New Jersey Administrative Code
Title 3 - BANKING
Chapter 15 - RESIDENTIAL MORTGAGE LENDERS; CORRESPONDENT MORTGAGE LENDERS; MORTGAGE BROKERS; QUALIFIED INDIVIDUAL LICENSEES; MORTGAGE LOAN ORIGINATORS
Subchapter 10 - CHARACTERISTICS OF LOANS
Section 3:15-10.2 - Secondary mortgage loans

Universal Citation: NJ Admin Code 3:15-10.2

Current through Register Vol. 56, No. 18, September 16, 2024

(a) A mortgage lender shall not require or accept from a borrower any collateral or security for a secondary mortgage loan other than a mortgage, indenture or any other similar instrument or document that creates a lien upon any real property or an interest in real property including, but not limited to, shares of stock in a cooperative corporation.

(b) For purposes of (a) above, the co-signature of a person, other than a spouse or other person having an interest in the real property used as security for the loan, shall constitute prohibited collateral or security unless the co-signer is a joint borrower.

(c) A person not having an interest in the real property used as security for the loan shall be considered a joint borrower if:

1. The borrowers sign an affidavit affirming their agreement to be jointly liable and to share in the proceeds of the secondary mortgage loan; and

2. The mortgage lender issues the proceeds check or checks in all borrowers' names. If borrowers may access a line of credit by writing checks or otherwise, this requirement will be satisfied if all borrowers have the authority to draw against the account.

(d) A mortgage lender shall not be made a beneficiary of an insurance policy purchased by the borrower from the mortgage lender except as otherwise permitted by law.

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