New Jersey Orders Use of State-Specific Settlement Disclosure Form
On August 2, the Commissioner of the New Jersey Department of Banking and Insurance (the Department), issued Bulletin 10-17, which provides guidance on how mortgage lending entities should comply with both amended federal regulations governing Good Faith Estimate (GFE) and HUD-1/HUD-1A Settlement Statements and New Jersey’s settlement disclosure requirements which require broader disclosures than included in the amended federal forms. New Jersey regulations currently permit lenders to rely on U.S. Department of Housing and Urban Development (HUD) disclosure forms to meet New Jersey disclosure requirements provided lenders also disclose whether certain settlement service fees are refundable, and how to receive such a refund. The newly amended HUD forms, however, provide less information regarding broker and banker fees than New Jersey requires, and lenders are forbidden by HUD from modifying the HUD forms to meet state disclosure requirements. According to Bulletin 10-17, until the Department revises its regulations the Department will no longer permit lenders to rely on the HUD disclosure forms to meet New Jersey disclosure requirements. Instead, lenders must create a "New Jersey Disclosures Form" which lists all applicable origination and settlement fees referenced in N.J.A.C. 3:1-16.2, totaled by category and matching the amounts listed on the GFE, and identifying which fees are refundable and the terms and conditions for such refund. Lenders cannot attach the New Jersey form to any HUD form, nor refer to the New Jersey form as a supplement or addendum to a HUD form. New Jersey Disclosure Forms must be signed, dated, and maintained in the licensee’s mortgage files.