N.J.S. § 31:1-1 Contract Rate; Rate On Mortgages On Dwellings and Other Loans; Computation of Interest Or Discount; Determination of Rates

• Library: New Jersey Permanent Statutes
• Edition: 2023
• Currency: Current through L. 2023, c. 118.
• Year: 2023
• Citation: N.J.S. § 31:1-1

(a) Except as herein and otherwise provided by law, no person shall, upon contract, take, directly or indirectly for loan of any money, wares, merchandise, goods and chattels, above the value of $6.00 for the forbearance of $100.00 for a year, or when there is a written contract specifying a rate of interest, no person shall take above the value of $16.00 for the forbearance of $100.00 for a year.

(b) Notwithstanding the limitations of subsection (a) of this section, the Commissioner of Banking may by regulations adopted, amended and rescinded from time to time, provide that the value which may be taken for any loan secured by a first lien on real property as described in paragraph (1) of this subsection shall be a value more than $6.00 but not more than the Monthly Index of Long Term United States Government Bond Yields, compiled by the Board of Governors of the Federal Reserve System and as published by said Board of Governors in the monthly Federal Reserve Bulletin, for the second preceding calendar month plus an additional 8% per annum rounded off to the nearest quarter of 1% per annum. Within the limits as provided by this subsection, and if he finds it to be in the best interests of the citizens and economy of this State, the commissioner may establish: (1) A rate of interest on loans secured by a first lien on real property on which there is erected or to be erected a structure containing one, two, three, four, five or six dwelling units, a portion of which structure may be used for nonresidential purposes. The commissioner may establish different rates for such loans based upon the ratio of the loan to the appraised value of the real property. With respect to loans covered by this subsection, the commissioner may by regulation provide that any mortgage commitment outstanding as of the date of an increase in the rate set by the commissioner shall be extended from that date for a period not to exceed 60 days, provided that such extension shall not apply to any commitment which expires beyond the extension period so established.

If for any reason no such index of long term bonds is compiled or published for any 1 or more months, the commissioner shall determine and publish such an index based upon available statistics.

In the case of a loan secured by a first lien on real property made under the provisions of paragraph (1) of this subsection, beginning in the calendar year following the date of the mortgage loan, and annually thereafter, the mortgagee shall notify the mortgagor of the interest rate ceilings established by the commissioner as of the fifteenth day of the month preceding. Such notification shall be given at the same time as the mortgagee gives notice to the mortgagor for Federal Income Tax purposes of the interest paid on the loan in the preceding calendar year.