notice of cancellation in (b) below should be mailed; and
The date the owner signed the contract.

(b) The following notice, printed in at least 14-point boldface type, if the contract is printed, or in capital letters, if the contract is typed, and completed with the name of the foreclosure consultant business licensee and individual licensee who procured the contract, shall be printed immediately above the statement required by (c) below: NOTICE REQUIRED BY NEW JERSEY LAW

............................ (Individual Name) or anyone working for him or her or for .................................(Firm Name) CANNOT:

(1) Take any money from you or ask you for money until

................................... (Name, Individual and Firm) has completely finished doing everything he, she or it said would be done; and

(2) Ask you to sign or have you sign any lien, mortgage, or deed unless all provisions of the "Foreclosure Rescue Fraud Prevention Act," P.L. 2011, c. 146 (N.J.S.A. 46:10B-53 et al.), and any other applicable federal and State laws have been complied with; and

(3) Guarantee that they will be able to refinance a loan on your home or arrange for you to keep your home.

(c) A foreclosure consultant contract shall be written in the same language as principally used by the foreclosure consultant to describe the consultant's services to be performed and the distressed property relief to be secured for the distressed property owner, shall be dated and signed by the owner, and shall contain in immediate proximity to the space reserved for the owner's signature a conspicuous statement in 14-point boldface type, if the contract is printed, or in capital letters, if the contract is typed, as follows:

"You, the owner, may cancel this transaction at any time until after the foreclosure consultant has fully performed every service the foreclosure consultant contracted to perform and has secured the distressed property relief for the owner. See the attached notice of cancellation form for an explanation of this right."

(d) A foreclosure consultant contract shall contain on the first page, in type size no smaller than that generally used in the body of the document, each of the following:

The name and address of the foreclosure consultant business licensee to which the notice of cancellation is to be mailed; and
The date the distressed property owner signed the contract.

(e) A foreclosure consultant contract shall be accompanied by a completed form, captioned "NOTICE OF CANCELLATION," which shall be attached to the contract and easily detachable, and shall contain, in at least 14-point boldface type, if the contract is printed, or in capital letters, if the contract is typed, the following statement written in the same language as used in the contract:

NOTICE OF CANCELLATION

............................

(Enter date of transaction)

You may cancel this transaction, without any penalty or obligation, at any time until after the foreclosure consultant has fully performed every service and has secured the relief for the owner.

To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice to:

..................... (Name of foreclosure consultant business licensee) at

.......................... (Address of foreclosure consultant's place of business)

I hereby cancel this transaction on ..................................... (Date)

............................ (Owner's signature).

(f) The individual foreclosure consultant licensee shall provide the distressed property owner with a copy of a foreclosure consultant contract and the attached notice of cancellation in duplicate immediately upon execution of the contract.

N.J. Admin. Code § 3:18-5.5 Recording of foreclosure consultant contracts

(a) The foreclosure consultant business licensee shall record all foreclosure consultant contracts in accordance with N.J.S.A. 46:26A-1 et seq. and with the clerk of the county in which the distressed property is located, within 10 business days of its execution.

For purposes of this section, the term "county clerk" shall also refer to the Register of Deeds and Mortgages in counties in which instruments affecting real property are recorded with such officials.

(b) Foreclosure consultant contracts shall be in recordable form with the signatures of all parties acknowledged in accordance with N.J.S.A. 46:26A-1 et seq. In addition to all the information required by N.J.A.C. 3:18-5.4, all such contracts shall include, at a minimum, information specifying the taxing municipality and tax block and lot number and the street address of the distressed property with respect to which the foreclosure consultant will provide any distressed property service, the start date of the contract, the expiration date of the contract, and a statement identifying who has prepared the contract. The names of all signatories shall be typed under all signatures.

(c) Foreclosure consultant contracts shall be for a specified term prominently identified on the face of the contract. The initial contract term shall be for a period not to exceed 18 months. The contract shall clearly state that, upon the expiration date set forth in the contract, the contract shall become void unless the term is extended by mutual agreement of the parties. The contract shall also provide that the term of the contract may be extended by mutual agreement of the parties to a date certain not to exceed 180 days from the original expiration date or any prior extended date. All such extensions shall be memorialized in a recordable document evidencing the extension which shall be filed by the foreclosure consultant for recording with the county clerk within 10 days of its being signed by the distressed property owner.

(d) In the event the contract is cancelled by the distressed property owner during its term, the foreclosure consultant shall file with the county clerk a notice of the cancellation of the previously recorded foreclosure consultant contract and attach to it a copy of the distressed property owner's notice of cancellation of the contract. The notice of cancellation shall be in recordable form with all signatures acknowledged in accordance with N.J.S.A. 46:26A-1 et seq. and shall be filed with the county clerk within 10 days of the foreclosure consultant's receipt of the distressed property owner's written notice of cancellation in accordance with N.J.S.A. 46:10B-57. The notice of cancellation shall include information specifying the taxing municipality and tax block and lot number and the street address of the distressed property with respect to which the foreclosure consultant contracted to provide any distressed property service, and the date of the cancellation of the contract. The names of all signatories shall be typed under all signatures.

(e) In the event the foreclosure consultant contract is fully performed by the foreclosure consultant, and no distressed property conveyance or distressed property conditional conveyance has been contracted for by the distressed property owner, the foreclosure consultant shall, within 10 days of collecting any compensation for the services provided to the distressed property owner under the terms of the foreclosure consultant contract, file with the county clerk a notice discharging of record the previously recorded foreclosure consultant contract. Such notice of discharge shall be signed by both the foreclosure consultant and the distressed property owner and shall be in recordable form with all signatures acknowledged as prescribed by N.J.S.A. 46:26A-3.

(f) In the event the foreclosure consultant contract is fully performed and the distressed property owner has contracted to sell the property through a distressed property conveyance or a distressed property conditional conveyance, the foreclosure consultant shall either file a notice discharging of record the foreclosure consultant contract recorded with the county clerk prior to any closing on the distressed property conveyance or distressed property conditional conveyance, or deliver to the distressed property owner or his or her attorney or settlement agent such a notice of discharge signed by the foreclosure consultant, with the signature properly acknowledged, at or prior to the closing on the distressed property conveyance or distressed property conditional conveyance transaction.

(g) In the event a foreclosure consultant contract is fully performed by both parties and the foreclosure consultant has not filed or delivered to the distressed property owner, his or her agent, or his or her attorney a notice of discharge as set forth in (f) above, the owner may file a notice discharging the foreclosure consultant contract of record. The owner-filed notice of discharge shall be accompanied by a certification stating that the foreclosure consultant contract has been fully performed and, despite the distressed property owner's best efforts, the foreclosure consultant has failed to file a notice of discharge of the previously recorded foreclosure consultant contract.

Subchapter 6 REPORTS TO THE DEPARTMENT

N.J. Admin. Code § 3:18-6.1 Reports to the Department

Each business licensee shall file a report with the Department annually on or before May 1 of each year. The report shall be submitted on forms provided by the Department and shall indicate specified information relating to the licensee's foreclosure consulting activity, including the number of foreclosure consultant agreements entered into by the licensee, the number of accounts on which the licensee received compensation in accordance with the Act and this chapter, and the total amount of compensation so received during the reporting period. In accordance with N.J.A.C. 3:1-7.6, a business licensee shall be subject to a penalty for any late filed annual report.

Subchapter 7 ADVERTISING

N.J. Admin. Code § 3:18-7.1 Advertising

(a) No person shall advertise as a foreclosure consultant, foreclosure consultant specialist, or similar designation in this State unless licensed as a foreclosure consultant.

(b) One copy of each advertisement, including radio and television scripts, and any materials disseminated over the Internet or by any other electronic means, shall be maintained as a business record by the business licensee for at least three years after the last date on which any such advertisement was utilized, said date to be noted on each such advertisement record.

Subchapter 8 PROHIBITED ACTS

N.J. Admin. Code § 3:18-8.1 Prohibited acts

(a) No business licensee or individual licensee shall:

Claim, demand, charge, collect, or receive any compensation from a distressed property owner until after the foreclosure consultant has fully performed every distressed property service the foreclosure consultant contracted to perform and has secured the distressed property relief for the owner;
Claim, demand, charge, collect, or receive any fee, interest, or any other compensation from a distressed property owner, for any reason, in excess of two monthly mortgage payments of principal and interest, or the most recent quarterly property tax installment on the distressed property, whichever is less;
Take a wage assignment, a lien of any type on real or personal property, or other security to secure the payment of compensation. Any agreement to take such security is void and unenforceable;
Receive any consideration from any third party in connection with distressed property services rendered to a distressed property owner;
Acquire any interest, directly or indirectly, or by means of a subsidiary or affiliate in a distressed property from a distressed property owner with whom the foreclosure consultant has contracted;
Accept any power of attorney from a distressed property owner for any purpose, except to inspect documents as provided by law;
Induce or attempt to induce a distressed property owner to enter a contract that does not comply in all respects with the Act or this chapter;
Violate any of the provisions of the Act or this chapter; and
Other than compensation payable to the business licensee, no individual licensee shall receive or solicit any compensation for foreclosure consulting directly from, or on behalf of, a distressed property owner.

(b) All business licensees shall ensure that all persons in their employ conduct business in compliance with the Act and this chapter.

Subchapter 9 ADMINISTRATIVE ACTIONS AS TO APPLICANTS, LICENSEES, OR OTHER PERSONS

N.J. Admin. Code § 3:18-9.1 Administrative penalties

(a) The Commissioner may refuse to issue and may revoke, suspend, or refuse to renew a license, or impose a penalty pursuant to the Act, if the Commissioner finds, after notice and an opportunity for a hearing in accordance with the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., that any person, applicant for or holder of the license, including, but not limited to, any of the persons listed in N.J.A.C. 3:18-2.2(a)2, has:

Violated any of the provisions of the Act or any order, rule, or regulation made or issued pursuant to the Act;
Failed at any time to meet the requirements for licensure, or withheld information or made a material misstatement in an application for a license;
Been convicted of an offense involving breach of trust, moral turpitude, or fraudulent or dishonest dealing, or had a final judgment entered against the person in a civil or administrative action upon grounds of fraud, misrepresentation, or deceit, or failure to maintain books, accounts, records, and other documents as required by N.J.A.C. 3:18-5;
Become insolvent;
Demonstrated unworthiness, incompetence, bad faith, or dishonesty in the transaction of business as a licensee; or
Engaged in any other conduct which would be deemed by the Commissioner to be the cause for denial, revocation, suspension, or refusal of the license or license renewal.

N.J. Admin. Code § 3:18-9.2 Initiation of action

(a) Before an administrative penalty is imposed, the Department shall direct a notice by certified mail and regular mail, or by personal delivery, or by any other means consistent with N.J.A.C. 1:1-7.1 and recognized by the Courts of this State as valid service in administrative actions, to the last known business or residence or other address of the alleged violator. The notice shall include:

A reference to the statute, rule, and/or administrative order alleged to have been violated;
A concise statement of the facts on which the violation is based;
A statement of the administrative penalties or other relief sought to be imposed; and
A statement advising the alleged violator of their right to a hearing and the procedure for requesting a hearing.

N.J. Admin. Code § 3:18-9.3 Failure to respond to notice

(a) The alleged violator's failure to respond, as required by the notice, within the time provided in the notice, shall be deemed to be an admission of all of the factual and legal allegations, charges, and conclusions contained in the notice, and no further proceeding shall be required prior to the conversion of the notice into a final order that imposes the administrative penalties and any other relief specified in the notice in accordance with the terms set forth in the notice, or prior to the execution of a final order that imposes the administrative penalties and other relief described in the notice.

(b) If no response is received within the time provided in any notice seeking to suspend or revoke a license to conduct foreclosure consulting activity and such notice did not provide for its conversion into a final order, in such event the Department shall prepare a final order suspending or revoking the license or authority to conduct such activity, and mail a copy of the order to the violator at his or her last known business address on file with the Department.

N.J. Admin. Code § 3:18-9.4 Consent to an administrative penalty

(a) In order for matters set forth in a notice to be deemed concluded by means of the consent of the alleged violator to the imposition of the administrative penalty or other relief described in the notice, the Department may require any or all of the following:

That the business licensee returns its license and/or the licenses of any person employed by it to the Department for cancellation;
The payment of a monetary penalty;
The restitution of moneys owed any person; and
The execution of an administrative order that may include admissions of material facts, conclusions of law, and such other terms and conditions as the Commissioner, or his or her authorized designee, may deem to be necessary and appropriate under the circumstances.

N.J. Admin. Code § 3:18-9.5 Response and request for a hearing

(a) An alleged violator shall have 20 calendar days from service of the notice of intent to impose an administrative penalty within which to deliver a written response and request for a hearing to: Chief of Investigations, Enforcement Bureau, New Jersey Department of Banking and Insurance, PO Box 040, Trenton, New Jersey 08625-0040.

(b) A response and request for a hearing shall include:

The name, address, and daytime telephone number of the alleged violator;
A copy of the notice;
A statement requesting a hearing;
A specific admission, denial or explanation of each fact alleged in the notice, or a statement that the person is without knowledge thereof; and
A concise statement of the facts or principles of law asserted to constitute any factual or legal defense.

(c) If a hearing request fails to include a specific admission, denial, or explanation of each factual allegation, or a statement that the person is without knowledge thereof, the facts alleged in the notice shall be deemed to have been admitted.

(d) Unless a matter is dismissed, with or without prejudice, or otherwise resolved, the Department shall transmit the matter to the Office of Administrative Law as a contested case for a hearing in accordance with the Uniform Administrative Procedure Rules, N.J.A.C. 1:1.

Chapter 19 HOME REPAIR FINANCING ACT REGULATIONS

Subchapter 1 GENERAL

N.J. Admin. Code § 3:19-1.1 Jurisdictional provision

Notwithstanding the place of execution, nominal or real, of a home repair contract, if it includes as a party thereto a New Jersey owner and is to be performed in New Jersey, it will be deemed to be subject to the Home Repair Financing Act.

N.J. Admin. Code § 3:19-1.2 Licensing requirement

(a) In the administration of the Home Repair Financing Act, N.J.S.A. 17:16C-62(d) and 77(a), the following will be deemed to require licensing as a "home repair contractor":

A person who, for his or her own account, solicits and procures the execution of a home repair contract by an owner, and who signs said home repair contract as a contractor, or who has such a home repair contract solicited and executed on his or her behalf by his or her salesperson, whether or not such contract is subsequently assigned to, or performed by, another; and
A person who assumes, by assignment, performance or otherwise, the contractual responsibility to perform a home repair contract, and benefits thereunder.

(b) In the administration of the Home Repair Financing Act, N.J.S.A. 17:16C-62(n) and 77(a), the following will be deemed to require licensing as a "home repair salesperson":

A person who contracts or who solicits, arranges, discusses or otherwise negotiates with an owner, directly or indirectly, and in so doing procures any written memorandum, agreement, estimate, contract or any other writing which subsequently results in the execution of a home repair contract between an owner and a home repair contractor.

(d) Application fees are not refundable.

History

As amended, R.1977 d.174, eff. 6/1/1977.
See: 9 New Jersey Register 111(a), 9 New Jersey Register 253(a).
Amended by R.1991 d.194, effective 4/15/1991.
See: 23 New Jersey Register 256(a), 23 New Jersey Register 1127(a).
Expanded coverage to require that those who have home repair contracts solicited on their behalf and who assign them to others for performance are subject to licensure.
Amended by R.2001 d.179, effective 6/4/2001.
See: 33 New Jersey Register 931(a), 33 New Jersey Register 1911(a).
Rewrote (a) and (b) and added (c).
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Substituted "application" for "annual license" in (c); and added (d).

N.J. Admin. Code § 3:19-1.3 Self-installation exemption

A contract for goods or services, whether contained in one or more documents, executed between an owner and the seller or supplier of goods or services to such owner will be deemed a home repair contract if it provides that the time sales price of said goods or services is to be paid in installments over a period of time greater than 90 days; provided, however, that where such an installment contract for goods is made with the express understanding and representation that such goods will be utilized, installed or applied by the owner independently, and not directly or indirectly in connection with any written, oral or implied installment contract for services, such contract for goods will not be deemed to be a home repair contract.

History

Amended by R.1991 d.194, effective 4/15/1991.
See: 23 New Jersey Register 256(a), 23 New Jersey Register 1127(a).
Reference to "three months" changed to "90 days".

N.J. Admin. Code § 3:19-1.4 Two or more transactions

A person who participates in two or more home repair contracts in any calendar year will be deemed to be "in the business" for the purpose of qualifying as a home repair contractor.

N.J. Admin. Code § 3:19-1.5 Sales and use tax disclosure

For the purpose of implementing N.J.S.A. 17:16C-67, as these sections relate to N.J.S.A. 54:32B-2(d) and 54:32B-12(a), of the Sales and Use Tax Act, the sales tax, if applicable, shall be shown as a separate item in the manner prescribed below, if the down payment or any part of the down payment represents a credit given by the home repair contractor as authorized by N.J.S.A. 54:32B-2(d).

| Sale without Trade-in | | | --- | --- | | Cash price (sales tax $ 60.00) | $ 1,060.00 | | or | | | Cash price | $ 1,000.00 | | Sales Tax | $ 60.00 | | Total cash price | $ 1,060.00 | | Sale with Trade-in | | | Cash price | $ 1,000.00 | | Allowance on trade-in | $ 500.00 | | Adjusted cash price (sales tax $ 30.00) | $ 530.00 | | or | | | Cash price | $ 1,000.00 | | Allowance on trade-in | $ 500.00 | | Adjusted cash price | $ 500.00 | | Sales tax | $ 30.00 | | Total cash price | $ 530.00 |

History

Amended by R.1996 d.215, effective 5/6/1996.
See: 28 New Jersey Register 1333(a), 28 New Jersey Register 2373(b).

N.J. Admin. Code § 3:19-1.6 License, reference or certificate number

(a) A home repair contractor shall indicate the current license, reference or certificate number on all contracts, subcontracts, bids and all forms of advertising.

(b) Home repair contractors having multiple offices may utilize their main office license or certificate number for the purpose of compliance with this section and N.J.S.A. 45:1-9.

History

R.1975 d.148, eff. 5/30/1975.
See: 7 New Jersey Register 191(b), 7 New Jersey Register 291(d).
As amended, R.1977 d.175, eff. 6/1/1977.
See: 9 New Jersey Register 111(c), 9 New Jersey Register 253(b).
As amended, R.1980 d.556, eff. 12/29/1980.
See: 12 New Jersey Register 566(a), 13 New Jersey Register 62(b).
Reference to "or certificate" number added.
Amended by R.1991 d.194, effective 4/15/1991.
See: 23 New Jersey Register 256(a), 23 New Jersey Register 1127(a).
Permitted licensees to use their reference number in lieu of their current license number on contracts, subcontracts, bids and advertisements.

N.J. Admin. Code § 3:19-1.7 Home repair salesperson; change of affiliation

A licensed home repair salesperson must be employed by a licensed home repair contractor and may represent only that employer in the transaction of home repair financing business. A licensed home repair salesperson who changes his or her employer shall, within 10 days of this change, submit to the Department a change notification form. When submitting this form, the salesperson shall surrender the license indicating the affiliation with his or her prior employer.

History

Emergency new rule, R.1989 d.407, effective 7/3/1989 (expires September 1, 1989).
See: 21 New Jersey Register 2398(a).
Adopted concurrent proposal, R.1989 d.510, effective 8/31/1989.
See: 21 New Jersey Register 2398(a), 21 New Jersey Register 3082(a).
Provisions of emergency amendment R.1989 d.407 readopted without change.
Amended by R.1991 d.194, effective 4/15/1991.
See: 23 New Jersey Register 256(a), 23 New Jersey Register 1127(a).
Removed $ 25.00 fee.
Amended by R.2001 d.179, effective 6/4/2001.
See: 33 New Jersey Register 931(a), 33 New Jersey Register 1911(a).
Substituted "salesperson" for "salesmen" and "salesman" throughout.

Chapter 21 CREDIT UNIONS

Subchapter 1 LOW-INCOME CREDIT UNIONS

N.J. Admin. Code § 3:21-1.1 Definitions

The following words and terms, as used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Applicant" means an applicant for designation as a low-income credit union.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Credit union" means a State-chartered credit union or an entity which has submitted an application for a State charter for a credit union.

"Low-income credit union" or "LICU" means a credit union which has been designated a low-income credit union pursuant to this subchapter.

"Low-income members" or "low-income residents" means those members or residents:

Whose annual income falls at or below the lower level standard of living classification as established by the Bureau of Labor Statistics and as updated by the Employment Training Administration of the U.S. Department of Labor;
Who are residents of a public housing project who qualify for such residency because of low income;
Who qualify as recipients in a community action program; or
Who are enrolled as full-time or part-time students in a college, university, high school, or vocational school.

"NCUA" means the National Credit Union Administration.

"Predominantly" means a majority.

"State" means the State of New Jersey.

History

Amended by R.1997 d.83, effective 2/18/1997.
See: 28 New Jersey Register 5123(a), 29 New Jersey Register 548(a).
Amended "Commissioner".

N.J. Admin. Code § 3:21-1.2 Application for designation as a low-income credit union

(a) A credit union may apply to the Commissioner for designation as a low-income credit union pursuant to this subchapter.

(b) An applicant shall submit the following to the Department:

A completed application, the form of which may be prescribed by the Commissioner;
Sufficient evidence to allow the Commissioner to determine whether the applicant meets the criteria set forth in (c) below; and
An application fee of $ 50.00 if the applicant is an existing credit union seeking designation, but no fee other than an incorporation application fee of $ 50.00 shall be charged to a credit union seeking designation as a part of its incorporation application; and
Such other information as the Commissioner may require.

In the case of an existing credit union, whose members are predominantly low-income; or
In the case of an entity which has submitted or which intends to submit an application for a State charter for a credit union, which is located in a well-defined neighborhood, community, or rural geographical area, recognized as distinct by residents and populated predominantly by low-income residents.

History

Amended by 47 N.J.R. 273(a), effective 1/20/2015

N.J. Admin. Code § 3:21-1.3 Concurrence of the appropriate Regional Director of the NCUA

Upon approving an application for designation as an LICU, the Commissioner shall forward that determination, along with the materials submitted by the applicant, to the appropriate Regional Director of the NCUA for concurrence.

N.J. Admin. Code § 3:21-1.4 Publication and effective date of designation

(a) Upon the Commissioner's receipt of the concurrence of the appropriate Regional Director in the designation of a credit as an LICU, the Commissioner shall, by mail, inform the applicant, the CrossState Credit Union Association, and the National Credit Union Association of the designation.

(b) The designation of the credit union as an LICU shall be effective on the date of the Commissioner's notice to the applicant.

History

Amended by 54 N.J.R. 137(b), effective 1/18/2022

N.J. Admin. Code § 3:21-1.5 Removal of designation

The Commissioner may, after opportunity for a hearing pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-14F and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1 and with the concurrence of the appropriate Regional Director of the NCUA, remove the designation of a credit union as a LICU upon determining that the credit union no longer meets the criteria set forth in N.J.A.C. 3:21-1.2(c).

N.J. Admin. Code § 3:21-1.6 Reserved

History

Repealed by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a)
Section was "Examination fees for LICU's".

Subchapter 2 CREDIT UNION PARITY

N.J. Admin. Code § 3:21-2.1 Credit union parity with Federally chartered credit unions

(a) In addition to other authority granted by law and unless contrary to State law, a credit union may exercise any power, right, benefit, or privilege that is now, or hereafter, authorized for Federal credit unions to the same extent as Federal credit unions pursuant to Federal law or rules and regulations of the National Credit Union Administration. A credit union, in exercising those powers, rights, benefits, or privileges shall do so in accordance with the terms, conditions, and requirements established for Federal credit unions. Such powers, rights, benefits, or privileges shall be automatically exercisable upon the expiration of 30 days from the date of adoption of the enabling regulation by the Federal regulatory agency, except if the Commissioner of Banking and Insurance, within that time, provides notice that the power, right, benefit, or privilege shall not be granted to New Jersey credit unions. Such notice shall be posted on the Department's website at www.njdobi.org. The pertinent information included in such a notice shall also be provided to each credit union, and to the CrossState Credit Union Association. The Commissioner of Banking and Insurance may permit credit unions to begin the exercise of a power, right, benefit, or privilege prior to the expiration of the 30-day period by providing notice of permission through posting the notice on the Department's website at www.njdobi.org. The pertinent information included in such a notice shall also be provided to each credit union, and the CrossState Credit Union Association.

(b) "Power, right, benefit or privilege" shall not mean any activity that would fail to comply with or would violate:

The New Jersey Code of Criminal Justice, N.J.S.A. 2C:1-1 et seq., including, but not limited to, the criminal usury limits established at N.J.S.A. 2C:21-19 as applied to loan products;
New Jersey statutes and rules providing for the structure and corporate governance of credit unions, including, but not limited to, statutes and rules governing amendments of certificates of incorporation, adoptions of bylaws, rights of members, membership of boards of directors, applications where there is a supervisory concern, and requests for approvals or no objection opinions where there is a supervisory concern;
New Jersey statutes and rules providing the Department with supervisory powers over credit unions with regard to safety and soundness and other matters, including, but not limited to, the power to issue orders and apply for relief from a court of competent jurisdiction established at N.J.S.A. 17:13-115 et seq., and the power to require reports and examination by the Department pursuant to N.J.S.A. 17:13-112 et seq. and similar law;
The provisions of N.J.S.A. 17:16N-1 et seq. and any rules regarding Consumer Checking Accounts; and
The New Jersey Home Ownership Security Act of 2002, N.J.S.A. 46:10B-22 et seq.

History

Amended by R.1997 d.83, effective 2/18/1997.
See: 28 N.J.R. 5123(a), 29 N.J.R. 548(a).
Amended by R.2002 d.209, effective 7/1/2002.
See: 34 N.J.R. 816(a), 34 N.J.R. 2311(a).
Substituted "Credit Union Affiliates of New Jersey" for "New Jersey Credit Union League" in the 4th and 5th sentences.
Amended by R.2005 d.417, effective 12/5/2005.
See: 37 N.J.R. 2742(a), 37 N.J.R. 4531(a).
Added designation "(a)" and rewrote section; added (b).
Amended by R.2007 d.299, effective 10/1/2007.
See: 39 N.J.R. 1549(a), 39 N.J.R. 4112(a).
Section was "Credit union parity with Federally chartered credit unions". In (b)5, substituted "Home Ownership" for "Homeownership".

Subchapter 3 BRANCHING BY A STATE CHARTERED CREDIT UNION

N.J. Admin. Code § 3:21-3.1 Purpose and scope

(a) The purpose of this subchapter is to permit State chartered credit unions to have parity with Federally chartered credit unions by allowing interstate branching on a reciprocal basis. These rules also set forth the requirements for in-State branching by New Jersey State chartered credit unions.

(b) This subchapter shall apply to New Jersey State chartered credit unions that wish to establish a branch in New Jersey or in a state other than New Jersey. It shall also apply to out-of-State state chartered credit unions that wish to establish a branch in New Jersey.

N.J. Admin. Code § 3:21-3.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Department" means the New Jersey Department of Banking and Insurance.

"Establish a branch" means to begin operations of a branch, whether by acquisition of an existing credit union or its branch, or de novo.

"Home state" means the state or territory of the United States in which the credit union is chartered.

"Host state" means a state, other than the home state of the credit union, in which the credit union maintains, or seeks to establish and maintain, a branch.

"New Jersey State chartered credit union" means a credit union chartered by the State of New Jersey under N.J.S.A. 17:13-79 et seq.

"Out-of-State state chartered credit union" means a credit union chartered under the laws of a state or territory of the United States other than New Jersey.

"Solvent" means that the present cash value of a credit union's assets, after providing for liabilities, exceeds the total amount of its shares.

"State chartered credit union" means a credit union chartered by the State of New Jersey or any other state or territory of the United States, but not a Federally chartered institution.

N.J. Admin. Code § 3:21-3.3 Power to establish branches

(a) A New Jersey State chartered credit union may establish a branch in other states or territories of the United States provided that it is permitted to establish a branch by the laws of those states or territories and approval to establish such a branch is granted by the Commissioner.

(b) A New Jersey State chartered credit union may establish a branch in New Jersey with the approval of the Commissioner.

(c) An out-of-State state chartered credit union may establish a branch in this State with the approval of the Commissioner.

(d) An out-of-State state chartered credit union may relocate a previously approved New Jersey branch or a New Jersey State chartered credit union may relocate a previously approved in-State or out-of-State branch with the approval of the Commissioner.

N.J. Admin. Code § 3:21-3.4 Content of branch applications of credit unions

(a) An application by a New Jersey State chartered credit union to establish a branch office shall contain:

The name of the credit union and the location of the applied for branch;
An original certification of a copy of the board resolution authorizing the application;
If the proposed transaction involves the acquisition of deposits from another credit union:

i. Pro forma balance sheet projections reflecting the acquiring credit union before and after the acquisition; and

ii. Projections of the ratio of capital to total assets of the credit union before and after the acquisition;

If the branch is to be located outside of New Jersey, a statement from the proposed host state regulator of credit unions that the New Jersey State chartered credit union is authorized by the law of that host state to establish a branch in that state or territory; and
All other documentation required of a specific applicant by the Commissioner or which the applicant wishes the Department to consider.

(b) An application by an out-of-State state chartered credit union to establish a branch office in New Jersey shall contain:

The name of the credit union and the location of the applied for branch;
A filing fee of $ 25.00;
An original certification of a copy of the board resolution authorizing the application;
Proof of deposit insurance;
Certification by its home state regulator indicating that the credit union is incorporated under the credit union laws of its home state and that the laws of its home state permit a New Jersey State chartered credit union to establish a branch in its home state;
A copy of the branch application submitted to its home state regulator;
A copy of its most recent Financial Performance Report; and
All other documentation required of a specific applicant by the Commissioner or which the applicant wishes the Department to consider.

(c) An out-of-State state chartered credit union that seeks approval to relocate a New Jersey branch or a New Jersey State chartered credit union that seeks approval to relocate a branch shall submit the following to the Department:

A letter indicating where the office will be relocated to, why it is being relocated, and stating how its relocation will benefit the members of the credit union;
An original certification of a copy of the board resolution authorizing the relocation; and
All other documentation required of a specific applicant by the Commissioner or which the applicant wishes the Department to consider.

History

Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Deleted former (a)2; and recodified (a)3 through (a)6 as (a)2 through (a)5.

N.J. Admin. Code § 3:21-3.5 Criteria to establish a branch

(a) Before granting approval to an out-of-State state chartered credit union to establish a branch in New Jersey, the Commissioner shall find that the out-of-State state chartered credit union:

Is a credit union organized under the credit union laws of its home state;
Is solvent;

Has deposit insurance of a type approved by the Commissioner for credit unions chartered by this State;

Is adequately examined and supervised by a regulatory agency of its home state;
Has persons in its field of membership in this State to serve;

Operates under laws of its home state that permit a New Jersey State chartered credit union to establish a branch in its home state; and

Has consented in writing to be examined by the Department either directly or by cooperative or reciprocal agreements, developed by the National Association of State Credit Union Supervisors, with its home state regulatory authority.

(b) Before granting approval to a New Jersey State chartered credit union to establish a branch, the Commissioner shall find the New Jersey State chartered credit union:

Is solvent;
Will establish a branch that will serve the interests of its members;
Is currently in compliance with all provisions of N.J.S.A. 17:13-79 et seq. and any regulations adopted pursuant to that statute; and
If the branch is to be located outside of New Jersey, that the New Jersey State chartered credit union is permitted to establish a branch by the laws of the proposed host state.

N.J. Admin. Code § 3:21-3.6 Conditions to remain in good standing to operate a branch

(a) As a condition to continue to be authorized to maintain a branch in this State, an out-of-State state chartered credit union shall:

Not grant loans at interest rates that are higher than is permitted for credit unions incorporated pursuant to N.J.S.A. 17:13-79 et seq.;
Comply with any consumer protection statutes or regulations that are applicable to credit unions incorporated pursuant to N.J.S.A. 17:13-79 et seq.; and
Designate and maintain an agent in this State for receipt of service of process and inform the Department of the name and address of the agent and any change regarding the name and address of the agent.

(b) As a condition to continue to be authorized to maintain a branch, a New Jersey State chartered credit union shall comply with all provisions of N.J.S.A. 17:13-79 et seq. and any rules adopted pursuant to that statute.

N.J. Admin. Code § 3:21-3.7 Revocation or denial of authority to operate a branch

(a) The Commissioner may deny an application to establish a branch or relocate a previously approved existing branch if all of the applicable conditions set forth in N.J.A.C. 3:21-3.4 and 3.5 are not met to the satisfaction of the Commissioner. In the event of a denial, the credit union may, within 10 days of the date of the decision, request a hearing. Such hearing shall be conducted in accordance with the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1.

(b) The Commissioner may, upon notice and a hearing, revoke the approval of a State chartered credit union to maintain a branch if the Commissioner determines that:

The credit union no longer meets the requirements of N.J.A.C. 3:21-3.5 or 3.6;
The credit union has violated the laws of this State, or the laws of its home state, or Federal laws, or orders issued by the Commissioner, its home state regulator or its insurer;
The credit union has engaged in unsafe or unsound credit union practices; or
Continued operation by the credit union may have a substantial adverse impact on the financial, economic or other interest of residents of this State.

(c) A hearing pursuant to (b) above shall be conducted in accordance with the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1.

N.J. Admin. Code § 3:21-3.8 Discontinuance of a branch

(a) A State-chartered credit union that has received approval pursuant to this subchapter to establish a branch may discontinue the branch upon resolution of its board of directors. Upon the adoption of such a resolution, the credit union shall file a certificate with the Department specifying the location of the branch to be discontinued, and the date upon which the discontinuance shall be effective.

(b) The failure of a credit union to open and operate a branch within one year after the Commissioner approves the application shall automatically terminate the right of the credit union to open the branch.

Subchapter 4 CREDIT UNION MERGERS

N.J. Admin. Code § 3:21-4.1 Merger standards

(a) In approving a certificate and plan of merger under N.J.S.A. 17:13-110, the Commissioner of Banking and Insurance shall make the following determinations:

The continuing credit union has a high likelihood of operating in a safe and sound manner following the merger;
The management of the continuing credit union has sufficient expertise to operate the credit union following the merger;
In the case of a merger involving a group or multi-group credit union and a community credit union, the continuing credit union has designated whether the group or multi-group credit charter shall survive as the operating charter, or whether the community charter shall survive as the operating charter; and
In the case of a merger involving a community credit union, the community does not exceed a well-defined neighborhood, local community or rural district which is interpreted as not exceeding what would be permitted under the Community Charter Requirements of the National Credit Union Administration.

(b) Following the merger, the continuing credit union may take new members from any of the fields of the combined credit union, may add additional fields of membership pursuant to N.J.S.A. 17:13-92, or may merge with another credit union pursuant to N.J.S.A. 17:13-110.

Subchapter 5 COMMUNICATIONS FROM THE DEPARTMENT OF BANKING AND INSURANCE

N.J. Admin. Code § 3:21-5.1 Official e-mail address

Each credit union shall provide its official e-mail address to the Department as part of its annual report to the Commissioner required by N.J.S.A. 17:13-111. Within 10 days following any change in the official e-mail address previously provided to the Department, the credit union shall notify the Department in writing, on letterhead signed by an officer, of the change and include the full name of the entity, its old e-mail address, its new e-mail address and the effective date of the change. The notice shall be sent to: New Jersey Department of Banking and Insurance, Division of Banking, Attention: Office of Consumer Finance, 20 West State Street, P.O. Box 040, Trenton, New Jersey 08625-0040.

Chapter 22 INSURANCE PREMIUM FINANCE COMPANY ACT

Subchapter 1 PREMIUM FINANCE AGREEMENT

N.J. Admin. Code § 3:22-1.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise:

"Personal lines policies" means policies as defined by N.J.A.C. 11:13-1.2.

"Commercial policies" means policies subject to the Commercial Insurance Deregulation Act of 1982, N.J.S.A. 17:29AA-1 et seq. and N.J.A.C. 11:13-1.1.

History

New Rule, R.2005 d.166, effective 6/6/2005.
See: 36 New Jersey Register 5191(a), 37 New Jersey Register 2009(a).
Former N.J.A.C. 3:22-1.1, Premium finance agreement, recodified to N.J.A.C. 3:22-1.2.

N.J. Admin. Code § 3:22-1.2 Premium finance agreement

(a) There shall be disclosure in each premium finance agreement of the key elements prior to the signature of the insured in accordance with the requirements set forth in N.J.S.A. 17:16D-9 and (c) below.

(b) A continuous payment agreement which authorizes renewable or continuing arrangements is prohibited.

(c) Companies shall utilize separately signed premium finance agreements for each personal lines policy, renewal, addition or change on which the premium is to be financed. With respect to the premiums on commercial policies, companies may utilize either separately signed agreements, or one premium finance agreement covering multiple commercial policies, renewals, additions or changes where the commercial policies to which the single premium financing agreement pertains are issued through the same producer. Regardless of whether they finance one or multiple policies, all premium finance agreements shall disclose current conditions and provisions applicable to each loan.

(d) This rule shall apply to insurance premium finance companies doing business or authorized to do business in the State of New Jersey.

History

Repeal and recodification, R.1984 d.346, effective 8/20/1984.
See: 15 New Jersey Register 1707(a), 16 New Jersey Register 2264(a), 17 New Jersey Register 990(a).
Repealed sections 1.1, 1.2 and 1.3 and recodified old 1.4 as new 1.1. Old 1.1 was "Maximum finance charge rate permissible."
Amended by R.1989 d.307, effective 6/5/1989.
See: 21 New Jersey Register 661(a), 21 New Jersey Register 1516(a).
In (b), (c) and (d): Corrections and stylistic changes.
Amended by R.2004 d.389, effective 10/18/2004.
See: 36 New Jersey Register 1154(a), 36 New Jersey Register 4813(a).
In (a), substituted "shall" for "must", "each" for "the", "finance" for "financing" and inserted "and (c) below" following the N.J.S.A. reference; rewrote (c).
Recodified from N.J.A.C. 3:22-1.1 by R.2005 d.166, effective 6/6/2005.
See: 36 New Jersey Register 5191(a), 37 New Jersey Register 2009(a).
Former N.J.A.C. 3:22-1.2, Annual report; fee, recodified to N.J.A.C. 3:22-1.3.

N.J. Admin. Code § 3:22-1.3 Annual report; penalty

Each insurance premium finance company licensee shall file an annual report as mandated by N.J.S.A. 17:16D-7. In accordance with N.J.A.C. 3:1-7.6, the Department may assess a penalty against any licensee for each report the licensee files late.

History

New Rule, R.1995 d.655, effective 12/18/1995.
See: 27 N.J.R. 3655(a), 27 N.J.R. 5011(a).
Recodified from N.J.A.C. 3:22-1.2 by R.2005 d.166, effective 6/6/2005.
See: 36 N.J.R. 5191(a), 37 N.J.R. 2009(a).
Former N.J.A.C. 3:22-1.3, Reserved, recodified to N.J.A.C. 3:22-1.4.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Substituted "In accordance with N.J.A.C. 3:1-7.6, the" for "The licensee shall remit a fee of $ 100.00 for each such report filed. The" and deleted "$ 50.00" preceding "penalty".
Amended by R.2007 d.306, effective 10/1/2007.
See: 39 N.J.R. 2299(a), 39 N.J.R. 4111(a).
Deleted ", on or before February 1," following "file".
Amended by R.2010 d.255, effective 11/1/2010.
See: 42 N.J.R. 1274(a), 42 N.J.R. 2608(b).
Section was "Annual report; fee". Substituted "may" for the second occurrence of "shall".

N.J. Admin. Code § 3:22-1.4 Reserved

History

Repealed by R.1984 d.346, effective 8/20/1984.
See: 15 New Jersey Register 1707(a), 16 New Jersey Register 2264(a), 17 New Jersey Register 990(a).
Was "Term of regulation."
Recodified from N.J.A.C. 3:22-1.4 by R.2005 d.166, effective 6/6/2005.
See: 36 New Jersey Register 5191(a), 37 New Jersey Register 2009(a).
Former N.J.A.C. 3:22-1.4, Reserved, recodified to N.J.A.C. 3:22-1.5.

N.J. Admin. Code § 3:22-1.5 Reserved

History

New Rule, R.1984 d.194, effective 5/21/1984.
See: 16 New Jersey Register 298(a), 16 New Jersey Register 1196(c).
Amended by R.1984 d.346, effective 8/20/1984.
See: 15 New Jersey Register 1707(a), 16 New Jersey Register 2264(a), 17 New Jersey Register 990(a).
Recodified old 1.4 as new 1.1.
Recodified from N.J.A.C. 3:22-1.4 by R.2005 d.166, effective 6/6/2005.
See: 36 New Jersey Register 5191(a), 37 New Jersey Register 2009(a).

Chapter 23 FEES, LICENSE TERMS AND ANNUAL REPORTS FOR LICENSEES

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:23-1.1 Purpose and scope

(a) This chapter shall implement the provisions of N.J.S.A. 17:1-8 et seq., 17:11C-1 et seq., 17:15A-1 et seq., 17:15C-1 et seq., 17:16C-1 et seq., 17:16C-82 et seq., 17:16D-1 et seq., 17:16G-1 et seq., 45:22-1 et seq. and 46:10B-22 et seq. which permit the Commissioner of Banking and Insurance to establish application fees for new licenses issued by the Commissioner, to set the length of license terms and to require the submission of annual reports by licensees.

(b) This chapter applies to all licensees as defined by N.J.A.C. 3:5-2.1.

History

Amended by 47 N.J.R. 2669(a), effective 11/2/2015

Subchapter 2 APPLICATION FEES AND LICENSE TERMS

N.J. Admin. Code § 3:23-2.1 Application fees

(a) All licensees governed by the Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 to 50, shall be subject to the application fees specified in N.J.A.C. 3:17-3.2. All licensees governed by the Residential Mortgage Lenders Act, N.J.S.A. 17:11C-51 et seq., shall be subject to the application fees specified in N.J.A.C. 3:15-4.1.

(b) The following table indicates the application fees established by the Commissioner of Banking and Insurance for application fees other than those specified in N.J.A.C. 3:15-4.1 and 3:17-3.2.

| Licensees | Application Fee | | --- | --- | | 1. Money Transmitter | | | i. Money Transmitter (N.J.S.A. 17:15C-7a) | $ 700.00 | | ii. Foreign Money Transmitter (N.J.S.A. 17:15C-7a) | $ 700.00 | | 2. Check Casher (N.J.S.A. 17:15A-33) | $ 700.00 | | 3. Retail Installment Sales | | | i. Motor Vehicle Installment Seller (N.J.S.A. 17:16C-8) | $ 300.00 | | ii. Home Financing Agency (N.J.S.A. 17:16C-82(a)) | $ 400.00 | | iii. Home Repair Contractor (N.J.S.A. 17:16C-82(b)) | $ 300.00 | | iv. Home Repair Salesman (N.J.S.A. 17:16C-82(c)) | $ 60.00 | | 4. Insurance Premium Finance Company (N.J.S.A. 17:16D-4) | $ 500.00 | | 5. Pawnbroker (N.J.S.A. 45:22-4) | $ 500.00 | | 6. Debt Adjuster (N.J.S.A. 17:16G-1 et seq.) | $ 300.00 | | 7. High Cost Home Loan Credit Counselor (N.J.S.A. 46:10B-22 et seq.) | $ 100.00 | | 8. Foreclosure Consultants (N.J.S.A. 46:10B-55) (Business including Sole Proprietorship) | $ 500.00 | | 9. Foreclosure Consultants (N.J.S.A. 46:10B-55) (Natural Persons) | $ 100.00 |

History

Amended by 47 N.J.R. 2669(a), effective 11/2/2015

N.J. Admin. Code § 3:23-2.2 License terms

(a) All newly issued licenses referenced in N.J.A.C. 3:23-2.1 shall run from the date of issuance to the end of the license term during which the initial license was issued.

(b) Commencing with the license term that began July 1, 2007, the license term for all licenses referenced in N.J.A.C. 3:23-2.1 shall be two years, beginning on July 1 of each odd numbered year and ending on June 30 of the next odd numbered year.

History

New Rule, R.2007 d.306, effective 10/1/2007.
See: 39 N.J.R. 2299(a), 39 N.J.R. 4111(a).

Subchapter 4 ANNUAL REPORTS

N.J. Admin. Code § 3:23-4.1 Filing of annual reports

Unless otherwise prescribed by a statute or rule applicable to a particular license type, each licensee listed in N.J.A.C. 3:23-2.1 shall file an annual report on or before April 1 on a form supplied by the Commissioner. Mortgage lenders and mortgage brokers shall file an annual report on or before May 1 on a form supplied by the Commissioner. The form shall include the licensee's name, address, official e-mail address, volume of business(es), bonding information, if any, and may include any other information that the licensee is required by rule or statute to maintain or report.

History

Amended by R.2008 d.178, effective 7/7/2008.
See: 40 N.J.R. 1399(a), 40 N.J.R. 3989(a).
Inserted "official e-mail address,".
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Inserted "or rule", deleted ", including licensed lenders," following "N.J.A.C. 3:23-2.1", inserted the second sentence, and deleted the last sentence.

N.J. Admin. Code § 3:23-4.2 Electronic filing; exemption

(a) All annual reports shall be filed electronically.

(b) Licensees unable to file electronically may apply to the Department for an exemption from electronic filing.

(c) All exemption applications shall be forwarded to the Department by January 15 of the year in which the report is to be filed and shall include a statement certifying to the applicant's inability to file electronically and the reasons for that inability.

N.J. Admin. Code § 3:23-4.3 Late filings

(a) All annual reports shall be filed in accordance with N.J.A.C. 3:1-7.6.

(b) All annual reports filed late shall be subject to penalties as provided in N.J.A.C. 3:1-7.6.

(c) A final annual report shall be required for the calendar year in which the licensee discontinues its licensed business operations in New Jersey.

Chapter 24 CHECK CASHING

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:24-1.1 Purpose

The purpose of this chapter is to implement and to augment the requirements of N.J.S.A. 17:15A-30 et seq., "The Check Cashers Regulatory Act of 1993."

N.J. Admin. Code § 3:24-1.2 Scope

These rules are applicable to all licensed check cashers and applicants for licensure.

N.J. Admin. Code § 3:24-1.3 Definitions

Words and terms, when used in this chapter, shall have the meanings as defined below, unless the context clearly indicates otherwise.

"Act" means N.J.S.A. 17:15A-30 et seq., "The Check Cashers Regulatory Act of 1993."

"Appropriate documentation" means a corporate resolution filed with the Secretary of State, Federal taxpayer identification number, filed New Jersey Certificate of Authority, filed trade-name certificate or other readily verifiable official document.

"Cash" (cashing a check) includes both the exchange of money for the presentment of a check, and the acceptance of a replacement check for one which has been returned for insufficient funds.

"Commissioner" means the Commissioner of Banking and Insurance.

"Consideration" means, but is not limited to, a requirement by the check casher that a person make a purchase or otherwise patronize a business operated by the check casher in order to cash a check at the check cashing establishment, or a returned check charge imposed by a bank.

"Department" means the Department of Banking and Insurance.

"Disabled person" means, for the purpose of these rules, a person whose disability either temporarily or permanently prevents him from going into a check cashing establishment for the purpose of cashing a check.

"Essential records" includes all records listed in N.J.S.A. 17:15A-44(l) and (m); N.J.A.C. 3:24-5.3(a); and all corporate resolutions.

"Insolvent" means that the check cashing licensee cannot or does not pay his or her debts as they become due in the normal course of business, or his or her financial statement indicates that the licensee has a negative net worth.

"Payday loan" means an agreement to defer the presentment of a negotiable item, or defer the deposit of an item for collection, or defer debiting the borrower's account electronically or by any other means, in return for a consideration or other thing of value where the rate, fee or other consideration charged for such forbearance exceeds the "maximum rate permitted by law" as that phrase is used in N.J.S.A. 2C:21-19. "Payday loan" shall include, but not be limited to, such loans made.

In person

Through an agent
By electronic means (including telephone, fax, computer, internet or similar means); or
Through response to an advertisement or solicitation made in this State.

"Person" includes corporations, companies, associations, societies, firms, partnerships and joint stock companies as well as individuals, unless the context clearly indicates otherwise.

"Refund anticipation loan" means an agreement to lend a borrower funds, or to extend any other consideration to a borrower, in return for a promise by the borrower to repay the loan or other consideration that includes an assignment of the borrower's Federal and/or state tax refund, where the rate, fee or other consideration charged for such forbearance exceeds the "maximum rate permitted by law" as that phrase is used in N.J.S.A. 2C:21-19. "Refund anticipation loan" includes, but is not limited to, such loans made:

In person
Through an agent
By electronic means (including telephone, fax, computer, internet or similar means); or
Through response to an advertisement or solicitation made in this State.

"Title loan" means an agreement to lend a borrower funds, secured by a title to a motor vehicle, which loan is in return for a consideration or other thing of value where the rate, fee or other consideration for such forbearance exceeds the "maximum rate permitted by law" as that phrase is used in N.J.S.A. 2C:21-19. "Title loan" shall include, but not be limited to, such loans made:

In person;

Through an agent;
By electronic means (including telephone, fax, computer, internet or similar means); or
Through response to an advertisement or solicitation made in this State.

History

Amended by R.2000 d.177, effective 5/1/2000.
See: 32 N.J.R. 344(a), 32 N.J.R. 1513(b).
Inserted "Commissioner" and "Department".
Amended by R.2006 d.329, effective 9/18/2006.
See: 37 N.J.R. 2917(a), 38 N.J.R. 3773(a).
Rewrote the introductory paragraph and added definitions "Payday loan", "Refund anticipation loan" and "Title loan".
Amended by R.2010 d.140, effective 7/6/2010.
See: 41 N.J.R. 4583(a), 42 N.J.R. 1355(a).
In definition "Essential records", inserted parentheses around "l" and "m".

N.J. Admin. Code § 3:24-1.4 Application fees

(a) An application fee of $ 700.00 shall be charged for the following:

Application for a principal office;

Application for a full branch office;
Application for a limited branch office; and
Application for a mobile office.

History

Amended by R.2000 d.177, effective 5/1/2000.
See: 32 N.J.R. 344(a), 32 N.J.R. 1513(b).
In (a), increased the fee from $ 250.00 to $ 300.00 in 1, and increased the fee from $ 100.00 to $ 250.00 in 5.
Recodified from N.J.A.C. 3:24-1.5 by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Former N.J.A.C. 3:24-1.4, License fees; reporting fee, repealed. Rewrote the section.

N.J. Admin. Code § 3:24-1.5 Application process; requirements

(a) No applicant for a license shall commence operations until a license has been issued.

(b) In addition to the information required to be furnished to the Department by N.J.S.A. 17:15A-33 through 39, the applicant shall supply the following as part of its application for each director, substantial stockholder, officer, owner, partner, member, manager and employee of the business to be licensed:

A personal certification on a form supplied by the Commissioner;
A two-inch by two-inch passport style photograph of the persons listed in (b) above;
Fingerprints in the manner currently required by the New Jersey State Police or their authorized representative;
Application fee(s) as required by N.J.A.C. 3:24-1.4; and
Any other information or supporting documentation relating to the operation of the proposed check cashing business which the Commissioner may require.

(c) Corporate applicants for a check cashing license shall submit a copy of the Certificate of Incorporation showing the filed or recording stamp of the New Jersey Department of Treasury, Division of Revenue, and shall identify the registered agent for service of process. Foreign corporations shall submit a New Jersey Certificate of Authority in addition to their corporate certificate. A limited liability company shall submit a filed copy of its operating agreement.

(d) Individual or partnership applicants using a trade name shall submit a copy of the trade name as filed with the county clerk showing date of recording.

(e) Corporations using alternate names shall file a copy of registration of such name, as recorded, as part of their applications, in addition to the documents listed in (c) above.

(f) A new employee, hired after a license has issued, may begin work pending receipt by the Department of fingerprint results provided all other information is complete and satisfactory.

(g) Applicants seeking approval of a branch, mobile office, change of address or for change of control must have their license in good standing to receive said additional approval.

(h) Applicants seeking approval of change of address shall submit:

A physical description of the premises;
Two interior and two exterior photos of the premises;
A copy of the executed lease;
Necessary permits, variances or other documentation sufficient to demonstrate that the facility is in compliance with all applicable State, county and municipal laws, ordinances and traffic regulations; and
Proof of compliance with N.J.S.A. 17:15A-41(e) regarding the requirement that no office or mobile office shall be located within 2,500 feet of an existing office or mobile office.

(i) Applicants who file applications lacking any necessary information shall be notified by letter of the missing information and shall have one year from the date of the letter to submit the information or the application will be deemed withdrawn. If an application is so withdrawn, all application fees shall be retained by the Department and shall not be applied to any re-application.

(j) Changes in bank accounts and banking institution information supplied to the Department pursuant to N.J.S.A. 17:15A-44(f) and (g), information submitted as part of an application as set forth in (b) above or the New Jersey motor vehicle registration or other identification of a mobile office and the exact locations where any mobile office unit will be operated, shall be reported in writing to the Department within five business days of the change in the information or commencing operation at a new location.

History

Amended by R.2000 d.177, effective 5/1/2000.
See: 32 N.J.R. 344(a), 32 N.J.R. 1513(b).
In (b), inserted a reference to Form SBI-19 in 3, changed N.J.A.C. reference in 4, and rewrote 6; in (c), substituted a reference to the Department of Treasury, Division of Revenue for a reference to the Secretary of State; and added (g) through (i).
Amended by R.2005 d.191, effective 6/20/2005.
See: 37 N.J.R. 697(a), 37 N.J.R. 2201(a).
In (b), inserted "member," preceding "manager" in the introductory paragraph; in (c), inserted "their" preceding "corporate certificate" in the second sentence and added the third sentence; in (e), substituted "alternate names" for "fictitious names"; in (h), added 5; added (j).
Recodified from N.J.A.C. 3:24-1.6 by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Former N.J.A.C. 3:24-1.5 recodified as N.J.A.C. 3:24-1.4; section was "Application fees". Substituted "personal certification on a form supplied by the Commissioner" for "Certificate of Certified Consent for criminal investigative purposes" in (b)1, substituted "A two-inch by two-inch passport style photograph" for "Photographs" in (b)2, rewrote (b)3, substituted "1.4; and" for "1.5" in (b)4, deleted "; and" from the end of (b)5 and deleted (b)6.

N.J. Admin. Code § 3:24-1.6 Reserved

History

Recodified as N.J.A.C. 3:24-1.5 by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Section was "Application process; requirements".

Subchapter 2 FINANCIAL RESPONSIBILITY

N.J. Admin. Code § 3:24-2.1 Proof of net worth; records

(a) An applicant shall submit to the Department an unqualified, audited financial statement prepared by a Certified Public Accountant or a public accountant, in accordance with generally accepted accounting principles, sufficient to satisfy the capital and net worth requirements of N.J.S.A. 17:15A-37. This statement shall reflect the financial status of the applicant as of a date not more than 12 months prior to the date of the application. The certified public accountant or public accountant issuing the statement shall be in good standing with their State Board of Accountancy or other appropriate regulatory agency.

(b) For each subsequent application, the applicant may use the initial unqualified, audited financial statement, provided that it is less than 12 months old and that it indicates that the applicant meets the higher net worth and liquid assets necessary for the additional offices sought to be approved.

(c) In the event the accountant does not maintain an office in New Jersey, the licensee's records may, at the option of the Department, be examined at the licensee's main office.

(d) Uncollected checks may not be carried on a financial statement more than 90 days after presentment.

History

Amended by R.2000 d.177, effective 5/1/2000.
See: 32 New Jersey Register 344(a), 32 New Jersey Register 1513(b).
Rewrote (a); in (c), substituted "may, at the option of the Department," for "shall" following "records"; and added (d).

Subchapter 3 PLACE OF BUSINESS

N.J. Admin. Code § 3:24-3.1 Compliance with State and local law

The applicant shall supply necessary permits, variances or other documentation sufficient to demonstrate that the facility is in compliance with all applicable State, county and municipal laws, ordinances and traffic regulations.

History

Amended by R.2000 d.177, effective 5/1/2000.
See: 32 New Jersey Register 344(a), 32 New Jersey Register 1513(b).
Deleted (a) designation; and deleted a former (b).

Subchapter 4 CHECK CASHING FEES; POSTING; RETURNED CHECKS

N.J. Admin. Code § 3:24-4.1 Check cashing fees

(a) A licensed check casher shall be permitted to charge a fee for cashing a check drawn on a depository institution or other financial entity located in this or any other state, up to an amount as follows:

For cashing a check payable to a recipient of Temporary Assistance for Needy Families (TANF), one percent of the face amount of the check, or $.90, whichever is greater;
For cashing a check payable to a recipient of Supplemental Security Income pursuant to Subchapter XVI of the Social Security Act, 42 U.S.C. §§ 1381 et seq., one and one half percent of the face amount of the check, or $.90, whichever is greater;
For cashing a check payable to a recipient of Old-Age and Survivors benefit payments pursuant to Subchapter II of the Social Security Act, 42 U.S.C. §§ 401 et seq., one and one half percent of the face amount of the check, or $.90, whichever is greater; and
For cashing any other check, 2.21 percent of the face amount of the check, or $ 1.00, whichever is greater.

History

New Rule, R.2010 d.140, effective 7/6/2010.
See: 41 N.J.R. 4583(a), 42 N.J.R. 1355(a).
Former N.J.A.C. 3:24-4.1, Returned check fee; prohibition, recodified to N.J.A.C. 3:24-4.3.

N.J. Admin. Code § 3:24-4.2 Posting of fees; signs

(a) The licensee shall post and at all times display in a conspicuous place on the premises the license and also the schedule of fees to be charged, which fees shall not exceed the maximums permitted pursuant to N.J.A.C. 3:24-4.1. The Department shall determine the number of signs which shall be posted and shall designate those areas in the check cashing facility where these signs will be displayed, depending upon the size of the office and its physical layout. These signs shall be in both the English language and Spanish language except where the Department deems it necessary that a different or additional language be used.

(b) Each sign shall be printed on heavy cardboard or other durable material, with printed information in a minimum of 22 point type with appropriate headings of at least 24 point bold type. These signs shall read as follows:

| STATE LICENSED CHECK CASHER MAXIMUM | | | | --- | --- | --- | | AND MINIMUM FEES YOU CAN BE CHARGED | | | | 2.21% OF YOUR CHECK | | | | Example: | | | | New Jersey check | $ 300.00 | | | Maximum fee | 6.63 | 2.21% | | Cash to you | $ 293.37 | | | The minimum fee is $ 1.00. | | |

| CHECKS PAYABLE TO PERSON UNDER | | | | --- | --- | --- | | TEMPORARY ASSISTANCE FOR NEEDY | | | | FAMILIES (TANF) 1% OF YOUR CHECK | | | | Example: | | | | TANF check | $ 300.00 | | | Maximum fee | 3.00 | 1% | | Cash to you | $ 297.00 | | | The minimum fee is $ .90. | | |

| SUPPLEMENTAL SECURITY INCOME CHECKS | | | | --- | --- | --- | | (Sub XVI) 1 1/2% OF YOUR CHECK | | | | Example: | | | | SSI check | $ 300.00 | | | Maximum fee | 4.50 | 1 1/2 % | | Cash to you | $ 295.50 | | | The minimum fee is $ .90. | | |

| SOCIAL SECURITY | | | | --- | --- | --- | | OLD AGE AND SURVIVORS CHECKS | | | | (Sub II) 1 1/2 % OF YOUR CHECK | | | | Example: | | | | SS check | $ 300.00 | | | Maximum fee | 4.50 | 1 1/2 % | | Cash to you | $ 295.50 | | | The minimum fee is $ .90. | | |

History

Amended by R.2000 d.177, effective 5/1/2000.
See: 32 N.J.R. 344(a), 32 N.J.R. 1513(b).
In (a), inserted ", which fees shall not exceed the maximums permitted pursuant to N.J.S.A. 17:15A-43" at the end of the first sentence; and in (b), added a sign relating to Social Security Old Age and Survivors checks.
Amended by R.2010 d.140, effective 7/6/2010.
See: 41 N.J.R. 4583(a), 42 N.J.R. 1355(a).
In (a), substituted "N.J.A.C. 3:24-4.1" for "N.J.S.A. 17:15A-43"; in the first table under (b), in the heading, inserted "AND MINIMUM" and substituted "2.21" for "2", and in the table, substituted "6.63" for "6.00", "2.21" for "2" and "$ 293.37" for "$ 294.00" and inserted "The minimum fee is $ 1.00"; in the next three tables, inserted "The minimum fee is $.90."; in the heading of the second table, substituted "TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)" for "AID TO FAMILIES WITH DEPENDENT CHILDREN (AFDC)", and in the second table, substituted "TANF" for "AFDC".

N.J. Admin. Code § 3:24-4.3 Returned check fee; prohibition

(a) No licensee shall impose any charge or fee for a returned check on the customer who cashes the check.

(b) A licensee may charge a fee to the maker of the check, sufficient to reimburse the licensee for the charge imposed by the bank which returns the check unpaid.

History

Recodified from N.J.A.C. 3:24-4.1 by R.2010 d.140, effective 7/6/2010.
See: 41 N.J.R. 4583(a), 42 N.J.R. 1355(a).

Subchapter 5 CONDUCT OF BUSINESS

N.J. Admin. Code § 3:24-5.1 Check cashing procedure

(a) In addition to the requirements of N.J.S.A. 17:15A-44c, e and j, each licensee shall:

Pay to each customer tendering a check, draft or money order to be cashed, the entire face amount of the instrument in cash less any charges permitted by law, on the same date upon which the instrument is presented;
Indicate on each check, draft or money order cashed at the time of cashing, the date on which the item was cashed; and
Give each person presenting a check, draft or money order for cashing upon completion of each transaction an itemized receipt indicating the name of the check casher, the teller number indicating which teller completed the transaction, the amount of the check cashed, the amount of the fee charged to cash the check and the amount of cash given to the person cashing the check.

History

Amended by R.2000 d.177, effective 5/1/2000.
See: 32 New Jersey Register 344(a), 32 New Jersey Register 1513(b).

N.J. Admin. Code § 3:24-5.2 Recordkeeping

(a) In addition to the requirements of N.J.S.A. 17:15A-44(l), a Summary of Business Record shall be maintained in which the number of checks, drafts, or money orders cashed, their total face amount, and the aggregate fees received, shall be shown for each business day and totaled for each calendar month. If this information is included in a horizontal form of daily cash reconcilement, that record will be acceptable in lieu of a separate summary of business. The summary record shall consist of six categories:

All 2.21 percent checks cashed;
All one percent checks cashed, including TANF checks;
All one and one-half percent checks cashed including SSI and Social Security Old Age and Survivors checks;
All no-fee checks cashed;
All check cashing customer receipts; and
Any other checks cashed which do not fit into categories (a)1 through 5 above.

(b) A viewable photographic record of checks, drafts and money orders cashed, that sets forth all the information pertaining to said checks, drafts and money orders required by N.J.S.A. N.J.S.A. 17:15A-44 d and l and (a) above, will be acceptable in lieu of the records required by this section.

In such event, the photographic film shall be processed promptly after each roll of film has been exposed, and the viewable records maintained by the licensee for at least three years after the date of the last photograph on the roll.
The licensee shall maintain a log indicating the beginning and ending business days covered by each individual roll of processed photographic records.

History

Amended by R.2000 d.177, effective 5/1/2000.
See: 32 N.J.R. 344(a), 32 N.J.R. 1513(b).
In (a)3, inserted a reference to Social Security Old Age and Survivors checks.
Amended by R.2010 d.140, effective 7/6/2010.
See: 41 N.J.R. 4583(a), 42 N.J.R. 1355(a).
In the introductory paragraph of (a), inserted parentheses around "l" following "N.J.S.A. 17:15A-44"; in (a)1, substituted "2.21" for "two"; and in (a)2, substituted "TANF" for "AFDC".

N.J. Admin. Code § 3:24-5.3 Return items record

(a) A return items record shall be maintained in which the following information shall be clearly recorded with respect to each check, draft or money order, returned unpaid:

The date on which each check, draft or money order was originally cashed by licensee;
The issuer of each check, draft or money order;
The date of each check, draft or money order returned unpaid;
The name of the drawer of each check, draft or money order returned unpaid;
The name of the payee or last endorser of each check, draft or money order;
The amount of each check, draft or money order returned unpaid;
The name of the bank on which each check, draft or money order is drawn;
The reason for which each check, draft or money order was returned unpaid;
The date on which each check, draft or money order was redeposited;
The date and manner of payment of each check, draft or money order, with complete details of the disposition made of it, including a record of the specific check, draft or money order utilized in the payment of the original item; and
A current record, updated (monthly), showing the efforts and progress being made to collect any unpaid checks, drafts, or money orders, including the receipt of partial payments.

N.J. Admin. Code § 3:24-5.4 Daily cash reconcilement

(a) A daily cash reconcilement shall be maintained which shall contain the following information:

Cash on hand at opening of business;
Checks, drafts or money orders cashed the previous day and on hand at opening of business;
Cash received during the day showing in detail the source of funds;
The total amount of fees received during the day;
The sum of items (a)1 through 4 above;
The total deposits made during the day;
Other cash paid out during the day showing in detail the nature of the disbursement;
The sum of items (a)6 and 7 above;
Item (a)5 less item (a)8 above, representing the cash on hand and the total of undeposited checks, drafts or money orders, cashed during the day;
The total of cash included in item (a)9 above; and
Cash on hand at close of business day with shortages or overages explained (disposition or resolution).

N.J. Admin. Code § 3:24-5.5 Deposits

(a) All checks, drafts and money orders shall be deposited no later than the next business day in a financial institution located in this State which has been identified to the Department or located outside this State, if the out-of-State financial institution is approved by the Commissioner as set forth in this section. Use of a bank's night deposit facility, if any, is permitted. In order for an out-of-State financial institution to qualify for approval by the Commissioner, it shall:

Be insured by the Federal Deposit Insurance Corporation;
Provide a letter from its primary regulator confirming that the financial institution is adequately capitalized and managed; and
Not make or facilitate, directly or indirectly, payday loans, title loans or refund anticipation loans through the check casher or otherwise in this State, and shall provide a certification to the Department to that effect.

(b) When the number of payroll checks cashed amount to 50 or more, the licensee may present such package of checks to the drawee bank or the maker of the checks and receive in exchange a single draft, provided full details of the transaction are recorded. Separate tapes of these transactions shall be maintained as set forth in N.J.A.C. 3:24-5.2.

(c) All checks, drafts, money orders cashed on any one day and deposited on the same day or next business day shall be deposited under a separate deposit total and not commingled with any other day's business.

(d) A violation of this section shall occur if a licensee instead of depositing all checks, drafts and money orders as required:

Cashes all or any of them at another check casher;
Exchanges all or any of them for another check or checks; or
Negotiates all or any of them in any manner or for any purpose other than that provided in this section.

(e) If an out-of-State financial institution approved by the Commissioner fails to maintain the standards specified in (a) above or if the institution is placed under a supervisory order from its primary regulator or operates in a manner inconsistent with safe and sound financial practices, the Commissioner may take such action as he or she deems appropriate and necessary to protect the licensee and the public. The action may include revoking the approval conferred by the Commissioner on the institution pursuant to (a) above and requiring any check casher utilizing that institution to submit and comply with a plan for moving its business account(s) to a different institution within a reasonable timeframe established by the Department. If a check casher utilizing such an institution fails to supply such a plan or fails to comply with a plan submitted, the Department may suspend, revoke or refuse to renew the license of the check casher pursuant to N.J.S.A. 17:15A-48(a)1.

History

Amended by R.2006 d.329, effective 9/18/2006.
See: 37 N.J.R. 2917(a), 38 N.J.R. 3773(a).
Rewrote the introductory paragraph of (a); added (a)1 through (a)3; and added (e).

N.J. Admin. Code § 3:24-5.6 Dual business and deposit record requirements

(a) The checks, drafts, money orders or cash of any other business in which the licensee is engaged shall not be commingled with other funds in the licensee's bank account or with the cash or checks on hand.

A licensee may apply to the Commissioner in writing for an exception to the requirements set forth in (a) above which prohibits commingling of checks, drafts, money orders or cash of any other business conducted by the licensee on the same premises, with the cash or checks on hand. The Commissioner shall grant an exception based on the following criteria and conditions:

i. The licensee shall continue to maintain a separate bank account for the check cashing business as required by N.J.S.A. 17:15A-44f and N.J.A.C. 3:24-5.6(a);

ii. The licensee shall provide the Department with complete access to all check cashing records, as well as the records of all other businesses, funds of which are commingled with funds of the check cashing business, conducted by the licensee at the licensed location(s) and/or at the approved limited station branch(es);

iii. The licensee shall maintain and utilize a separate payment bank account for transfers of funds and/or payment of funds related to other businesses;

iv. The licensee shall fill out Department Form No. 001-95 on a daily basis for each licensed location and for each limited station branch. Form No. 001-95 shall provide financial accounting deemed sufficient to track the flow of funds and to reconcile cash balances of all activities which result in use of the check cashing drawer for funds. These forms shall be maintained on file for a period of two years; and

v. The check cashing register tape of all activity (including, but not limited to, checks cashed and money order activity) shall be available with Form No. 001-95.

(b) Separate records shall be kept for a check cashing business conducted on the same premises where another business is also operated. In such cases the licensee shall apportion to the check cashing business its share of expense. Reasonable estimates may be used.

History

Amended by R.1995 d.656, effective 12/18/1995.
See: 27 New Jersey Register 3255(a), 27 New Jersey Register 5011(b).

N.J. Admin. Code § 3:24-5.7 Prohibitions

(a) In addition to the prohibitions contained in N.J.S.A. 17:15A-30 et seq., no licensee or person acting on behalf of a licensee shall:

Cash a check made payable to "cash";
Cash a check using any form of consideration other than cash; or

Cash a check for anyone other than the payee named on the face of the check, except where the presenter of the check to be cashed has obtained a written, notarized authorization from a disabled payee specifically requesting the presenter to cash the check.

Subchapter 6 ADDITIONAL REPORTS

N.J. Admin. Code § 3:24-6.1 Annual report

Each check cashing licensee shall file an annual report as mandated by N.J.S.A. 17:15A-45. In accordance with N.J.A.C. 3:1-7.6, the Department shall assess a penalty against a licensee for each report the licensee files late.

History

New Rule, R.1995 d.655, effective 12/18/1995.
See: 27 N.J.R. 3655(a), 27 N.J.R. 5011(a).
Former 3:24-6.1, "Additional reports; fee", recodified to N.J.A.C. 3:24-6.2.
Amended by R.2000 d.177, effective 5/1/2000.
See: 32 N.J.R. 344(a), 32 N.J.R. 1513(b).
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Section was "Annual report; fee". Substituted "In accordance with N.J.A.C. 3:1-7.6, the" for "The licensee shall submit a fee of $ 100.00 with each report filed. The" and deleted "$ 50.00" preceding "penalty".
Amended by R.2007 d.306, effective 10/1/2007.
See: 39 N.J.R. 2299(a), 39 N.J.R. 4111(a).
Deleted ", on or before March 1," following "file".

N.J. Admin. Code § 3:24-6.2 Additional reports

(a) In any case in which the Commissioner finds that reasonable grounds exist for requiring additional recordkeeping and reporting, the Commissioner may issue an order requiring any licensee or group of licensees in a geographic area to provide information regarding transactions that involve a total dollar amount or denomination of $ 2,500 or more, including the names of the persons participating in those transactions.

(b) A licensee shall maintain in its files for five years a copy of any Currency Transaction Report it is required to file with the New Jersey Attorney General's office and the Federal government.

History

Recodified from N.J.A.C. 3:24-6.1 by R.1995 d.655, effective 12/18/1995.
See: 27 New Jersey Register 3655(a), 27 New Jersey Register 5011(a).
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Section was "Additional reports; fee". Deleted former (b) and recodified (c) as (b).

Chapter 25 DEBT ADJUSTMENT AND CREDIT COUNSELING

Subchapter 1 DEBT ADJUSTMENT AND CREDIT COUNSELING FEES

N.J. Admin. Code § 3:25-1.1 Definitions

The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise.

"Acts" means the Debt Adjustment and Credit Counseling Act, N.J.S.A. 17:16G-1 et seq. and the New Jersey Home Ownership Security Act of 2002, N.J.S.A. 46:10-22 et seq.

"Affiliated" means a relationship in which the high-cost home loan credit counseling service is directly or indirectly controlled by, or under the common control of, the directors, principal officers and/or any shareholder of another company.

"Client" means an individual or a group of individuals comprising a single family unit.

"Commissioner" means the Commissioner of Banking and Insurance.

"Covered home loan" means a home loan in which the total points and fees payable in connection with the loan, excluding either a conventional prepayment penalty or not more than two bona fide discount points, exceed four percent of the total loan amount, or 4.5 percent of the total loan amount if the total loan amount is $ 40,000 or less, and 4.5 percent of the total loan amount if the loan is insured by the Federal Housing Administration or guaranteed by the Federal Department of Veterans Affairs, or a home loan that is considered a high-cost home loan under the Home Ownership Security Act.

"Credit counseling" means any guidance or educational program or advice offered by a nonprofit social service agency or nonprofit consumer credit counseling agency regarding the use of credit or debt management.

"Debt Adjuster Act" means the Debt Adjustment and Credit Counseling Act, N.J.S.A. 17:16G-1 et seq.

"Debt adjustment" means either acting or offering to act for a consideration as an intermediary between a debtor and his creditors for the purpose of settling, compounding, or otherwise altering the terms of payment of any debts of the debtor, or, to that end, receiving money or other property from a debtor, or on behalf of the debtor, for payment to, or distribution among the creditors of the debtor. Debt adjustment shall not include the activities of:

An attorney-at-law of this State who is not principally engaged as a debt adjuster;
A person who is a regular full-time employee of a debtor and who acts as an adjuster of his or her employer's debts;
A person acting pursuant to any order or judgment of a court, or pursuant to authority conferred upon that person by any law of this State or the United States;
A person who is a creditor of the debtor or an agent of one or more creditors of the debtor and whose services in adjusting the debtor's debts are rendered without cost to the debtor; or
A person who, at the request of a debtor, arranges for or makes a loan to the debtor and who, at the authorization of the debtor, acts as an adjuster of the debtor's debts in the disbursement of the proceeds of the loan without compensation for the services rendered in adjusting those debts.

"Debtor" means a person or two or more persons who are jointly and severally indebted.

"Department" means the Department of Banking and Insurance.

"High-cost home loan" means a home loan for which the principal amount of the loan does not exceed $ 350,000 as of 2003, adjusted annually to include the last published increase of the housing component of the national Consumer Price Index, New York-Northeastern New Jersey Region, and in which the terms of the loan meet or exceed one or more of the thresholds as defined in N.J.S.A. 46:10B-24. The annual adjustment in the principal amount of the loan shall be reflected through a notice of administrative change published in the New Jersey Register.

"High-cost home loan credit counseling" means the counseling of a borrower on a high-cost home loan transaction which includes the financing of points and fees in connection with the high-cost home loan.

"Home loan" means an extension of credit primarily for personal, family or household purposes, including an open-end credit plan, other than a reverse mortgage transaction, in which the loan is secured by 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 a security interest in a manufactured home which is or will be occupied by a borrower as the borrower's principal dwelling.

"Home Ownership Security Act" means the New Jersey Home Ownership Security Act of 2002, N.J.S.A. 46:10B-22 et seq.

"Licensee" means a nonprofit social service or credit counseling agency licensed pursuant to N.J.S.A. 17:16G-2.

"Non-affiliated third party agency" means a nonprofit social service or credit counseling agency which is not under the influence, control, or direction of any outside party such as a landowner, real estate broker, lender, or consultant seeking to derive a profit or gain from the counseling services.

"Nonprofit social service agency" or "nonprofit credit counseling agency" means any corporation duly organized under Title 15 or 15A of the New Jersey Statutes, and no part of the assets, income or profit of which is distributable to, or enures to the benefit of, its members, directors or officers, except to the extent permitted under the Debt Adjustment and Credit Counseling Act, N.J.S.A. 17:16G-1 et seq.

"Points and fees" shall have the meaning as defined in the New Jersey Home Ownership Security Act of 2002, N.J.S.A. 46:10B-22 et seq.

"Registrant" means an entity registered by the Department for the purposes of providing high-cost home loan credit counseling.

"State" means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands and the Northern Mariana Islands.

History

Amended by R.1992 d.323, effective 8/17/1992.
See: 24 N.J.R. 2106(a), 24 N.J.R. 2836(a).
Revised text.
Amended by R.1997 d.336, effective 8/18/1997.
See: 29 N.J.R. 2500(a), 29 N.J.R. 3719(a).
Added "Nonprofit social service agency"; deleted "Billing cycle" and "Office"; and amended "Act", "Commissioner", "Department", and "Licensee".
Amended by R.2003 d.59, effective 2/3/2003.
See: 34 N.J.R. 2552(a), 35 N.J.R. 607(b).
In "Credit counseling", substituted "regarding the use of credit or debt management" for "for the purpose of fostering the responsible use of credit and debt management"; in "Debtor" substituted "a person" for "an individual debtor" and "persons" for "individuals".
Amended by R.2004 d.81, effective 2/17/2004.
See: 35 N.J.R. 4187(a), 36 N.J.R. 943(a).
Rewrote the section.
Amended by R.2008 d.203, effective 7/21/2008.
See: 40 N.J.R. 837(a), 40 N.J.R. 4311(a).
Rewrote definition "Debt adjustment"; in definition "Non-affiliated third party agency" substituted "nonprofit" for "non-profit"; substituted definition "Nonprofit social service agency" for definition "Non-profit social service agency" and in definition "Nonprofit social service agency", inserted a comma following "benefit of"; and added definition "State".
Amended by R.2009 d.322, effective 10/19/2009.
See: 41 N.J.R. 2370(a), 41 N.J.R. 3897(a).
Added definition "Registrant".

N.J. Admin. Code § 3:25-1.2 Fees charged by licensed nonprofit social service and nonprofit consumer credit counseling agencies

(a) A licensee may charge a fee to cover the cost of providing debt adjustment and credit counseling.

The fee for debt adjustment shall not exceed one percent of the gross monthly income of the client but in no case more than $ 25.00 in any one month. This fee may be waived at the discretion of the licensee.
The fee that the licensee may charge a client for credit counseling services shall not exceed $ 60.00 in any one month.

(b) The licensee shall provide to the client a written statement of the fees to be charged before providing any debt adjustment or credit counseling service.

History

Amended by R.1992 d.323, effective 8/17/1992.
See: 24 N.J.R. 2106(a), 24 N.J.R. 2836(a).
Revised text.
Repeal and New Rule, R.1997 d.336, effective 8/18/1997.
See: 29 N.J.R. 2500(a), 29 N.J.R. 3719(a).
Section was "Debt adjustment fees".
Amended by R.2003 d.59, effective 2/3/2003.
See: 34 N.J.R. 2552(a), 35 N.J.R. 607(b).
Rewrote (a)2.
Amended by R.2008 d.203, effective 7/21/2008.
See: 40 N.J.R. 837(a), 40 N.J.R. 4311(a).
Section was "Fees charged by licensees".

N.J. Admin. Code § 3:25-1.3 Reserved

History

Amended by R.1992 d.323, effective 8/17/1992.
See: 24 New Jersey Register 2106(a), 24 New Jersey Register 2836(a).
Revised text.
Repealed by R.1997 d.336, effective 8/18/1997.
See: 29 New Jersey Register 2500(a), 29 New Jersey Register 3719(a).
Section was "Credit counseling fees".

N.J. Admin. Code § 3:25-1.4 Reserved

History

Repealed by R.1997 d.336, effective 8/18/1997.
See: 29 New Jersey Register 2500(a), 29 New Jersey Register 3719(a).
Section was "Prior notice".

Subchapter 2 LICENSING OR REGISTRATION REQUIREMENTS, BONDING, AUDITS AND DUTIES OF A DEBT ADJUSTER

N.J. Admin. Code § 3:25-2.1 Eligibility for license or registration

(a) No person other than a nonprofit social service agency or a nonprofit credit counseling agency duly licensed in accordance with the Debt Adjuster Act and this chapter shall act as a debt adjuster.

(b) An unlicensed nonprofit social service agency or nonprofit credit counseling agency may provide high-cost home loan credit counseling if it is registered in accordance with this chapter. In order to provide high-cost home loan credit counseling, agencies licensed pursuant to the Debt Adjuster Act shall also be registered in accordance with this chapter.

(c) To be eligible for a license under the Debt Adjuster Act, a nonprofit social service agency or nonprofit consumer credit counseling agency shall establish a board of directors whose function shall be to establish the policies of the agency. No more than 40 percent of the members of the board shall have as their principal employer any corporation, association or institution that offers credit to the general public.

(d) To be eligible for registration as a high-cost home loan credit counselor, an agency, including an agency licensed pursuant to the Debt Adjuster Act, shall be a non-affiliated third party nonprofit credit counseling agency approved by the United States Department of Housing and Urban Development.

History

New Rule, R.1997 d.336, effective 8/18/1997.
See: 29 N.J.R. 2500(a), 29 N.J.R. 3719(a).
Former section recodified to N.J.A.C. 3:25-2.3.
Amended by R.2004 d.81, effective 2/17/2004.
See: 35 N.J.R. 4187(a), 36 N.J.R. 943(a).
In (a), inserted "duly licensed in accordance with the Debt Adjuster Act and this chapter" following "credit counseling agency"; added a new (b); recodified former (b) as (c) and inserted "under the Debt Adjuster Act" following "To be eligible for a license"; added (d).
Amended by R.2008 d.203, effective 7/21/2008.
See: 40 N.J.R. 837(a), 40 N.J.R. 4311(a).
In (a), deleted "or provide credit counseling" from the end; and in (d), substituted "nonprofit" for "non-profit".

N.J. Admin. Code § 3:25-2.2 Application for license as a debt adjuster or registration as a high-cost home loan credit counselor

(a) Prior to acting as a debt adjuster, a nonprofit social services or nonprofit consumer counseling agency shall obtain a license from the Department. The license application shall be on a form approved by the Commissioner and shall include the following information:

A Certificate of Incorporation bearing the New Jersey Division of Revenue's dated filing stamp or its equivalent. For non-New Jersey state nonprofit corporations, a copy of the Certificate of Authority to do business in New Jersey bearing the New Jersey Division of Revenue's dated filing stamp or its equivalent;
If the corporation uses a doing business as name, a copy of the registration of alternate corporate name bearing the New Jersey Division of Revenue's dated filing stamp or its equivalent;
A completed certified consent certificate authorizing a criminal record check for each corporate director or trustee;
A completed biographical information form and personal financial statement for each director or trustee;
Information on whether any director, trustee or member of an advisory or other similar committee has ever had a license, permit or other authorization, other than a driver's license, been suspended or revoked by this or any other state or has been affiliated directly or indirectly with any other organization that has had such a license suspended or revoked;
An unqualified financial statement prepared by a certified public accountant or a public accountant demonstrating the financial condition of the corporation;
A copy of the annual report of the nonprofit agency most recently filed with the New Jersey Division of Revenue pursuant to N.J.S.A. 15A:4-5, or an equivalent report for non-New Jersey state nonprofit corporations;
The applicant's balance sheet and profit and loss statement for the last fiscal period, if available;
If the primary source of operating funds is obtained from outside sources such as financial institutions, retail merchants, industrial concerns, labor unions, trade associations, religious organizations, foundations, etc., a schedule citing the names and addresses of all such individual contributors and the amount contributed and the amount anticipated for the current fiscal period;
A list of salaries or compensation paid to individual directors, trustees, officers, members of the advisory council or other persons in managerial positions during the last fiscal period or if the applicant is recently incorporated, the estimated amounts to be paid to all such individuals during the current fiscal period;
A schedule citing the types and amounts of insurable risks including:

i. Fidelity bonds covering every director, trustee, officer, employee or anyone who will have authority to act on the licensee's behalf;

ii. Indemnity insurance covering robbery, burglary, holdup, embezzlement or fraud by insiders, outsiders, forgery, errors and omissions, misplacement, etc.; and

iii. Fire and extended coverage on the office(s), furniture, fixtures and equipment, etc.;

Proof of the surety bond required by N.J.A.C. 3:25-2.5;
The address of all offices conducting debt adjustment activities on behalf of debtors residing in New Jersey;
The license application fee required by N.J.A.C. 3:23-2.1; and
Additional information, which may be specifically requested by the Commissioner from a particular applicant.

(b) Upon determination that an applicant is qualified for licensure under the Debt Adjuster Act, the Commissioner shall issue a license for each location where the licensee may conduct debt adjustment activities on behalf of debtors residing in New Jersey.

(c) A licensee shall advise the Department of a change of any legal name, business name or a change of the address that appears on the license by noting the change on the current original license and returning it to the Department for cancellation and reissuance of a new license containing updated information. No fee shall be required for such changes. If the notice is to change a legal or business name, the request shall be accompanied by a copy of the document filed in the office of the Division of Revenue or other authority evidencing that the change has been properly recorded.

(d) Applicants for registration as a high-cost home loan credit counseling service shall not be affiliated with any lender of high-cost home loans and shall furnish acceptable proof of approval by the United States Department of Housing and Urban Development as a Housing Counseling Agency.

(e) Prior to providing high-cost home loan credit counseling services, a nonprofit social service or nonprofit credit counseling agency shall be registered by the Department. The registration application shall be on a form approved by the Commissioner and shall include the following information:

A Certificate of Incorporation bearing the New Jersey Division of Revenue's dated filing stamp or its equivalent or, for non-New Jersey state corporations, a copy of the Certificate of Authority to do business in New Jersey bearing the New Jersey Division of Revenue's dated filing stamp or its equivalent;
If the corporation uses a doing business as name, a copy of the registration of alternate corporate name bearing the New Jersey Division of Revenue's dated filing stamp or its equivalent;
Information on whether any director, trustee or member of an advisory or other similar committee has ever had a license, permit or other authorization, other than a driver's license, suspended or revoked by this or any other state or has been affiliated, directly or indirectly, with any organization that has had such a license suspended or revoked;
An unqualified financial statement prepared by a certified public accountant or a public accountant demonstrating the financial condition of the corporation;
A copy of the annual report of the nonprofit agency most recently filed with the New Jersey Division of Revenue pursuant to N.J.S.A. 15A:4-5, or an equivalent report for non-New Jersey state nonprofit corporations;
The applicant's balance sheet and profit and loss statement for the fiscal period preceding the filing of the application, if available;
The registration application fee required by N.J.A.C. 3:23-2.1; and
A copy of the current HUD Certificate of Approval of the agency as a Housing Counseling Agency and a certified statement affirming that, as of the date of the application, the agency's approval by HUD as a Housing Counseling Agency remains in full force and effect.

(f) The Commissioner may request from a particular applicant any additional information that is necessary to determine an applicant's eligibility for registration.

(g) Upon determination that an applicant is qualified for registration as a high-cost home loan credit counselor, the Commissioner shall register each office location from which the high-cost home loan credit counselor provides credit counseling to debtors residing in New Jersey. Such registration shall be deemed approval pursuant to N.J.S.A. 46:10B-26g.

(h) The Department shall post on the Department's website at http://www.state.nj.us/dobi/, a list of the office locations of all registered credit counseling agencies approved to counsel borrowers on high-cost home loans.

(i) A registrant shall advise the Department of a change of business address. No fee shall be required for such changes.

History

New Rule, R.1997 d.336, effective 8/18/1997.
See: 29 N.J.R. 2500(a), 29 N.J.R. 3719(a).
Former section recodified to N.J.A.C. 3:25-2.4.
Amended by R.2004 d.81, effective 2/17/2004.
See: 35 N.J.R. 4187(a), 36 N.J.R. 943(a).
In (a), inserted "other than high-cost home loan credit counseling," following "counseling services" in the introductory paragraph, amended the N.J.A.C. references in 11 and 13; in (b), inserted "for licensure under the Debt Adjuster Act" preceding "the Commissioner"; added (d) through (i).
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
In (a)13 and (e)7, inserted "application" and substituted "N.J.A.C. 3:23-2.1" for "N.J.A.C. 3:25-2.4".
Amended by R.2008 d.203, effective 7/21/2008.
See: 40 N.J.R. 837(a), 40 N.J.R. 4311(a).
Section was "Application for license or registration". Rewrote the introductory paragraph of (a), and (a)1 and (a)2; added new (a)7; recodified former (a)7 through (a)14 as (a)8 through (a)15; in (b), substituted "the licensee may conduct" for "credit counseling and" and deleted "will take place" following "activities"; in (c), substituted "Division of Revenue" for "Secretary of State, County Clerk"; in the introductory paragraph of (e), substituted the first occurrence of "nonprofit" for "non-profit" and inserted the second occurrence of "nonprofit"; throughout (e)1 and in (e)2, substituted "Division of Revenue's" for "Secretary of State's" and inserted "or its equivalent"; in (e)1, substituted "non-New Jersey state" for "foreign (out-of-State)"; in (e)2, substituted "alternate" for "fictitious"; and in (e)5, inserted "most recently" and "state nonprofit", substituted "Division of Revenue" for "Secretary of State" and updated the N.J.S.A. reference.
Amended by R.2009 d.322, effective 10/19/2009.
See: 41 N.J.R. 2370(a), 41 N.J.R. 3897(a).
In (a)13, substituted "conducting debt adjustment activities on behalf of debtors residing in New Jersey" for "to be located in this State"; in (b), deleted "in this State" following "location" and deleted the last sentence, and inserted "on behalf of debtors residing in New Jersey"; and in (g), deleted "in this State" following "location" and substituted "provides credit counseling to debtors residing in New Jersey" for "shall operate".

N.J. Admin. Code § 3:25-2.3 Office requirement

(a) A licensee or registrant is not required to have a place of business in this State in order to conduct business in this State. A licensee or registrant with more than one office shall designate one office as its principal office, at which it shall receive official notices from the Department.

(b) Prior to conducting debt adjusting at any new location, the licensee shall file with the Commissioner the address of the office and the license application fee required by N.J.A.C. 3:25-2.2.

History

Recodified from N.J.A.C. 3:25-2.1 and amended by R.1997 d.336, effective 8/18/1997.
See: 29 N.J.R. 2500(a), 29 N.J.R. 3719(a).
Section name changed; in (a), substituted "have a place" for "establish a place"; and rewrote (b). Former section recodified to N.J.A.C. 3:25-2.5.
Amended by R.2004 d.81, effective 2/17/2004.
See: 35 N.J.R. 4187(a), 36 N.J.R. 943(a).
In (a), inserted "or registrant" following "licensee".
Amended by R.2008 d.203, effective 7/21/2008.
See: 40 N.J.R. 837(a), 40 N.J.R. 4311(a).
In (b), deleted "or credit counseling" following "adjusting" and inserted "application".
Amended by R.2009 d.322, effective 10/19/2009.
See: 41 N.J.R. 2370(a), 41 N.J.R. 3897(a).
In (a), substituted "is not required to" for "shall", and inserted "in order to conduct business in this State" and the last sentence.

N.J. Admin. Code § 3:25-2.4 Bond

(a) A licensee shall maintain a bond in an amount not less than $ 50,000 for the first office and $ 25,000 for each additional office from a surety company authorized to do business in this State. The bond shall run to the State, pro rata, for its benefit and for the benefit of all consumers injured by the wrongful act, omission, default, fraud or misrepresentation of the licensee in the course of activity as a debt adjuster or credit counselor and for the benefit of the Department for unpaid assessments, unpaid penalties and any other obligation of the licensee to the Department, including, but not limited to, returned items submitted to the Department in payment of bills, penalties, charges or fees. The bond shall not be payable for claims made by business creditors. No bond shall comply with this section unless it contains a provision that it shall not be cancelled for any reason unless notice of intention to cancel is filed with the Department at least 30 days before the day upon which cancellation shall take effect.

(b) The amount of the bond required by (a) above shall be considered as attributable to the first 250 debtors serviced at any office and the first $ 250,000 in funds held in the trust account of the licensee. The amount of the bond required by (a) above shall be increased based on information regarding the number of New Jersey debtors serviced by and the balance held in the trust accounts of licensees as set forth below:

The amount of the bond shall be increased by $ 25,000 for each additional set of 250 New Jersey debtors or portion thereof serviced at each office as reported in the most recent annual report;
The amount of the bond shall be increased by $ 25,000 for each set of $ 250,000 or portion thereof in additional funds held in the trust account of the licensee based on the average of the highest daily balance each month as reported in the most recent annual report.

For example, if a licensee had three offices and serviced 800 debtors at the first office, 300 at the second and 180 at the third and had an average trust account balance of $ 400,000, the bond would be increased by $ 125,000, comprised of $ 75,000 for the first office, $ 25,000 for the second office and zero additional for the third office, and by $ 25,000 for the increased trust account balance.

(c) The surety company shall pay consumers claims based on the damages directly incurred by the wrongful act, default, fraud or misrepresentation of the licensee.

(d) Attorney's fees, pre- or post-judgment interest, court costs and similar charges are not recoverable through the bond, unless such charges are included in a final judgment against the licensee and the surety company was given prior notice of the court action and an opportunity to respond.

(e) The bond shall not be payable for treble damage claims pursuant to the Consumer Fraud Act or any other State or Federal law.

History

Recodified from N.J.A.C. 3:25-2.3 and amended by R.1997 d.336, effective 8/18/1997.
See: 29 N.J.R. 2500(a), 29 N.J.R. 3719(a).
In (a), substituted "$ 50,000 for the first office and $ 25,000 for each additional office" for "$ 50,000 for each principal office and $ 25,000 for each branch office", substituted "debt adjuster ... charges or fees" for "licensee"; and added last two sentences; rewrote (b); and added (c) and (d). Former section recodified to N.J.A.C. 3:25-3.3.
Recodified from N.J.A.C. 3:25-2.5 by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Former N.J.A.C. 3:25-2.4, License and registration fees, repealed.
Amended by R.2009 d.322, effective 10/19/2009.
See: 41 N.J.R. 2370(a), 41 N.J.R. 3897(a).
In (a), substituted "assessments" for "examination bills"; added new (b); and recodified former (b) through (d) as (c) through (e).

N.J. Admin. Code § 3:25-2.5 Annual audit requirement

Each licensee shall have its financial records relating to debt adjustment audited annually by a certified public accountant or a public accountant. The auditor shall certify that the salaries and expenses paid by the licensee are reasonable compared to those incurred by comparable organizations providing similar services. The licensee shall be responsible for submitting or verifying the submission of the audit report to the Commissioner within 30 days of its issuance.

History

New Rule, R.1997 d.336, effective 8/18/1997.
See: 29 N.J.R. 2500(a), 29 N.J.R. 3719(a).
Amended by R.2002 d.59, effective 2/3/2003.
See: 34 N.J.R. 2552(a), 35 N.J.R. 607(b).
In the third sentence, substituted "licensee shall be responsible for submitting or verifying the submission of the audit report" for "audit report shall be submitted".
Recodified from N.J.A.C. 3:25-2.6 by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Section was "Bond".

N.J. Admin. Code § 3:25-2.6 Duties of debt adjusters

(a) Every licensee acting as a debt adjuster shall:

Disburse to the appropriate creditors all funds received from a debtor, less any fees permitted by N.J.A.C. 3:25-1.2, within 10 days of receipt of those funds;
Maintain a separate trust account in a qualified bank as defined in N.J.S.A. 17:9A-1, in the name of the debt adjuster for the benefit of the debtors serviced by the debt adjuster; and
Maintain an appropriate ledger book for the trust account required by (a)2 above, having at least one single page for each debtor, with appropriate entries of all deposits into and disbursements from each debtor's account, including copies of all records showing disbursements to creditors and receipts from debtors, which ledger book and records shall be maintained in accordance with generally accepted accounting principles for not less than six years following the close of each debtor's account.

History

Recodified as N.J.A.C. 3:25-2.5 by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Section was "Annual audit requirement".
New Rule, R.2008 d.203, effective 7/21/2008.
See: 40 N.J.R. 837(a), 40 N.J.R. 4311(a).

Subchapter 3 PENALTIES AND EXAMINATION

N.J. Admin. Code § 3:25-3.1 Penalties

(a) The Commissioner may revoke, suspend or refuse to issue or renew a license, if after notice and hearing conducted in accordance with the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1, the Commissioner determines that the licensee or applicant:

Has violated any provision of the Debt Adjuster Act or any order rule or regulation issued pursuant to that Act;
Has failed to pay any fee, penalty, or other lawful levy imposed by the Commissioner;
Has withheld information or made a material misstatement in an application for a license or in any other submission to the Department;
Has been convicted of an offense involving breach of trust, moral turpitude or fraudulent or dishonest dealing, or has had a final judgment entered against him or her in a civil action upon grounds of fraud, misrepresentation or deceit;
Is associating with, or has associated with, any person who has been convicted of an offense involving breach of trust, moral turpitude or fraudulent or dishonest dealing, or who has had a final judgment entered against him or her in a civil action upon grounds of fraud, misrepresentation or deceit;
Has become insolvent or has acted in a way that indicates that the licensee's debt adjustment and credit counseling business would not be operated in a financially responsible manner; or
Has demonstrated unworthiness, incompetence, bad faith or dishonesty in transacting business or otherwise.

(b) The Commissioner may revoke, suspend or refuse registration as a high-cost home loan credit counselor if, after notice and hearing as set forth in (a) above, the Commissioner determines that the registrant, applicant for registration or any officer, director or employee of either the registrant or applicant for registration has:

Issued a certification of counseling on a high-cost home loan or of alternate counseling on high-cost home loans without having fully provided the counseling as provided by the Home Ownership Security Act and this chapter;
Failed to pay any fee, penalty, or other lawful levy imposed by the Commissioner;
Withheld information or made a material misstatement in an application for registration or in any other submission to the Department;
Been convicted of an offense involving breach of trust, moral turpitude or fraudulent or dishonest dealing, or has had a final judgment entered against him or her in a civil action upon grounds of fraud, misrepresentation or deceit;
Associated with any person who has been convicted of an offense involving breach of trust, moral turpitude or fraudulent or dishonest dealing, or who has had a final judgment entered against him or her in a civil action upon grounds of fraud, misrepresentation or deceit;
Demonstrated unworthiness, incompetence, bad faith or dishonesty in transacting business or otherwise;
Failed to retain its HUD approval as a Housing Counseling Agency; or
Violated any provision of the Home Ownership Security Act or any order, rule or regulation issued pursuant to that Act.

(c) In addition to the penalties in (a) above, any person who violates any provisions of the Debt Adjuster Act or the rules applicable to licensees shall be subject to a penalty of $ 1,000 for the first offense and not more than $ 5,000 for the second and each subsequent offense to be collected in a summary procedure under the "penalty enforcement law,"N.J.S.A. 2A:58-1 et seq. and any agency registered as a high-cost home loan credit counselor who violates any provision of the Home Ownership Security Act or the rules applicable to such registrants shall be subject to penalties pursuant to N.J.S.A. 46:10B-28(d).

(d) Any person who knowingly and willfully engages in the business of debt adjustment without a license in violation of the Debt Adjuster Act shall be guilty of a crime of the fourth degree pursuant to N.J.S.A. 2C:21-19f.

History

Recodified from N.J.A.C. 3:25-2.4 and amended by R.1997 d.336, effective 8/18/1997.
See: 29 N.J.R. 2500(a), 29 N.J.R. 3719(a).
Section name changed; in (a), inserted "or refuse to issue or renew" and "or applicant"; deleted (a)8; and rewrote (b).
Amended by R.2003 d.59, effective 2/3/2003.
See: 34 N.J.R. 2552(a), 35 N.J.R. 607(b).
Added (c).
Amended by R.2004 d.81, effective 2/17/2004.
See: 35 N.J.R. 4187(a), 36 N.J.R. 943(a).
In (a), inserted "Debt Adjuster" preceding "Act" and substituted "that" for "the" in 1; added a new (b); recodified existing (b) and (c) as (c) and (d) and rewrote the paragraphs.
Amended by R.2008 d.203, effective 7/21/2008.
See: 40 N.J.R. 837(a), 40 N.J.R. 4311(a).
In (c), substituted "$ 1,000 for the first offense and not more than $ 5,000 for the second and each subsequent offense" for "$ 500.00"; and in (d), deleted "and credit counseling, other than high-cost home loan credit counseling" following "adjustment".

N.J. Admin. Code § 3:25-3.2 Injunctions

If the Commissioner has reason to believe that any person or licensee has engaged or is engaging in any practice or transaction prohibited by either of the Acts, the Commissioner may, in addition to any other remedies available, bring a summary action in the name of and on behalf of the State against the person or licensee and any other person concerned in or in any way participating or about to participate in those practices or transactions, to enjoin the person from continuing those practices or engaging in or doing any act in furtherance of those practices or in violation of the Acts.

History

New Rule, R.1997 d.336, effective 8/18/1997.
See: 29 New Jersey Register 2500(a), 29 New Jersey Register 3719(a).
Amended by R.2004 d.81, effective 2/17/2004.
See: 35 New Jersey Register 4187(a), 36 New Jersey Register 943(a).
Inserted "either of" following "transaction prohibited by".

N.J. Admin. Code § 3:25-3.3 Right of investigation and examination

The Commissioner may make such investigations and examinations of any licensee or other person as he or she deems necessary to determine compliance with either of the Acts, these rules or orders issued by the Commissioner. For such purposes, he or she may examine, or compel by subpoena, the production of all relevant books, records, and other documents and materials relative to an examination or investigation.

History

Recodified from N.J.A.C. 3:25-2.5 and amended by R.1997 d.336, effective 8/18/1997.
See: 29 New Jersey Register 2500(a), 29 New Jersey Register 3719(a).
Substituted "these rules or orders issued by the Commissioner" for "regulations or orders" and added N.J.A.C. reference.
Amended by R.2004 d.81, effective 2/17/2004.
See: 35 New Jersey Register 4187(a), 36 New Jersey Register 943(a).
Inserted "either of" following "to determine compliance with" and "of the activities of an agency licensed under the Debt Adjuster Act" preceding "shall be borne".
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Deleted former last sentence, which read: "The costs of examination of the activities of an agency licensed under the Debt Adjuster Act shall be borne by the licensee at the rates set forth in N.J.A.C. 3:1-6.6(b)."

Subchapter 4 ADDITIONAL REQUIREMENTS FOR HIGH-COST HOME LOAN CREDIT COUNSELING

N.J. Admin. Code § 3:25-4.1 Certification of receipt of high-cost home loan counseling

(a) Registered high-cost home loan credit counselors shall certify on a form approved by the Department that the consumer has received counseling on a high-cost home loan provided in accordance with the Home Ownership Security Act and the minimum standards set forth in N.J.A.C. 3:25-4.2.

(b) The certification shall include, but not be limited to:

The names of the borrower and of the individual who provided the counseling;
The time and manner of the consultation, indicating whether the consultation occurred in person, by telephone, on the Internet, or by other identified means;
The length of time of the consultation;
The name of the prospective lender;
The amount, term, interest rate, annual percentage rate ("APR"), points and fees of the prospective loan;
A statement that the advice given by the counselor meets or exceeds the standards required by this chapter;
The topics discussed;
The dated signatures of both the individual who provided the counseling and the consumer;
A statement that the high-cost home loan credit counselor is not affiliated with any high-cost home loan lender and is a non-affiliated third party agency as defined in N.J.A.C. 3:25-1.1; and
Information disclosing whether a fee has been paid to the high-cost home loan credit counselor for providing counseling to the particular borrower named on the certification and, if so, the amount of the fee and the identity of the payor.

(c) A high-cost home loan credit counselor shall not issue a certification if all counseling required by N.J.S.A. 46:10B-26 and this subchapter has not been provided.

History

Amended by R.2009 d.322, effective 10/19/2009.
See: 41 N.J.R. 2370(a), 41 N.J.R. 3897(a).
In (b)2, substituted "manner" for "place" and inserted ", indicating whether the consultation occurred in person, by telephone, on the Internet, or by other identified means".

N.J. Admin. Code § 3:25-4.2 Minimum standards for individuals providing high-cost home loan credit counseling

(a) High-cost home loan credit counselors, and the individuals they employ to counsel prospective high-cost home loan borrowers, shall:

Possess sufficient expertise and ability to provide counseling on high-cost home loans to consumers as prescribed in N.J.A.C. 3:25-4.3 in a reasonably competent manner;
Possess an adequate working knowledge of high-cost home loans, sub-prime loans and other basic loan forms; and
Have an adequate working knowledge of all pertinent New Jersey and Federal consumer credit and banking laws and regulations.

(b) High-cost home loan credit counselors may make arrangements for funding or the payment of fees for high-cost home loan credit counseling consistent with the restrictions specified in the HUD Housing Counseling Program Handbook 7610.1 as amended and supplemented, which is incorporated herein by reference and which is available at www.hudclips.org.

(c) If a high-cost home loan credit counselors receives a fee for high-cost home loan credit counseling or high-cost home loan alternative credit counseling from the borrower, they may not receive an additional fee for that particular certification from another source. This prohibition shall not, however, preclude a high-cost home loan credit counselor from receiving payments under contractual arrangements with, or receiving funding from lenders or other parties in addition to the receipt of such fees from borrowers.

(d) High-cost home loan credit counselors shall not employ individuals who have demonstrated unworthiness, incompetence, bad faith or dishonesty in transacting business or otherwise.

N.J. Admin. Code § 3:25-4.3 Minimum standards for certifications of high-cost home loan credit counseling

(a) Prior to providing a certification in compliance with N.J.S.A. 46:10B-26(g), persons providing high-cost home loan credit counseling shall review with the consumer the following:

The estimated total monthly payment on the loan based upon principal and interest and, if applicable, taxes, homeowner's insurance and any other costs to be included in the monthly payment;
The equity that currently exists in the borrower's home, to the extent it is known;
The effect of the loan's terms, including its actual interest rate, annual percentage rate, points, fees, any provision for a balloon payment and prepayment penalties;
The borrower's financial situation both before and after the prospective loan, including the impact that the loan will have on the borrower's general financial condition and monthly finances, any personal benefits, and the advantages and disadvantages of proceeding with the high-cost home loan transaction;
The Federal Regulation X good faith estimate and Federal Regulation Z Truth in Lending Disclosure Statement, or other informational documentation supplied by the lender which provides the minimum information concerning the prospective high-cost home loan necessary for certification;
Opportunities for the borrower to seek other means of funding;
That the counselor is a non-affiliated third party agency and is not affiliated with any lender who offers high-cost home loans; and
Other information necessary to ensure that the consumer understands their obligations with regard to the prospective high-cost home loan and the ramifications of default.

N.J. Admin. Code § 3:25-4.4 Certification of alternate high-cost home loan credit counseling

(a) A high-cost home loan credit counselor may provide alternate counseling as set forth in this section and, thereafter, issue a certificate confirming its having done so. If the borrower, at the time of counseling, has an application pending for a high-cost home loan on which the borrower has not previously received high-cost home loan credit counseling, alternate counseling may only be given in addition to the counseling on the actual pending loan transaction required by N.J.A.C. 3:25-4.3.

(b) The alternate counseling shall be based upon three hypothetical loans as set forth in (c) below.

(c) Prior to providing a certification of alternate counseling, an individual providing high-cost home loan credit counseling shall discuss with the consumer the following:

A comparison of the following three types of hypothetical loans:

i. A high-cost home loan;

ii. A home loan other than a high-cost home loan; and

iii. A home loan;

For each hypothetical loan, the estimated total monthly payment on the loan based upon principal and interest and, if applicable, taxes, homeowner's insurance and any other costs to be included in the monthly payment;
The equity that currently exists in the borrower's home, to the extent it is known;
The effect of each loan's terms including interest rate, annual percentage rate, points, fees, any provision for a balloon payment and prepayment penalties;
The borrower's financial situation both before and after each hypothetical loan, including the impact that the loan will have on the borrower's general financial condition and monthly finances, any personal benefits, and the advantages and disadvantages of proceeding with each hypothetical loan transaction;
Opportunities for the borrower to seek other means of funding;

That the counselor is a non-affiliated third party agency and is not affiliated with any lender which offers high-cost home loans; and

Other information necessary to ensure that the consumer understands their obligations with regard to the hypothetical loans and the ramifications of a default.

(d) High-cost home loan credit counselors shall certify on a form approved by the Department that the consumer has received alternate counseling on the high-cost home loans in accordance with this subchapter.

(e) The certification of alternate counseling shall include:

The names of the borrowers and of the individual who provided the counseling;
The time and manner of the consultation, indicating whether the consultation occurred in person, by telephone, on the Internet, or by other identified means;
The length of time of the consultation;
The amount, term, interest rates, annual percentage rates (APRs), points and fees of the hypothetical loans;
The topics discussed;
A statement that the advice given by the counselor meets or exceeds the standards required by this chapter;
The dated signatures of both the individual who provided the counseling and the consumer;
A statement that the high-cost home loan credit counselor is not affiliated with any high-cost home loan lender and is a non-affiliated third party agency as defined in N.J.A.C. 3:25-1.1; and
Information disclosing whether a fee has been paid to the high-cost home loan credit counselor for providing counseling to the particular borrower named on the certification and, if so, the amount of the fee and the identity of the payor.

(f) A high-cost home loan credit counselor shall not issue a certification of alternate counseling unless all counseling required by N.J.S.A. 46:10B-26 and this subchapter has been provided with regard to the hypothetical loans.

(g) For a period of 90 days subsequent to its being issued as provided in this section, a certification of alternate counseling issued by a registered high-cost home loan credit counselor may be used by the borrower for one or more loan transactions in satisfaction of the certification requirements of N.J.S.A. 46:10B-26g.

History

Amended by R.2009 d.322, effective 10/19/2009.
See: 41 N.J.R. 2370(a), 41 N.J.R. 3897(a).
In (e)2, substituted "manner" for "place" and inserted ", indicating whether the consultation occurred in person, by telephone, on the Internet, or by other identified means".

N.J. Admin. Code § 3:25-4.5 Books and records

(a) All agencies registered as high-cost home loan credit counselors shall maintain a current and continuing list of all individuals employed by them to provide high-cost home loan credit counseling.

(b) As part of its annual report to the Department, and at any time the Department requests, a high-cost home loan credit counselor shall submit to the Department a certified list of all individuals employed by it who provided such counseling and attest that those individuals are in compliance with the minimum requirements of N.J.A.C. 3:25-4.2.

Copies of all certifications issued by it in the preceding three years;
The names of all consumers who applied to the agency for high-cost home loan credit counseling, which application did not result in the issuance of a certification, with an indication of the reason(s) for the non-issuance of the certification; and
The fees received for each certification issued by the counselor and the identity of the payor of the fee.

N.J. Admin. Code § 3:25-4.6 Continuing requirements for high-cost home loan credit counseling registrants

(a) By April 1st of each year, agencies registered as high-cost home loan credit counselors shall submit an annual report which shall contain:

A copy of their annual report most recently filed with the New Jersey Division of Revenue pursuant to N.J.S.A. 15A:4-5 or an equivalent report for non-New Jersey state nonprofit corporations with documentation attesting to their continuing status as a nonprofit corporation;
A certified list of the individuals who provide high cost home loan counseling on behalf of the agency attesting that those individuals are in compliance with the minimum requirements of N.J.A.C. 3:25-4.2;
A report, on a form approved by the Department, containing:

i. The numbers of loan-specific and alternate counseling certifications issued during the year being reported on;

ii. The lenders to whom those certifications were provided;

iii. The number of high-cost home loans reviewed; and

iv. The number of high-cost home loans reviewed on which certifications were not issued; and

A certified statement affirming their current status as a HUD-approved Housing Counseling Agency.

(b) If a high-cost home loan credit counselor loses the approval of the Department of Housing and Urban Development (HUD) as a Housing Counseling Agency, the counselor must inform the Department immediately and cease to engage in high-cost home loan credit counseling, including the issuance of any certifications with respect to high-cost home loans.

(c) Notice of the loss of HUD approval as a Housing Counseling Agency shall be provided to the Department in writing and directed to: New Jersey Department of Banking and Insurance

Office of Administration and Finance

Licensing Services Bureau

PO Box 473

Trenton, NJ 08625-0473

History

Amended by R.2008 d.203, effective 7/21/2008.
See: 40 N.J.R. 837(a), 40 N.J.R. 4311(a).
In (a)1, substituted "most recently" for "last" and "Division of Revenue" for "Secretary of State", updated the N.J.S.A. reference and inserted "state nonprofit"; and updated the address in (c).

Chapter 26 GENERAL PROVISIONS FOR STATE SAVINGS AND LOAN ASSOCIATIONS

Subchapter 1 DESTRUCTION AND RETENTION OF RECORDS

N.J. Admin. Code § 3:26-1.1 Records retention schedule

(a) A savings and loan association shall maintain its records for the following minimum periods:

| Description of Books, Records, etc. | Period to be Retained | | | --- | --- | --- | | | | | | 1. | Payment slips | 2 years | | 1A. | Coupons used with club accounts | 1 year after payout of | | club account | | | | 1B. | Coupons used with mortgage accounts | 2 years, where a copy | | of the statement of the | | | | mortgage account is | | | | submitted annually to | | | | the mortgagor and a | | | | copy of said statement | | | | is retained in the | | | | association's file | | | | 2. | Withdrawal slips | | | i. | Supported by checks | 6 years | | ii. | If only record | 10 years | | 3. | Subsidiary ledgers, etc. | | | i. | Individual account cards and sheets | 6 years after account | | is closed | | | | ii. | Roll books (Shareholders' ledgers) | 10 years | | 4. | General ledger: books, cards or sheets | 10 years | | 5. | Tellers' Proof Sheets used as posting media | 6 years | | 6. | Tellers' Proof Sheets not used as posting media | 2 years | | 7. | Cancelled checks, including dividend and trust | 6 years | | account checks | | | | 8. | Bank statements | 6 years | | 9. | Cancelled signature cards on closed accounts | 6 years | | 10A. | Passbooks (Closed accounts and filled books) | Cancel and return to | | member or destroy | | | | 10B. | Share certificates | 10 years | | 11. | Account transfer or share assignment records | | | i. | Individual accounts cards or sheets | 10 years | | ii. | Roll book accounts | 10 years | | 12. | Paid bills | 6 years | | 13. | Correspondence | | | (a) | General | 6 years | | (b) | Of contractual nature | Expiration of contract | | 14. | Expired insurance policies | Until after notice | | period for claims has | | | | expired, when policy is | | | | cancelled or when a | | | | policy is renewed | | | | 15. | Memorandum insurance records | Until loan is repaid | | 16. | Corporate insurance records | Until after policy is | | renewed, when notice | | | | period for filing of | | | | claims has expired, or | | | | when policy is cancelled | | | | 17. | Paid bills for mortgagors | Until loan is repaid | | 18. | Tax bills | Return to borrower or | | retain until loan is | | | | repaid | | | | 19. | Memorandum of tax payments on mortgages | Until loan is repaid | | 20. | Paid off mortgage files | Return appropriate | | documents to borrowers, | | | | retaining a separate | | | | "loans paid in full" | | | | file wherein a copy of | | | | the letter itemizing | | | | papers returned to the | | | | borrower will be filed | | | | or a receipt for said | | | | papers will be filed. | | | | Other correspondence | | | | can be destroyed. | | | | Loan application and appraisal reports to be retained for at least 2 years | | | | 21. | Unconsummated loans (Approved but not | Retain loan application | | completed) | and appraisal report | | | for 2 years | | | | 22. | Proxies and ballots | 6 years | | Where there is no | | | | contest a certificate | | | | of the Judge of | | | | Elections certifying | | | | the result may be | | | | retained instead of | | | | proxies and ballots for | | | | said 6 years | | | | 23. | Corporate minutes: directors, executive | 10 years | | committee and members' meetings | | | | 24. | Reports | | | i. | Examination reports | 10 years | | ii. | Audit reports | 10 years | | iii. | Annual reports to Department | 10 years | | 25. | Monthly reports to directors (one copy) | 3 years | | 26. | Records of original entry--general journal, | 10 years | | cash receipts and disbursements journal, etc. | | | | 27. | Unit accounting machine tapes | 2 years | | 28. | Block control and trial balance tapes | 2 years | | 29. | Journal vouchers | 3 years | | 30. | Duplicate bank deposit tickets or transit | 2 years | | sheets | | | | 31. | Inheritance tax waivers and surrogates' | 6 years | | certificates | | | | 32. | Account loan notes | Return to borrower on | | repayment | | | | 33. | Trustee account bank statements | 6 years | | 34. | Trustee account ledger | 10 years | | 35. | Money order stubs, receipts for travelers' | 2 years | | checks and receipt for bond sales and | | | | redemptions | | |

Subchapter 2 CHARGES FOR SUBSTITUTION OF INSURANCE POLICIES

N.J. Admin. Code § 3:26-2.1 Maximum charge

No lender or other legal entity servicing mortgages shall make any charge in excess of $ 5.00 for substitution in midterm by the mortgagor of an insurance policy or policies.

Subchapter 4 STATE ASSOCIATION PARITY

N.J. Admin. Code § 3:26-4.1 State Association parity with Federal and out-of-State institutions

(a) State associations as defined in N.J.S.A. 17:12B-5 may exercise those powers, rights, benefits or privileges authorized as of May 2, 2005 and, thereafter, for national banks, Federal savings banks or Federal savings associations, either directly or through a financial subsidiary or other subsidiary, to the same extent and subject to the same limitations as national banks, Federal savings banks or Federal savings associations may exercise those powers, rights, benefits or privileges. Pursuant to P.L. 2000 c. 69, §10(N.J.S.A. 17:12B-48(21)), State associations may exercise such powers, rights, benefits or privileges consistent with (c) and (d) below, notwithstanding the provisions of N.J.S.A. 17:12B-1 et seq. or any other law. If, under Federal law, the exercise of a power, right, benefit or privilege is subject to compliance with state law in the state in which the national bank, Federal savings bank or Federal savings association exercises the power, right, benefit or privilege, then the exercise of the power, right, benefit, or privilege in this State shall be subject to New Jersey law.

(b) State associations may exercise those powers, rights, benefits or privileges as of May 2, 2005 and thereafter authorized for out-of-State banks, savings banks or savings associations either directly or through a financial subsidiary or other subsidiary, to the same extent and subject to the same limitations as out-of-State banks, savings banks or savings associations may exercise those powers, rights, benefits or privileges, provided that, before exercising any such power, right, benefit or privilege, the Commissioner has approved, by rule, the exercise of such a power, right, benefit or privilege by State associations generally, or the State association provides notice of its intent to exercise such a power, right, benefit or privilege to the Commissioner and, on a case by case basis, the Commissioner either approves the activity or does not determine, within 45 days of his or her receipt of such notice, that the power, right, benefit or privilege is not to be exercised by the State association on grounds of safety and soundness or on other grounds as provided in this rule. Pursuant to P.L. 2000 c. 69, §10(N.J.S.A. 17:12B-48(21)), State associations may exercise such powers, rights, benefits or privileges, consistent with (c) and (d) below, notwithstanding the provisions of N.J.S.A. 17:12B-1 et seq. or any other law. If the exercise of a power, right, benefit or privilege is subject to compliance with state licensing law in the state to which the institution looks for the authority to exercise the power, right, benefit or privilege, then the exercise of the power, right, benefit, or privilege in this State shall be subject to applicable New Jersey licensing law regulating the conduct in which the State association seeks to engage.

The New Jersey Code of Criminal Justice, N.J.S.A. 2C:1-1 et seq., including, but not limited to, the criminal usury limits established at N.J.S.A. 2C:21-19 as applied to loan products;
New Jersey statutes and rules providing for the structure and corporate governance of State associations, including, but not limited to, statutes and rules governing amendments of certificates of incorporation, adoptions of bylaws, rights of shareholders or members, membership of boards of directors, closing of branch offices, establishing of de novo branch offices by foreign banks, applications where there is a supervisory concern, and requests for approvals or no objection opinions where there is a supervisory concern;
New Jersey statutes and rules providing the Department with supervisory powers over State associations with regard to safety and soundness and other matters, including, but not limited to, the power to issue orders and apply for relief from a court of competent jurisdiction established at N.J.S.A. 17:12B-177 et seq., and the power to require reports and examination by the Department pursuant to N.J.S.A. 17:12B-171 et seq. and similar law;
The provisions of N.J.S.A. 17:16N-1 et seq. and any rules regarding Consumer Checking Accounts; and
The New Jersey Homeownership Security Act of 2002 (N.J.S.A. 46:10B-22 et seq.).

(d) Prior to the exercise by a State association of any power, right, benefit, or privilege that is exercised by an out-of-State bank, savings bank, or savings association, the State association shall submit a notice of intent for the Commissioner's approval. Such notice of intent shall include: a description of the intended activity; a copy of the statutory or regulatory authority, including any pertinent regulatory interpretation of such authority, that governs the out-of-State institution that the applicant State association proposes as the basis for such exercise of parity; and a business plan and statement of the general or specific experience of the applicant that establishes how such exercise of parity would be conducted in a manner consistent with safe and sound banking practices. The items submitted as part of the business plan and the statement of experience shall be treated as confidential by the Department and shall not be public records pursuant to N.J.S.A. 47:1A-1 et seq. The Commissioner may disapprove the exercise of any power, right, benefit or privilege on the grounds of: an incomplete notice of intent; safety and soundness; failure to comply with New Jersey licensing requirements; or other grounds as provided in this subchapter. The Commissioner may condition the exercise of any power, right, benefit or privilege on the grounds of safety and soundness, compliance with New Jersey licensing requirements, or on other grounds as provided in this subchapter.

History

Amended by R.2001 d.232, effective 7/16/2001.
See: 33 New Jersey Register 1157(a), 33 New Jersey Register 2461(a).
In the fourth sentence, amended the trade publications to be provided notice.
Repeal and New Rule, R.2005 d.139, effective 5/2/2005.
See: 36 New Jersey Register 1900(b), 37 New Jersey Register 1511(b).
Section was "State Savings and Loan Association parity with Federal savings and loan associations".

Subchapter 5 COMMUNICATIONS FROM THE DEPARTMENT

N.J. Admin. Code § 3:26-5.1 Official e-mail address

Each State association as defined in N.J.S.A. 17:12B-5 shall provide its official e-mail address to the Department as part of its annually filed report to the Commissioner required by N.J.S.A. 17:12B-171. Within 10 days following any change in the official e-mail address previously provided to the Department, the State association shall notify the Department in writing, on letterhead signed by an officer, of the change and include the full name of the entity, its old e-mail address, its new e-mail address and the effective date of the change. The notice shall be sent to: New Jersey Department of Banking and Insurance, Division of Banking, Attention: Depositories, 20 West State Street, P.O. Box 040, Trenton, New Jersey 08625-0040.

Chapter 27 MONEY TRANSMITTERS

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:27-1.1 Purpose and scope

(a) This chapter implements the New Jersey Money Transmitters Act, N.J.S.A. 17:15C-1 et seq., which combines under one license two activities that previously required separate licenses as well as two additional activities not previously subject to licensure and regulation.

(b) This chapter shall apply to all licensed money transmitters and to all persons whose activities require that they be licensed under the Act.

History

Amended by R.2009 d.230, effective 7/20/2009.
See: 41 N.J.R. 831(a), 41 N.J.R. 2777(b).
In (b), substituted "licensed money transmitters and to all persons whose activities require that they be licensed under the Act" for "licenses which are issued or renewed under the Act on or after July 31, 1998".

N.J. Admin. Code § 3:27-1.2 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Act" means the "New Jersey Money Transmitters Act,"N.J.S.A. 17:15C-1 et seq.

"Authorized delegate" means an entity authorized by the licensee pursuant to the Act to sell or issue payment instruments or engage in the business of transmitting money on behalf of a licensee.

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Control" means ownership of, or the power to vote, 25 percent or more of the outstanding voting securities of a licensee or controlling person. For purposes of determining the percentage of a licensee controlled by any person, there shall be aggregated with the person's interest the interest of any other person controlled directly or indirectly by that person or by any spouse, parent or child of that person.

"Controlling person" means any person in control of a license.

"Department" means the Department of Banking and Insurance.

"Foreign money transmitter" means a person who, from a location in this State or through interacting via any means, including, but not limited to, the Internet, with persons in this State, engages, in this State, only in the business of the receipt of money for transmission or transmitting money to locations outside of the United States by any and all means, including, but not limited to, payment instrument, wire, facsimile, electronic transfer, or otherwise for a fee, commission or other benefit.

"Key shareholder" means any person, or group of persons acting in concert, who is the owner of 25 percent or more of any voting class of an applicant's or licensee's stock.

"Licensee" means a person licensed under the Act.

"Location" means a place of business at which activities regulated by the Act occur.

"Money transmitter" means a person who, from a location in this State or through interacting via any means, including, but not limited to, the Internet, with persons in this State, engages in this State in the business of:

The sale or issuance of payment instruments for a fee, commission or other benefit;
The receipt of money for transmission or transmitting money within the United States or to locations abroad by any and all means, including but not limited to, payment instrument, wire, facsimile, electronic transfer, or otherwise for a fee, commission or other benefit; or
The receipt of money for obligors for the purpose of paying obligors' bills, invoices or accounts for a fee, commission or other benefit paid by the obligor (for example, mortgage payment acceleration programs and utilities payment programs).

"OFAC" means the Office of Foreign Assets Control of the United States Department of the Treasury.

"Outstanding payment instrument" means any payment instrument issued by the licensee which has been sold in the United States directly by the licensee or any payment instrument issued by the licensee which has been sold by an authorized delegate of the licensee in the United States, which has been reported to the licensee as having been sold, and which has not yet been paid by or for the licensee.

"Payment instrument" means any check, draft, money order, travelers check or other instrument or written order for the transmission or payment of money, sold or issued to one or more persons, whether or not the instrument is negotiable. The term "payment instrument" does not include any credit card voucher, any letter of credit or any instrument which is redeemable by the issuer in goods or services.

"Permissible investments" means:

Cash;

Certificates of deposit or other debt obligations of a bank, savings bank, savings and loan association, or credit union, either domestic or foreign;
Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers' acceptances, which are eligible for purchase by member banks of the Federal Reserve System;
Any investment which is rated in one of the three highest rating categories by a nationally recognized statistical rating organization;
Investment securities that are obligations of the United States, its agencies or instrumentalities, or obligations that are guaranteed fully as to principal and interest by the United States, or any obligations of any state, municipality or any political subdivision thereof which is rated in one of the three highest rating categories by a nationally recognized statistical rating organization;
Shares in a money market mutual fund, interest-bearing bills, notes or bonds, debentures or stock traded on any national securities exchange or on a national over-the-counter market, or mutual funds primarily composed of those securities or a fund composed of one or more permissible investments;
Demand borrowing agreements made to a corporation or a subsidiary of a corporation whose capital stock is listed on a national exchange;
Receivables which are due to a licensee from its authorized delegates pursuant to a contract described in section 17 of the Act, which are not past due or doubtful of collection; or

Any other investment or security device which the Commissioner may authorize by rule.

"Security device" means a surety bond issued by a surety company authorized to do business in this State or an irrevocable letter of credit issued by a Federally-insured depository institution.

History

Amended by R.2004 d.152, effective 4/19/2004.
See: 35 N.J.R. 4938(a), 36 N.J.R. 1958(a).
Rewrote the section.
Amended by R.2009 d.230, effective 7/20/2009.
See: 41 N.J.R. 831(a), 41 N.J.R. 2777(b).
Added definition "Key shareholder".

Subchapter 2 LICENSING

N.J. Admin. Code § 3:27-2.1 Requirement to be licensed

(a) No person shall act as a money transmitter or as a foreign money transmitter without holding, in good standing, a license under the Act, unless that person is exempt from licensure pursuant to section 3 of the Act.

(b) The license shall be renewable for subsequent licensing periods commencing on July 1, 2007.

History

Amended by R.2004 d.152, effective 4/19/2004.
See: 35 New Jersey Register 4938(a), 36 New Jersey Register 1958(a).
In (a), deleted "As of July 31, 1998, " at the beginning; in (b), deleted the first two sentences.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
In (b), deleted "biennial" and substituted "July 1, 2007" for "January 1, 2000".

N.J. Admin. Code § 3:27-2.2 Application for an initial license

(a) All persons applying for an initial license pursuant to the Act shall submit the following:

A completed application form as prescribed by the Commissioner which shall comply in all respects with the requirements of N.J.S.A. 17:15C-7;
An original, executed bond or an irrevocable letter of credit which meets the requirements of N.J.A.C. 3:27-4.1;
An audited financial statement prepared by a certified public accountant or a public accountant, in good standing, demonstrating proof of net worth as specified in N.J.A.C. 3:27-5.1; and
The application fee specified in N.J.A.C. 3:27-3.2 and 3:23-2.1.

(b) In addition, for each executive officer, key shareholder, officer, owner, partner and manager responsible for the business to be licensed, the following information is required to be furnished to the Department:

A personal certification on a form supplied by the Commissioner;
A two inch by two inch passport style photograph of the persons listed in (b) above;
Fingerprints in the manner currently required by the New Jersey State Police or their authorized representative. In the case of a publicly traded corporation, its subsidiaries and affiliates, or a bank, bank holding company, and the subsidiaries and affiliates thereof, it is not required that the applicant furnish the fingerprints of each of the applicant's executive officers and of each officer or manager who will be in charge of the applicant's activities requiring licensure; and
Additional information, which may be specifically requested by the Commissioner from a particular applicant.

(d) Corporate applicants for a money transmitter license shall submit a copy of the Certificate of Incorporation showing the filed or recording stamp of the New Jersey Department of Treasury, Division of Revenue, and shall identify the registered agent for service of process. Foreign corporations shall submit a New Jersey Certificate of Authority in addition to a corporate certificate.

(e) Individual or partnership applicants using a trade name shall submit a copy of the trade name as filed with the county clerk showing the date of recording.

(f) Corporations using alternate names shall file a copy of registration of such name, as recorded, as part of their applications, in addition to the documents listed in (a) above.

(g) Limited liability companies shall file a copy of the Certificate of Formation.

History

Recodified from N.J.A.C. 3:27-2.3 and amended by R.2004 d.152, effective 4/19/2004.
See: 35 New Jersey Register 4938(a), 36 New Jersey Register 1958(a).
Former N.J.A.C. 3:27-2.2, Conversion of an existing license, repealed. Added (b) through (g).
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Added "and" in (a)3, substituted "and N.J.A.C. 3:23-2.1" for "; and" in (a)4 and deleted (a)5; and rewrote(b)1, inserted "and" at the end of (b)3, deleted former (b)4 and recodified (b)5 as (b)4 and deleted (b)6.

N.J. Admin. Code § 3:27-2.3 Reserved

History

Repealed by R.2004 d.152, effective 4/19/2004.
See: 35 New Jersey Register 4938(a), 36 New Jersey Register 1958(a).
Section was "Application for an initial license".

Subchapter 3 FEES

N.J. Admin. Code § 3:27-3.1 Fees-general

Except as specified elsewhere in this chapter, all fees shall be paid by a check made payable to "Treasurer--State of New Jersey."

History

Amended by R.2004 d.152, effective 4/19/2004.
See: 35 New Jersey Register 4938(a), 36 New Jersey Register 1958(a).
Substituted "Except as specified elsewhere in this chapter, all" for "All" preceding "fees".

N.J. Admin. Code § 3:27-3.2 Application fees

(a) A person who is applying for an initial license under this Act shall pay an application fee to the Department in accordance with N.J.A.C. 3:23-2.1.

(b) Application fees are nonrefundable.

History

Amended by R.2004 d.152, effective 4/19/2004.
See: 35 New Jersey Register 4938(a), 36 New Jersey Register 1958(a).
In (a), deleted the N.J.A.C. reference.
Amended by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Substituted "in accordance with N.J.A.C. 3:23-2.1" for "in the amount of $ 400.00 for a money transmitter license or $ 300.00 for a foreign money transmitter license" in (a).

N.J. Admin. Code § 3:27-3.3 Annual report

(a) Each money transmitter, including foreign money transmitters, shall file an annual report on or before April 1, on a form supplied by the Commissioner. The form shall include information indicating the adequacy of net worth, confirmation of compliance with the bonding requirements, summary of activity, the names of all banks with which the money transmitter does business and a list of all money transmissions as outlined below.

(b) Each money transmitter shall list all money transmissions for the calendar year immediately preceding the report as follows:

The total number and amounts of all transmissions (100 percent of all activity including all outstanding transmissions), whether initiated through the money transmitter directly or through any of its authorized delegates, listed by country including the United States;
The number and amounts of all transmissions initiated through the money transmitter directly, listed by country including the United States; and
A separate list for each authorized delegate, listing the number and amounts of all transmissions for that delegate, listed by country including the United States.

(c) Unless waived by the Commissioner in accordance with N.J.S.A. 17:15C-6, the permissible investments of a money transmitter shall not be considered adequate if the permissible investments do not have an aggregate market value, calculated in accordance with generally accepted accounting principles, of not less than the aggregate face amount of all outstanding payment instruments issued or sold by the licensee in the United States or the licensee is not in compliance with N.J.S.A. 17:15C-5.

(d) Any licensee who fails to file a complete annual report in a timely manner, as set forth in (a) above, shall pursuant to N.J.S.A. 17:15C-12 be assessed a penalty of not more than $ 100.00 per day for each day after the due date that the complete report remains unfiled.

History

New Rule, R.2004 d.152, effective 4/19/2004.
See: 35 N.J.R. 4938(a), 36 N.J.R. 1958(a).
Recodified from N.J.A.C. 3:27-3.6 by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R.10(a), 38 N.J.R. 2674(a).
Former N.J.A.C. 3:27-3.3, License fees, repealed. Section was "Annual report and fee". In (d), deleted the first sentence and inserted "pursuant to N.J.S.A. 17:15C-12".
Amended by R.2007 d.306, effective 10/1/2007.
See: 39 N.J.R. 2299(a), 39 N.J.R. 4111(a).
In (d), inserted "not more than".

N.J. Admin. Code § 3:27-3.4 Reserved

History

Repealed by R.2006 d.235, effective 6/19/2005.
See: 38 N.J.R 10(a), 38 N.J.R. 2674(a).
Section was "Registration fees".

N.J. Admin. Code § 3:27-3.5 Reserved

History

Repealed by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Section was "Change of control fee".

N.J. Admin. Code § 3:27-3.6 Reserved

History

Recodified as N.J.A.C. 3:27-3.3 by R.2006 d.235, effective 6/19/2006.
See: 38 N.J.R. 10(a), 38 N.J.R. 2674(a).
Section was "Annual Report and fee".

Subchapter 4 BONDING, SECURITY DEVICES

N.J. Admin. Code § 3:27-4.1 Bond or security device requirements

(a) A person who seeks an initial license to engage in the business of a money transmitter or in the business of foreign money transmitter shall comply with the requirements of N.J.S.A. 17:15C-8 and shall obtain a surety bond, utilizing a bond form provided by the Department, from a surety company authorized to do business in this State, or an irrevocable letter of credit, or a security device, authorized by the Commissioner in the amounts stated in chapter Appendix A which is incorporated herein by reference.

(b) The security device shall be in a form satisfactory to the Commissioner and shall run to the State for the benefit of any person injured by a wrongful act, default, or misrepresentation of the licensee, including its directors, officers, authorized delegates and employees, to secure the faithful performance of the obligations of the licensee with respect to the receipt, handling, transmission, and payment of money in connection with the sale and issuance of payment instruments, transmission of money, or both and for the benefit of the Department for unpaid examination bills, unpaid penalties and any other unpaid obligation of the money transmitter to the Department, including, but not limited to, returned items submitted to the Department in payment of bills, penalties, charges or fees.

(c) The security device shall remain in effect until cancellation, which may only occur after 30 days' written notice to the Commissioner. Cancellation shall not affect any liability incurred or accrued during the period the security device was in effect.

(d) The security device shall remain in place for no longer than five years after the licensee ceases money transmission operations in the State. The Commissioner may periodically review the amount of the licensee's payment obligations and the security device may be increased or reduced accordingly. However, notwithstanding this provision, the Commissioner may permit the security device to be reduced or eliminated prior to that time to the extent that the amount of the licensee's payment instruments outstanding in this State are reduced or eliminated. The Commissioner may also permit a licensee to substitute an irrevocable letter of credit or other form of security device acceptable to the Commissioner for the security device in place at the time the licensee ceases money transmission operations in the State by surrender, revocation or expiration of its license.

(e) Attorney's fees, pre-or post-judgment interest, court costs and similar charges are not recoverable through the security device, unless such charges are included in a final judgment against the money transmitter and the surety company was given prior notice of the court action and an opportunity to respond.

(f) The security device shall not be payable for claims made by business creditors.

(g) The security device shall not be payable for treble damage claims pursuant to the Consumer Fraud Act or any other State or Federal law.

History

Amended by R.2004 d.152, effective 4/19/2004.
See: 35 New Jersey Register 4938(a), 36 New Jersey Register 1958(a).
Designated existing text as (a) and added (b) through (g).

Subchapter 5 NET WORTH

N.J. Admin. Code § 3:27-5.1 Net worth requirements

(a) Each applicant for an initial license as a money transmitter, except those described in (b) below, shall demonstrate a net worth of not less than $ 100,000, calculated in accordance with generally accepted accounting principles, plus an additional net worth of $ 25,000 per location or agent to be located in this State, as applicable, up to a maximum of $ 1,000,000.

(b) Each applicant for an initial license only as a foreign money transmitter shall demonstrate a net worth of not less than $ 50,000, calculated in accordance with generally accepted accounting principles, plus an additional net worth of $ 10,000 per location or agent to be located in this State, as applicable, up to a maximum of $ 400,000.

History

Amended by R.2004 d.152, effective 4/19/2004.
See: 35 New Jersey Register 4938(a), 36 New Jersey Register 1958(a).
In (a), inserted "except those described in (b) below," preceding "shall demonstrate a net worth".

Subchapter 6 MAINTENANCE OF BOOKS, RECORDS AND ACCOUNTS

N.J. Admin. Code § 3:27-6.1 Maintenance of books, records, and accounts

(a) Each licensee shall make, keep, and preserve in English the following books, accounts, and other records for a period of three years:

A record of each payment instrument sold and a record of each money transmission sent or accepted, including the name and address of each recipient;
A general ledger containing all assets, liabilities, capital, income and expense accounts (which general ledger shall be posted at least monthly and all books closed quarterly);
Settlement sheets received from authorized delegates containing the date, name of delegate, name of customer, the amount of the transmission, the country to which it was transmitted and the fee charged for the transmission;
All bank statements and bank reconciliation records relating to the business of money transmission;
Records of outstanding payment instruments;
Records of each payment instrument paid within the three-year period;
Records of completed money transmissions;
Records of outstanding money transmission orders;
A list of names and addresses of all of the licensee's authorized delegates;
A list of all countries to which money is transmitted or from which money is received for transmission;
A list of the names and addresses of all clearing banks through which the licensee's money transmission business is conducted;
Records of all numbers including voids, for numbered money transmission forms and records of all characters or other information including voids, which identify non-numbered money transmission forms;
All records required to be maintained pursuant to 31 CFR Part 1022.400 to 1022.420; and

Records of all events reported to the OFAC in compliance with all reporting requirements of OFAC.

(b) Maintenance of the documents required by this section in a photographic, electronic or other similar form shall constitute compliance with this section.

(c) The records of the licensee regarding business regulated under the Act shall be maintained at its principal place of business or, with notice to the Commissioner, at another location designated by the licensee. If the records are maintained outside this State, the Commissioner may require that the licensee reimburse the Department for the travel costs incurred in the examination or investigation of those records or may require that the licensee make those records available to the Commissioner at the licensee's principal place of business or at the Commissioner's office within three business days of the demand. The Commissioner may further require that those records be accompanied by an individual, on behalf of the licensee, who will be available to answer questions regarding those records and the business regulated under the Act. The Commissioner may require the appearance of a specific individual, or request that the licensee designate an individual with knowledge of the records and the business.

History

Amended by 55 N.J.R. 825(a), effective 5/1/2023

Subchapter 7 CHANGE OF CONTROL OR KEY PERSONNEL

N.J. Admin. Code § 3:27-7.1 Applications for change of control or key personnel

(a) A person shall not directly or indirectly acquire control of a licensee without the prior written approval of the Commissioner. The application for change of control shall be in writing filed by the existing licensee, in a form prescribed by the Commissioner, and shall be accompanied by the information required by N.J.A.C. 3:27-2.2 for an initial license application, and an amended version of the last submitted annual report updated through the date of the application, as well as all documents related to the change in control, (that is, a stock purchase agreement). The Commissioner may request copies or access to any or all of the books and records maintained in accordance with N.J.A.C. 3:27-6.1 prior to granting approval.

(b) Any change of key shareholders, executive officers, owners, partners, or managers responsible for the licensed business shall require the submission of the information required by N.J.A.C. 3:27-2.2(b).

History

Amended by R.2009 d.230, effective 7/20/2009.
See: 41 N.J.R. 831(a), 41 N.J.R. 2777(b).
In (b), substituted "the information required by" for "a new application in accordance with".

Subchapter 8 PENALTIES

N.J. Admin. Code § 3:27-8.1 Penalties

(a) A violation of the Act or these rules shall be subject to the penalties contained in N.J.S.A. 17:15C-1 et seq.

Chapter 29 AUDIT REQUIREMENTS OF STATE ASSOCIATIONS

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:29-1.1 Qualifications of auditor

An audit of an association shall be performed by a competent accountant who is not an officer, director or employee of the association. For purposes of this section, a competent accountant is a certified public accountant, or an accounting firm licensed and/or registered in New Jersey or approved by the Commissioner. Choice of a competent auditor is the responsibility of the board of directors. If the board fails to provide for the making of a proper audit or if the required audit is not properly made, prepared or filed, the Commissioner is charged with the duty of making such audit or causing the same to be made.

History

Amended by R.1991 d.418, effective 8/5/1991.
See: 23 New Jersey Register 1485(b), 23 New Jersey Register 2306(a).
Further defined "competent accountant".

N.J. Admin. Code § 3:29-1.2 Scope of audit

The auditor shall set forth the scope of his work in the audit report. In general, audit procedure will be acceptable if based on the audit program prepared for audit of savings and loan associations by the American Institute of Certified Public Accountants. A copy of this program can be obtained from the American Institute of Certified Public Accountants, Inc., 1211 Avenue of the Americas, New York, New York 10036. The Institute's web site address is www.AICPA.org.

History

Amended by R.1991 d.418, effective 8/5/1991.
See: 23 N.J.R. 1485(b), 23 N.J.R. 2306(a).
Added "shall" to make provisions mandatory; corrected address.
Amended by R.2007 d.300, effective 10/1/2007.
See: 39 N.J.R. 1339(a), 39 N.J.R. 4112(b).
Inserted the last sentence.

N.J. Admin. Code § 3:29-1.3 Statements in audit report

(a) The following statements are required to be part of the audit report provided by all State chartered associations including associations which are wholly owned subsidiaries:

Comparative statements of condition;
Comparative statements of operations;

Reconciliation of retained earnings;

Reconciliation of equity capital; and
Statements of cash flows.

History

Amended by R.1991 d.418, effective 8/5/1991.
See: 23 New Jersey Register 1485(b), 23 New Jersey Register 2306(a).
Clarified the inclusion of wholly owned subsidiaries as State chartered associations.

N.J. Admin. Code § 3:29-1.4 Minimum verification; mail communications

Audits of insured associations shall include verifications to the extent required of banks and savings banks pursuant to N.J.A.C. 3:7-3.3 through 3.6.

History

Amended by R.1991 d.418, effective 8/5/1991.
See: 23 New Jersey Register 1485(b), 23 New Jersey Register 2306(a).
Former provisions on uninsured associations deleted as unnecessary pursuant to N.J.S.A. 17:12B-286.

N.J. Admin. Code § 3:29-1.5 Continuous audits; verification notices

Where continuous audits are made, verification notices may be mailed periodically; provided, however, that the members' subsidiary ledgers are proved with the general ledger control at time of each mailing. Furthermore, the total of verifications in each year shall not be less than the minimum requirement set forth in N.J.A.C. 3:29-1.4.

N.J. Admin. Code § 3:29-1.6 Comments

(a) The auditor shall comment on pertinent matters affecting the association, either in a separate report or as part of the report upon review of the association's internal accounting control. As a guide, the following are suggested as appropriate subjects for comment:

Investment on which no income is received;
Summary of changes in other real estate; and
Insufficient surety bond coverage and other insurance.

History

Amended by R.1991 d.418, effective 8/5/1991.
See: 23 New Jersey Register 1485(b), 23 New Jersey Register 2306(a).
Clarified parameters of what an auditor should comment on; deleted majority of previous topics.

N.J. Admin. Code § 3:29-1.7 Time of audit

(a) At least one such audit shall be made in each calendar year, and it is not necessary that the audit coincide with a fiscal year. The audit may be made on a "surprise" basis so that preliminary or interim work, such as branch audits, may be accomplished at any time. The auditor shall cover the period from the previous audit to the date the present audit is started.

(b) The examination shall be commenced within the time period specified in N.J.S.A. 17:12B-176(1). Prior to commencing the examination, the person scheduled to conduct the examination shall notify the Department so as to avoid a conflict with an examination conducted pursuant to N.J.S.A. 17:12B-172. In the transmittal or report to the association, the person conducting the examination shall specify the date of completion of the examination.

History

Amended by R.1991 d.418, effective 8/5/1991.
See: 23 N.J.R. 1485(b), 23 N.J.R. 2306(a).
Clarified how often and under what circumstances an audit shall be done.
Amended by R.2008 d.331, effective 11/3/2008.
See: 40 N.J.R. 3775(a), 40 N.J.R. 6437(a).
Inserted designation (a); and added (b).

N.J. Admin. Code § 3:29-1.8 Audit report must be certified and filed

(a) The audit report must be certified to or sworn to by the person making such audit. Such certification shall include:

A statement that the audit was made in accordance with the provisions of the N.J.S.A. 17:12B-176 and the rules of the Commissioner of Banking and Insurance of this State of New Jersey; and
A statement that the financial statements contained in the audit report present fairly the financial position of the association at the audit date and its operations for the periods reported upon.

(b) The statements required by (a)1 and 2 above may be submitted in a separate report or made a part of the report upon review of the association's internal accounting control, so long as the statements are submitted within 14 calendar days after submission of the report.

(c) If an association is required to perform and file an audit based on the regulations of the Federal Deposit Insurance Corporation, a copy of any such audit shall be simultaneously filed with the Department at:

Department of Banking and Insurance

Division of Banking - Depositories

P.O. Box 40

Trenton, NJ 08625-0040.

Such filing shall satisfy the audit requirements of this chapter.

History

Amended by R.1991 d.418, effective 8/5/1991.
See: 23 N.J.R. 1485(b), 23 N.J.R. 2306(a).
Established at (b), statements may be submitted separate from report but a 14 day submission deadline is attached.
Amended by R.1996 d.519, effective 11/4/1996.
See: 28 N.J.R. 3696(a), 28 N.J.R. 4781(a).
Amended by R.2007 d.300, effective 10/1/2007.
See: 39 N.J.R. 1339(a), 39 N.J.R. 4112(b).
Section was "Audit report must be certified". Added (c).

N.J. Admin. Code § 3:29-1.9 Qualified certificate

If any of the parts of the certification set forth in N.J.A.C. 3:29-1.8 cannot be made, the certification should be qualified to show any exceptions.

Chapter 30 PREDATORY LENDING

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:30-1.1 Purpose

The purpose of this chapter is to implement the New Jersey Home Ownership Security Act of 2002, N.J.S.A. 46:10B-22 et seq.

N.J. Admin. Code § 3:30-1.2 Scope

This chapter shall apply to all creditors and borrowers as defined in N.J.A.C. 3:30-1.3.

N.J. Admin. Code § 3:30-1.3 Definitions

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:

Are knowingly paid by the borrower;
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;
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
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 N.J.S.A. 46:10B-22 et seq., provided the home loan:

Does not have an annual percentage rate that exceeds the conventional mortgage rate by more than two percentage points; and
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 N.J.S.A. 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 N.J.S.A. 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 N.J.S.A. 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:

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
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:

All items listed in 15 U.S.C. §§ 1605(a)(1) through (4), except interest or the time-price differential;
All charges listed in 15 U.S.C. § 1605(e);
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;
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;
The maximum prepayment fees and penalties that may be charged or collected under the terms of the loan documents;
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
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 N.J.S.A. 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:

"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.
"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 N.J.S.A. 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.

History

Amended by R.2014 d.042, effective 3/17/2014.
See: 45 N.J.R. 2063(a), 46 N.J.R. 495(a).
In definitions "Conventional mortgage rate", "Escrow charge", and "Points and fees", updated the C.F.R. references throughout; and rewrote definition "Rate" and paragraph 1 of definition "Threshold".

Subchapter 5 HOME LOANS

N.J. Admin. Code § 3:30-5.1 Posting payments received

(a) When a creditor that is a depository institution receives a home loan payment, the creditor shall treat the payment as posted on the banking day that the payment is received. For purposes of the posting requirements in this section, payments received by a servicer or agent of a depository institution shall be treated as received by the depository institution.

(b) A payment received by a creditor that is not a depository institution shall, if received before the end of business hours, be posted on the business day that it is received or, if received after the end of business hours, on the next business day. For purposes of the posting requirements in this section, payments received by a servicer or agent of a non-depository entity shall be treated as received by the non-depository entity.

Subchapter 8 AFFIRMATIVE CLAIMS AND DEFENSES

N.J. Admin. Code § 3:30-8.1 Loans in which sellers, including sellers of manufactured homes and home improvements, are involved

(a) If a home loan was made, arranged or assigned by a seller of manufactured homes or of home improvements to the dwelling of a borrower, or was made by or through a creditor to whom the borrower was referred by such a seller, the borrower may assert against the original creditor and any person who purchases or is otherwise assigned the loan all affirmative claims and any defenses that the borrower may have against such a seller of manufactured homes or home improvements, including any claims and defenses available under N.J.S.A. 46:10B-22 et seq. against a home improvement contractor retained by the seller of home improvements to make home improvements on the borrower's dwelling. The amounts of any such affirmative claims and defenses shall be limited to amounts required to reduce or extinguish the borrower's liability under the home loan, plus the total amount paid by the borrower in connection with the transaction, plus amounts required to recover costs, including reasonable attorney's fees against the creditor, any assignee or holder, in any capacity.

(b) If a loan covered by (a) was made by the seller or assigned to a creditor by the seller, all payments made to the seller including down payments, deposits, periodic payments, late fees and other payments are considered paid in connection with the transaction.

(c) If a loan covered by (a) was made by a creditor by way of a referral or arrangement through the seller, down payments, deposits, periodic payments, late fees and other payments made to the seller are not considered paid in connection with the transaction.

N.J. Admin. Code § 3:30-8.2 Purchaser and assignee liability under N.J.S.A. 46:10B-27

(a) Pursuant to N.J.S.A. 46:10B-27b, any person who purchases or is otherwise assigned a high-cost home loan shall be subject to all affirmative claims and any defenses with respect to the loan that the borrower may assert against the original creditor or broker of the loan; except that the liability thereunder shall not arise if the purchaser or assignee demonstrates, by a preponderance of the evidence, that a reasonable person exercising reasonable due diligence could not determine that the loan was a high-cost home loan.

In any administrative action commenced under N.J.S.A. 46:10B-22 et seq. or this chapter, it shall be presumed by the Department that a purchaser or assignee of a high cost home loan has exercised such due diligence if the purchaser or assignee demonstrates by a preponderance of the evidence that it:

i. Has in place, at the time of the purchase or assignment of the loan, policies that expressly prohibit its purchase or acceptance of assignment of any high-cost loan;

ii. Requires by contract that all sellers or assignors of home loans represent and warrant to the purchaser or assignee that either:

(1) It will not sell or assign any high-cost home loan to the purchaser or assignee; or

(2) That the seller or assignor is a beneficiary of a representation and warranty from a previous seller or assignor to that effect; and

iii. Exercises reasonable due diligence at the time of the purchase or assignment of home loans or within a reasonable period of time thereafter, which due diligence is intended by the purchaser or assignee to prevent it from purchasing or taking assignment of any high-cost loan.

(b) With respect to a claim brought under N.J.S.A. 46:10B-27c, notwithstanding any other law to the contrary, a borrower acting only in an individual capacity may, within six years of the closing of a high-cost home loan, assert against the creditor or any subsequent holder or assignee of the home loan a violation of N.J.S.A. 46:10B-22 et seq. in connection with the loan as an original action.

(c) With respect to a claim brought under N.J.S.A. 46:10B-27c, notwithstanding any other law to the contrary, a borrower acting only in an individual capacity may, at any time during the term of a high-cost home loan after an action to collect on the home loan or foreclose on the collateral securing the home loan has been initiated or the debt arising from the home loan has been accelerated or the home loan has become 60 days in default, assert against the creditor or any subsequent holder or assignee of the high-cost home loan any defense, claim or counterclaim.

(d) Pursuant to N.J.S.A. 46:10B-27c, the damages sought in any original action as referenced in (b) above, or in any claim or counterclaim as referenced in (c) above, shall be limited to amounts required to reduce or extinguish the borrower's liability under the home loan plus amounts required to recover costs, including reasonable attorney's fees not included in the principal amount of the loan.

(e) No person shall, in bad faith or otherwise in an attempt to avoid the application of N.J.S.A. 46:10B-22 et seq.:

Divide any loan transaction into separate parts; or
Undertake any other such subterfuge, with the intent of evading the provisions of N.J.S.A. 46:10B-22 et seq.

(f) The limitations on assignee liability with respect to high cost home loans as set forth in (a) above shall not apply to assignee liability asserted on any ground other than N.J.S.A. 46:10B-27.b.

(g) The limitations in this chapter shall apply to any assignee liability arising under N.J.S.A. 46:10B-27 regardless of whether an individual asserting assignee liability pursuant to this chapter chooses to pursue such an action under the Consumer Fraud Act, as authorized under N.J.S.A. 46:10B-29a, or under the Act, as authorized under N.J.S.A. 46:10B-29b. Regardless of which alternative method for seeking damages against an assignee the borrower chooses to pursue, whenever a borrower alleges assignee or holder liability pursuant to N.J.S.A. 46:10B-27, the limitations and conditions set forth in the applicable subsections of N.J.S.A. 46:10B-27 shall apply to such assignee liability.

(h) Any borrower asserting a claim under N.J.S.A. 46:10B-22 et seq. may, in appropriate circumstances, recover damages under both N.J.S.A. 46:10B-27.a and 27.c from one assignee on the basis of separate claims brought simultaneously under N.J.S.A. 46:10B-27.a and 27.c in connection with the same loan transaction. In such a case the limitations on damages set forth in N.J.S.A. 46:10B-27 would apply to the respective claims made under N.J.S.A. 46:10B-27.a and 27.c.

(i) The limitations upon and conditions for assignee liability prescribed by N.J.S.A. 46:10B-27 may not be avoided by a borrower seeking to obtain separate compensatory and punitive damages against the same assignee. The limitations on damages set forth in N.J.S.A. 46:10B-27 apply to the total of all types of damages.

(j) If a seller of home improvements or manufactured homes is not otherwise involved in the transaction as specified in N.J.S.A. 46:20B-27.a, the loan shall not give rise to assignee liability pursuant to N.J.S.A. 46:10B-27.a. This rule applies irrespective of whether the loan is secured by a first lien, or by a second or subsequent lien (sometimes referred to as a "junior lien"), whether the transaction is a cash-out refinance, and whether the proceeds of the loan are used to pay for home improvements or to purchase a manufactured home.

A seller of manufactured homes or home improvements who has referred a borrower to a creditor shall be deemed to be otherwise involved as set forth in N.J.S.A. 46:10B-27.
Where a borrower refinances without the involvement of a seller of manufactured homes or home improvements as set forth in N.J.S.A. 46:10B-27.a and subsequently uses the funds obtained in the process to pay for a manufactured home or for home improvements, the seller of manufactured homes or home improvements shall not be deemed to be otherwise involved in the transaction.

(k) The exercise of reasonable due diligence as referenced in N.J.S.A. 46:10B-27.b(3) does not, in all cases, require compliance review of one hundred percent of the loans being acquired. Depending upon the size of the loan pool being purchased or acquired by an assignee and/or the assignee being aware of information material to the determination of whether a lender engages in making high-cost home loans, including but not limited to any indication of the presence of high cost home loans in a loan pool, sampling, if properly performed, shall be considered reasonable due diligence by the Department. In order for sampling to be considered reasonable due diligence by the Department, purchasers or assignees shall, at a minimum, conduct quality control review of appropriate loan documentation at the beginning of the buyer/seller relationship, whenever a particular problem is identified, and throughout the relationship by random sampling. When a loan pool is very small or initial review has uncovered a high number of high cost loans, more extensive review is required to meet the reasonable due diligence standard.

(l) Creditors may utilize third party software packages or internally developed computer programs to comply with the requirements of N.J.S.A. 46:10B-27.b(3) or to determine whether loans are home loans or high cost home loans. Such software programs shall be calibrated and tested prior to use and periodically tested as part of an ongoing compliance review process. Periodic manual oversight and monitoring shall be done to ensure that the software is performing adequately and to evaluate matters not addressed by the software.

(m) A creditor may secure documentation from the borrower in which the borrower represents that no contractor or seller referred the borrower to the creditor, arranged the loan or was otherwise involved in facilitating the loan transaction. The Department shall consider such documentation when contemplating the exercise of its administrative authority pursuant to the Act.

Subchapter 9 ENFORCEMENT

N.J. Admin. Code § 3:30-9.1 Rights, remedies, prohibitions declared additional, cumulative

(a) Pursuant to N.J.S.A. 46:10B-30, the rights, remedies, and prohibitions accorded by the provisions of this chapter are hereby declared to be in addition to and cumulative of any other right, remedy, or prohibition accorded by the common law or statutes of the United States or of this State, and nothing herein shall be construed to deny, abrogate, or impair any such common law or statutory right, remedy, or prohibition. Without limiting the foregoing, the rights, remedies and prohibitions accorded by this chapter are hereby further declared to create no presumption that any home loan or any term in a home loan is not unconscionable, whether or not the home loan or loan term, alone or in conjunction with other terms of the loan, violates the provisions of this chapter.

(b) In accordance with N.J.S.A. 46:10B-23.d, the amendments in P.L. 2004, c. 84 to the New Jersey Home Ownership Security Act of 2002, N.J.S.A. 46:10B-22 et seq., deleting the covered home loan category from N.J.S.A. 46:10B-25 and the prohibition on flipping a home loan, shall create no presumption that any home loan that has been refinanced is not unconscionable. The deletions of the covered home loan category and of the prohibition on flipping from N.J.S.A. 46:10B-25 shall also create no presumption that any home loan that is refinanced does not constitute an unlawful practice under the Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.

Chapter 32 CONVERSIONS OF ASSOCIATIONS

Subchapter 1 CONVERSION OF A MUTUAL ASSOCIATION TO A CAPITAL STOCK ASSOCIATION

N.J. Admin. Code § 3:32-1.1 Authorization for conversion

An insured mutual association may convert to a capital stock association subject to the limitations and provisions at N.J.S.A. 17:12B-1 et seq., and this chapter. The association shall also be subject to the requirements at 12 CFR Part 303, Subpart I and 12 CFR 333.4, relating to conversions from mutual to stock form.

History

Amended by 48 N.J.R. 1063(b), effective 5/16/2016

N.J. Admin. Code § 3:32-1.2 Application

Applications and other forms provided by the Office of the Comptroller of the Currency shall be considered as acceptable material by the Commissioner for compliance with the provisions of this chapter and N.J.S.A. 17:12B-1 et seq. Copies of all forms required to be filed with the Office of the Comptroller of the Currency should be forwarded to the Commissioner as part of the application for preliminary approval.

History

Amended by 48 N.J.R. 1063(b), effective 5/16/2016

N.J. Admin. Code § 3:32-1.3 Conversion; general

(a) A State chartered association making such conversion shall comply with the following conditions and procedures:

Any plan for conversion shall be approved by two-thirds of the board of such association, and a resolution shall be adopted to that effect;
A preliminary application for approval of conversion with a proxy statement and a proxy form shall be submitted to the commissioner who shall determine that:

i. The plan of conversion has been adopted and approved by the board of directors;

ii. The plan of conversion is fair and equitable to all members;

iii. Sufficient provision has been made to protect the interest of the depositors of the prospective capital stock association;

(b) If the preliminary application for approval of conversion is deemed acceptable by the Commissioner, he or she shall issue a notice of intent to approve subject to the affirmative vote of a majority of eligible members and compliance with the conditions prescribed in the conversion provisions of N.J.S.A. 17:12B-1 et seq. and this regulation.

History

Amended by R.1998 d.559, effective 12/7/1998.
See: 30 New Jersey Register 3124(a), 30 New Jersey Register 4209(a).
In (b), substituted a reference to N.J.S.A. 17:12B-1 et seq. for a reference to article XXI of the Savings and Loan Act (1963).

N.J. Admin. Code § 3:32-1.4 Meeting of members

(a) Savings and/or borrowing members, as defined by the mutual association's bylaws, who are 16 years of age, or over, shall be entitled to vote at the special meeting to consider conversion to a capital stock association.

(b) The record date for determining those members eligible to vote at the special meeting called to consider the plan of conversion shall not be less than 90 days prior to the date of approval of such plan by the board of directors.

(c) A special meeting of the members shall be called by the board of directors, not later than 180 days following preliminary approval of the plan of conversion by both the Commissioner and the Office of the Comptroller of the Currency. The members shall consider and vote upon, either in person or by proxy, the following business:

The adoption of the plan of conversion of the mutual association into a capital stock association;
The election of directors to hold office from the effective date of conversion until the next annual meeting; and
The adoption of bylaws for the capital stock association.

(d) Upon affirmative vote of a majority of the members present either in person or by proxy determining to convert the mutual association into a capital stock association, the board of directors shall within 45 days file with the Commissioner the following documents:

A copy of the minutes of the proceedings of such meeting;
A certified copy of the resolution adopted by the stockholders or members relating to the plan of conversion, and a certified statement signed by two officers, one of whom shall be the president or a vice-president, containing the following information with regard to the resolution:

i. The total number of votes eligible to be cast;

ii. The total number of votes represented in person or by proxy at the special meeting; and

iii. The total number of votes cast in favor and against the resolution and each matter related to the resolution including, but not limited to, adopted and defeated amendments;

A certificate of incorporation as provided at N.J.S.A. 17:12B-1 et seq.;
A copy of the bylaws for the stock corporation; and
The conversion application for final approval.

History

Amended by 48 N.J.R. 1063(b), effective 5/16/2016

N.J. Admin. Code § 3:32-1.5 Voting in person or by proxy

(a) Every proxy shall be executed and dated by the member or his agent and filed with the secretary of the association not later than the commencement of the scheduled meeting.

(b) A proxy shall be revocable at will; however the presence of the member at the meeting of the members shall not revoke such proxy unless the member files a written notice of such revocation with the secretary of the meeting prior to the voting of such proxy.

(c) A proxy shall not be revoked by the death or incapacity of the member but such proxy shall continue in force until revoked by the legally constituted or appointed representative or guardian of the member.

(d) The proxies shall be valid only for the meeting at which a conversion plan will be voted upon.

(e) Requirements as to proxy forms:

Shall indicate in boldface type whether proxy is solicited on behalf of management;
Shall provide specifically designated blank spaces for dating and signing the proxy;
Shall clearly identify each matter or group of related matters to be voted upon;
Shall be clearly labeled "revocable proxy" in boldface type;

Shall contain an acknowledgement by the person giving the proxy that he has received a proxy statement prior to signing the proxy form;

Shall contain the date, time and place of meeting;
Shall provide by a box, or otherwise, a means whereby a person solicited can indicate his choice between approval or disapproval of each matter to be acted upon;
Shall indicate in boldface type how the proxy shall be voted on each matter where no choice is specified;
Shall clearly show the procedure for revocation of proxy set forth in subsection (b) of this section.

History

Amended by R.1976 d.337, effective 10/27/1976.
See: 8 New Jersey Register 452(d), 8 New Jersey Register 543(a).

N.J. Admin. Code § 3:32-1.6 Stock purchase rights

(a) Eligible account holders shall be entitled to subscription rights to purchase capital stock pro rata to the value of their holdings. Eligible account holders under 18 years of age shall be entitled to purchase stock under a custodian agreement.

(b) The exercise of the subscription rights of the eligible account holders shall be in accordance with 12 CFR 563 b.

(c) An "eligible account holder" means any person holding a savings account in a converting association on the eligibility record date established by the Commissioner which shall be not less than one year prior to the approval of the plan of conversion of the board of directors.

History

Amended by R.1988 d.472, effective 10/3/1988.
See: 20 New Jersey Register 697(a), 20 New Jersey Register 2450(a).
Added (d).
Amended by R.1998 d.559, effective 12/7/1998.
See: 30 New Jersey Register 3124(a), 30 New Jersey Register 4209(a).
Deleted a former (d).
Amended by R.2004 d.115, effective 3/15/2004.
See: 35 New Jersey Register 5187(a), 36 New Jersey Register 1355(b).
In (c), substituted "one year" for "90 days" preceding "prior to the approval".

N.J. Admin. Code § 3:32-1.7 Purchase price of stock

(a) The application for final approval shall fix a subscription price per share not less than $ 5.00 and not more than $ 50.00, except that the subscription price may exceed $ 50.00 per share upon a showing of special circumstances.

(b) Prices are to be established by persons independent of the converting association who are experienced and expert in corporate appraisal. The independence of the persons shall not be deemed to have been compromised merely because they participated in selling the stock or received from the association a fee for price appraisal services. The persons shall be acceptable to the Commissioner and the corporation.

History

Amended by R.1976 d.337, effective 10/27/1976.
See: 8 New Jersey Register 452(d), 8 New Jersey Register 543(a).
Amended by R.1988 d.472, effective 10/3/1988.
See: 20 New Jersey Register 697(a), 20 New Jersey Register 2450(a).
Substantially amended.

N.J. Admin. Code § 3:32-1.8 Capital stock; no par value

The stated capital for stock issued without par value shall be not less than $ 2.00 per share.

N.J. Admin. Code § 3:32-1.9 Liquidation account

Appropriate subaccount records shall be maintained for each eligible account holder with respect to each savings account. Such subaccount will represent a related inchoate interest in a portion of the liquidation account balance. Such initial interest shall be adjusted for withdrawals in the savings account subsequent to the eligibility record date in accordance with 12 CFR 563 b.

History

Amended by R.1998 d.559, effective 12/7/1998.
See: 30 New Jersey Register 3124(a), 30 New Jersey Register 4209(a).

N.J. Admin. Code § 3:32-1.10 Reserved

History

New Rule, R.1988 d.472, effective 10/3/1988.
See: 20 N.J.R. 697(a), 20 N.J.R. 2450(a).
Amended by R.1991 d.294, effective 6/17/1991.
See: 23 N.J.R. 929(b), 23 N.J.R. 1919(b).
Deleted reference to conversion fee of $ 1,500 and added reference to application fee in N.J.A.C. 3:1-2.26.
Recodified from N.J.A.C. 3:32-1.11 and amended by R.1998 d.559, effective 12/7/1998.
See: 30 N.J.R. 3124(a), 30 N.J.R. 4209(a).
Changed N.J.A.C. reference. Former N.J.A.C. 3:32-1.10, 3121 Associations, repealed
Amended by R.2004 d.115, effective 3/15/2004.
See: 35 N.J.R. 5187(a), 36 N.J.R. 1355(b).
Amended N.J.A.C. reference.
Repealed by R.2009 d.231, effective 7/20/2009.
See: 41 N.J.R. 8(a), 41 N.J.R. 2777(c).
Section was "Fees; conversion from mutual to capital stock association".

N.J. Admin. Code § 3:32-1.11 Reserved

History

Recodified to N.J.A.C. 3:32-1.10 by R.1998 d.559, effective 12/7/1998.
See: 30 New Jersey Register 3124(a), 30 New Jersey Register 4209(a).

Subchapter 2 CONVERSION OF AN ASSOCIATION TO A SAVINGS BANK

N.J. Admin. Code § 3:32-2.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

"Capital stock association" shall have the meaning ascribed to it in N.J.S.A. 17:12B-244.

"Capital stock savings bank" shall have the meaning ascribed to it in N.J.S.A. 17:9A-8.1.

"Mutual savings bank" means any savings bank organized pursuant to N.J.S.A. 17:9A-1 et seq. without capital stock.

"Savings bank" shall have the meaning ascribed to it in N.J.S.A. 17:9A-1.

"State association" and "mutual association" shall have the meanings ascribed to those terms in N.J.S.A. 17:12B-5.

N.J. Admin. Code § 3:32-2.2 Authorization for conversion

(a) Any mutual association may apply to the Commissioner to convert itself to a mutual savings bank by organizing and transferring its assets and liabilities to a newly-chartered mutual savings bank, and any capital stock association may apply to the Commissioner to convert itself to a capital stock savings bank by organizing and transferring its assets and liabilities to a newly-chartered capital stock savings bank.

(b) Before applying to the Commissioner for a conversion pursuant to (a) above, the association shall obtain a resolution of the association's board of directors indicating that the conversion is advisable and in the best interests of the members or shareholders.

(c) After the board of directors has adopted a resolution, a meeting of the members or stockholders shall be held upon not less than 10 days' written notice. The notice shall contain a statement of the time, place and purpose for which such meeting is called. At this meeting, the members or shareholders shall vote on whether the association shall convert to a savings bank. An affirmative vote of at least two-thirds of the members present, or shares eligible to be voted which are represented at the meeting, either in person or by proxy, may approve the conversion.

N.J. Admin. Code § 3:32-2.3 Application for conversion

(a) An application for a conversion from an association to a savings bank shall contain the following:

A certified copy of the resolution of the board of directors authorizing the conversion;
A certified copy of the resolution adopted by the stockholders or members relating to the plan of conversion, containing the following information:

i. The total number of votes eligible to be cast;

ii. The total number of votes represented in person or by proxy at the special meeting;

iii. The total number of votes cast in favor and against each matter; and

iv. The percentage of votes cast in favor and against each matter.

A certificate of incorporation for the new savings bank; and

Copies of all applications for Federal regulatory approval and all approvals required in connection with the conversion, or, if no application or approval is required, a statement or opinion of counsel to that effect.

(b) The Commissioner may require the applicant to supply one or more of the following items:

Biographical information for any of the incorporators and/or directors on forms approved by the Commissioner;
A completed form from the New Jersey State Police requesting criminal history record information for any director and/or incorporator, along with a cashier's check, certified check or money order for the applicable amount, payable to the "Division of State Police--S.B.I.";
A copy of the association's most recent quarterly financial report; and
A business plan and financial projections for the converted savings bank for the next three years. Projections shall include a consolidated balance sheet and a profit and loss statement projected for the end of each year.

History

Amended by R.1998 d.559, effective 12/7/1998.
See: 30 N.J.R. 3124(a), 30 N.J.R. 4209(a).
In (a), deleted former 4 through 7, recodified former 8 and 9 as 4 and 5, and added N.J.A.C reference at the end of the new 5; and added (b).
Amended by R.2004 d.115, effective 3/15/2004.
See: 35 N.J.R. 5187(a), 36 N.J.R. 1355(b).
In (a)5, amended N.J.A.C. reference.
Amended by R.2009 d.231, effective 7/20/2009.
See: 41 N.J.R. 8(a), 41 N.J.R. 2777(c).
In (a)3, inserted "and" at the end; in (a)4, substituted a period for "; and" at the end; and deleted (a)5.

Subchapter 3 MUTUAL STATE ASSOCIATION HOLDING COMPANIES

N.J. Admin. Code § 3:32-3.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Capital stock state association" means any association chartered pursuant to the provisions of N.J.S.A. 17:12B-244 et seq.

"Commissioner" means the Commissioner of the Department of Banking and Insurance.

"Department" means the New Jersey Department of Banking and Insurance.

"Mutual state association" means a mutual association which has its principal place of business in this State.

"Mutual state association holding company" means a mutual state association holding company which has its principal office of business in this State and which has been formed by a mutual state association pursuant to N.J.S.A. 17:12B-298 through N.J.S.A. 17:12B-318.

"Organizing mutual state association" means a mutual state association which has its principal office or business in this State, the board of directors of which propose to form a mutual state association holding company pursuant to the provisions of this subchapter.

"State association" means any savings and loan association or any corporation, however named, now or hereafter chartered pursuant to N.J.S.A. 17:12B-1 et seq.

"Subsidiary capital stock state association" means a capital stock state association which has been incorporated by the directors of a mutual state association holding company, a majority of the stock of which subsidiary capital stock state association is held by a mutual state association holding company.

"Subsidiary holding company" means a mid-tier stock holding company, controlled by a mutual stock association holding company, that owns the stock of a savings association whose depositors have membership rights in the parent mutual holding company.

History

Amended by R.1998 d.559, effective 12/7/1998.
See: 30 New Jersey Register 3124(a), 30 New Jersey Register 4209(a).
In "Capital stock state association" deleted a reference to P. L. 1974, c.137; and in "State association", deleted a reference to P.L. 1963, c.144.
Amended by R.2004 d.115, effective 3/15/2004.
See: 35 New Jersey Register 5187(a), 36 New Jersey Register 1355(b).
Added "Subsidiary holding company".

N.J. Admin. Code § 3:32-3.2 Formation of mutual State association holding company

(a) The board of directors of an organizing mutual State association may apply to the Commissioner to form a mutual State association holding company in any of the following ways:

Plan 1: The board of directors may apply to incorporate a mutual state association holding company, transfer a portion of the organizing mutual state association's assets to the mutual state association holding company, and then convert the organizing mutual state association to a capital stock state association;
Plan 2: The board of directors may apply to incorporate a mutual state association holding company, form a subsidiary capital stock state association, and either merge the organizing mutual state association into the capital stock state association or sell or transfer the assets and liabilities of the organizing mutual state association to the capital stock state association and liquidate the organizing mutual state association;
Plan 3: The board of directors may apply to form a mutual State association holding company by incorporating a subsidiary capital stock State association, and by transferring a substantial part of the assets and liabilities of the organizing mutual State association to the newly formed capital stock State association in return for a majority of its capital stock;
Plan 4: The board of directors may apply to incorporate a mutual State association holding company that will hold a controlling interest (51 percent or more) in a newly formed subsidiary holding company, which in turn will hold 100 percent of the outstanding stock of the capital stock State association that has been formed by one of the methods set forth in Plans 1 through 3; or
Any other method of reorganization approved by the Commissioner.

(b) In the event that the proposed mutual State association holding company reorganization provides for a minority stock issuance by either the subsidiary holding company or capital stock State association, the procedural and substantive requirements set forth in N.J.S.A. 17:12B-261 et seq. and N.J.A.C. 3:32, regarding the conversion from mutual to stock form of ownership shall apply, unless clearly inapplicable.

History

Amended by R.2004 d.115, effective 3/15/2004.
See: 35 New Jersey Register 5187(a), 36 New Jersey Register 1355(b).
In (a), added a new 4 and recodified former 4 as 5; added (b).

N.J. Admin. Code § 3:32-3.3 Application

(a) The board of directors of an organizing mutual state association may apply to form a mutual state association holding company by submitting the following to the Commissioner:

A description of the proposed formation of the mutual state association holding company;
A certified copy of the resolution of the board of directors of the organizing mutual state association authorizing the application by a two-thirds vote of the board;
A certified copy of the resolution adopted by the stockholders or members relating to the plan of conversion, containing the following information:

i. The total number of votes eligible to be cast;

ii. The total number of votes represented in person or by proxy at the special meeting;

iii. The total number of votes cast in favor and against each matter; and

iv. The percentage of votes cast in favor and against each matter.

A certificate of incorporation for the mutual state association holding company containing:

i. The name by which the mutual state association holding company shall be known;

ii. The street, street number, and municipality where the principal office of the mutual state association holding company is to be located;

iii. The names and addresses of the directors of the organizing mutual state association;

iv. The number of directors of the mutual state association holding company;

v. The names of persons who are to act as directors of the mutual state association holding company, until their successors are elected and qualified;

vi. The amount of capital deposits and surplus which are to be transferred from the organizing mutual state association to the mutual state association holding company;

vii. A provision allowing for the retention of any interests of the respective depositors of the organizing mutual state association in the assets of the organizing mutual state association, according to a fair valuation, including assets which are proposed to be transferred from the organizing mutual state association to the mutual state association holding company; and

viii. A provision providing for the establishment of a liquidation account;

Proposed by-laws of the surviving subsidiary capital stock state association and mutual state association holding company; and
A copy of any applications for establishment of a mutual state association holding company filed with any Federal regulator.

(b) The Commissioner may require the applicant to supply one or more of the following items:

Biographical statements for any director of the subsidiary capital stock state association and mutual state association holding company;
A completed form from the New Jersey State Police requesting criminal history record information for any director of the subsidiary capital stock state association and mutual state association holding company along with a cashier's check, certified check or money order for the applicable amount, payable to the Division of State Police--S.B.I.; and
A business plan for the subsidiary capital stock state association and mutual state association holding company.

(c) Along with the certificate of incorporation, each incorporator of the subsidiary capital stock state association bank shall submit an affidavit setting forth the following:

That no fee, commission, or other compensation has been paid, directly or indirectly, by the mutual state association holding company or by the subsidiary capital stock state association in the course of organizing the subsidiary capital stock state association, and that no promotion fees or charges have been provided or are contemplated;
A complete disclosure of all fees paid or agreed to be paid in the matter of chartering and organizing the proposed subsidiary capital stock state association;
That at least a majority of the shares of the authorized stock of the subsidiary capital stock state association is held by the mutual state association holding company; and
That the subsidiary capital stock state association proposes to either:

i. Merge with the organizing mutual state association;

ii. Purchase the assets of the organizing mutual state association; or

iii. Receive the assets and liabilities of the organizing mutual state association.

(d) Within 10 days after the date upon which a completed application is filed with the Commissioner, the applicant shall cause to be published a notice of application containing:

The name and address of the applicant;
A brief statement of the nature of the application; and
A statement advising that objections to the application can be filed with the New Jersey Commissioner of Banking and Insurance along with the address of the Commissioner.

History

Amended by R.1998 d.559, effective 12/7/1998.
See: 30 New Jersey Register 3124(a), 30 New Jersey Register 4209(a).
Rewrote the section.
Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Inserted "and" at the end of (a)5, substituted a period for "; and" at the end of (a)6 and deleted (a)7.

N.J. Admin. Code § 3:32-3.4 Approval of application

(a) The Commissioner shall approve the application for a mutual state association holding company upon a finding of the following factors:

The establishment of a mutual state association holding company is in the best interests of the depositors of the mutual state association;
The qualifications, experience and character of the proposed officers and directors of the mutual state association holding company are sufficient to result in the successful operation of the mutual state association holding company;
The interests of the public will be served by the establishment of a mutual state association holding company;
The mutual state association holding company is adequately capitalized; and
The establishment of the mutual state association holding company meets the requirements of law.

(b) The Commissioner shall approve the charter application of a subsidiary capital stock state association filed with an application for a mutual state association holding company upon a finding of the following factors:

The qualifications, experience and character of the proposed officers and directors of the subsidiary capital stock state association are sufficient to result in the successful operation of the subsidiary capital stock state association;
The interests of the public will be served by the establishment of the subsidiary capital stock state association; and
The capital stock of the subsidiary capital stock state association is in accordance with the amount required for state associations pursuant to N.J.S.A. 17:12B-248.

N.J. Admin. Code § 3:32-3.5 Filings after application approval

(a) Within 60 days after its execution, the directors shall submit a certificate of incorporation for any subsidiary capital stock state association setting forth the following:

The name by which the subsidiary capital stock state association shall be known;
The street, street number and municipality in which the principal office of the subsidiary capital stock state association is to be located;
The names and addresses of the directors of the mutual state association holding company who will be the incorporators of the subsidiary capital stock state association;
The number of directors on the board of directors;
The names of the persons who will serve as directors until their successors are elected and qualified;
The amount of capital stock, the number of shares into which it is divided, and the par value of each share, not less than a majority of the total outstanding shares of which will be held in the name of the mutual state association holding company; and
The amount of surplus with which the subsidiary capital stock state association will commence business.

History

New Rule, R.1998 d.559, effective 12/7/1998.
See: 30 New Jersey Register 3124(a), 30 New Jersey Register 4209(a).
Former N.J.A.C. 3:32-3.5, Board of Directors, recodified to N.J.A.C. 3:32-3.6.

N.J. Admin. Code § 3:32-3.6 Board of directors

(a) The board of directors of a mutual state association holding company shall be managed by a board of not less than six nor more than 21 directors.

(b) Directors of a mutual state association holding company shall be elected by a plurality of the members of the board of the mutual association holding company at the annual meeting for a term of up to three years, as provided in the by-laws.

(d) Directors of a mutual association holding company may be paid reasonable compensation. The compensation paid to directors shall be fixed by a majority vote of the board. The Commissioner may direct that the amount of compensation paid to directors be reduced if it is deemed to be excessive. The Commissioner shall consider the duties, experience, education and responsibilities of the director, and any other relevant factors, when making this determination.

History

Recodified from N.J.A.C. 3:32-3.5 by R.1998 d.559, effective 12/7/1998.
See: 30 New Jersey Register 3124(a), 30 New Jersey Register 4209(a).
Former N.J.A.C. 3:32-3.6, Officers, recodified to N.J.A.C. 3:32-3.7.

N.J. Admin. Code § 3:32-3.7 Officers

(a) The board of directors of a mutual state association holding company at the first meeting following each annual meeting may elect a Chairman of the Board and shall elect a President, both of whom shall be directors. The board of directors shall select the Chairman of the Board, President or another officer who is a director to be the chief executive officer, and may elect a Secretary and a Treasurer, neither of whom need be directors.

(b) A mutual state association holding company may pay its officers any reasonable compensation as may be from time to time fixed by the board of directors. The Commissioner may direct that the amount of compensation paid to officers be reduced if it is deemed to be excessive. The Commissioner shall consider the duties, experience, education and responsibilities of the officer, and any other relevant factors, when making this determination.

History

Recodified from N.J.A.C. 3:32-3.6 by R.1998 d.559, effective 12/7/1998.
See: 30 New Jersey Register 3124(a), 30 New Jersey Register 4209(a).
Former N.J.A.C. 3:32-3.7, Division of surplus, recodified to N.J.A.C. 3:32-3.8.

N.J. Admin. Code § 3:32-3.8 Division of surplus

(a) The board of a mutual state association holding company may, by a majority vote of the directors, divide any surplus which is in excess of the amount required for the operations of the mutual state association holding company and which is not necessary to maintain the safety and soundness of the mutual state association holding company, and may distribute this surplus to the depositors of its subsidiary capital stock state association or associations. All such distributions shall be made equitably based on the amount deposited by each depositor in the mutual state association or associations.

(b) The Commissioner may, if he or she deems the surplus held by a mutual state association holding company to be excessive, either upon petition or on the Commissioner's own initiative, order the state association holding company to distribute the surplus to the depositors of the subsidiary capital stock state association or associations.

History

Recodified from N.J.A.C. 3:32-3.7 by R.1998 d.559, effective 12/7/1998.
See: 30 New Jersey Register 3124(a), 30 New Jersey Register 4209(a).

Chapter 33 PROPOSED INTERSTATE ACQUISITION

Subchapter 1 DETERMINATION OF ELIGIBILITY

N.J. Admin. Code § 3:33-1.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Applicant" means any out-of-State insured savings association or out-of-State savings and loan holding company filing an application hereunder to acquire a New Jersey insured savings association or New Jersey savings and loan holding company.

"Central-Atlantic Region" means the states of New Jersey, Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, Missouri, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, Wisconsin and the District of Columbia.

"Commissioner" means the New Jersey Commissioner of Banking and Insurance.

"Control" shall have the meanings set forth in 12 U.S.C. § 1467a(a)(2).

"Eligible insured savings association" means an insured savings association:

Located in an eligible state other than New Jersey, which state has reciprocal legislation in effect;
Which is not directly or indirectly controlled by an insured savings association located outside of an eligible state or by a savings and loan holding company located outside of an eligible state; and
Which has at least 75 percent of the total aggregate deposits of the insured savings association and of the savings and loan subsidiaries of a savings and loan holding company directly or indirectly controlling the insured, savings association if any, in an eligible state or states.

"Eligible savings and loan holding company" means a savings and loan holding company:

Located in an eligible state, other than New Jersey, which has reciprocal legislation in effect;
Which is not directly or indirectly controlled by a savings and loan holding company located outside of an eligible state; and
Which has at least 75 percent of the total aggregate deposits of its savings and loan subsidiaries in savings and loan subsidiaries located in an eligible state or states.

"Eligible state" means:

Any state in the Central-Atlantic Region, when at least two of those states, in addition to New Jersey, each of which has at least $ 20,000,000,000 in insured savings association deposits, have reciprocal legislation in effect; or
Any state or territory of the United States, when at least 13 states in addition to New Jersey, of which at least four, other than New Jersey, are among the 10 states, other than New Jersey, with the largest amount of insured savings association deposits, have reciprocal legislation in effect.

"Insured savings association" means a "savings association" as defined in 12 U.S.C. § 1813 whose deposits are insured by the Federal Deposit Insurance Corporation.

"Insured savings association deposits" means the total domestic deposits in insured savings associations in each state according to the most recent available statistics of the Federal Deposit Insurance Corporation or, if those statistics are not available, from sources designated by the Commissioner.

"Located" means:

When referring to an insured savings association, the state in which the amount of aggregate deposits of all of its offices in that state is greater than the amount of aggregate deposits of all of its offices in any one other state or foreign jurisdiction; or
When referring to a savings and loan holding company, the state in which the amount of aggregate deposits of all of its savings and loan subsidiaries in that state is greater than the amount of aggregate deposits of all its savings and loan subsidiaries in any one other state or foreign jurisdiction.

"New Jersey insured savings association" means an insured savings association located in New Jersey.

"New Jersey savings and loan holding company" means a savings and loan holding company located in New Jersey.

"Out-of-State insured savings association" means an insured savings association located outside of New Jersey.

"Out-of-State savings and loan holding company" means a savings and loan holding company located outside of New Jersey.

"Reciprocal legislation" means statutory law of a state that authorizes or permits a New Jersey insured savings association or a New Jersey savings and loan holding company, or both, to acquire insured savings associations or savings and loan holding companies, or both, located in that state on terms and conditions substantially the same as the terms and conditions pursuant to which an insured savings association or savings and loan holding company located in that state may acquire insured savings associations or savings and loan holding companies, or both, located in that state. The fact that the law of that other state imposes limitations or restrictions on the acquisition of insured savings associations or savings and loan holding companies, or both, located in that state by a New Jersey insured savings association or New Jersey savings and loan holding company, or both, shall not necessarily mean that the law of that state is not reciprocal legislation; provided, however, that if the law of the other state limits acquisitions by a New Jersey insured savings association or New Jersey savings and loan holding company, or both, to insured savings associations or savings and loan holding companies, or both, which are not in competition with insured savings associations or savings and loan holding companies, or both, located in or chartered by the state or to insured savings associations or savings and loan holding companies which do not have customary deposit and commercial loan powers, the law of that other state shall not be reciprocal legislation. If the reciprocal legislation of that other state imposes limitations or restrictions on the acquisition or ownership of an insured savings association or savings and loan holding company located in that state by a New Jersey insured savings association or New Jersey savings and loan holding company, or both, substantially the same limitations and restrictions shall be applicable to the eligible insured savings association or eligible savings and loan holding company, or both, located in that other state with respect to its acquisitions of New Jersey insured savings associations or New Jersey savings and loan holding companies, or both.

"Savings and loan holding company" shall have the meaning set forth in 12 U.S.C. § 1467a(a)(1)(D).

"Savings and loan subsidiary" means an insured savings association or savings and loan holding company, more than 50 percent of the voting shares or members' rights of which are owned or controlled, directly or indirectly, by a savings and loan holding company.

"State" means any state of the United States, and also the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa and the U.S. Virgin Islands.

"Subsidiary" means any person or company which is controlled by another person or company.

History

Amended by R.1999 d.419, effective 12/6/1999.
See: 31 New Jersey Register 2673(a), 31 New Jersey Register 4001(b).
Amended by R.2005 d.76, effective 2/22/2005.
See: 36 New Jersey Register 4866(a), 37 New Jersey Register 585(a).
Rewrote "Insured institution", "Savings and loan subsidiary", "State" substituted reference to "savings association" for "institution" throughout.

N.J. Admin. Code § 3:33-1.2 Content of application

(a) Any out-of-State insured savings association or out-of-State savings and loan holding company proposing to acquire and retain control of a New Jersey insured savings association or a New Jersey savings and loan holding company pursuant to N.J.S.A. 17:12B-278 et seq. shall submit an application to the Commissioner. The application shall comply with N.J.S.A. 17:12B-279 and shall contain the following information:

The name and location of the applicant;
The name and location of each New Jersey insured savings association or New Jersey savings and loan holding company to be acquired;
Certified copies of:

i. The board resolution of the applicant authorizing the proposed acquisition of each New Jersey insured savings association or New Jersey savings and loan holding company; and

ii. The board resolution of each New Jersey insured savings association or New Jersey savings and loan holding company approving the proposed acquisition if such approval has been adopted;

A schedule reflecting the name, location and total aggregate deposits of each savings and loan subsidiary of the applicant, as of the date of the last thrift financial report required by the Department;
Copies of the current reciprocal legislation of each of the states in which a savings and loan subsidiary of the applicant is located;
A listing of any limitations or restrictions on the acquisition or ownership of an insured savings association or savings and loan holding company in the state in which the applicant is located that would be imposed on the acquisition of an insured savings association or savings and loan holding company in that state by a New Jersey insured savings association or New Jersey savings and loan holding company;
The name and location of any out-of-State savings and loan holding company that has direct or indirect control of the applicant. A controlling out-of-State insured savings association or out-of-State savings and loan holding company shall submit the information which is prescribed in the application to assist the Commissioner in determining whether the controlling out-of-State insured savings association or savings and loan holding company is an eligible insured savings association or eligible savings and loan holding company;
If the applicant has formally filed for the acquisition of any additional insured savings association subsidiaries with the State of New Jersey or with any agency of another state or of the Federal government, the applicant shall submit to the Commissioner the information required by those applications; and
The applicant shall submit a statement that it will notify the Commissioner in the event it subsequently obtains or divests control of any insured savings association or savings and loan holding company, or if another insured savings association or savings and loan holding company obtains direct or indirect control of the applicant.

History

Amended by R.2005 d.76, effective 2/22/2005.
See: 36 New Jersey Register 4866(a), 37 New Jersey Register 585(a).

N.J. Admin. Code § 3:33-1.3 Determination of eligibility

(a) Within 30 days after receipt of a completed application for determination of compliance with the requirements of N.J.S.A. 17:12B-279 and this subchapter, the Commissioner shall issue a determination:

Whether the out-of-State insured savings association or out-of-State savings and loan holding company is an eligible insured savings association or eligible savings and loan holding company;
Whether the out-of-State insured savings association or out-of-State savings and loan holding company has more than 50 percent of the total aggregate deposits of its insured savings association subsidiaries in insured savings association subsidiaries located in an eligible state or states, each of which has reciprocal legislation in effect; and
Whether any limitations or restrictions on acquisition or ownership shall be applicable with respect to the proposed transaction, and a description of those limitations or restrictions, if any.

(b) If the Commissioner disapproves the application, the applicant may, within 10 days of receipt of a notice of disapproval, ask the Commissioner in writing to hold a hearing on the proposed acquisition. The hearing shall be held in accordance with the provisions of the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1.

History

Amended by R.2005 d.76, effective 2/22/2005.
See: 36 New Jersey Register 4866(a), 37 New Jersey Register 585(a).

N.J. Admin. Code § 3:33-1.4 Fees

(a) The following fees shall be paid to the Commissioner relative to the application required by N.J.A.C. 3:33-1.3:

Filing of application: $ 1,500.
Issuance by the Commissioner of a determination that the proposed acquisition would be in compliance with the requirements of N.J.S.A. 17:12B-279, if it were consummated and approved by all applicable persons and/or regulatory authorities: $ 100.00.

(b) For a request for a hearing pursuant to N.J.A.C. 3:33-1.3 (b), a fee of $ 2,500 must accompany the request.

Chapter 34 GOVERNMENTAL UNIT DEPOSIT PROTECTION

Subchapter 1 GOVERNMENTAL UNIT DEPOSIT PROTECTION

N.J. Admin. Code § 3:34-1.1 Purpose and scope

(a) This subchapter implements N.J.S.A. 17:9-41 et seq. regarding collateral requirements for depositories that accept the deposits of local New Jersey governmental unit funds.

(b) This subchapter shall apply to all depositories that accept the deposits of local New Jersey governmental unit funds.

N.J. Admin. Code § 3:34-1.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Act" or "GUDPA" means the Governmental Unit Deposit Protection Act, N.J.S.A. 17:9-41 et seq.

"Adequately capitalized" means, with respect to a public depository, "adequately capitalized" as the term is defined in N.J.S.A. 17:9-41.

"Association" means any State or Federally chartered savings and loan association.

"Call report" means the quarterly report on a depository's overall condition made to the appropriate Federal banking agency as defined by subsections (q) and (r) of section 3 of the Federal Deposit Insurance Act, Pub. L. 81-797 (12 U.S.C. § 1813(q) and (r)) or to the National Credit Union Administration.

"Capital funds" means:

In the case of a State bank or national bank or capital stock savings bank, the aggregate of the capital stock, surplus and undivided profits of the bank or savings bank;
In the case of a mutual savings bank, the aggregate of the capital deposits, if any, and the surplus of the savings bank;
In the case of an association, the aggregate of all reserves required by any law or regulation, and the undivided profits, if any, of the association; and
In the case of a credit union, the aggregate of all reserves required by any law or regulation, and the capital deposits of the credit union.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Credit union" means a credit union as defined in N.J.S.A. 17:13-80.

"Critically undercapitalized" means, with respect to a public depository, "critically undercapitalized" as the term is defined in N.J.S.A. 17:9-41.

"Custodial depository or custodian" means the depositories specified in N.J.S.A. 17:9-44c.

"Department" means the New Jersey Department of Banking and Insurance.

"Eligible collateral" means:

Obligations of any of the following:

i. The United States;

ii. Any agency or instrumentality of the United States, including, but not limited to, the Student Loan Marketing Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Federal Housing Administration and the Small Business Administration;

iii. The State of New Jersey or any of its political subdivisions; or

iv. Any other governmental unit;

Obligations guaranteed or insured by any of the following, to the extent of that insurance or guaranty:

i. The United States;

iii. The State of New Jersey or any of its political subdivisions;

Obligations now or hereafter authorized by law as security for public deposits;
Obligations in which the State, political subdivisions of the State, their officers, boards, commissions, departments and agencies may invest pursuant to an express authorization under any law authorizing the issuance of those obligations;
Obligations, letters of credit, or other securities or evidence of indebtedness constituting the direct and general obligation of a Federal Home Loan Bank or Federal Reserve Bank; or
Any other obligations as may be approved by the Commissioner by regulation or by specific approval.

"Governmental unit" means any county, municipality, school district, or any public body corporate and politic created or established under any law of this State by or on behalf of any one or more counties or municipalities, or any board, commission, department, or agency of any of the foregoing having custody of funds, or any charitable funds established pursuant to N.J.S.A. 54:4-66.7 or spillover funds established pursuant to N.J.S.A. 54:4-66.7.e.

"Public depository" means a State or Federally chartered bank, savings bank or an association located in this State or a State or Federally chartered bank, savings bank or an association located in another state with a branch office in this State, the deposits of which are insured by the Federal Deposit Insurance Corporation, or a State or Federally chartered credit union located in this State, or a State or Federally chartered credit union located in another state with a branch office in this State, the deposits of which are insured by the National Credit Union Share Insurance Fund administered by the National Credit Union Administration, and which receives or holds public funds on deposit.

"Public funds" means the funds of any governmental unit, including, but not limited to, moneys possessed or held by charitable funds established pursuant to N.J.S.A. 54:4-66.7, spillover funds established pursuant to N.J.S.A. 54:4-66.7.e, or local charitable donations as defined in N.J.S.A. 54:4-66.6 or in escrow related thereto, but does not include deposits held by the State of New Jersey Cash Management Fund.

"Significantly undercapitalized" means, with respect to a public depository, "significantly undercapitalized" as the term is defined in N.J.S.A. 17:9-41.

"Undercapitalized" means, with respect to a public depository, "undercapitalized" as the term is defined in N.J.S.A. 17:9-41.

"Uninsured" means not insured by the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Share Insurance Fund administered by the National Credit Union Administration, or by any other agency of the United States which insures deposits made in public depositories.

"Valuation date" means March 31, June 30, September 30, and December 31.

"Well capitalized" means, with respect to a public depository, "well capitalized" as the term is defined in N.J.S.A. 17:9-41.

History

Amended by 51 N.J.R. 504(a), effective 4/15/2019

N.J. Admin. Code § 3:34-1.3 General requirement

No deposit from a governmental unit may be received and held by any public depository unless the public depository secures such deposit in accordance with the Governmental Unit Deposit Protection Act, N.J.S.A. 17:9-41 et seq., and this subchapter.

N.J. Admin. Code § 3:34-1.4 Required reports

(a) A public depository shall file electronically with the Department a report as set out on the Department's website at http://www.nj.gov/dobi/index.html. The report is due on a quarterly basis and is to be filed on or before the due date for the filing of a call report. The report shall include the following information:

The name and address of the reporting institution;
The date of report filing and the valuation date of the report;
The name and title of the designated GUDPA officer or contact person and that person's telephone number and e-mail address;
A secondary contact name and title, with telephone number and e-mail address;
The total capital funds;
New Jersey capital funds allocated pursuant to N.J.A.C. 3:34-1.6;
Seventy five percent of New Jersey capital funds;
The total average balance of New Jersey public funds during the three-month period ending prior to the current valuation date;
Whether a daily or four-day average was used;
The New Jersey public funds covered by insurance;
The average New Jersey public funds on deposit in excess of insurance;
The total average balance of New Jersey public funds during the 15-day period preceding the current valuation date;
The collateral requirement, and the total market value of collateral pledged;
A listing of collateral pledged; and, for each security, the par value, name and description, the Committee on Uniform Security Identification Procedures (CUSIP) number, the rate, the maturity date, the market value, and the collateral location;
The gross New Jersey public funds on deposit as of the valuation date; and
As of the valuation date, the depository's:

i. Capital category;

ii. Tier 1 leverage capital/average total assets;

iii. Tier 1 risk-based capital/risk-weighted assets; and

iv. Total risk-based capital/risk-weighted assets.

(b) Each public depository required to pledge collateral shall provide an electronic listing of such collateral with each report. Such listing shall be in a form prescribed by the Commissioner and made available on the Department's website.

(c) Each public depository must also certify that the information filed in connection with the report is complete and accurate and that all public funds on deposit have been reported and sufficient eligible collateral is in place and that its valuation meets the requirement of the Act. The certification must be signed by a member of the public depository's audit committee, its Chief Financial Officer, or an equivalent officer and is due upon the filing of the report required by subsection (a) above.

(d) Failure to file complete and timely reports will result in the depository being removed from the approved list referenced in N.J.A.C. 3:34-1.8.

History

Amended by 50 N.J.R. 1257(a), effective 5/21/2018

N.J. Admin. Code § 3:34-1.5 Fees

(a) Each public depository, unless exempt, shall pay an annual fee for every fiscal year. The fee will be based on the average daily public funds on deposit for the three-month reporting period ending on the June 30 valuation date of the prior fiscal year.

(b) A public depository paying dedicated funding assessments pursuant to N.J.A.C. 3:5 shall be exempt from paying the annual fee set forth in this section.

(c) Payment shall be made by electronic means as directed by the Commissioner on the Department's website at http://www.nj.gov/dobi/index.html at the time of the filing in accordance with (a) above and (d) and (e) below.

(d) The amount of the annual fee shall be:

$ 500.00 for a public depository with no uninsured public funds;
$ 1,000 for a public depository with less than $ 50,000,000 in uninsured public funds;
$ 2,000 for a public depository with $ 50,000,000 or more, but less than $ 100,000,000 in uninsured public funds;
$ 3,000 for a public depository with $ 100,000,000 or more, but less than $ 200,000,000 in uninsured public funds;
$ 4,000 for a public depository with $ 200,000,000 or more, but less than $ 300,000,000 in uninsured public funds;
$ 5,000 for a public depository with $ 300,000,000 or more, but less than $ 400,000,000 in uninsured public funds; or
$ 6,000 for a public depository with $ 400,000,000 or more in uninsured public funds.

(e) A proportional amount of the annual fee shall be charged to a public depository that accepts its first public funds deposit in a fiscal year after July 1, based on the first report filed during a fiscal year covering a full three-month period ending on a valuation date. The amount of the proportional fee will be determined by the amount of the public funds held during the first full three-month period and in which quarter of the fiscal year the public depository commenced to accept public funds for deposit, as specified in the first report filed as referenced above. For example, if a public depository first accepts public funds in December, the first full three-month period ending on a valuation date during which it would hold such funds would end on the succeeding March 31. If the average daily amount of public funds on deposit during that three-month period was $ 50,000,000 or more but less than $ 100,000,000, the fee payable by that public depository would be $ 1,500, determined by dividing the $ 2,000 full year fee for that amount by .75, since the fee would be payable for the second, third and fourth quarters of that fiscal year, which were the quarters, or parts thereof, that the public depository was authorized to hold public funds. A public depository that had previously been charged an annual fee or a proportional amount of an annual fee as set forth herein, but which subsequently ceased to hold any public funds and was not charged any fee for the fiscal year immediately preceding the fiscal year in which it renews its acceptance of public funds, shall be charged a proportional fee amount as set forth in this subsection based upon its renewed acceptance of such funds.

(f) All fees are non-refundable.

(g) Failure to timely pay fees will result in the depository being removed from the approved list referenced in N.J.A.C. 3:34-1.8.

History

Amended by 50 N.J.R. 1257(a), effective 5/21/2018

N.J. Admin. Code § 3:34-1.6 Collateral obligations

(a) Every public depository having uninsured public funds on deposit shall maintain, in addition to collateral noted in (b) and (c) below, as security for such deposits, eligible collateral having a market value at least equal to:

Five percent of the uninsured public funds on deposit, if the public depository is well capitalized;
50 percent of the uninsured public funds on deposit, if the public depository is adequately capitalized;
75 percent of the uninsured public funds on deposit, if the public depository is undercapitalized;
100 percent of the uninsured public funds on deposit, if the public depository is significantly undercapitalized; or
150 percent of the uninsured public funds on deposit, if the public depository is critically undercapitalized.

(b) A public depository which receives and holds on deposit for any period exceeding 15 calendar days public funds of a governmental unit or units which in the aggregate exceed 75 percent of the capital funds of the public depository as reported on the most recent valuation date shall report such excess and describe the eligible collateral pledged to secure said excess. Such collateral shall have a market value at least equal to the amount of such excess and shall be in addition to the security required by (a) above and as reported in the most recent report filed with the Department. For purposes of this subsection, the capital funds of a public depository located in New Jersey which has branches located outside New Jersey shall be its total capital funds multiplied by the percentage of deposits located in New Jersey to total deposits of the depository.

(c) Every public depository having uninsured public funds on deposit in excess of $ 200,000,000, not collateralized under (b) above, shall maintain, as security for such excess uninsured public funds, eligible collateral having a market value at least equal to 100 percent of the average daily balance of those collected, uninsured public funds on deposit in excess of $ 200,000,000 during the three-month period ending on the immediately preceding valuation date or, at the election of the depository, at least equal to 100 percent of the average balance of those collected, uninsured public funds on deposit in excess of $ 200,000,000 on the first, eighth, 15th and 22nd days of each month in the three-month period ending on the immediately preceding valuation date.

(d) The amount of eligible collateral in relation to the amount of uninsured public funds on deposit necessary for a public depository to meet the collateral requirements shall be measured as:

The percentage, set forth under (a) above, of the average daily balance of collected, uninsured public funds on deposit during the three-month period ending on the immediately preceding valuation date; or
At the election of the depository, the percentage, set forth under (a) above, of the average balance of collected, uninsured public funds on deposit on the first, eighth, 15th and 22nd days of each month in the three-month period ending on the immediately preceding valuation date.

N.J. Admin. Code § 3:34-1.7 Eligible collateral

(a) All eligible collateral used to secure public funds on deposit in a public depository shall be in a form that is "readily marketable" and "liquid." The determination of "readily marketable" and "liquid" shall be made by the Commissioner based upon the existence of a substantial public market for the collateral and a high probability that the Commissioner could convert the collateral into cash promptly through existing available channels.

(b) In addition to obligations otherwise authorized in N.J.S.A. 17:9-41, eligible collateral shall also include irrevocable stand-by letters of credit issued by a Federal Home Loan Bank. The Commissioner shall review and approve the form of all such letters of credit proposed by a public depository as eligible collateral under this section. Further, the original letter of credit shall be held by the Commissioner.

N.J. Admin. Code § 3:34-1.8 Notice of approval of an eligible public depository

The Department will maintain a listing on its website at http://www.nj.gov/dobi/index.html of all depositories it has approved as public depositories.

History

Amended by 50 N.J.R. 1257(a), effective 5/21/2018

N.J. Admin. Code § 3:34-1.9 Scope of terms surplus, undivided profits, reserves, and capital deposits

(a) As included within the definition of capital funds in N.J.S.A. 17:9-41 and N.J.A.C. 3:34-1.2:

The terms "surplus" and "undivided profits" shall, in the case of a State bank or national bank, include any reserve for contingency, reserve for securities and reserve for bad debts as computed for Federal income tax purposes, but shall:

i. Exclude any specifically allocated reserves or reserves for known specific charges; and

ii. Be reduced by the booked value of any intangible assets set up on the balance sheet which represent nonmaterial values over and above physical assets, such as goodwill, deferred losses and intangible assets.

The term "surplus" shall, in the case of a savings bank, include undivided profits, any reserve for contingency, reserve for securities and reserve for bad debts as computed for Federal income tax purposes but shall:

i. Exclude any specifically allocated reserves or reserves for known specific charges; and

The term "undivided profits" shall, in the case of an association, include any reserve for contingency required by any law or regulation and any reserve for bad debts as computed for Federal income tax purposes, but shall:

i. Exclude any specifically allocated reserves or reserves for known specific charges; and

The terms "reserves" and "capital deposits" shall, in the case of a credit union, include any reserve for contingency required by any law or regulation and any reserve for bad debts as computed for Federal income tax purposes, but shall:

i. Exclude any specifically allocated reserves or reserves for known specific charges; and

ii. Be reduced by the booked value of any intangible assets referenced on the balance sheet which represent nonmaterial values over and above physical assets, such as goodwill, deferred losses, and intangible assets.

History

Amended by R.2012 d.152, effective 9/4/2012.
See: 44 N.J.R. 955(a), 44 N.J.R. 2167(a).
Section was "Scope of terms surplus and undivided profits". Added (a)4.

N.J. Admin. Code § 3:34-1.10 Substitution of collateral

Public depositories shall have the right to make substitutions of eligible collateral between valuation dates without notification to and approval by the Commissioner; provided that any substituted collateral shall have a market value as of the date of substitution that is at least equal to the market value of the collateral so replaced as reported on the last valuation date. Any withdrawal of pledged collateral without replacement as aforesaid requires the prior approval of the Commissioner. A written request to the Commissioner requesting such withdrawal of collateral shall indicate the collateral to be withdrawn and the reason or reasons for such withdrawal. The Commissioner shall transmit to the public depository his or her approval or disapproval of such withdrawal in writing.

N.J. Admin. Code § 3:34-1.11 Agreement between custodial depositories and Commissioner

(a) A public depository shall not deposit collateral in a custodial depository that is a parent or subsidiary of the public depository, or is otherwise related to the public depository.

(b) A custodial depository shall be required to have a written agreement with the Commissioner authorizing such depository to hold securities as collateral for public funds under the terms and conditions enumerated therein.

(c) Should a public depository fail to meet its minimum regulatory capital requirements as established by the appropriate supervising Federal agency, or meet the criteria set forth in N.J.S.A. 17:16J-2(a), or for reasons grounded in other safety and soundness concerns, the Commissioner may:

Limit the authority of the public depository by prohibiting the public depository from accepting public deposits not insured by a Federal agency; and/or
Require that the public depository pledge only readily marketable investment grade securities, and pledge such securities to the extent of 120 percent of the amount of public funds on deposit not insured by the appropriate Federal insurance fund.

N.J. Admin. Code § 3:34-1.12 Agreement or resolution; public depository and custodial depository

Each public depository shall be required to have a written agreement with a custodial depository. Said agreement shall indicate that the collateral pledged is to be held subject to the order of the Commissioner or his or her authorized deputy and is held as security for public funds as required under the Act.

N.J. Admin. Code § 3:34-1.13 Security; State and other public deposits

The securing of public deposits as required under the Act shall not preclude any public depository from securing State or other public deposits which are otherwise required to be secured by law. The deposits which are otherwise required to be secured shall be excluded from the computation of the average balance of public funds as required in this subchapter.

N.J. Admin. Code § 3:34-1.14 Records maintained by Commissioner; eligibility

The Commissioner shall maintain such records as he or she shall deem necessary in order to determine which public depositories have complied with the Act. After receipt of each quarterly report, the Commissioner shall post a listing of public depositories eligible to act as a depository for public funds on the Department's website at http://www.nj.gov/dobi/index.html.

History

Amended by 50 N.J.R. 1257(a), effective 5/21/2018

N.J. Admin. Code § 3:34-1.15 Requirements for first time public depositories

(a) Before initially accepting public funds, a depository shall submit a complete application to the Department for approval as a public depository on a form found on the Department's website at http://www.nj.gov/dobi/index.html. The information to be provided on the form shall include the depository's identifying information, chartering agency, a certified copy of board resolution(s) authorizing participation in GUDPA and designating the depository's GUDPA custodian, total capital funds, and the name of the approved custodian. Upon receipt of a complete application, the Commissioner shall publish notice of the submission of the application on the Department's website at http://www.nj.gov/dobi/index.html. After review of the application, the Commissioner shall approve the application within 30 days of the Department's acceptance of all required materials and confirmation of compliance with all requirements set forth in this chapter and shall prescribe the amount of eligible collateral required to be maintained.

(b) Upon the Commissioner approving the application and prescribing the required collateral amount and the collateral being properly pledged with the custodian and proof of that being provided by the custodian to the Department, the approved status of the public depository will be published on the Department's website at http://www.nj.gov/dobi/index.html. After approval by the Department of the first valuation report filed by the public depository in accordance with N.J.A.C. 3:34-1.4, the public depository will be added to the electronic list of approved public depositories referenced in N.J.A.C. 3:34-1.8.

(c) After a public depository has held public funds for an entire three-month period and filed a valuation report for the full three-month period, it shall hold eligible collateral in the amount required by N.J.A.C. 3:34-1.6 unless otherwise ordered by the Commissioner. When deciding whether to order a public depository to hold eligible collateral in an amount higher than required by N.J.A.C. 3:34-1.6, the Commissioner shall consider factors related to the level of risk to which the public funds held by the public depository are exposed, including, but not limited to, the factors listed below:

The tangible equity capital of a non-credit union public depository or net worth of a credit union public depository;
The level of concentrations reflected in the public depository's financial statements;
The single borrower lending limit to which the public depository is subject pursuant to applicable State or Federal law or regulations; and
Such other factors as the Commissioner may deem relevant to an evaluation of the level of risk to which the public funds held by the public depository may be exposed.

History

Amended by 50 N.J.R. 1257(a), effective 5/21/2018

N.J. Admin. Code § 3:34-1.16 Financial education program supported by credit union public depositories

(a) If the average daily balance of the public funds on deposit at the credit union for the preceding year is in excess of $ 2,000,000, the chief financial officer, or the senior official in the credit union with responsibility for performing the functions of a chief financial officer, of a credit union that qualifies as a public depository shall transmit to the Department with each fourth calendar quarter GUDPA report a written certification, in a form specified by the Commissioner and posted on the Department's website, that the credit union has forwarded to the nonprofit corporation designated by the Department of Education in accordance with N.J.S.A. 17:9-43.2 a sum equal to the average daily balance, multiplied by the appropriate factor, as determined in accordance with the following schedule:

An average daily balance in excess of $ 2 million but less than $ 25 million: multiply by a factor of .0005;
An average daily balance of $ 25 million or over but less than $ 50 million: multiply by a factor of .00075;
An average daily balance of $ 50 million or over: multiply by a factor of .0010. However, in no event, shall a credit union be required to forward a sum in excess of $ 100,000 in any one year.

(b) The certification shall contain proof of payment to the designated nonprofit corporation in the form of a copy of a cancelled check or other payment instrument or evidence of a successful wire transfer.

History

New Rule, R.2012 d.152, effective 9/4/2012.
See: 44 N.J.R. 955(a), 44 N.J.R. 2167(a).

Chapter 35 QUALIFIED EDUCATIONAL INSTITUTIONS

Subchapter 1 QUALIFIED EDUCATIONAL INSTITUTIONS

N.J. Admin. Code § 3:35-1.1 Purpose and scope

(a) This subchapter implements N.J.S.A. 17:9A-213(b) which permits qualified educational institutions to exercise certain trust powers as set forth in N.J.S.A. 17:9A-28(6) and (9).

(b) This subchapter shall apply to all educational institutions that seek to exercise powers pursuant to N.J.S.A. 17:9A-213(b), except those exempt from the requirements pursuant to N.J.S.A. 17:9A-213(f).

N.J. Admin. Code § 3:35-1.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Department" means the New Jersey Department of Banking and Insurance.

"Qualified educational institution" means a not-for-profit corporation which is operated pursuant to Title 15A of the New Jersey Statutes and which is organized and operated exclusively for educational purposes, is exempt from Federal income taxation pursuant to paragraph (3) of subsection (c) of section 501 or 115 of the Internal Revenue Code of 1986, 26 U.S.C. § 501(c)(3) and 26 U.S.C. § 115, and has registered with the Department to act as executor, trustee, guardian or administrator pursuant to this subchapter.

"Qualified interest" means the interest of the qualified educational institution as an income beneficiary, a principal beneficiary of a trust, or both, which is a charitable remainder trust, charitable lead trust or pooled income fund, or similar split interest trust, and in which the qualified educational institution is entitled to receive at least 51 percent of the income of the trust or 51 percent of the principal.

"Unrestricted net assets" means the part of the net assets of the educational institution that is neither permanently restricted nor temporarily restricted by donor imposed stipulations.

N.J. Admin. Code § 3:35-1.3 Required disclosures and minimum standards

(a) A qualified educational institution shall have unrestricted net assets in an amount at least equal to the amount of assets under trust management.

(b) A qualified educational institution shall provide for adequate vault or other safekeeping facilities for the safeguarding of stocks and other securities held in its trust accounts.

(c) A qualified educational institution shall have in effect liability insurance in the amount of $ 1,000,000, for each director, officer or other employee of the educational institution responsible for administering and investing assets of its trust accounts.

(d) A qualified educational institution shall have among its officers or other employees persons determined by the Commissioner to possess the qualifications, experience and character required for the duties and responsibilities for which they will be responsible in administering and investing assets of its trust accounts.

(e) A qualified educational institution shall have available competent legal counsel licensed to practice law in this State to advise about trust matters whenever necessary.

(f) All monies, securities and other properties held by a qualified educational institution in trust shall be kept separate and apart from the monies, securities and other property belonging to the qualified educational institution. This requirement shall be satisfied as long as the qualified educational institution at all times maintains records that show the name of the party on whose account the monies, securities and other property is held.

N.J. Admin. Code § 3:35-1.4 Registration to act as a qualified educational institution

(a) The educational institution shall register with the Department prior to exercising the powers specified in N.J.S.A. 17:9A-28(6) and 28(9) as trustee of funds in which the educational institution has a qualified interest. The application for registration to act as a qualified educational institution shall be on a form approved by the Commissioner and shall contain the following:

The name of the educational institution and the address of the principal office of the educational institution located in this State;
The names of the officers or employees of the educational institution, responsible for administering and investing the assets of the trusts together with a summary of each person's education and experience in the field of trust management;
The address of the office(s) or location(s) at which the institution will manage the trusts;
The names and home addresses of the directors and officers of the educational institution;
An audited financial statement with an unqualified opinion prepared by a certified public accountant or public accountant disclosing the institution's assets and liabilities and its unrestricted net assets;
Proof of liability insurance for directors and officers in an amount set forth in N.J.A.C. 3:35-1.3(c);
Evidence that the applicant has adequate vault or other safekeeping facilities for safeguarding stocks and other securities held for their trust accounts at its own offices or has made adequate arrangements for the safekeeping of all the securities;
The name and address of its legal counsel for trust matters;
Proof of compliance with all standards set forth in N.J.A.C. 3:35-1.3(c); and
An application fee of $ 250.00.

(b) The president or vice president of the institution shall certify that the information contained on the application was reviewed by the Board of Directors and is true to the best of his or her knowledge and belief.

N.J. Admin. Code § 3:35-1.5 Filing of annual report

(a) Within 60 days of receipt of the audited financial statement referred to in (a)2 below, each qualified institution shall file an annual report on a form approved by the Commissioner containing the following:

The name of the educational institution and the address of the principal office of the educational institution located in this State;
An audited financial statement with an unqualified opinion as of the end of its most recent fiscal year prepared by a certified public accountant or a public accountant disclosing the institution's assets and liabilities and its unrestricted net assets;
Proof of liability insurance for directors and officers in an amount set forth in N.J.A.C. 3:35-1.3(c);
A statement whether any of the information contained in the initial application for registration has changed and the updated information; and
A filing fee of $ 100.00.

(b) The president or vice president of the institution shall certify that the information contained on the annual report was reviewed by the Board of Directors and is true to the best of his or her knowledge and belief.

History

Amended by R.2006 d.233, effective 6/19/2006.
See: 38 N.J.R. 5(a), 38 N.J.R. 2671(a).
Substituted "April 1" for "December 31" in (a).
Amended by R.2007 d.44, effective 2/5/2007.
See: 38 N.J.R. 4273(a), 39 N.J.R. 363(a).
In the introductory paragraph of (a), substituted "Within 60 days of receipt of the audited financial statement referred to in (a)2 below" for "On or before April 1 of each year".

N.J. Admin. Code § 3:35-1.6 Examination by Commissioner

The Commissioner may at any time, by a person or persons duly designated by him or her, examine the financial records of a qualified educational institution. The costs of such examination shall be borne by the qualified educational institution so examined in accordance with the fees established at N.J.A.C. 3:1-6.6(a).

N.J. Admin. Code § 3:35-1.7 Records of registration

The Commissioner shall provide public access to the names and addresses of all qualified educational institutions registered pursuant to this subchapter.

History

Amended by 46 N.J.R. 1331(b), effective 5/5/2014.

N.J. Admin. Code § 3:35-1.8 Revocation or suspension of registration

(a) The Commissioner may revoke or suspend the registration of any qualified educational institution if, after notice and hearing pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1, the Commissioner determines that the licensee:

Has violated any provision of N.J.S.A. 17:9A-213 or any order or rule issued pursuant thereto, or has violated any other banking law of this State in connection with the exercise of its trust powers;
Has failed to pay any fee imposed by the Commissioner;
Has withheld information from the Department, or has made a material misstatement in its registration with the Department or any other submission to the Department;
Has failed to meet the minimum standards set forth in N.J.A.C. 3:35-1.3;
Has demonstrated unworthiness, incompetence, bad faith or dishonesty in the exercise of its trust powers; or
Has engaged in any other conduct determined by the Commissioner to be grounds to revoke or suspend a registration.

Chapter 36 BANKING DEVELOPMENT DISTRICTS

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:36-1.1 Purpose and scope

(a) This chapter implements N.J.S.A. 17:16Z-1 et seq. regarding the establishment of banking development districts.

(b) This chapter shall apply to all municipalities that seek to establish a banking development district and to banks that seek to locate a branch in a banking development district.

N.J. Admin. Code § 3:36-1.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Bank" means a State or Federally chartered bank, savings bank, savings and loan association, or credit union doing business in the State.

"Banking services" means deposit taking, check cashing, sale of money orders, and origination of residential or commercial mortgages, consumer loans, and commercial loans.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Complete application" means an application that has been received by the Department and contains all necessary information required for the Department to complete its review of the application, and which the Department has acknowledged, in writing, is ready for review.

"Department" means the New Jersey Department of Banking and Insurance.

"District" means a banking development district approved under this chapter.

Subchapter 2 APPLICATION TO ESTABLISH A DISTRICT

N.J. Admin. Code § 3:36-2.1 Application by a municipality in conjunction with a bank to establish a district

(a) An application by a municipality in conjunction with a bank to establish a banking development district shall contain the following items in order to be considered a complete application by the Department:

A completed current application form, including the name of the municipality, the county in which it is located, and the location of the proposed bank branch by street address and tax lot and block number;
A certified copy of the municipal resolution authorizing the application to the Department;
A certification from a duly authorized official of the municipality confirming that a copy of the application has been provided to the New Jersey Department of Community Affairs, Division of Local Government Services, and that any depository agreement reached with the co-applicant or with any other bank that will operate in the proposed district will not be reasonably expected to create a structural deficit in the municipality's budget over the term of the agreement;
The name of the bank and its primary regulator;
A map indicating the borders of the proposed district containing street names or other boundaries, if applicable;
The rationale for the proposed district in accordance with the criteria set forth in N.J.A.C. 3:36-3.1(b) and the applicants' plan for community outreach; and
Any other documentation required of a specific applicant by the Commissioner or which the applicant wishes the Department to consider.

N.J. Admin. Code § 3:36-2.2 Application solely by a municipality to establish a district

(a) An application solely by a municipality to establish a banking development district shall contain the following items before it will be considered complete by the Department:

A completed current application form, including the name of the municipality and the county in which it is located;
A certified copy of the municipal resolution authorizing the application to the Department;
A certification from a duly authorized official of the municipality confirming that a copy of the application has been provided to the New Jersey Department of Community Affairs, Division of Local Government Services and that any depository agreement reached with any bank that will operate in the proposed district will not be reasonably expected to create a structural deficit in the municipality's budget over the term of the agreement;
A map indicating the borders of the proposed district containing street names or other boundaries, if applicable;
The rationale for the proposed district in accordance with the criteria set forth in N.J.A.C. 3:36-3.1(b) and the applicant's plan for community outreach; and
Any other documentation required of a specific applicant by the Commissioner or which the applicant wishes the Department to consider.

Subchapter 3 APPROVAL OF DISTRICTS

N.J. Admin. Code § 3:36-3.1 Approval of a district by the Commissioner

(a) The Commissioner may approve a complete application if he or she determines that there is a demonstrated need for banking services within the geographic area specified in the application as the proposed district.

(b) The criteria to be considered by the Commissioner to determine a demonstrated need for banking services shall be:

The location, number, and proximity of existing locations where banking services are currently available within the proposed district;
The identification of consumer needs for banking services within the proposed district;
The economic viability and local credit needs of the community within the proposed district;
The existing commercial development within the proposed district; and
The impact additional banking services would have on potential economic development in the proposed district.

N.J. Admin. Code § 3:36-3.2 Time of decision

The Commissioner shall issue a written determination on an application for designation as a district within 60 days of receipt of a complete application. All approved districts shall be posted on the Department's web site.

Subchapter 4 REPORTING

N.J. Admin. Code § 3:36-4.1 Reports to the Department

(a) A municipality that receives approval for a district based upon an application submitted in accordance with N.J.A.C. 3:36-2.2 shall notify the Department in writing within 20 days of a bank establishing a branch in a district in the municipality and shall specify the name of the bank and the address of such a branch.

(b) The notifications set forth in (a) above shall be submitted to: New Jersey Department of Banking and Insurance, Division of Banking, Office of Depositories, P.O. Box 040, Trenton, New Jersey 08625-0040.

(c) A municipality that is required to file any certifications with the New Jersey Department of Community Affairs, Division of Local Government Services regarding a banking development district shall simultaneously provide a copy of same to the Department.

Chapter 37 SAVINGS ACCOUNT PROMOTIONS

N.J. Admin. Code § 3:37-1.1 Purpose and scope

(a) This subchapter implements P.L. 2015, c. 236, which permits financial institutions to conduct savings account promotions.

(b) This subchapter shall apply to all financial institutions that opt to conduct savings account promotions.

History

Adopted by 49 N.J.R. 3355(b), effective 10/2/2017

N.J. Admin. Code § 3:37-1.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Department" means the New Jersey Department of Banking and Insurance.

"Eligible individual" means a natural person who:

Is at least 18 years of age; and
Is an account holder who holds a qualified account with the financial institution conducting the savings account promotion.

"Financial institution" means a New Jersey chartered bank, savings bank, savings and loan association, or credit union as defined in N.J.S.A. 17:13-80.c.

"Qualified account" means a savings account, time deposit, share account, share certificate, or other savings program held at a financial institution and bearing interest at a rate comparable to the rate on other such accounts at the financial institution. "Qualified account" includes an account in which the eligible individual has an interest individually or jointly with another natural person. "Qualified account" does not include a tax deferred account, trust account, or any account where the named account holder is not a natural person.

"Savings account promotion" means a raffle conducted by a financial institution in compliance with this chapter.

History

Adopted by 49 N.J.R. 3355(b), effective 10/2/2017

N.J. Admin. Code § 3:37-1.3 Required disclosures and minimum standards

(a) A financial institution may conduct a savings account promotion provided that the sole consideration required for a chance to win a designated prize is the deposit of a minimum specified amount of money in a qualified account.

(b) A financial institution shall provide that each entry must have an equal chance of being drawn.

(d) A financial institution may not conduct a savings account promotion in a way that jeopardizes the financial institution's financial condition, unfairly discriminates, or misleads an eligible individual or the public.

(e) A financial institution conducting a savings account promotion shall:

Post the terms and conditions of the savings account promotion in any location where entries may be submitted and shall include such terms and conditions in any printed materials or electronic media advertising the savings promotion; and
Include the following terms and conditions for a savings account promotion in all raffle information:

i. No other action, purchase, or other consideration is necessary to enter the savings account promotion;

ii. Each entry has the same chance of winning the savings account promotion;

iii. The chance of winning the savings account promotion will be determined based on the number of entries received;

iv. Any limitations on the number of entries that an eligible individual may submit;

v. Any specific requirement on the length of time that the money must remain on deposit in a qualified account in order to participate in a savings promotion; and

vi. The winner is solely responsible for all applicable Federal and State taxes.

History

Adopted by 49 N.J.R. 3355(b), effective 10/2/2017

N.J. Admin. Code § 3:37-1.4 Maintenance of books and records

A financial institution that conducts a savings account promotion under this subchapter shall maintain books and records, including, but not limited to, copies of all advertisements relating to the conduct of the savings account promotion sufficient to facilitate an independent audit or an examination by the Department of the savings account promotion.

History

Adopted by 49 N.J.R. 3355(b), effective 10/2/2017

Chapter 42 PINELANDS DEVELOPMENT CREDIT BANK

Subchapter 1 GENERAL PROVISIONS

N.J. Admin. Code § 3:42-1.1 Scope

Unless otherwise provided by rule or statute, this chapter shall constitute the rules of the Pinelands Development Credit Bank governing the procedures and standards for carrying out the duties and responsibilities of the Bank pursuant to "The Pinelands Development Credit Bank Act", N.J.S.A. 13:18A-30 et seq.

N.J. Admin. Code § 3:42-1.2 Purpose

(a) The purpose of this chapter is to:

Establish an efficient and effective method for documenting the sale, transfer, conveyance, encumbrance, and use of Pinelands Development Credits which are authorized and allocated pursuant to the Pinelands Comprehensive Management Plan, N.J.A.C. 7:50-1.1 et seq.; and
Facilitate the effective operation of the Pinelands Development Credit program through the Bank's participation in the purchase and use of Pinelands Development Credits.

N.J. Admin. Code § 3:42-1.3 Applicability

The rules contained in this chapter shall apply to all sales, transfers, conveyances, encumbrances and redemptions of Pinelands Development Credits and shall be supplemental to the provisions of the Pinelands Comprehensive Management Plan, N.J.A.C. 7:50-1.1 et seq.

N.J. Admin. Code § 3:42-1.4 Construction

These rules shall be liberally construed to permit the Bank to effectuate the purposes of the law.

N.J. Admin. Code § 3:42-1.5 Severability

If any section, part, phrase, or provision of these rules or the application thereof to any person be adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the section, part, phrase, provision or application directly involved in the controversy in which such judgment shall have been rendered and it shall not affect or impair the validity of the remainder of these rules or the application thereof to other persons.

N.J. Admin. Code § 3:42-1.6 Duties and powers of the Board of Directors

The Board of Directors is the governing body of the Pinelands Development Credit Bank and bears the ultimate responsibility for implementing and enforcing the provisions of the Pinelands Development Credit Bank Act and these rules. The Board shall exercise the powers necessary to implement the objectives of the Act and these rules.

N.J. Admin. Code § 3:42-1.7 Meetings, hearings, procedures and rules of the Board of Directors

(a) The Board of Directors shall adopt its own bylaws and procedures for the conduct of its business, meetings and hearings not inconsistent with the Pinelands Development Credit Bank Act, these rules and the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. Copies of those bylaws and procedures shall be available to any person upon request.

(b) The Board shall adopt and revise, as appropriate, the form and content of the Pinelands Development Credit Certificate as provided in N.J.A.C. 3:42-3.3.

(c) The Board shall adopt and revise, as appropriate, rules pursuant to the Administrative Procedure Act to implement the legislative mandates of the Pinelands Development Credit Bank Act.

N.J. Admin. Code § 3:42-1.8 Duties and powers of the Executive Director

(a) The Executive Director shall be the chief administrative officer of the Board and, subject to the approval of his actions by the Board as provided herein, shall be responsible for the administration and enforcement of these rules. In order to effectively implement these rules, the Executive Director shall exercise the following duties and powers:

Administrative Procedures: The Executive Director shall, consistent with the express standards, purposes and intent of these rules, establish administrative procedures and forms as are necessary to the effective administration and enforcement of these rules and the procedures of the Board.
Pinelands Development Credit Certificates: The Executive Director shall, consistent with the express standards, purposes, and intent of these rules, issue Pinelands Development Credit Certificates.
Records: The Executive Director shall maintain:

i. Current and permanent records of the Bank including a registry of all Pinelands Development Credit Certificates issued, sold, conveyed, transferred, encumbered, retired and redeemed; and

ii. A current and permanent record of the Bank pertaining to Pinelands Development Credits the Bank purchases, credit guarantees extended by the Bank and authorities delegated and grants provided to counties.

Subchapter 2 INTERPRETATIONS AND DEFINITIONS

N.J. Admin. Code § 3:42-2.1 Word usage

(a) In the interpretation of these rules, the provisions of this section shall be observed and applied, except when the context clearly requires otherwise:

Words used or defined in one tense or form shall include other tenses and derivative forms.
Words in the singular shall include plural and words in the plural shall include the singular.
The masculine gender shall include the feminine and the feminine gender shall include the masculine.
The word "shall" is mandatory.
The word "may" is permissive.
In case of any difference of meaning or implication between the text of these rules and any caption, the text shall control.

N.J. Admin. Code § 3:42-2.2 Definitions

The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise:

"Bank" means the Pinelands Development Credit Bank created pursuant to N.J.S.A. 13:18A-30 et seq.

"Board" means the Board of Directors of the Pinelands Development Credit Bank.

"Certificate" means the document issued by the Executive Director pursuant to N.J.A.C. 3:42-3.1 et seq.

"Encumber" means the act of burdening a Pinelands Development Credit with a financial liability such as that created when a Pinelands Development Credit is pledged as security or collateral.

"Grantee" means the person to whom an interest in a Pinelands Development Credit is conveyed.

"Grantor" means the person who conveys an interest in a Pinelands Development Credit.

"Letter of Interpretation" means a letter issued by the Pinelands Commission, pursuant to N.J.A.C. 7:50-4.7 1 et seq., attesting to the number of Pinelands Development Credits allocated to a parcel of land.

"Marketable title" means title free and clear of objectionable liens or encumbrances, free from reasonable doubts or defects, and insurable by a reputable title insurance company authorized to do business in New Jersey.

"Person" means an individual, corporation, public agency, business trust, partnership, association, two or more persons having a joint or common interest or any other legal entity.

"Pinelands Commission" means the Commission created pursuant to Section 5 of the Pinelands Protection Act, N.J.S.A. 13:18A-1 et seq.

"Pinelands Comprehensive Management Plan" means the plan adopted by the Pinelands Commission as N.J.A.C. 7:50-1.1 et seq.

"Pinelands Development Credits" means transferable development rights which are used to increase the residential density on certain lands in municipalities designated to receive such credits pursuant to the Pinelands Comprehensive Management Plan.

"Pinelands Development Credit Bank Act". See N.J.S.A. 13:18A-30 et seq.

"Pinelands Protection Act". See N.J.S.A. 13:18A-1 et seq.

"Prime interest rate" means the base rate on corporate loans at large United States money center commercial banks. This rate is published in the Wall Street Journal under money rates.

"Redeemed" means any Pinelands Development Credit which is used to increase the residential density on a parcel of land in any municipality designated to receive such credits pursuant to the Pinelands Comprehensive Management Plan, N.J.A.C. 7:50-1.1 et seq.

"Registry" means a permanent record established and maintained by the Executive Director documenting all Pinelands Development Credit Certificates issued, sold, conveyed, transferred, encumbered, redeemed and retired.

"Retired" means any Pinelands Development Credit owned by the Bank which is permanently withdrawn from use prior to its redemption.

History

Amended by R.1990 d.119, effective 2/20/1990.
See: 21 New Jersey Register 3691(a), 22 New Jersey Register 628(b).
Added definition of "prime interest rate".

Subchapter 3 PROCEDURES GOVERNING THE SALE, CONVEYANCE, TRANSFER OR ENCUMBRANCE OF PINELANDS DEVELOPMENT CREDITS

N.J. Admin. Code § 3:42-3.1 Applicability

(a) No person shall sell, transfer, convey or encumber any Pinelands Development Credits or any interest therein without first obtaining a Pinelands Development Credit Certificate from the Bank.

(b) Within 10 business days following the sale, transfer, conveyance or encumbrance of a Pinelands Development Credit or any interest therein, the person acquiring such Pinelands Development Credit or interest therein shall notify the Executive Director of his ownership or interest in the Pinelands Development Credit and the Executive Director shall re-issue a Pinelands Development Credit Certificate pursuant to the provisions of N.J.A.C. 3:42-3.4.

(c) Within 10 business days of the redemption of any Pinelands Development Credit, the person redeeming such Pinelands Development Credit shall notify the Executive Director of said redemption pursuant to the provisions of N.J.A.C. 3:42-3.6.

N.J. Admin. Code § 3:42-3.2 Application for Pinelands Development Credit Certificate

(a) Application for a Pinelands Development Credit Certificate shall be made to the Executive Director in such form and number as he shall from time to time specify.

(b) The Executive Director may waive or modify any of the application requirements set forth in (c) below if he determines that any required information is not relevant or necessary for purposes of issuing a Pinelands Development Credit Certificate.

The applicant's name and mailing address;
The property owner's name and address, if different from the applicant's, and a signed consent to the filing of the application;
The deed to the property to which Pinelands Development Credits are allocated;
A letter of interpretation from the Pinelands Commission, pursuant to N.J.A.C. 7:50-4.7 1 et seq., attesting to the number of Pinelands Development Credits allocated to the property;
The municipal tax block and lot number and a copy of the municipal tax map sheet(s) showing the property to which Pinelands Development Credits are allocated;
A title search of the property to which Pinelands Development Credits are allocated which covers at least the 60 years preceding the date of application except for Pinelands Development Credits transferred before April 4, 1988 (the effective date of these rules), in which case sufficient evidence of marketable title as exists shall be submitted;
A certification from the property owner that he has marketable title to the property to which Pinelands Development Credits are allocated and is legally empowered to restrict the use of this property in accordance with the Pinelands Comprehensive Management Plan, N.J.A.C. 7:50-5.4 7, except for Pinelands Development Credits transferred before April 4, 1988 (the effective date of these rules);
A properly executed and recorded restriction on the deed to the property in accordance with the Pinelands Comprehensive Management Plan, N.J.A.C. 7:50-5.4 7; and
Such other information as the Executive Director may determine is necessary in order to issue a Pinelands Development Credit Certificate.

N.J. Admin. Code § 3:42-3.3 Issuance of Pinelands Development Credit Certificates

(a) The Executive Director shall review the application and shall issue a Pinelands Development Credit Certificate, in such form as shall from time to time be specified by the Board, upon determining that the standards of (b) below are met. If the Executive Director determines that the standards are not met, he shall notify the applicant in writing of the reasons which prevent the issuance of a Certificate.

(b) The Certificate shall, at a minimum, specify the following:

The owner(s) of the Pinelands Development Credits;
The number of Pinelands Development Credits owned;
The municipality, block and lot of the property to which the Pinelands Development Credits are allocated;
The date on which the Certificate is issued; and
The information to be reported to the Executive Director when the Pinelands Development Credits are sold, conveyed, transferred, encumbered or redeemed, N.J.A.C. 3:42-3.4(c).

The Pinelands Development Credit allocation set forth in the Pinelands Commission's letter of interpretation has not changed;
The property owner has marketable title and is legally empowered to restrict the use of his property in a manner consistent with the Pinelands Comprehensive Management Plan, N.J.A.C. 7:50-5.4 7;
The deed restriction limits the uses of the property to those permitted pursuant to the Pinelands Comprehensive Management Plan, N.J.A.C. 7:50-5.4 7.

i. Nothing herein shall be construed to require nor preclude the deed restriction from prohibiting or limiting uses which are otherwise permitted in N.J.A.C. 7:50-5.4 7.

ii. The restriction shall be in favor of a public agency or not for profit incorporated conservation organization and shall be specifically and expressly enforceable by the Pinelands Commission. In no case, however, shall the restrictions be in favor of the Board.

(d) In the event that the Executive Director determines that a question exists as to marketable title or the legal ability of the property owner to impose the necessary restrictions on the use of the property, the applicant may elect to conduct a more extensive search of the title or secure insurance which guarantees that the owner has an interest in the property sufficient to meet the standards set forth in (c) above. If the Executive Director then determines that the title questions are resolved, he shall issue the Certificate.

N.J. Admin. Code § 3:42-3.4 Sale, transfer, conveyance or encumbrance of Pinelands Development Credits after issuance of the Certificate

(a) Within 10 business days of the sale, transfer, conveyance or encumbrance of a Pinelands Development Credit or interest therein, the grantee shall deliver to the Executive Director the Certificate properly documented as to the specifics of the transaction as set forth in (c) below.

(b) Upon receipt of the Certificate, the Executive Director shall re-issue a Certificate, or Certificates as the case may be, in the name of the person or persons who have secured an interest in the Pinelands Development Credits.

The name(s) of the grantee(s);
The name(s) of the grantor(s);
The number of Pinelands Development Credits sold, conveyed, transferred, or encumbered;
The date of the transaction;
The interest in the Pinelands Development Credits acquired by the grantee and written evidence of the transaction; and
The consideration involved in the transaction.
In the case of a Pinelands Development Credit pledged as collateral, the name and address of any person who has pledged a Pinelands Development Credit as security on any loan or other obligation, the name and address of the lender, and the date, amount and term of the loan or obligation.

N.J. Admin. Code § 3:42-3.5 Purchases of Pinelands Development Credits in association with conservation or agricultural easements

(a) In the event that any county or agency thereof proposes to acquire a conservation or agricultural easement which restricts the use of property in a manner consistent with N.J.A.C. 7:50-5.4 7 and the Pinelands Development Credits which are allocated to the property so restricted, the Executive Director shall be authorized to issue the Pinelands Development Credit Certificate when settlement on the easement occurs.

(b) In the event the Board determines to purchase Pinelands Development Credits pursuant to N.J.A.C. 3:42-5.1 et seq., it may authorize the Executive Director to complete the purchase, including the issuance of the Pinelands Development Credit Certificate, in association with the placement of the requisite restriction on the deed to the property.

N.J. Admin. Code § 3:42-3.6 Redemption of Pinelands Development Credits

(a) When Pinelands Development Credits are redeemed in association with a development project approved by a municipal approval agency, the person redeeming the Pinelands Development Credits shall, within 10 business days thereafter, deliver to the Executive Director the Certificate properly documented as to the specifics of the redemption as set forth in (b) below.

(b) Notification to the Executive Director shall include, but is not necessarily limited to, the following:

The name of the person redeeming;
The municipality in which the Pinelands Development Credits were redeemed;
The municipal tax block and lot number of the property for which the Pinelands Development Credits were redeemed;
The number of Pinelands Development Credits redeemed; and
The date on which the municipal development approval was issued and endorsement by the responsible municipal official.

(c) The Executive Director shall notify the person redeeming and the appropriate municipal official that the Pinelands Development Credits have been redeemed and shall so indicate in the Pinelands Development Credit Registry upon his determination that:

The Pinelands Development Credits have not been previously redeemed;
The Pinelands Commission has concurred with the municipal approval; and
The number of Pinelands Development Credits redeemed were adequate to secure the increased number of residential units permitted pursuant to the Pinelands Comprehensive Management Plan, N.J.A.C. 7:50-1.1 et seq., and the applicable municipal zoning ordinance.

(d) In the event that only a portion of the Pinelands Development Credits specified in the Certificate are redeemed, the Executive Director shall re-issue a Certificate for the Pinelands Development Credits not so redeemed.

(e) A Pinelands Development Credit shall be redeemed at the time of final subdivision or site plan or, if no such approval is required, when construction permits are issued. In the event that Pinelands Development Credits are being required for a Pinelands Commission waiver pursuant to N.J.A.C. 7:50-4.6 1 through 4.70, they shall be redeemed at the same time the waiver is granted.

History

Amended by R.1993 d.151, effective 4/5/1993.
See: 25 New Jersey Register 223(b), 25 New Jersey Register 1511(a).
Revised (a) and (e).

Subchapter 4 REGISTRY OF PINELANDS DEVELOPMENT CREDITS

N.J. Admin. Code § 3:42-4.1 Registry

(a) The Executive Director shall maintain a registry of Pinelands Development Credits, the purpose of which shall be to organize information on the following:

The issuance of Pinelands Development Credit Certificates;
The sale, transfer, conveyance, or encumbrance of Pinelands Development Credits;
The use of Pinelands Development Credits as security on loans and other obligations; and
The redemption and retirement of Pinelands Development Credits.

N.J. Admin. Code § 3:42-4.2 Content of registry

(a) The registry shall at a minimum include the following information:

The name and address of every owner to whom a Pinelands Development Credit Certificate is issued pursuant to N.J.A.C. 3:42-3.3; the date of its issuance; the municipal tax lot and block identification of the parcels of land to which the Pinelands Development Credit has been allocated; the number of Pinelands Development Credits or fraction thereof allocated to each parcel; the total number of Pinelands Development Credits allocated; and the total acreage to which Pinelands Development Credits have been allocated;
The name and address of every person to whom a Pinelands Development Credit is sold, transferred, conveyed, or encumbered; the date of the conveyance; and the consideration, if any, received therefor;
The name and address of any person who has pledged a Pinelands Development Credit as security on any loan or other obligation; the name and address of the lender; and the date, amount and term of the loan or obligation;
The name and address of any person who has redeemed a Pinelands Development Credit; the location of the land to which the credit was transferred; and the date this redemption was made; and

An annual enumeration of the total number of Pinelands Development Credits purchased and transferred, listing the municipality in which the land for which each Pinelands Development Credit was issued is located, and the municipality to which the Pinelands Development Credit was transferred and redeemed.

N.J. Admin. Code § 3:42-4.3 Availability of registry

(a) The Executive Director shall, upon reasonable notice, make the registry available for public inspection at the principal offices of the Bank. It is also available on the Bank's website at http://www.nj.gov/pinelands/pdcbank/.

(b) The Executive Director shall, upon request from any person, provide copies of the registry or any portion thereof. A fee for this service shall be charged in accordance with the copy fee schedule set forth in N.J.S.A. 47:1A-2.

History

Amended by 47 N.J.R. 2491(a), effective 10/5/2015

N.J. Admin. Code § 3:42-4.4 Annual report

(a) On August 28 of each calendar year, the Board shall issue an annual report to the Governor, the Legislature and each county and municipality located in whole or in part within the Pinelands Area. Such report shall incorporate and summarize the information contained in the registry.

(b) The annual report shall also be made available to any person upon request. It is also available on the Bank's website at http://www.nj.gov/pinelands/pdcbank/.

History

Amended by 47 N.J.R. 2491(a), effective 10/5/2015

Subchapter 5 BOARD PURCHASE OF PINELANDS DEVELOPMENT CREDITS

N.J. Admin. Code § 3:42-5.1 Applicability

(a) The Board may purchase Pinelands Development Credits from any person to:

Further the objectives of the Pinelands Protection Act, N.J.S.A. 13:18A-1 et seq., and the Pinelands Comprehensive Management Plan, N.J.A.C. 7:50-1.1 et seq.; or

Alleviate a hardship.

N.J. Admin. Code § 3:42-5.2 Application to the Board

(a) An application for the Board's purchase of Pinelands Development Credits shall be made to the Executive Director in such form and number as he shall from time to time specify.

The applicant's name and mailing address;
The name of the person(s) who own(s) the Pinelands Development Credits, if different from the applicant's, and a signed consent to the filing of the application;
A duplicate of the Pinelands Development Credit Certificate or, if a Certificate has not been issued, the information required pursuant to N.J.A.C. 3:42-3.2(c) with the exception of N.J.A.C. 3:42-3.2(c)8.
The number of Pinelands Development Credits to be sold;
A statement detailing the applicant's basis for believing that the Board can make one of the findings required in N.J.A.C. 3:42-5.3(b)3 and (c) 3; and
Such other information as the Executive Director may determine is necessary in order to review and act on the application.

N.J. Admin. Code § 3:42-5.3 Standards governing the Board$DQ$s decision to purchase

(a) The Board shall, after considering the recommendation of the Executive Director, determine whether or not to authorize the purchase of all or a portion of the Pinelands Development Credits proposed for sale in the application in accordance with the criteria set forth in (b) and (c) below, as appropriate.

(b) The Board may authorize a purchase of Pinelands Development Credits to further the objectives of the Pinelands Protection Act and the Pinelands Comprehensive Management Plan if:

Adequate funds are available for the purchase; and
The expenditure of funds does not substantially impair the Board's ability to carry out its duties and responsibilities with respect to guarantees which have already been extended; and
The purchase will result in:

i. The protection of property which is of significant ecological or agricultural importance; or

ii. The protection of property which serves to complement or buffer publicly owned and managed conservation lands; or

iii. The Pinelands Development Credits which the Board purchases are likely to be resold, transferred or conveyed for redemption in a residential development project that satisfies compelling public need or that will result in the protection of other properties which satisfy (b)i or ii above; or

iv. The timing and nature of the Board's purchase will result in a significant and positive example of the Pinelands Development Credit Program at work; or

v. The proceeds from the sale being used for operating or capital expenditures on the property from which the Pinelands Development Credits are allocated in a manner consistent with the terms of the restriction on the deed to that property; or

vi. The transaction otherwise furthering the purposes of the Pinelands Protection Act and the Pinelands Comprehensive Management Plan.

Adequate funds are available for the purchase; and
The expenditure of funds does not substantially impair the Board's ability to carry out its duties and responsibilities with respect to Pinelands Development Credit guarantees which have already been extended; and
A hardship exists on the basis of one or more of the following tests:

i. The owner's investment in the land to which the Pinelands Development Credits are allocated is substantial in relation to his net worth; or

ii. The owner has sought and been denied a waiver of strict compliance from the Pinelands Commission pursuant to the Comprehensive Management Plan, N.J.A.C. 7:50-1.1 et seq.; or

iii. The owner is experiencing a unique and extraordinary financial hardship which may only be ameliorated through an expedient sale of his Pinelands Development Credits.

N.J. Admin. Code § 3:42-5.4 Notification to applicant

Upon the Board's decision to purchase or not purchase Pinelands Development Credits, the Executive Director shall notify the applicant, in writing, setting forth the basis for the Board's decision.

N.J. Admin. Code § 3:42-5.5 Completion of Board authorized purchases

(a) The Executive Director is authorized to complete any and all administrative procedures necessary to consummate the purchase of Pinelands Development Credits once approved for purchase by the Board.

(b) No Pinelands Development Credit shall be purchased by the Board after the date, if any, specified in N.J.S.A. 13:18A-48 as the last date on which the Board may purchase Pinelands Development Credits.

History

Amended by R.2008 d.348, effective 11/17/2008.
See: 40 N.J.R. 2622(a), 40 N.J.R. 6539(b).
In (b), substituted "the date, if any, specified in N.J.S.A. 13:18A-48 as the last date on which the Board may purchase Pinelands Development Credits" for "December 31, 1990".

N.J. Admin. Code § 3:42-5.6 Purchase price

(a) The purchase price for Pinelands Development Credits acquired by the Board shall be $ 74,000 for each Pinelands Development Credit or fraction of that amount which reflects that portion of a Pinelands Development Credit so acquired.

(b) The Board may increase the purchase price set forth in (a) above if it determines that:

The purchase price, as increased, does not exceed 80 percent of the market value of Pinelands Development Credits as determined by examination and analysis of Pinelands Development Credit sales data reported to the Bank pursuant to N.J.A.C. 3:42-3.4; provided, however, that the Board shall not consider any sales data which does not meet generally accepted real estate appraisal practices; and
The purchase price, as increased, will not substantially impair the private sale of Pinelands Development Credits.

History

Amended by R.1996 d.145, effective 3/18/1996.
See: 28 N.J.R. 5(a), 28 N.J.R. 1504(a).
In (a) increased the purchase price from $ 10,000.
Amended by R.2001 d.49, effective 2/5/2001.
See: 32 N.J.R. 4161(a), 33 N.J.R. 550(b).
In (a), substituted "$ 24,000" for "$ 12,600".
Amended by R.2008 d.348, effective 11/17/2008.
See: 40 N.J.R. 2622(a), 40 N.J.R. 6539(b).
In (a), substituted "$ 74,000" for "$ 24,000".

Subchapter 7 SALE, TRANSFER, EXCHANGE, CONVEYANCE OR RETIREMENT OF PINELANDS DEVELOPMENT CREDITS OWNED BY THE BANK

Part 1 SALES OF PINELANDS DEVELOPMENT CREDITS

N.J. Admin. Code § 3:42-7.1 Board decision to hold sale

(a) The Board may from time to time authorize the Executive Director to sell all or a portion of those Pinelands Development Credits owned by the Bank.

(b) The Board shall authorize such a sale and determine how many Pinelands Development Credits will be made available for sale only upon a finding that:

There is sufficient interest in the purchase of its Pinelands Development Credits to warrant a sale; and
The timing of the sale and the number of Pinelands Development Credits to be sold will not substantially impair the private sale of Pinelands Development Credits.

(c) All sales authorized by the Board will be conducted by open bidding through a public auction or by closed bidding through the receipt of sealed, written bids.

(d) When authorizing these sales, the Board shall determine a minimum acceptable bid pursuant to N.J.A.C. 3:42-7.3(b) and shall also determine which method of sale is most advantageous for the purpose of stimulating competitive bidding.

(e) The Board may establish such conditions for the bidding and sale as are necessary and desirable to advance the Pinelands Development Credit program, provided that any such conditions do not otherwise conflict with the minimum requirements set forth in this subchapter.

N.J. Admin. Code § 3:42-7.2 Notifications of upcoming sales

(a) All sales of Bank-owned Pinelands Development Credits shall be held only after due notice has been given by the Executive Director at least 10 business days prior to the date of the sale.

(b) At a minimum, the Executive Director shall:

Have notices of the sale published in at least four newspapers; and
Transmit notices to every person who has submitted to the Bank a written request to be informed of upcoming sales.

The method by which the sales shall be conducted;
The date, time and location for the auction or bid opening;
The number of Pinelands Development Credits available for sale;

The minimum acceptable bid and deposit;

The date, time and location when the sales must be completed;
A summary of the rules governing the sale and the terms and conditions of the sale; and
How an interested person can obtain a complete set of instructions for, and the terms and conditions of, the sale.

N.J. Admin. Code § 3:42-7.3 Requirements governing all bidding

(a) Bidders who are acting on behalf of another person shall supply to the Executive Director with their sealed written bid or prior to the commencement of an auction the following:

If the bidder is representing an individual, a notarized statement from the individual duly authorizing the bidder to act on his behalf; or
If the bidder is representing a corporation, public agency, business trust, partnership, association, two or more persons having a joint or common interest, or any other legal entity, a duly adopted resolution or other legal instrument authorizing the bidder to act on the entity's behalf.

(b) The minimum acceptable bid shall be $ 74,000 for each Pinelands Development Credit or fraction of that amount which reflects that portion of a Pinelands Development Credit to be sold, provided, however, that the Board may establish a higher minimum acceptable bid if it determines that, based upon recent Pinelands Development Credit sales prices, a higher amount is necessary to avoid a substantial impairment of the private sale of Pinelands Development Credits.

(c) No bid or sale shall be conditioned upon a bidder obtaining financing or any municipal, county, State or Federal permit or development approval.

(d) All bids, whether they be submitted verbally or in writing, shall be deemed to be an acceptance of all terms and conditions of the sale as specified in the written instructions.

(e) Except as provided in N.J.A.C. 3:42-7.8, successful bidders shall be required to complete the purchase within 30 days of the date of award.

History

Amended by R.2008 d.348, effective 11/17/2008.
See: 40 N.J.R. 2622(a), 40 N.J.R. 6539(b).
In (b), substituted "$ 74,000" for "$ 2,500", deleted "one-quarter of one" following "each" and inserted "or fraction of that amount which reflects that portion of a Pinelands Development Credit"; deleted former (c); and recodified former (d) through (f) as (c) through (e).

N.J. Admin. Code § 3:42-7.4 Additional requirements governing open bidding

(a) All bidders shall sign a register before the auction begins. After signing the register, no bidder shall be permitted to leave and re-enter the room except at intervals pre-determined by the Executive Director.

(b) Each time a bid is made, the bidder shall state his or her name and the amount of the bid clearly.

(d) A deposit equal to 10 percent of the highest bid shall be required at the completion of the auction.

The deposit shall be in the form of a certified check, cashier check, money order, or travelers check made payable to the State of New Jersey. No exceptions shall be made.
If the highest bidder does not have the required deposit, the Executive Director may cancel all bids for that Pinelands Development Credit or fraction thereof, or may award the bid to the second highest bidder.

(e) Successful bidders will be required to sign an agreement of sale following the auction, which specifies the conditions and terms of the sale.

N.J. Admin. Code § 3:42-7.5 Additional requirements governing sealed bids

(a) All sealed bids shall be submitted to the Executive Director in such form as he or she shall from time to time specify.

(b) Sealed bids shall specify the maximum number of Pinelands Development Credits the bidder wishes to purchase; however, awards will be made to the highest bidder for each one-quarter of a Pinelands Development Credit, or other increment if established by the Board pursuant to N.J.A.C. 3:42-7.3(c). Submission of a sealed bid shall be deemed to be a bid for each one-quarter of a Pinelands Development Credit or other increment and the Board reserves the right to award a bid for less than the maximum number of Pinelands Development Credits specified by the bidder.

(c) Sealed bids will be publicly opened, read and tabulated on the date, time and the location specified in the notice of sale.

(d) Within five business days of the bid opening, the Executive Director will notify all successful and unsuccessful bidders.

(e) A deposit equal to 10 percent of the bid shall accompany all sealed bids.

The deposit shall be in the form of a certified check, cashier check, money order, or travelers check made payable to the State of New Jersey. No exceptions shall be made.
If a bid is received without the required deposit, the bid shall be deemed to be invalid and will not receive any further consideration.
The Executive Director shall return all deposits to all unsuccessful bidders within five business days of the bid opening date.
In cases where a bidder is awarded a portion of the Pinelands Development Credits it bid on, the Executive Director shall provide the bidder an opportunity to submit, in lieu of the original deposit, a deposit equal to 10 percent of the award within five business days of the bid opening date. If no such deposit is received, the Executive Director shall accept the original deposit and apply any excess amount toward the payment due at the time of closing.

N.J. Admin. Code § 3:42-7.6 Bid awards

(a) Awards shall be made for each one-quarter of a Pinelands Development Credit, or other increment established by the Board pursuant to N.J.A.C. 3:42-7.3(c), offered for sale.

(b) The total number of Pinelands Development Credits awarded for valid bids shall equal the total number of Pinelands Development Credits offered for sale, except as provided in (e)3 below.

(c) In the case of sealed bids, successful bidders shall be determined by tabulating the bids on the basis of the highest per unit bid.

(d) Once the highest per unit bid is established, the highest bidder will be awarded the total number of Pinelands Development Credits specified in his or her bid. If there is more than one highest bidder and the total number of Pinelands Development Credits specified in those bids exceed the number available, no award shall be made and the Executive Director shall immediately arrange for another open or closed bid.

(e) In the event any Pinelands Development Credits remain, the Executive Director will offer them to the other bidders at a per unit price equal to that of the highest bid.

The Executive Director will tender this offer in writing to each bidder within five days of the bid opening.
Each bidder may supplement his or her bid in writing and enclose a certified check, cashier check, money order, or a travelers check for the balance of the deposit no later than 10 days of the bid opening.
In the event that the maximum number of Pinelands Development Credits specified in those bids exceed that available for sale, the Executive Director shall award the available Pinelands Development Credits to the bidders in descending order of their original bid. If the original bids are equivalent and the number of Pinelands Development Credits specified in those bids exceed the number available, no award shall be made.

N.J. Admin. Code § 3:42-7.7 Completion of sales

(a) Except as otherwise provided in N.J.A.C. 3:42-7.8, all sales shall be completed no earlier than 21 days and no later than 30 days following the award.

(b) Failure of the bidder to pay the balance of the purchase price as scheduled shall be considered to be a breach of contract and the deposit shall be retained by the State as liquidated damages.

(c) Payment of the balance shall be in the form of a certified or cashier check only, made payable to the State of New Jersey.

(d) Upon receipt of payment, the Executive Director shall issue a duly executed Pinelands Development Credit Certificate to the purchaser.

N.J. Admin. Code § 3:42-7.8 Deferring the date for completion of sales

(a) When authorizing a sale, the Board may also authorize the Executive Director to defer the date on which sales to the highest bidder(s) are to be completed. Such authorization shall specify the maximum period of time for such a deferral and all notices of the sale shall include such a notation.

(b) If the Board authorizes deferrals, any successful bidder may, at his or her option, enter into an agreement with the Executive Director which extends the date for completing the sale.

(c) All such agreements shall require that a payment be made for each year, or portion thereof, that the sale completion date is deferred.

The thirty-first day following bid award shall be considered the first day when calculating deferral periods.
The payment shall be equal to the sum of the prime interest rate in effect on the date of the bid award plus two percentage points times the remaining balance of the purchase price of the Pinelands Development Credits for each year that the completion date is deferred. The payment shall be pro-rated for portions of a year.
Payment for the first year, or portion thereof as specified in the agreement, shall be in the form of a certified check, cashier check, money order, or travelers check made payable to the State of New Jersey. This first payment shall be due no later than 30 days following the award.
Payments for each succeeding year, or portion thereof as specified in the agreement, shall be due no later than the anniversary date of the first payment.

(d) These payments shall be in addition to the purchase price for the Pinelands Development Credits and shall be non-refundable except as provided in (e) below.

(e) The successful bidder may at his or her option choose to complete the sale prior to the date specified in the agreement.

The bidder shall notify the Executive Director in writing of his or her intent to complete the sale and the sale shall be completed within 10 business days of the Executive Director's receipt of the notification.
The bidder shall be entitled to receive a pro-rated refund of any payment for that portion of the deferral period which he did not utilize.

N.J. Admin. Code §§ 3:42-7.9 through 3:42-7.10 Reserved

Part 2 CONVEYANCE OF BOARD OWNED PINELANDS DEVELOPMENT CREDITS AT NO COST

N.J. Admin. Code § 3:42-7.11 Board authorization to convey Pinelands Development Credits at no cost

(a) The Board may authorize the Executive Director to convey at no cost Pinelands Development Credits when it determines that:

The proposed development will serve a compelling public purpose;
The proposed development could not proceed without the conveyance of Pinelands Development Credits at no cost;
The benefit of the conveyance of Pinelands Development Credits at no cost will enure to the public and will be made to a governmental agency or incorporated, not for profit organization;
The conveyances of Pinelands Development Credits at no cost will not substantially impair the sale of Pinelands Development Credits in the private market; and
The Pinelands Development Credit being conveyed will be redeemed within one year of the Board's authorization.

(b) Such authorizations shall be made only upon an affirmative vote of two thirds of the Board's members.

N.J. Admin. Code § 3:42-7.12 Application for conveyance of Board-owned Pinelands Development Credits at no cost

(a) Application for conveyance of Board-owned Pinelands Development Credits at no cost shall be made to the Executive Director in such form and number as he or she shall from time to time specify.

(b) The Executive Director may waive or modify any of the application requirements set forth in (c) below if he or she determines that any required information is not relevant or necessary for the purposes of conveying Pinelands Development Credits at no cost.

(c) The following information shall be included in applications for conveyance of Board-owned Pinelands Development Credits at no cost:

The applicant's name and mailing address;
The municipality in which the Pinelands Development Credits are to be redeemed;
The number of Pinelands Development Credits needed;
A duly adopted resolution granting preliminary subdivision or site plan approval pursuant to the Municipal Land Use Law (N.J.S.A. 40:55D-1 et seq.);
Written affirmation of the subdivision or site plan approval from the Pinelands Commission;
The municipal tax block and lot number for which the Pinelands Development Credits will be redeemed;
A written description of the property along with any relevant plans; and
A written statement addressing the project's consistency with the standards set forth in N.J.A.C. 3:42-7.1 1.

History

Amended by R.2008 d.348, effective 11/17/2008.
See: 40 N.J.R. 2622(a), 40 N.J.R. 6539(b).
In (c)4, updated the N.J.S.A. reference.

N.J. Admin. Code § 3:42-7.13 Notification to applicant

Upon the Board's decision on an application for conveyance of Board-owned Pinelands Development Credits, the Executive Director shall notify the applicant, in writing, setting forth the basis for the Board's decision.

N.J. Admin. Code § 3:42-7.14 Completion of Board-authorized conveyances

The Executive Director is authorized to complete any and all administrative procedures to consummate the conveyance after approval by the Board provided that no conveyance shall be made until such time as the applicant is required to redeem the Pinelands Development Credits.

N.J. Admin. Code § 3:42-7.15 Voiding conveyances

(a) No Pinelands Development Credits conveyed pursuant to this part shall be:

Conveyed, sold or transferred to a person other than that who received the Board's approval;
Redeemed for use in a project other than that which received the Board's approval; and/or
Redeemed after one year following the Board's authorization.

(b) The Executive Director shall void any such conveyance of Pinelands Development Credits which is in violation of (a) above.

Subchapter 9 AMENDMENTS

N.J. Admin. Code § 3:42-9.1 Board initiated proposals

(a) The Board may, at its own initiative or upon the recommendation of the Executive Director, periodically consider revisions to these rules in this chapter.

(b) Any such revisions shall be considered pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq.

N.J. Admin. Code § 3:42-9.2 Petitions for amendment

(a) Any interested person may petition the Board for an amendment to the rules in this chapter by filing an application with the Executive Director in such form and number as he shall from time to time specify.

(b) The application shall include the following:

The petitioner's name and address;
The precise wording of any proposed amendment to the text of the rules in this chapter;
A statement of the need and justification for the proposed amendment;
A statement as to the conformity of the proposed amendment to the Pinelands Development Credit Bank Act; and
A statement of the social, economic and environmental impacts of the proposed amendment.

(c) Upon receipt of the application, the Executive Director shall process the petition in accordance with the Administrative Procedure Act and the following procedures:

The Executive Director may deny the petition if he determines that the Board is not legally empowered to adopt the proposed amendment; or
The Executive Director may refer the matter for further deliberation in which case he shall prepare a report which analyzes the proposed amendment and presents a recommendation as to whether the Board should deny the petition, authorize the filing of a pre-proposal with the Office of Administrative Law, or authorize the filing of a rule proposal consistent with the petition.

(d) Except as provided in (c)1 above, the Board shall render all final decisions with respect to petitions for amendment in accordance with the Administrative Procedure Act.

Chapter 6 GENERAL PROVISIONS

N.J. Admin. Code Tit. 3, ch. 6, subch. 4 RESERVED

Chapter 1 GENERAL PROVISIONS

N.J. Admin. Code Tit. 3, ch. 1, subchs. 4 through 5 RESERVED

Chapter 42 PINELANDS DEVELOPMENT CREDIT BANK

N.J. Admin. Code Tit. 3, ch. 42, subch. 6 RESERVED

Chapter 6 GENERAL PROVISIONS

N.J. Admin. Code Tit. 3, ch. 6, subch. 7 RESERVED

Chapter 1 GENERAL PROVISIONS

N.J. Admin. Code Tit. 3, ch. 1, subch. 8 RESERVED

N.J. Admin. Code Tit. 3, ch. 9 RESERVED

History

CHAPTER HISTORICAL NOTE:
Chapter 9, Federal Matters, was adopted and became effective prior to 9/1/1969.
Chapter 9, Federal Matters, was readopted as R.2006 d.407, effective 10/26/2006. As a part of R.2006 d.407, Subchapter 4, Mortgage Loans for Sale by Administrator of Veterans Affairs with Guarantees of Administrator, and Subchapter 5, Exclusion of F.H.A. and V.A. Loans, by Banks, from Legal Limit on Investment in Mortgages, were repealed, effective 12/4/2006. See: 38 N.J.R. 3104(a), 38 N.J.R. 5009(a).
In accordance with N.J.S.A. 52:14B-5.1b, Chapter 9, Federal Matters, was scheduled to expire on 10/26/2013. See: 43 N.J.R. 1203(a).
Chapter 9, Federal Matters, was readopted, effective 9/24/2013. See: 45 N.J.R. 2329(a).
Chapter 9, Federal Matters, was scheduled to expire on 9/24/2020. In accordance with Executive Order No. 127 (2020) and P.L. 2021, c. 103, any chapter of the New Jersey Administrative Code that would have otherwise expired during the Public Health Emergency originally declared in Executive Order No. 103 (2020) was extended through January 1, 2022. Accordingly, Chapter 9, Federal Matters, expired on 1/1/2022.

Chapter 15 RESIDENTIAL MORTGAGE LENDERS; CORRESPONDENT MORTGAGE LENDERS; MORTGAGE BROKERS; QUALIFIED INDIVIDUAL LICENSEES; MORTGAGE LOAN ORIGINATORS

N.J. Admin. Code Tit. 3, ch. 15, subch. 11 RESERVED

Chapter 6 GENERAL PROVISIONS

N.J. Admin. Code Tit. 3, ch. 6, subch. 13 RESERVED

N.J. Admin. Code Tit. 3, ch. 20 RESERVED

History

CHAPTER HISTORICAL NOTE:
Chapter 20, Retail Installment Sales Act of 1960 Regulations, was adopted and became effective prior to 9/1/1969. Chapter 20, Retail Installment Sales Act of 1960 Regulations, was readopted as R.2006 d.410, effective 10/26/2006. See: 38 N.J.R. 3106(a), 38 N.J.R. 5010(b).
In accordance with N.J.S.A. 52:14B-5.1b, Chapter 20, Retail Installment Sales Act of 1960 Regulations, expired on 10/26/2013. See: 43 N.J.R. 1203(a).

N.J. Admin. Code Tit. 3, ch. 28 RESERVED

History

CHAPTER HISTORICAL NOTE:
Chapter 28, Bookkeeping Methods and Accounting Practices, became eff. 8/26/1971 as R.1971 d.147. See: 3 New Jersey Register 99(b), 3 New Jersey Register 175(c). The chapter was amended by R.1977 d.248, effective 7/17/1977. See: 9 New Jersey Register 252(a), 9 New Jersey Register 355(c). The chapter was further amended by R.1982 d.306, effective 9/7/1982. See: 14 New Jersey Register 678(a), 14 New Jersey Register 989(a). Further amendments were made to Chapter 28 by R.1984 d.576, effective 12/17/1984. See: 16 New Jersey Register 2713(a), 16 New Jersey Register 3428(a). Pursuant to Executive Order No. 66(1978). Chapter 28 was readopted as R.1990 d.18, effective 12/12/1989. See: 21 New Jersey Register 3336(a), 22 New Jersey Register 1264(a). Chapter 28, Bookkeeping Methods and Accounting Practices, expired on 12/12/1994.

N.J. Admin. Code Tit. 3, ch. 31 RESERVED

History

CHAPTER HISTORICAL NOTE:
Chapter 31, formerly Other Loans, was adopted pursuant to N.J.S.A. 17:12B-197, and was filed and became effective prior to 9/1/1969. The chapter comprised Subchapter 1, Account Loans, and Subchapter 2, Repair and Improvement Loans (Section 157). Subchapter 2 was amended by R.1973 d.124, effective 5/7/1973, and R.1980 d.18, effective 1/14/1980. See: 5 New Jersey Register 103(a), 5 New Jersey Register 183(b); 12 New Jersey Register 63(b).
Chapter 31 was repealed by R.1993 d.517, effective 11/1/1993. See: 25 New Jersey Register 3587(a), 25 New Jersey Register 4900(b).

N.J. Admin. Code Tit. 3, ch. 38 RESERVED

History

CHAPTER HISTORICAL NOTE:
Chapter 38, Mortgage Bankers and Mortgage Brokers, was adopted as R.1981 d.260, effective 7/9/1981. See: 13 New Jersey Register 256(c), 13 New Jersey Register 384(b). Subchapter 1, License Fees, was renamed General Provisions and amended by Emergency Rule R.1982 d.165, effective 5/10/1982 (to expire July 9, 1982). See: 14 New Jersey Register 571(a). The concurrent proposal of R.1982 d.165 was adopted by R.1982 d.302, with changes effective 9/7/1982. See: 14 New Jersey Register 977(a). Subchapter 2, Books and Records; Subchapter 3, Examinations; Subchapter 4, Fees and Charges; Subchapter 5, Obligation of Licensees; and Subchapter 6, Appeal Procedure, were adopted as R.1982 d.303, effective 9/7/1982. See: 14 New Jersey Register 493(a), 14 New Jersey Register 977(b). Pursuant to Executive Order No. 66(1978), Chapter 38, Mortgage Bankers and Mortgage Brokers, expired on 9/7/1987.
Chapter 38, Mortgage Bankers and Mortgage Brokers was adopted as R.1987 d.396, effective 10/5/1987. See: 19 New Jersey Register 1261(a), 19 New Jersey Register 1791(a). Subchapter 5, Obligation of Licensees, was repealed by R.1989 d.191, effective 4/17/1989 (operative July 16, 1989). See: 20 New Jersey Register 1021(b), 21 New Jersey Register 981(c). Subchapter 5, Persons Licensed, was adopted as R.1992 d.226, effective 6/1/1992 (Section 5.3 operative January 1, 1993). See: 23 New Jersey Register 3406(b), 23 New Jersey Register 3686(c), 24 New Jersey Register 2048(b). See, also, Mortgage Bankers Ass'n of New Jersey v. New Jersey Real Estate Comm'n, 102 N.J. 176 (1986), on remand--OAL Docket No. BRE-228-87.
Pursuant to Executive Order No. 66(1978), Chapter 38 was readopted as R.1992 d.387, effective 9/11/1992. See: 24 New Jersey Register 2653(a), 24 New Jersey Register 3514(a). Petition for Rulemaking: Reasonable access to real estate offices. See: 28 New Jersey Register 1076(a).
Chapter 38, Mortgage Bankers and Mortgage Brokers, was repealed by R.1997 d.257, effective 6/16/1997. See: 29 New Jersey Register 1489(a), 29 New Jersey Register 2641(a).

N.J. Admin. Code Tit. 3, ch. 39 RESERVED

N.J. Admin. Code Tit. 3, ch. 40 RESERVED

History

CHAPTER HISTORICAL NOTE:
Chapter 40, Procedural Rules, was adopted as R.1975 d.184, effective 6/25/1975. See: 7 New Jersey Register 192(b), 7 New Jersey Register 293(b). Chapter 40 was recodified as 13:44I by R.1995 d.581, effective 11/6/1995. See: 27 New Jersey Register 3122(a), 27 New Jersey Register 4437(a).

N.J. Admin. Code Tit. 3, ch. 41 RESERVED

History

CHAPTER HISTORICAL NOTE:
Chapter 41, Cemeteries, became effective 10/16/1980 as R.1980 d.449. See: 12 New Jersey Register 380(a), 12 New Jersey Register 628(a). A readoption became effective 10/16/1985 as R.1985 d.573. See: 17 New Jersey Register 1704(a), 17 New Jersey Register 2749(a). Pursuant to Executive Order No. 66(1978), Chapter 41, Cemeteries, was readopted as R.1990 d.537, effective 10/11/1990. See: 22 New Jersey Register 2627(a), 22 New Jersey Register 3363(a). Subchapter 11, Location of Interment Spaces, was adopted as new rules by R.1993 d.632, effective 12/6/1993. See: 25 New Jersey Register 623(a), 25 New Jersey Register 5462(b). Subchapter 13, Applications, was recodified from N.J.A.C. 3:40-6 and amended by R.1994 d.579, effective 11/21/1994. See: 26 New Jersey Register 3785(a), 26 New Jersey Register 4597(a). Pursuant to Executive Order No. 66(1978), Chapter 41, Cemeteries, expired on 10/11/1995. Chapter 41, Cemeteries, was adopted as new rules and recodified as 13:44J and Subchapter 10, Interpretation and Construction, was repealed by R.1995 d.581, effective 11/6/1995. See: 27 New Jersey Register 3122(a), 27 New Jersey Register 4437(a).

Chapter 1 GENERAL PROVISIONS

N.J. Admin. Code Tit. 3, ch. 1, app A

The following statements are presented as model forms only: the language is not mandatory. The language used must accurately reflect the intent of the Act and provide the information required by N.J.A.C. 3:1-12.4.

Joint Accounts

This is a joint account. Ownership of this account cannot be changed by will.

Each party to this account has a present right to payment from this account. Each party owns his/her net contribution to the account. In the absence of proof of net contribution, and unless the parties have specifically otherwise agreed, each party will own an equal share of this account. The financial institution may make payment from this account, including payment of the entire account balance, (i) pursuant to any statutory or common law right of set off, levy, attachment or other valid legal process or court order, relating to the interest of any one or more of the parties; and (ii) on request to a trustee in bankruptcy, receiver in any state or Federal insolvency proceeding, or other duly authorized insolvency representative of any one or more of the parties. The financial institution is not required to determine net contributions.

Upon the death of a party to this account:

(a) Where there is only one surviving party, the entire account will belong to the survivor;

(b) Where there are two or more surviving parties each party will continue to own his/her proportionate share. The portion of the account owned by the deceased party will be shared equally by the survivors.

P.O.D. Accounts

This account is a P.O.D. account. Ownership of this account cannot be changed by will.

This account belongs to the party/parties to this account during their lifetime and belongs to the payee/payees upon the death of all parties. The payee/payees have no present right of withdrawal:

(a) Where there are two or more parties, each party has right to payment from the account. Each party owns his/her net contribution. In the absence of proof of net contribution, and unless the parties have specifically otherwise agreed, each party will own an equal share of the account during their lifetimes. Upon the death of a party, the surviving party/parties will continue to own his/her proportionate share of the account. The share owned by the deceased party will be shared equally by the surviving party/parties. Upon the death of the sole surviving party, the account will belong to the P.O.D. payee/payees;

(b) Where there are two or more P.O.D. payee/payees, the account will belong to the payee/payees who survive all parties. Unless otherwise specifically stated in the account by the party/parties, each surviving P.O.D. payee will own an equal share of the account. Unless specifically stated in the account by the party/parties, upon the death of a surviving P.O.D. payee, the remaining P.O.D. payee/payees will not own any portion of the deceased payee's share of the account.

(c) The financial institution may make payment from this account, including payment of the entire account balance, (i) pursuant to any statutory or common law right of set off, levy, attachment or other valid legal process or court order, relating to the interest of any one or more of the parties; and (ii) on request to a trustee in bankruptcy, receiver in any state or Federal insolvency proceeding, or other duly authorized insolvency representative of any one or more of the parties. The financial institution is not required to determine net contributions.

Trust Accounts

This is a trust account. Ownership of this account cannot be changed by will.

This account belongs to the trustee/trustees during their lifetime of the trustee/trustees and belongs to the beneficiary/beneficiaries upon death of all trustees.

(a) Where there are two or more trustees, each trustee has a right to payment from the account. Each trustee owns his/her net contribution. In the absence of proof of net contribution and unless the trustees have specifically otherwise agreed, each trustee will own an equal share of the account during his/her lifetime. Upon the death of a trustee, the surviving trustee/trustees will continue to own his/her proportionate share of the account. The share owned by the deceased trustee will be shared equally by the surviving trustee/trustees. Upon the death of the sole surviving trustee, the account will belong to the beneficiary/beneficiaries;

(b) Where there are two or more beneficiaries, the account belongs to the beneficiary/beneficiaries who survive all the trustees. Unless otherwise specifically stated in the account by the trustee/trustees, each surviving beneficiary will own an equal share of the account. Unless specifically stated in the account by the trustee/trustees, upon the death of a surviving beneficiary, the remaining beneficiary/beneficiaries will not own any portion of the deceased beneficiary's share of the account.

(c) The financial institution may make payment from this account, including payment of the entire account balance, (i) pursuant to any statutory or common law right of set off, levy, attachment or other valid legal process or court order, relating to the interest of any one or more of the parties; and (ii) on request to a trustee in bankruptcy, receiver in any state or Federal insolvency proceeding, or other duly authorized insolvency representative of any one or more of the parties. The Financial institution is not required to determine net contributions.

History

Amended by R.1996 d.241, effective 5/20/1996.
See: 28 New Jersey Register 1440(a), 28 New Jersey Register 2543(a).
Administrative correction.
See: 31 New Jersey Register 1311(a).