SENATE, No. 636

STATE OF NEW JERSEY

INTRODUCED FEBRUARY 5, 1996

By Senator LaROSSA

An Act concerning mortgage payments and supplementing P.L.1990, c.69 (C.17:16F-15 et seq.).

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

    1. a. No mortgagee or its servicing organization shall assess a late payment charge with respect to a regularly scheduled mortgage or mortgage escrow account payment unless the payment is received more than 15 days after the scheduled due date.

    b. No mortgagee or its servicing organization shall assess a late payment charge with respect to a regularly scheduled mortgage or mortgage escrow account payment without also including with the statement informing the mortgagor of the late charge, a copy of the postmarked envelope in which the mortgage or mortgage escrow account payment was received by the mortgagee or its servicing organization, clearly showing the postmark, if any.

    c. No mortgagee or its servicing organization shall assess a late payment charge in excess of five percent of the regularly scheduled payment for principal and interest.

    d. No mortgagee or its servicing organization shall collect a late payment charge by:

    (1) charging the mortgagor’s escrow account;

    (2) deducting from a regular monthly installment;

    (3) deducting from a payment made to partially or fully cure a delinquency; or

    (4) adding to the outstanding principal balance of the mortgage.

    e. No mortgagee or its servicing organization shall cause a mortgage to become delinquent or be placed in foreclosure because of an unpaid late payment charge.

    2. If a mortgagor is aggrieved by a violation of this act, which violation is not remedied in a reasonable, timely, and good faith manner by the mortgagee or its servicing organization, after a good faith effort to resolve the dispute is made by the mortgagor, the mortgagor may bring an action in a court of competent jurisdiction, and, if the court finds that actual damages have occurred, the court shall award, in addition to actual damages, the amount of $500, together with court costs and reasonable attorneys' fees.

    3. This act shall take effect immediately.

STATEMENT

    This bill would prohibit a mortgagee or its servicing organization from assessing a late payment charge unless the payment is received more than 15 days after its scheduled due date. If the mortgagee or its servicing organization is assessing the mortgagor a late charge for a payment received after the 15 day grace period, the bill would require a mortgagee or its servicing organization to provide a copy of the postmarked envelope in which a scheduled mortgage payment was received, clearly showing the postmark, if any.

    The bill also prohibits a mortgagee or its servicing organization from: assessing a late payment charge in an amount which is greater than five percent of the regularly scheduled payment amount; collecting a late payment charge by charging the mortgagor’s escrow account; deducting from a regularly monthly installment; adding to the outstanding principal balance or deducting from a payment made to partially or fully cure a delinquency. In addition, the bill prohibits a mortgagee or its servicing organization from causing a mortgage to become delinquent or be placed in foreclosure because of an unpaid late payment charge.

    The bill provides for a remedy to a violation of the act first through the efforts of the mortgagor, and failing to achieve a remedy satisfactory to the mortgagor, by an action in a court of competent jurisdiction. If the court finds that actual damages have occurred to the mortgagor, the court is to award, in addition to actual damages, the amount of $500, together with court costs and reasonable attorney fees.

Establishes certain practices with respect to late payment charges on mortgage payments.