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What is a High-Risk Mortgage in New Jersey?


N.J.S.A. 46:10B-50 defines a “High Risk Mortgage” as a “first mortgage loan” that has one or more of the following characteristics:

  1. A reset mortgage interest rate that increases the initial interest rate by two or more percentage points.
  2. Contains a payment option plan or a “pick a payment” plan.
  3. Contains a negative amortization schedule.
  4. Is a subprime mortgage, which means a consumer credit transaction, secured by the consumer’s principal dwelling, with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction, as of the date interest is set, by 1.5 or more percentage points for loans secured by a first lien on a dwelling, or by 3.5 or more percentage points for loans secured by a subordinate lien on a dwelling.
  5. Contains an enforceable prepayment penalty.
  6. Is a High Cost Loan as defined in section 3 of the New Jersey Home Ownership Security Act of 2002 (N.J.S.A. 46:10B-24)(NJHOSA).