New Mortgage law 4 NJ..??? anyone here of it...? - Posted by JohnB_NJ

Posted by Nate(DC) on October 29, 2003 at 22:13:06:

As I understand the problem, from the financial markets’ point of view, it’s that the legislation doesn’t DEFINE “tangible net benefit” anywhere, so there is no way to prove that a loan in fact did result in a “tangible net benefit”. Accordingly, the rating agencies will not rate NJ mortgage securities, and so no one will buy them, because there is no way to guarantee that a pool of mortgages is “clean” of possible future legal action.


New Mortgage law 4 NJ…??? anyone here of it…? - Posted by JohnB_NJ

Posted by JohnB_NJ on October 28, 2003 at 23:23:43:

Anyone hear of the proposed law called "Home Ownership Security Act (NJ A75)? It goes into effect on Nov. 27, 2003. From my understanding it will limit refi’s. It is meant to stop preditory lending by limiting refi’s to title seasoning of 4 years. Now, this is hearsay from my mortgage broker and I have yet to research this myself. But I did get a solicitation from Champion Mortgage that says:

There is no time to delay for New Jersey homeowners. If you are considering refinancing or getting a home equity line of credit, you must act now.

November 27, 2003 is fast approaching. On that date, the Home Ownership Security Act (NJ A75) will take effect. It’s a new law that may severely limit your home financing options.

So, anyway, anyone hear of this? If someone finds a link out there on the web that refers to this would you mind posting that link.



Re: New Mortgage law 4 NJ…??? - Posted by LSNJ

Posted by LSNJ on October 29, 2003 at 15:27:50:

Here is a great bulletin posted by the commisioner of banking in NJ it will answer many of your questions.
It is a PDF file, I provided the link to the html file below as well.

***************html file

That’s interesting… - Posted by Ben (NJ)

Posted by Ben (NJ) on October 29, 2003 at 05:54:01:

so one viable option for those facing foreclosure will now be eliminated! Good going, Mcgreevey.

Re: New Mortgage law 4 NJ…??? anyone here of it - Posted by Ethan

Posted by Ethan on October 28, 2003 at 23:43:42:


Yes, it is true. I am a mortgage broker. We received that memo from our lenders.

Sorry wrong link - Posted by LSNJ

Posted by LSNJ on October 29, 2003 at 15:31:02:

Sorry guys gave the wrong link…
here is the correct one.

Re: That’s interesting… - Posted by Bob

Posted by Bob on October 29, 2003 at 21:35:23:

It’s true. I filed Ch13 1 yr ago. It’s been 12 months of good payments, and I am now able to refinance to pay off my bankruptcy and start over.

I was just told that I have to close the refi by Nov 27th, or I will not be able to use the refi to clear the bankruptcy.

Re: New Mortgage law 4 NJ…??? anyone here of it - Posted by David B

Posted by David B on October 29, 2003 at 09:39:00:

Does this mean that I won’t be able to refi a Jersey property for 4 years? I’d like to clarify this, too, because I invest in NJ. Thanks for any further clarification.

Another interpretation - Posted by Ken (NJ)

Posted by Ken (NJ) on October 29, 2003 at 18:29:31:

I saw nothing in this article banning refinancings under normal circumstances. The part I saw is here:

This is prohibited

“flipping” a home loan; i.e., making covered home loans to a borrower that refinances an existing home loan that was consummated in the last 60 months when the new loan does not have reasonable, tangible net benefit to the borrower considering all of the circumstance, including the terms, the purpose and cost of the loan.

In other words, a refinance has to have a legitimate purpose, not just an opportunity to generate junk fees. Predatory lenders frequently contact their borrowers to refinance their loans. This generates junk fees and closing costs, usually with no net benefit to the mortgagee. In other words, the predatory lender refinances a half point lower, but the closing costs are so high on the loan that the mortgagee never sees any benefit from the refinance. They roll the closing costs into the loan amount, so the principal increases despite the fact that the mortgagee may have refinanced numerous times and has been paying on time.

So I see nothing preventing folks from refinancing. The real question is if the financial market overreacts and interprets the regulation to mean that NOBODY can refinance in 5 years.

Ken (NJ)

Clear as Mud - Posted by David B.

Posted by David B. on October 29, 2003 at 16:12:03:

Thanks, LSNJ, for the link. I read the article, but to be honest, it’s clear as mud. The whole thing strikes me as a big government mess that’s going to freeze activity and limit options for investors. It makes me worried about pursuing deals where I’ve got to get financing. Does anyone else feel this way? Or do you think this will get ironed out shortly? Any thoughts would be appreciated.