Why are Mortgage Servicers required to be licensed?

One of the costliest purchases a person makes is their home. A significant portion of New Jersey foreclosures happened due to mortgages being serviced by individuals inadequately trained or those utilizing unethical practices. As an effort to protect consumers from fraud, New Jersey Bill A-4997 (active July 28, 2019) requires nonbank mortgage servicers to be licensed.

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New Jersey Bill A-4997 requires mortgage servicers to be licensed to minimize unethical practices and reduce the foreclosure rate.

What are the New Jersey Mortgage Servicers Licensing requirements?

• The New Jersey Department of Banking and Insurance issues the Mortgage Servicer licenses. New business applicants must create a record in the Nationwide Mortgage License System (NMLS) to get a unique identifier.
• The applicant must identify a qualified individual for the main office and a branch manager for each branch office. They each need to have a minimum of 3 years of experience in the mortgage servicing business within the last 5 years of submitting the licensing application.
• The application must have no material misstatements.
• The applicant or their branch managers must not have been convicted or plead guilty to a domestic, foreign or military court felony within the previous 7 years of the application date.
• The applicant must have a $100,000 surety bond for the main office and for each of the branch offices. A fidelity bond and errors and omissions (E&O) insurance policy is also required.

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• The initial license fee is $1,000 and will expire at the end of the year it was approved. If the applicant is approved Nov. 1 or later, the license will expire the following year. The renewal license fee is $3,000 but is valid for a 3-year term.
• The Commissioner of Banking and Insurance may have additional requirements for the applicant to meet.