SENATE, No. 161

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Senator BRYANT

An Act providing for mortgage loan guarantees for certain members of various State-administered retirement systems and supplementing N.J.S.18A:66-1 et seq., P.L.1954, c.84 (C.43:15A-1 et seq.), P.L.1944, c.255 (C.43:16A-1 et seq.), P.L.1965, c.89 (C.53:5A-1 et seq.) and P.L.1983, c.530 (C.55:14K-1 et seq.).

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

    1. As used in this act:

    "agency" means the New Jersey Housing and Mortgage Finance Agency established under section 4 of P.L.1983, c.530 (C.55:14K-4);

    "institutional lender" means any bank or trust company, savings bank, national banking association, savings and loan association, or building and loan association maintaining an office in this State, or any insurance company or any mortgage banking firm or mortgage banking corporation authorized to transact business in this State;

    "mortgage loan" means any indebtedness secured by a mortgage on a residential property, which mortgage shall constitute a first lien on the property; and

    "residential property" means any real property including land or, in the case of condominiums, an interest in a lot of land, which real property shall consist of a single one or two family dwelling, or unimproved real property if the proceeds of the mortgage loan shall be used exclusively for the purposes of erecting such a single one or two family dwelling thereon.

    2. The New Jersey Housing and Mortgage Finance Agency is authorized and directed to contract with institutional lenders on behalf of a member of the Teachers' Pension and Annuity Fund, established pursuant to N.J.S.18A:66-1 et seq., the Public Employees' Retirement System, established pursuant to P.L.1954, c.84 (C.43:15A-1 et seq.), the Police and Firemen's Retirement System, established pursuant to P.L.1944, c.255 (C.43:16A-1 et seq.), or the State Police Retirement System, established pursuant to P.L.1965, c.89 (C.53:5A-1 et seq.), to guarantee payment of 20% of the initial principal balance of the member's residential property mortgage loan, less the amount of the initial principal balance which has been paid off, if the member defaults. Every mortgage loan guarantee shall be secured by a second lien upon the residential property with respect to which the loan is made and such other collateral as the agency may consider necessary to secure the interests of the Teachers' Pension and Annuity Fund, the Public Employees' Retirement System, the Police and Firemen's Retirement System and the State Police Retirement System in accordance with the provisions of this act.

    3. Notwithstanding any law, rule or regulation to the contrary, a mortgage loan guarantee shall be used for the purpose of enabling a member of the Teachers' Pension and Annuity Fund, the Public Employees' Retirement System, the Police and Firemen's Retirement System or the State Police Retirement System who has at least one year of creditable service to acquire or construct for the member's own occupation a residential property as a principal residence located within this State without making a down payment for the acquisition or construction of the residential property. No member shall be eligible for more than one mortgage loan guarantee at any time and no member shall be eligible to receive a guarantee on a second mortgage loan. Preference shall be given in making loan guarantees to members who are acquiring or constructing their first principal place of residence. Any member receiving a mortgage loan guarantee pursuant to the provisions of this act shall, within 180 days of the date on which the guarantee was made, occupy the residence as the member's principal dwelling place.

    4. The mortgage loan guarantee shall terminate upon payment by the member of 20% of the initial principal balance of the mortgage loan. The mortgage loan guarantee shall not terminate prior to payment of 20% of the initial principal balance if the borrower ceases to be a member of the retirement system.

    5. The agency shall establish:

    a. procedures for the submission of requests for mortgage loan guarantees;

    b. standards and requirements governing the issuance of guarantees; and

    c. fees to be charged to defray administrative expenses and other costs and the manner of payment of those fees, provided, however, that such fees shall not be more than 30% of premiums for private mortgage loan guarantee insurance for a comparable risk.

    6. The Executive Director of the New Jersey Housing and Mortgage Finance Agency is authorized to promulgate, in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations to effectuate the provisions of this act.

    7. In addition to any loan for which a member may be eligible pursuant to the provisions of N.J.S.18A:66-35 and notwithstanding the provisions of that or any other law to the contrary, the Director of the Division of Investment in the Department of the Treasury is authorized and directed to fund, on behalf of and in the name of the Teachers' Pension and Annuity Fund, payments in fulfillment of the terms of mortgage loan guarantees entered into by the New Jersey Housing and Mortgage Finance Agency pursuant to the provisions of this act (P.L. , c. ) (now pending before the Legislature as this bill). The total amount of monies to be used to fund such payments shall not exceed 5% of the total investment assets of the retirement system.

    8. In addition to any loan for which a member may be eligible pursuant to the provisions of section 34 of P.L.1954, c.84 (C.43:15A-34) and notwithstanding the provisions of that or any other law to the contrary, the Director of the Division of Investment in the Department of the Treasury is authorized and directed to fund, on behalf of and in the name of the Public Employees' Retirement System, payments in fulfillment of the terms of mortgage loan guarantees entered into by the New Jersey Housing and Mortgage Finance Agency pursuant to the provisions of this act (P.L. , c. ) (now pending before the Legislature as this bill). The total amount of monies to be used to fund such payments shall not exceed 5% of the total investment assets of the retirement system.

    9. In addition to any loan for which a member may be eligible pursuant to the provisions of section 18 of P.L.1964, c.241 (C.43:16A-16.1) and notwithstanding the provisions of that or any other law to the contrary, the Director of the Division of Investment in the Department of the Treasury is authorized and directed to fund, on behalf of and in the name of the Police and Firemen's Retirement System, payments in fulfillment of the terms of mortgage loan guarantees entered into by the New Jersey Housing and Mortgage Finance Agency pursuant to the provisions of this act (P.L. , c. ) (now pending before the Legislature as this bill). The total amount of monies to be used to fund such payments shall not exceed 5% of the total investment assets of the retirement system.

    10. In addition to any loan for which a member may be eligible pursuant to the provisions of section 29 of P.L.1965, c.89 (C.53:5A-29) and notwithstanding the provisions of that or any other law to the contrary, the Director of the Division of Investment in the Department of the Treasury is authorized and directed to fund, on behalf of and in the name of the State Police Retirement System, payments in fulfillment of the terms of mortgage loan guarantees entered into by the New Jersey Housing and Mortgage Finance Agency pursuant to the provisions of this act (P.L. , c. ) (now pending before the Legislature as this bill). The total amount of monies to be used to fund such payments shall not exceed 5% of the total investment assets of the retirement system.

    11. This act shall take effect immediately.

STATEMENT

    The purpose of this bill is to provide a stimulus to the State's economy by increasing home ownership and construction. To accomplish this objective, this legislation authorizes and directs the New Jersey Housing and Mortgage Finance Agency to contract with institutional lenders on behalf of a member of the Teachers' Pension and Annuity Fund, the Public Employees' Retirement System, the Police and Firemen's Retirement System, or the State Police Retirement System to guarantee payment of 20% of the initial principal balance of the member's residential property mortgage loan, less the amount of the initial principal balance which has been paid off, if the member defaults.

    A mortgage loan guarantee shall be used for the purpose of enabling a member of the Teachers' Pension and Annuity Fund, the Public Employees' Retirement System, the Police and Firemen's Retirement System or the State Police Retirement System who has at least one year of creditable service to acquire or construct for the member's own occupation a residential property as a principal residence located within this State without making a down payment for the acquisition or construction of the residential property. No member shall be eligible for more than one mortgage loan guarantee at any time and no member shall be eligible to receive a guarantee on a second mortgage loan. Preference shall be given in making loan guarantees to members who are applying to acquire or construct their first principal place of residence. Any member receiving a mortgage loan guarantee pursuant to the provisions of this act shall, within 180 days of the date on which the guarantee was made, occupy the residence as the member's principal dwelling place.

    The mortgage loan guarantee shall terminate upon payment by the member of 20% of the initial principal balance of the mortgage loan. The mortgage loan guarantee shall not terminate prior to payment of 20% of the initial principal balance if the borrower ceases to be a member of the retirement system. Every mortgage loan guarantee shall be secured by a second lien upon the residential property with respect to which the loan is made and such other collateral as the agency may consider necessary to secure the interests of the Teachers' Pension and Annuity Fund, the Public Employees' Retirement System, the Police and Firemen's Retirement System and the State Police Retirement System in accordance with the provisions of this act.

    The New Jersey Housing and Mortgage Finance Agency shall establish:

    (1) procedures for the submission of requests for mortgage loan guarantees;

    (2) standards and requirements governing the issuance of guarantees; and

    (3) fees to be charged to defray administrative expenses and other costs and the manner of payment of those fees, provided, however, that such fees shall not be more than 30% of premiums for private mortgage loan guarantee insurance for a comparable risk.

    The Director of the Division of Investment in the Department of the Treasury shall fund payments in fulfillment of the terms of mortgage loan guarantees entered into by the New Jersey Housing and Mortgage Finance Agency pursuant to the provisions of this act. The total amount of monies to be used to fund such payments shall not exceed 5% of the total investment assets of each retirement system.

Provides for mortgage loan guarantees for certain TPAF, PERS, PFRS and SPRS members.