SENATE, No. 2177
STATE OF NEW JERSEY
INTRODUCED JUNE 12, 1997
By Senators CONNORS, LaROSSA and McNamara
An Act concerning the Police and Firemen's Retirement System's mortgage loan program and amending P.L.1992, c.78.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 4 of P.L.1992, c.78 (C.43:16A-16.11) is amended to read as follows:
4. a. In addition to any loan for which he 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, any member of the Police and Firemen's Retirement System who, at the time of application, is employed by the State or a county, municipality or other political subdivision of the State and who has at least one year of creditable service, or any retiree under the retirement system, is, for the purpose of securing for his own occupation as his principal residence a residential property located within this State, eligible to receive a mortgage loan pursuant to the provisions of this act. The mortgage loan shall be used only for the purpose of enabling a borrower to acquire or construct a residential property or refinance an existing residential property loan.
No member or retiree shall be eligible hereunder for more than one outstanding mortgage loan at any time, and no member or retiree shall be eligible to receive a second mortgage loan on a residential property already mortgaged by him. Preference shall be given in making loans to members who are applying to acquire or construct their first principal place of residence.
b. Any mortgage loan made pursuant to the provisions of this act, together with any interest and expenses to the retirement system associated with the making of that loan, shall be repaid in equal installments.
c. The amount of interest charged with respect to a mortgage loan made pursuant to the provisions of this act shall be fixed for the entire term of the loan. The New Jersey Housing and Mortgage Finance Agency, established under section 4 of P.L.1983, c.530 (C.55:14K-4), shall initially establish the rate within 120 days of the effective date of this act and semiannually reset the rate thereafter. The rate shall be determined by the New Jersey Housing and Mortgage Finance Agency by adding 2% to the index. For the purposes of this subsection, the index shall be the weekly average yield at the time the rate is reset on one-year United States Treasury securities adjusted to a constant maturity as made available by the Federal Reserve Board. The term of any mortgage loan so made shall not exceed 30 years.
d. No mortgage loan made pursuant to the provisions of this act shall be sold, transferred or assigned to any person, nor shall the payments with respect to any mortgage loan so made be assumed by any person other than the member or retiree to whom that loan was made, except that in the event of the death of a member or retiree, the mortgage may be assignable to a surviving spouse if the spouse is the sole heir to the property.
e. The instrument evidencing a mortgage loan under the provisions of this act may be in such form, and may contain such provisions, not inconsistent with law, as the director may choose to insert for the protection of the retirement system's lien and the preservation of its interest in the real property mortgaged to it.
(cf: P.L.1992, c.78, s.4)
2. Section 7 of P.L.1992, c.78 (C.43:16A-14) is amended to read as follows:
7. Any member or retiree receiving a mortgage loan pursuant to the provisions of this act shall, within 120 days of the date on which the loan was made, occupy the residence as his principal dwelling place. If any member or retiree receiving a mortgage loan pursuant to the provisions of this act sells, or ceases to occupy as his residence and principal dwelling place, that residential property, the entire amount of that mortgage loan, together with any accrued interest thereon, shall be due and payable on the 120th day following that action.
(cf: P.L.1992, c.78, s.7)
3. Section 8 of P.L.1992, c.78 (C.43:16A-16.15) is amended to read as follows:
8. a. Upon application of a member or retiree for a mortgage loan the director shall, within 90 days, make available to the New Jersey Housing and Mortgage Finance Agency sufficient funds to provide mortgage loans in accordance with the provisions of this act, except that no mortgage loan shall be made at any time when the total of all principal balances owing on mortgage loans made pursuant to this act, less all write-offs and reserves with respect to these mortgage loans, together exceeds, or by the making of the loan would exceed, 10% of the total investment assets, including mortgage loans, of the retirement system. Every mortgage loan made hereunder shall be evidenced by a note or bond and shall be secured by a mortgage on the fee of real property located within this State. Every mortgage shall be certified to be a first lien by an attorney-at-law of this State or certified or guaranteed to be a first lien by a corporation authorized to guarantee titles to land in this State. For the purposes of this section, a mortgage shall be deemed to be a first lien, notwithstanding the existence of a lien for current taxes or assessments not due or payable at the time the loan is made, and notwithstanding the existence of leases, building restrictions, easements, encroachments, or covenants which do not materially lessen the value of the real property to be mortgaged.
b. Pursuant to rules established by the State Treasurer, with the advice of the New Jersey Housing and Mortgage Finance Agency, no mortgage loan shall be made under this act except upon a written certification signed by at least two persons appointed or retained by the appraisers. In the case of a mortgage loan secured by a mortgage upon real property, such certification shall state the opinion of such persons as to the value of the land and the improvements thereon or to be erected thereon and the character of such improvements. Such certification shall be filed with the records of the retirement system and shall be preserved until the retirement system has no interest, as mortgagee or otherwise, in the real property.
c. No mortgage loan secured by a mortgage on real property shall be made unless the property shall consist of improved real property, or unimproved real property if the proceeds of such loan shall be used for the purposes of erecting improvements thereon.
(cf: P.L.1992, c.78, s.8)
4. Section 11 of P.L.1992, c.78 is amended to read as follows:
11. This act shall take effect immediately [and shall expire five years after the effective date, provided that any mortgage in effect on the expiration date shall remain in effect until retirement of the mortgage].
(cf: P.L.1992, c.78, s.11)
5. This act shall take effect immediately.
STATEMENT
At present, the Police and Firemen's Retirement System's mortgage loan program is limited to active members and is scheduled to expire in August of 1997 (five years after the date of enactment). This bill would remove the law's expiration provision, thereby making the
program permanent, and would allow PFRS retirees, as well as active members, to participate in the program.
Includes retirees under the PFRS mortgage loan program and makes the program permanent.