N.J. Admin. Code § 3:15-7.2 - Insurance provisions applicable to mortgage lenders on secondary mortgage loans

Current through Register Vol. 54, No. 7, April 4, 2022

(a) When a secondary mortgage loan is repaid in full or renewed, or if the insurance is terminated prior to the scheduled maturity date of a secondary mortgage loan, the mortgage lender shall refund to the borrower any unearned insurance premiums.
(b) If a borrower has repaid a secondary mortgage loan in full, or if a beneficiary named in a policy under a claim is due a refund of unearned premiums and the mortgage lender is unable to locate the borrower or beneficiary after due diligence, but in no event longer than 180 days, the licensee shall return all unearned premiums to the insurer, stating the reason therefor. The lender shall file evidence in the borrower's file of his or her efforts to locate the borrower.
(c) All refunds and credits made by mortgage lenders pursuant to this section shall be computed by the "Sum of Digits Method" commonly known as the "Rule of 78ths." These are rules for computing refunds of unearned finance charges on early payment of a loan so that the refund is proportional to the monthly unpaid balance. Tables for calculating refunds and credits according to this methodology can be obtained from Financial Publishing Company, 82 Brookline Drive, Brookline, MA 02212, (617) 262-4040, http://www.financial-publishing.com. When the refund or credit of the unearned insurance premium is less than $ 1.00, no refund is required.
(d) If a borrower has credit life insurance, interest charges shall cease accruing on the account at the death of the insured.
(e) If a secondary mortgage loan contract contains credit life insurance, the mortgage lender, shall file a death claim with the insurer upon receipt of notice of the death of the insured. The death claim filed by a mortgage lender with an insurer shall be made for the full amount of the coverage held at death by the insured.
(f) A policy for credit life insurance, credit health or disability insurance, or credit involuntary unemployment insurance may provide for the insurance of more than one person. If the policy is silent regarding whether the insurance covers more than one person, the person whose signature appears on the first line of the lines provided for the signatures on the loan contract shall be considered as the only borrower insured by the policy and the mortgage lender shall disclose to the borrower in writing the effect of the order of signing the loan contract.

Notes

N.J. Admin. Code § 3:15-7.2
Amended by R.2008 d.70, effective 4/7/2008.
See: 39 N.J.R. 4361(a), 40 N.J.R. 1826(b).
In (c), inserted ", (617) 262-4040, www.financial-publishing.com".
Amended by R.2010 d.129, effective 6/21/2010 (operative July 31, 2010).
See: 41 N.J.R. 2829(a), 42 N.J.R. 1139(b).
Section was "Insurance provisions applicable to secondary lenders and consumer lenders". Rewrote the section.

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