[Ord. 6 S+FE, 9-4-2002 § 2]
The following terms have the following meanings:
Shall mean any person that controls, is controlled by, or is under common control with another person, including any successors in interest.
Shall mean the annual percentage rate for a home loan calculated according to the provisions of the Truth in Lending Act, as amended by the Home Ownership and Equity Protection Act of 1994 (15 U.S.C. § 1601 et seq.), and its implementing regulations as such statute or regulations may be amended from time to time.
Shall mean discount points knowingly paid by the borrower, funded through any source which in fact results in a bona fide reduction of the interest rate or time-price differential applicable to the loan, provided that the amount of the interest rate reduction purchased by the discount points is reasonably consistent with established industry norms and practices for secondary mortgage market transactions. For purposes of this section, it shall be presumed that a point is a bona fide loan discount point if it reduces the interest rate by a minimum of 35 basis points or 3/8 of a point provided all other terms of the loan shall remain the same.
Shall mean the City of Newark or other office, position, administration, department, division, bureau, board or commission, or a corporation, institution or agency of City government, the expenses of which are paid in whole or in part from the Director of Finance.
Shall mean a bank, savings and loan association, thrift, credit union, mortgage banker, mortgage broker, trust company, savings bank, securities broker, municipal securities broker, securities dealer, municipal securities dealer, securities underwriter, municipal securities underwriter, investment trust, bank holding company, finance company, financial services holding company or home repair contractor.
Shall mean a home loan secured by a first lien on residential real property, a condominium unit or cooperative share.
Shall mean a home loan that meets either of the following thresholds:
The total points and fees on the loan exceed 5% of the total loan amount if the total loan amount is $20,000 or more; or 6% of the total loan amount if the total loan amount is $20,000 or more and the loan is a purchase money loan guaranteed by the Federal Housing Administration or the Veterans Administration; or the lesser of 6% of the total loan or $800, if the total loan amount is less than $20,000; provided that the following discount points shall be excluded from the calculation of the total points and fees payable by the borrower.
Up to and including two bona fide loan discount points payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan's interest rate will be discounted does not exceed by more than one percentage point the required net yield for a ninety day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater; or
Up to and including two bona fide loan discount points payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan's interest rate will be discounted does not exceed by more than one percentage point the required net yield for a ninety day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater; or
For a first lien home mortgage loan, the annual percentage rate of the home loan at consummation of the transaction exceeds five percentage points over the yield on U.S. treasury securities, having comparable periods of maturity on the fifteenth day of the month immediately preceding the month in which the application for the extension of credit is received by the lender; or for a subordinate mortgage lien, the annual percentage rate of the home loan at consummation of the transaction equals or exceeds 7% points over the yield on U.S. treasury securities having comparable periods of maturity on the fifteenth day of the month immediately preceding the month in which the application for the extension of credit is received by the lender and for purposes of paragraph d of the definition of predatory loan, the date of application for the home loan is received.
For purposes of this definition:
If the terms of the home loan provide for an initial or introductory period during which the annual percentage rate is lower than that which will apply after the end of such initial or introductory period, the annual percentage rate to be considered is the rate which applies after the initial or introductory period.
If the terms of the home loan provide for an annual percentage rate that varies in accordance with an index plus a margin, the annual percentage rate to be considered is the rate that is in effect on the date the loan is extended or on the date the loan application is made for purposes of the definition of predatory loan as herein defined.
In the case of a home loan with a regular interest rate that varies in accordance with an index plus a margin, but with an initial or introductory annual percentage rate established in some other manner that would be lower than the fully-indexed rate, the annual percentage rate to be considered is the fully-indexed rate on the date the loan is extended or on the date the loan application is made for purposes of the definition of predatory loan as herein defined.
Shall mean a loan secured by residential real property for not more than four families or a residential condominium or cooperative unit (or shares issued in respect thereof) located in the City of Newark, which is for the principal residence of one or more of the borrowers.
Shall mean a home loan secured by a lien on residential real property, condominium unit or cooperative share which is junior in priority to a first lien home loan with respect to such property.
Shall mean any person that extends, purchases or invests, directly or indirectly including through collective investment or securitization entities, in one or more home loans or arranges, directly or indirectly including through collective investment or securitization entities, for the extension, purchase of or investment in one or more home loans and any mortgage broker in respect of home loans. Furthermore, a person shall not be considered a lender by investing (and not acting as an arranger for the extension, purchase or securitization of home loans) in a collective investment or securitization entity which acquires or otherwise invests, directly or indirectly, in home loans if such collective investment or securitization entity is not an affiliate of such person.
Shall mean any person who functions as an intermediary for a fee between the borrower and the lender in the making of a home loan.
Shall mean any individual, domestic corporation, foreign corporation, association, syndicate, joint stock company, partnership, joint venture or unincorporated association engaged in a business or commercial enterprise.
Shall mean:
All items listed in U.S.C. sections 1605 (a)(1) through (4) except interest or the time-piece differential;
All charges for items listed under section 226.4(c)(7) of Title 12 of the code of Federal regulations, as amended from time to time, but only if the lender receives direct or indirect compensation in connection with the charge or the charge is paid to an affiliate of the lender;
All compensation not otherwise specified in this definition paid directly or indirectly to a mortgage broker, including a broker that originates a home loan in its own name through an advance of funds and subsequently assigns the home loan to the person advancing the funds;
The premium of any single premium credit life, credit disability, credit unemployment or other life or health insurance;
The maximum prepayment penalty that could be payable under the terms of the relevant home loan.
Shall mean a person that was, or is the affiliate of a person that was:
A lender within the last 12 months in respect of, as determined in the aggregate for such lender and its affiliates, and is at least the lesser of:
Charged any fees or other charges to modify, renew, extend or amend or to defer any payment due in respect of at least five high cost home loans, except for customary fees charged in connection with the extension of a high cost home loan after giving effect to which and the other terms of the extended loan, the borrower receives a reasonable and tangible net benefit from such extension; or
Engaged in fraudulent or deceptive marketing or sales efforts in respect of high-cost home loans in the City of Newark provided that any person shall not be a predatory lender if it:
Submits to the Director of Finance a plan to discontinue the practice of making of, purchasing or otherwise investing in predatory loans by the person and its affiliates, and the complete cessation of the making of, purchasing or otherwise investing predatory loans by the person and its affiliates within 90 days after the plan is submitted; and
Is in compliance with such plan, provided that no more than one plan may be submitted on behalf of any person, except a subsequent plan may be submitted by a person solely in connection with the acquisition of a predatory lender after the date of a prior plan, if such plan will discontinue the practice of marking of, purchasing or otherwise investing in predatory loans by the acquired predatory lender within 60 days of such acquisition;
By virtue of, directly or indirectly, purchasing or investing in predatory loans, or arranging for the purchase or investment in predatory loans by a collective investment or securitization entity, if such person reasonably believes, after reasonable investigation based upon reasonable procedures implemented by or on behalf of such person, that all of the home loans purchased or invested in do not constitute predatory loans.
As documented by both the United States Department of Housing and Urban Development and Treasury Task Force Report and other commentators include among other things: repeated refinancing of a loan without any tangible benefit to the borrower; charging excessive prepayment penalties; financing single premium credit insurance; encouraging a borrower to default on his or her other debts; failing to comply with Federal requirements with respect to the disclosure of loan terms and loan settlements; making a loan for more than the borrower can repay; financing excessive points and fees; requiring advance payments; charging fees to modify a loan or defer payments; permitting acceleration of a loan at lenders discretion; and increasing the interest rate upon default.
Shall mean any high cost home loan with one or more of the following characteristics:
Proceeds of the high cost home loan are used to payoff all or part of an existing home loan or other debt of the borrower(s), and the borrower(s) does (do) not receive a reasonable and tangible net benefit from the new home loan considering all the circumstances, including the terms of both the new home loan and the refinanced debt, the cost of the new home loan, and the borrower's circumstances.
The lender does not reasonably believe, based upon a consideration of the borrower(s) current and expected income, current obligations, employment status, and other financial resources (other than equity in the home being financed), at the time it makes the high cost home loan that one or more of the borrowers will be able to make the scheduled payments. There shall be a presumption that the borrower(s) is (are) able to make the scheduled payments if, at the time the loan is made:
The scheduled monthly payments (after giving effect to any index adjustments in respect of the loan) on the loan (including principal, interest, taxes, insurance, assessments, condominium fees, cooperative maintenance expenses) combined with the scheduled payments for all other debt, do not exceed 50% of the borrower(s) documented and verified monthly gross income; and
That the borrower(s) has (have) sufficient residual income as defined in the guidelines established in Title 38 code of Federal regulations section 36.4337(e) and United States Department of Veteran Administration form 26-6393 to pay essential monthly expenses after paying the scheduled monthly payments and any additional debt; and
If paragraphs 1 or 2 do not apply, predatory lender as defined in paragraph b shall apply unless the lender determines and documents prior to the closing of the loan that the making of the loan is justified based upon specific compensating factors, such as the excellent long-term credit history of the borrower(s), a demonstrated ability in the past by the borrower(s) to make payments under comparable or greater debt obligations to income ratios, conservative use of credit standards, significant liquid assets of the borrower(s) or other reasonable factors.
The total points and fees exceed 5% of the total loan amount if the total loan amount is $20,000 or more, or 6% of the total loan amount if the total loan amount is $20,000 or more and the loan is a purchase money loan guaranteed by the Federal Housing Administration or Veterans Administration; or the lesser of 6% of the total loan amount or $800, if the total loan amount is less than $20,000; provided, that the following discount points shall be excluded from the calculation of the total points and fees payable by the borrower:
Up to and including two bona fide discount points payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan's interest rate will be discounted does not exceed by more than 1% point the required net yield for a ninety day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Home Loan Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater; or
Up to and including one bona fide loan discount point payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan's interest rate will be discounted does not exceed by more than two percentage points the required net yield for a ninety day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater.
The lender does not receive prior to making the high cost home loan a written certification from an independent housing or credit counselor approved by the United States Department of Housing and Urban Development, the State of New Jersey or the City of Newark that the borrower has received counseling on the advisability of the loan transaction and the appropriateness of the loan for the borrower, or has waived the counseling option; provided that a borrower may waive the counseling option only by contacting such an independent housing or credit counselor by personal meeting or live telephone conversation at least three days prior to the closing of the home loan and certifying in writing to the counselor that he or she has elected to waive the counseling option and no such waiver shall be valid if the lender or a mortgage broker or any of their affiliates has recommended or advised the borrower to make such waiver.
More than two periodic payments (or portions thereof) required under the high cost home loan are consolidated and paid in advance from the loan proceeds provided to the borrower other than a loan issued by or guaranteed by an instrumentality of the United States or of any State or any City agency, such as loan products offered by the United States Department of Veterans Administration, Fair Housing Administration or State of New Jersey Mortgage Agency.
Any of the proceeds of the high cost home loan are paid to either a home improvement contractor that is an affiliate of the lender or any home improvement contract other than:
Proceeds of the high cost home loan are used to pay for any credit life, credit disability, credit property, credit unemployment, health or life insurance.
The high cost home loan violates any applicable provision of the Federal Truth in Lending Act, as amended by the Home Ownership and Equity Protection Act of 1994 (15 U.S.C. § 1601, et seq.), the Federal Real Estate Settlement Procedures Act of 1974 (12 U.S.C. § 2601, et seq.) or any regulations implementing these statues, or the restrictions and limitations on high cost home loans in the general regulations of the New Jersey State Department of Banking and Finance, as these statutes and regulations may be amended from time to time.