ASSEMBLY FINANCIAL INSTITUTIONS COMMITTEE

STATEMENT TO

[First Reprint]

SENATE, No. 928

with committee amendments

STATE OF NEW JERSEY

DATED: SEPTEMBER 16, 1996

      The Assembly Financial Institutions Committee reports favorably and with committee amendments Senate Bill No. 928 (1R).

      This bill, as amended, requires lenders licensed pursuant to P.L.1981, c.18 (C.17:11B-1 et seq.), mortgage bankers and brokers, to disburse funds for the proceeds of a loan to a mortgagor, acting on his own behalf, or the attorney or other person acting for a mortgagor, only by means of a certified, cashier's, teller's or bank check, or by arranging an electronic transfer of funds or by providing for payment by cash. The bill also requires title insurance producers and title insurance companies to maintain separate records of all receipts and disbursements for funds representing closing and settlement proceeds of a real estate transaction, to keep such funds in a separate trust or escrow account and not to commingle these funds with any other funds of the title insurance producer or company. The bill also prohibits a title insurance producer or company from disbursing funds representing closing or settlement proceeds of a real estate transaction unless those funds have been deposited in the trust or escrow account by certified, cashier's, teller's or bank check, an electronic funds transfer, cash, or other collected funds. Under the bill, a title insurance producer or company is not prohibited from disbursing against uncollected funds in an amount not to exceed $1,000.

      The committee amended the bill to replace "purchaser" with "mortgagor"; change the title of the Commissioner to Commissioner of Banking and Insurance; clarify that the bill does not prohibit a title insurance company from disbursing against funds deposited in a separate trust or escrow account other than by cash, electronic wire transfer, or certified, cashier's, teller's or bank check, or other collected funds in an amount not to exceed $1,000; and provide a definition of "teller's check" consistent with the definition in N.J.S.12A:3-104. This bill, as amended, is identical to Assembly No. 2322, as also amended by the committee.