Current through Register Vol. 54, No. 7, April 4, 2022
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
(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
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.
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.
N.J. Admin. Code §
Amended by R.2008 d.70,
See: 39 N.J.R. 4361(a), 40 N.J.R.
In (c), inserted ", (617) 262-4040,
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