S4152

An Act concerning residential mortgage application requirements, supplementing Title 17 of the Revised Statutes, and amending P.L.1948, c.259.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) a. As used in this section:

“Disabled veterans’ property tax exemption” means the exemption authorized pursuant to P.L.1948, c.259 (C.54:4-3.30 et seq.) or section 2 of P.L.2021, c.75 (C.54:4-3.30a).

“Qualified veteran” means a veteran who has been declared by the United States Department of Veterans' Affairs, or its successor, to have a 100 percent service-connected disability.

“Surviving spouse” means the surviving spouse of a qualified veteran.

b. (1) A qualified veteran or surviving spouse who seeks a mortgage loan from a State-chartered bank, mortgage company, or credit union for a dwelling house that is to be occupied as the person’s principal residence shall not be required by that bank, mortgage company, or credit union, as part of the underwriting requirements for that mortgage, to indicate or disclose the annual property tax obligation on that dwelling house, provided that the assessor of the municipality in which the property is located certifies to the State-chartered bank, mortgage company, or credit union on a form promulgated for this purpose by the Commissioner of Banking and Insurance that the qualified veteran or surviving spouse currently satisfies all eligibility requirements for the disabled veterans’ property tax exemption, other than ownership of the property.

(2) A qualified veteran or surviving spouse who seeks a mortgage to refinance an existing mortgage on a dwelling house that is the person’s current principal residence shall not be required by that bank, mortgage company, or credit union as part of the underwriting requirements for that mortgage, to indicate or disclose the annual property tax obligations on that dwelling house, provided that the assessor of the municipality in which the dwelling house is located certifies to the State-chartered bank, mortgage company, or credit union on a form promulgated for this purpose by the Commissioner of Banking and Insurance that the qualified veteran or surviving spouse currently satisfies all eligibility requirements for the disabled veterans’ property tax exemption, including ownership of the property.

c. If, on the date that the qualified veteran or surviving spouse applies for a mortgage on a dwelling house, the qualified veteran or surviving spouse owns and occupies another dwelling house in the State as their principal residence, the mortgage shall not be approved until the qualified veteran or surviving spouse has:

(1) provided evidence to the State-chartered bank, mortgage company or credit union that the current dwelling house has been sold or transferred or is under contract for sale or transfer; or

(2) notified the assessor of the municipality in which the current dwelling house is located that the qualified veteran or surviving spouse will no longer be occupying the dwelling house as their legal residence.

2. Section 2 of P.L.1948, c.259 (C.54:4-3.31) is amended to read as follows:

2. a. All exemptions from taxation under P.L.1948, c.259 (C.54:4-3.30 et seq.) shall be allowed by the assessor upon the filing with him of a claim in writing under oath, made by or on behalf of the person claiming the same, showing the right to the exemption, briefly describing the property for which exemption is claimed and having annexed thereto a certificate of the claimant's honorable discharge or release under honorable circumstances, from active service in any branch of the Armed Forces of the United States and a certificate from the United States Department of Veterans' Affairs or its successor, certifying to a service-connected disability of such claimant of the character described in section 1 of P.L.1948, c.259 (C.54:4-3.30). In the case of a claim by a surviving spouse of such veteran, the claimant shall establish in writing under oath that the claimant is the owner of the legal title to the premises on which exemption is claimed; that the claimant occupies the dwelling house on said premises as the claimant's legal residence in this State; that the veteran shall have been declared, either during the veteran's lifetime or after the veteran's death, by the United States Department of Veterans' Affairs to have or to have had a service-connected disability of a character described in this act, or, in the case of a claim for an exemption under subsection c. of section 1 of P.L.1948, c.259 (C.54:4-3.30), that the veteran shall have been declared to have died in active service; that the veteran was entitled to an exemption provided for in this act, except for an exemption under paragraph (2) of subsection b. and subsection c. of section 1 hereof, at the time of death; and that the claimant is a resident of this State and has not remarried. Such exemptions shall be allowed and prorated by the assessor for the remainder of any taxable year from the date the claimant shall have acquired title to the real property intended to be exempt by this act. Where a portion of a multiple-family building or structure occupied by the claimant is the subject of such exemption, the assessor shall aggregate the assessment on the lot or curtilage and building or structure and allow an exemption of that percentage of the aggregate assessment as the value of the portion of the building or structure occupied by the claimant bears to the value of the entire building or structure.

b. (1) A veteran or surviving spouse who has applied for a mortgage pursuant to the provisions of section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall submit a preliminary application for a property tax exemption on the dwelling house, on a form promulgated for this purpose by the Commissioner of Banking and Insurance. At a minimum, the preliminary application shall include the name and contact information for each State-chartered bank, mortgage company, or credit union from which the veteran or surviving spouse seeks a mortgage, as well as all of the documentation required in subsection a. of this section.

(2) In the case of an application for a mortgage related to a dwelling house in which the veteran or surviving spouse does not currently reside, the assessor shall certify whether the veteran or surviving spouse meets all of the eligibility requirements for the property tax exemption, except for the ownership of the property. In the case of an application for a mortgage related to a dwelling house in which the veteran or surviving spouse currently resides, the assessor shall certify whether the veteran or surviving spouse meets all of the eligibility requirements for the property tax exemption, including the ownership of the property.

(3) After the assessor has made a determination pursuant to paragraph (2) of this subsection, the assessor shall transmit a copy of the certification to each State-chartered bank, mortgage company, or credit union indicated on the veteran or surviving spouse’s preliminary application.

(4) Once the veteran or surviving spouse has acquired the subject property, the person shall formally apply to the assessor pursuant to subsection a. of this section in order to obtain the property tax exemption. The determination made for the preliminary application shall not be binding on the final application.

(cf: P.L.2019, c.413, s.2)

3. (New section) The Commissioner of Banking and Insurance shall identify and publish on the department’s Internet website all of the State-chartered banks, mortgage companies, and credit unions doing business in the State in order to assist qualified veterans in finding a financial institution with which to apply for a mortgage in accordance with the provisions of this act.

4. (New section) The Commissioner of Banking and Insurance shall promulgate such rules, regulations, and forms as may be necessary to effectuate the provisions of this act pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), not later than the first day of the seventh month next following its enactment.

5. This act shall take effect on the first day of the seventh month next following enactment, except that the Commissioner of Banking and Insurance shall take such anticipatory actions in advance thereof as may be necessary to implement the provisions of this act.

STATEMENT

This bill prohibits certain financial institutions from requiring certain disabled veterans to include anticipated property tax obligations as part of a mortgage applications.

Under current law, a veteran who has been declared by the United States Department of Veterans' Affairs to have a 100 percent service-connected disability, and meets all of the requirements for a veterans’ property tax exemption, may apply to the municipality in which their principal residence is located for a property tax exemption. The surviving spouse of such a veteran is also entitled to the property tax exemption for the duration of their widowhood or widowerhood, provided that certain eligibility criteria are met.

Currently, when a person, including a disabled veteran or their surviving spouse, seeks a mortgage to purchase a home, banks, mortgage companies, and credit unions generally require that the person qualify for the mortgage based on the calculated monthly mortgage payment for the mortgage loan, plus the monthly share of the annual property tax bill. Although these persons may qualify for a total property tax exemption after purchasing the property, the inclusion of property tax obligations in the mortgage application can make it significantly more difficult for these persons to obtain a mortgage, as well as increase the interest rates that may be approved for these mortgage applicants.

Under the bill, when a qualified veteran who has been declared by the United States Department of Veterans' Affairs to have a 100 percent service-connected disability, or their surviving spouse, seeks a mortgage loan from a State-chartered bank, mortgage company, or credit union for a dwelling house that is to be the person’s principal residence, the bank, mortgage company, or credit union may not require the person to indicate or disclose the annual property tax obligation on that dwelling house as part of the underwriting requirements for the mortgage loan, provided that the assessor of the municipality in which the property is located determines that the veteran or surviving spouse satisfies all of the eligibility requirements for the disabled veterans’ property tax exemption, other than the ownership of the property, and certifies the same to the State-chartered bank, mortgage company, or credit union on a form promulgated for this purpose by the Commissioner of Banking and Insurance. In the case of a mortgage refinance application, the qualified veteran or surviving spouse would be required to meet all of the eligibility requirements for the disabled veterans’ property tax exemption, including ownership of the property.