New Jersey Department
|For Immediate Release: July 25, 2003||
For Further Information:: Ellen Lovejoy - (609) 292-5064
Bulletin Explains New Predatory Lending Law
TRENTON - The New Jersey Department of Banking and Insurance today issued a bulletin to ensure appropriate enforcement of the recently enacted anti-predatory lending law, also known as the New Jersey Home Ownership Security Act of 2002.
The legislation, which Governor James E. McGreevey signed May 1, provides some of the strongest safeguards in the nation to prevent homeowners from losing their homes and assets as a result of unfair mortgage lending practices.
"Dishonest lenders exploit the misfortune or naivete of others with high interest rates, outrageous fees and unaffordable repayment terms," Governor McGreevey said as he signed the legislation.
"This Administration will continue to fight against unscrupulous lenders through the efforts of the Department of Banking and Insurance, as well as the Division of Consumer Affairs. The Department and Division will protect consumers in the marketplace by prohibiting abusive lending practices while maintaining the availability of mortgage products," said Banking and Insurance Commissioner Holly C. Bakke.
Just as Commissioner Bakke, Banking Director H. Robert Tillman and Consumer Affairs Director Reni Erdos worked to obtain a favorable settlement in the Household Finance predatory lending case, these individuals will continue to strive to provide protection for New Jersey consumers, Commissioner Bakke said.
Consumer groups praised the new law, which prohibits financing of credit insurance, penalty interest rates, most balloon payments and unfair arbitration standards. The law provides the Department of Banking and Insurance with enforcement provisions to ensure that companies comply with the law.
"Addressing the major issues raised by the rating companies was necessary to ensure that lenders can make loans without fear that they can’t be securitized on the secondary market,’’ Commissioner Bakke said. "Mortgages will continue to be available in the marketplace."
"We have worked diligently to provide guidance on how the Department intends to enforce the legislation,’’ said Banking Director Tillman. "Our efforts resulted in a better understanding of the legislation by the rating agencies."
The Department will issue additional guidance and participate in compliance workshops in order to help the industry to prepare prior to the Act’s effective date, November 27, 2003, as deemed necessary and appropriate. The Department will continue to work with Consumer Affairs Director Erdos in ending predatory lending practices in New Jersey.