ASSEMBLY, No. 2836

STATE OF NEW JERSEY

214th LEGISLATURE

 

INTRODUCED JUNE 10, 2010

 


 

Sponsored by:

Assemblyman  PATRICK J. DIEGNAN, JR.

District 18 (Middlesex)

Assemblyman  CRAIG J. COUGHLIN

District 19 (Middlesex)

 

 

 

 

SYNOPSIS

     The “Residential Mortgage Satisfaction Act.”

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act concerning satisfaction of residential mortgages and amending and supplementing P.L.1999, c.40.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    Section 1 of P.L.1999, c.40 (C.46:18-11.5) is amended to read as follows:

     1.    As used in this act:

     “Good faith” means honesty in fact and the observance of reasonable commercial standards of fair dealing.

     "Mortgage" means a residential mortgage, security interest or the like, in which the security is a residential property such as a house, real property or condominium, which is occupied, or is to be occupied, by the [debtor] mortgagor, who is a natural person, or a member of the [debtor's] mortgagor’s immediate family, as that person's residence. The provisions of sections 2 and 3 of P.L.1999, c.40 (C.46:18-11.6 and C.46:18-11.7) and sections 5 through 8 of P.L.     , c.     (C.     ) (pending before the Legislature as this bill) shall apply to all residential mortgages wherever made, which have as their security a residence in the State of New Jersey, provided that the real property which is the subject of the mortgage shall not have more than four dwelling units, one of which shall be, or is planned to be, occupied by the [debtor] mortgagor or a member of the [debtor's] mortgagor’s immediate family as the [debtor's] mortgagor’s or family member's residence at the time the loan is originated.

     “Mortgage holder” means a person that holds or is the beneficiary of a mortgage or that is authorized to receive payments on behalf of a person that holds a mortgage.  

     “Mortgagor” means a borrower obligated to repay a loan secured by a mortgage.

     “Pay-off amount” means all amounts necessary to satisfy a mortgage, or, if the pay-off letter so provides, the amounts necessary to release a portion of the property from the mortgage.

     "Pay-off letter" means a written document prepared by the mortgage holder or servicer of the mortgage being paid, which is dated not more than 60 days prior to the date the mortgage is paid, and which contains a [statement of all the sums due to satisfy the mortgage debt] pay-off amount, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.

(cf: P.L.1999, c.40, s.1)

     2.    Section 2 of P.L.1999, c.40 (C.46:18-11.6) is amended to read as follows:

     2.    a. A person which is entitled to receive payment of a mortgage duly recorded or registered in this State pursuant to a written agreement, whether or not recorded, entered into with the [holder or owner of the] mortgage holder may execute a discharge, satisfaction-piece, release, subordination or postponement on behalf of the mortgage holder [or owner thereof], which instrument shall be accepted for recording by the county clerk or register of deeds and mortgages, so long as:

     (1)   it meets the requirements of [section 2 of P.L.1991, c.308 (C.46:15-1.1)] R.S.46:15-1.1; and

     (2)   it contains the following wording in the body thereof: "_____________ is authorized to execute this instrument pursuant to the terms of a written agreement dated ______, between _______________, as [owner or holder of the] mortgage holder, and __________________, as servicer thereof."

     b.    A person which is the [owner or] mortgage holder of a mortgage duly recorded or registered in this State for which a prior assignment thereof is unrecorded, may execute a discharge, satisfaction-piece, release, subordination or postponement thereof, which instrument shall be accepted for recording by the county clerk or register of deeds and mortgages, so long as:

     (1)   it meets the requirements of [section 2 of P.L.1991, c.308 (C.46:15-1.1)] R.S.46:15-1.1; and

     (2)   it contains wording in the body of the instrument setting forth the particulars concerning all assignments of the mortgage, whether or not recorded.

     c.     Upon payment of the appropriate fees therefor, the county clerk or register of deeds and mortgages shall cause a marginal notation to be made upon the record of a mortgage which is specifically described in an instrument submitted in accordance with subsection a. or b. of this section.

(cf: P.L.1999, c.40, s.2)

 

     3.    Section 3 of P.L.1999, c.40 (C.46:18-11.7) is amended to read as follows:

     3.    a. An attorney-at-law of this State or a person duly licensed as an insurance producer pursuant to the ["New Jersey  Insurance Producer  Licensing Act,"  P.L.1987, c.293  (C.17:22A-1 et seq.)] “New Jersey Insurance Producer Licensing Act of 2001,” P.L.2001 c.210 (C.17:22A-26 et seq.), in the line of title insurance who has caused payment in full to be made of a mortgage duly recorded or registered in this State, which mortgage has not been timely  canceled  in accordance with section 1 of P.L.1975, c.137 (C.46:18-11.2), may submit for recording a discharge or satisfaction-piece, executed as agent or attorney-in-fact for [the owner or holder of] the mortgage holder, by virtue of this section, provided the discharge or satisfaction-piece is accompanied by an affidavit setting forth the circumstances of payment, which discharge or satisfaction-piece and affidavit shall be accepted for recording by the county clerk or register of deeds and mortgages, so long as the affidavit is substantially in the form set forth below:

 

AFFIDAVIT OF PAYMENT TO DISCHARGE MORTGAGE

PURSUANT TO SECTION 3 OF P.L.1999, c.40

(C.46:18-11.7)

 

State of New Jersey

County of ________,  ss. :

 

The undersigned, being duly sworn upon the undersigned's oath, avers as follows:

 

     1.    I am: (a) an attorney-at-law duly admitted to practice before the Courts of this State; or (b) duly licensed as an insurance producer in the line of title insurance.

 

     2.    On ______________, ________, I caused to be sent to ______________________, located at _______________________(the address designated for receipt of payment in the pay-off letter, or if no address is designated, the address given on the letterhead of the pay-off letter), the sum of $________, in full payment of a certain mortgage dated _______, _____, in the face amount of $ ___________, between _______________ (mortgagor) and __________________ (mortgagee), which mortgage was recorded on ________, ______ in the Office of the County Clerk/Register of Deeds of the County of ______________ in Mortgage Book  _______, page ______ (and which mortgage was subsequently assigned to __________ by assignment of mortgage dated _________, _________, in Assignment of Mortgage Book ____, page______).

 

     3.    Said payment was made by check or electronic wire transfer, in accordance with a pay-off letter received from _____________, dated ______, _____; and I have received advice that (a) the check has been negotiated and canceled on ______, ______; or (b) the wire transfer was received and credited to the recipient's account on ________, ____.

 

     4.    On ______, ____, at least 30 days' notice having elapsed since the date the payment was received, I caused a notice to be sent to ____________, located at ______________(the address designated for receipt of payment in the pay-off letter, or if no address is designated, the address given on the letter head of the pay-off letter), by registered or certified mail, return receipt requested, pursuant to section 2 of P.L.1975, c.137 (C.46:18-11.3).

 

     5.    On _______, _____, at least 30 days having elapsed since the date the notice as set forth in paragraph 4 of this affidavit was received, I caused a notice to be sent to ______________, located at ______________(the address designated for receipt of payment in the pay-off letter, or if no address is designated, the address given on the letterhead of the pay-off letter), by registered or certified mail, return receipt requested, of my intention to cause the mortgage to be discharged by  affidavit pursuant  to section 3 of  P.L.1999, c.40 (C.46:18-11.7), if the mortgage remains uncancelled 15 days after the notice is received.

 

     6.    At least 15 days have now elapsed since the notice described in paragraph 5 of this affidavit was received.  To the best of my knowledge and belief, no letter or other written communication has been received from _______________, to the effect that it denies or disputes that the mortgage has been paid in full and ought to be discharged of record at this time.

 

     7.    Wherefore, the undersigned directs the county clerk or register of deeds of the County of ____________ to cause to be recorded the discharge or satisfaction-piece accompanying this affidavit, and further directs the county clerk or register of deeds to cause a marginal notation of discharge to be made upon the record of the mortgage described in paragraph 2 of this affidavit.

 

__________________________

Sworn and subscribed before me

this ______ day of _______, ____.

     b.    Upon payment of the appropriate fees therefor, the county clerk or register of deeds and mortgages shall cause the marginal notation "Discharge  recorded in Book ______, Page _____" to be made upon the record of any mortgage which is specifically described in the affidavit.

(cf: P.L.1999, c.40, s.3)

 

     4.    (New section) This act shall be known and may be cited as the “Residential Mortgage Satisfaction Act.”

 

     5.    (New section)  a. A mortgagor, or an agent authorized by a mortgagor to request a pay-off letter, may give to a mortgage holder a notice to request a pay-off letter for a specified pay-off date. The notice shall contain:

     (1)   the mortgagor’s name;

     (2)   if given by a person other than a mortgagor, the name of the person giving notice and a statement that the person is an authorized agent of the mortgagor;

     (3)   a direction as to whether the pay-off letter is to be sent to the mortgagor or to that person’s authorized agent;

     (4)   the address to which the mortgage holder shall send the pay-off letter; and

     (5)   sufficient information to enable the mortgage holder to identify the mortgage and the real property encumbered by it.

     b.    An attorney-at-law of this State or a person duly licensed as an insurance producer pursuant to the “New Jersey Insurance Producer Licensing Act of 2001,” P.L.2001 c.210 (C.17:22A-26 et seq.) in the line of title insurance, may include, with a notice to request a pay-off letter, sent by registered or certified mail, return receipt requested, a notice of intent to submit for recording an affidavit of payment to discharge mortgage pursuant to section 8 of this act.

 

     6.    (New section) a. Within seven days after receiving a notice to request a pay-off letter that complies with section 5 of this act, the mortgage holder shall issue a pay-off letter without charge and send it to the mortgagor, except that if the notice to request a pay-off letter directs the mortgage holder to send the pay-off letter to a person identified as an authorized agent of the mortgagor, the mortgage holder shall send the pay-off letter to the agent.

     b.    Unless the mortgage terms provide otherwise, a mortgage holder shall not be required to send a pay-off letter by means other than first class mail. If the mortgage holder agrees to send a pay-off letter by another means, it may charge a reasonable fee for the actual cost of complying with the requested manner of delivery. 

     c.     If the person to whom the notice to request a pay-off letter is given once held an interest in the mortgage but has since transferred that interest and is no longer the mortgage holder, the person shall not be obligated to send a pay-off letter but, within seven days of receipt of a notice to request a pay-off letter, shall send written notice of the transfer to the person requesting the pay-off letter, which notice shall contain the name and address of the transferee.

     d.    If a mortgage holder to whom notice to request a pay-off letter has been given fails to send a timely pay-off letter pursuant to subsection a. of this section, or a person who has an obligation to give notice of a transfer of interest fails to give notice pursuant to subsection c. of this section, the mortgage holder or person shall be liable to the mortgagor for any actual damages caused by the failure, or a penalty of $500, whichever is greater, and reasonable attorney’s fees and costs of suit, provided, however, that a mortgage holder or person shall not be liable under this section if the mortgage holder or person:

     (1)   established reasonable procedures to fulfill its obligations under this section;

     (2)   complied with those procedures in good faith; and

     (3)   failed to fulfill an obligation solely due to circumstances beyond its control.

    

     7.    (New section)  a. Except as provided in subsection b. of this section, if a mortgage holder determines that the pay-off amount it provided in a pay-off letter was understated, the mortgage holder may send a corrected pay-off letter in the same manner that the original pay-off letter was sent. If the mortgagor or the mortgagor’s authorized agent receives and has a reasonable opportunity to act upon a corrected pay-off letter before making payment of the pay-off amount, the corrected pay-off letter shall supersede an earlier pay-off letter and the pay-off amount in the corrected pay-off letter shall be deemed to be the amount necessary to satisfy the mortgage.

     b.    A mortgage holder that sends a pay-off letter containing an understated pay-off amount shall not deny the accuracy of the pay-off amount as against any person that reasonably and detrimentally relies upon the understated pay-off amount.

      

8.      (New section)  a. An attorney-at-law of this State or a person duly licensed as an insurance producer pursuant to the “New Jersey Insurance Producer Licensing Act of 2001,” P.L.2001 c.210 (C.17:22A-26 et seq.), in the line of title insurance who has submitted to a mortgage holder along with a request for a pay-off letter, a notice of intent to submit an affidavit of payment to discharge mortgage, and who has caused payment in full to be made of a mortgage duly recorded or registered in this State in accordance with the terms of the pay-off letter, may submit for recording a discharge or satisfaction-piece, executed as agent or attorney-in-fact for the mortgage holder, by virtue of this section, provided the discharge or satisfaction piece is accompanied by an affidavit setting forth the circumstances of payment, which discharge or satisfaction piece and affidavit shall be accepted for recording by the county clerk or register of deeds and mortgages, so long as the affidavit is substantially in the form set forth below:


AFFIDAVIT OF PAYMENT TO DISCHARGE MORTGAGE PURSUANT TO SECTION    OF P.L.    , c.     (C.     ) (pending before the Legislature as this bill)

 

State of New Jersey

County of _________, ss.;

 

The undersigned, being duly sworn upon the undersigned’s oath, avers as follows:

 

      1.   I am: (a) an attorney-at-law duly admitted to practice before the Courts of this State; or (b) duly licensed as an insurance producer in the line of title insurance.

 

      2.   With respect to a certain mortgage dated_______ in the face amount of $_________, between _____(mortgagor) and ________(mortgagee), which mortgage was recorded on ____________,___________, in the Office of the County  Clerk/Register of Deeds, of the County of ____________in Mortgage Book____________, page_____(and which mortgage was subsequently assigned to _________________by assignment of mortgage dated _____________,________, in assignment of Mortgage Book_______________, page________), on ________,_______, I caused to be sent to ___________________, located at ___________________, by registered or certified mail, return receipt requested, a request for a pay-off letter and a notice of intent to submit an affidavit of payment to discharge mortgage.

 

      3.   On_________, ______, I caused to be sent to ___________________, located at ___________________, (the address designated for receipt of payment in the pay-off letter, or if no address is designated, the address given on the letterhead of the pay-off letter), the sum of $______, in full payment of the mortgage described in paragraph 2 of this affidavit.

 

      4.   Said payment was made by check or electronic wire transfer, in accordance with a pay-off letter received from ____________, dated __________, __________; and I have received advice that (a) the check has been negotiated and canceled on ___________,__________; or (b) the wire transfer was received and credited to the recipient’s account on ____________, __________.

 

      5.   Wherefore, the undersigned directs the county clerk or register of deeds of the County of __________ to cause to be recorded the discharge or satisfaction-piece accompanying this affidavit, and further directs the county clerk or register of deeds to cause a marginal notation of discharge to be made upon the record of the mortgage described in paragraph 2 of this affidavit.

 

______________________

 

Sworn and subscribed before me

This _________day of _________,__________.

      b.   Upon payment of the appropriate fees therefor, the county clerk or register of deeds and mortgages shall cause the marginal notation "Discharge recorded in Book ______, Page _____" to be made upon the record of any mortgage which is specifically described in the affidavit.

 

     9.    This act shall take effect on the 90th day following enactment.

 

 

STATEMENT

 

     This bill, entitled the “Residential Mortgage Satisfaction Act,” places certain requirements on mortgage holders to issue pay-off letters to facilitate the payment of residential property mortgages and provides an additional process to discharge them of record.

     The bill specifies the contents of a notice of a request by a mortgagor or the mortgagor’s authorized agent to obtain a mortgage pay-off letter and requires the mortgage holder to respond to the notice by providing a pay-off letter at no charge within seven days after receiving the notice.

     The bill also provides that if the person to whom the notice to request a pay-off letter is given once held an interest in the mortgage but has since transferred that interest and is no longer the mortgage holder, the person shall not be obligated to send a pay-off letter but, within seven days of receipt of a notice to request a pay-off letter, shall send written notice of the transfer to the person requesting the pay-off letter.

     The bill also provides that if a mortgage holder to whom notice to request a pay-off letter has been given fails to send a timely pay-off letter, or if a person who has an obligation to give notice of a transfer of mortgage interest fails to timely give the required notice, the mortgage holder or person shall be liable to the mortgagor for any actual damages caused by the failure, or a penalty of $500, whichever is greater, and reasonable attorney’s fees and costs of suit, provided, however, that a mortgage holder or person shall not be liable if the mortgage holder or person: (1) established reasonable procedures to fulfill its obligations; (2) complied with those procedures in good faith; and (3) failed to fulfill an obligation solely due to circumstances beyond its control.

     In addition, the bill provides what is commonly known as a “one-touch” method of discharging a mortgage, as a more efficient alternative to the current method of discharging a mortgage that is being prepaid. Currently, in situations in which a mortgagor pays all amounts due on a mortgage in accordance with a pay-off letter issued by the mortgage holder, the mortgagor must wait for the mortgage holder to provide an executed satisfaction of mortgage document, before recording a satisfaction of mortgage to discharge the mortgage of record. Under the one-touch method provided by this bill, an attorney-at-law of this State, or a person duly licensed as an insurance producer pursuant to the “New Jersey Insurance Producer Licensing Act of 2001,” P.L.2001 c.210 (C.17:22A-26 et seq.) in the line of title insurance (hereinafter referred to as “title agent”), may include, with a notice to request a pay-off letter from a mortgage holder, sent by registered or certified mail, return receipt requested, a notice of intent to submit for recording an affidavit of payment to discharge a mortgage. Further, the bill allows the attorney or title agent, without any further action by the mortgage holder, to discharge the mortgage of record by recording the affidavit, provided it is substantially in the form set forth in the bill, along with a satisfaction of mortgage. The affidavit form set forth in the bill requires a statement that the attorney or title agent made full payment of the pay-off amount due on the mortgage in accordance with the pay-off letter provided by the mortgage holder, and that confirmation of payment was received.  Thus, in a typical title or mortgage closing, during which an existing mortgage is being prepaid, the attorney or title agent handling the closing on behalf of the mortgagor, may utilize the one-touch method at the closing to pay off the existing mortgage and discharge it of record.

     The bill also makes certain technical changes to ensure consistent use of terminology in the statutes that govern mortgage pay-off letters and mortgage satisfactions.