New Jersey passed a bill amending escrow analysis requirements and mortgage payment allowances. Under the bill, if at the time an escrow analysis is performed, the analysis projects an escrow shortage or otherwise results in an increase to escrow amount payments, a financial institution must:
- Notify the borrower of the new contractual mortgage payment and adjust the amount of the borrower’s recurring payment amount, if any, in accordance with the payment change resulting from the escrow analysis; and
- Apply any additional amounts paid by the mortgagor first to any unsatisfied escrow payments and then to the mortgage loan principal, without the imposition of any penalty; and
Also, the borrower may elect to submit a payment or payments to the financial institution to reduce or eliminate any projected escrow shortage. A mortgagor that elects to make additional escrow payments must notify the financial institution of their intent to make the payments. The payments must be treated separately and independent of payments applied to the mortgage loan principal pursuant to this section.
In addition, this bill requires financial institutions to allow mortgagors in good standing to make biweekly and semi-monthly payments to mortgage principal and provides that a financial institution shall apply any amount paid in excess of the total annual contractual mortgage payments due to the mortgage loan principal.
The bill becomes effective November 1, 2025.
Click to view the New Jersey SB 3525: https://www.tenaco.com/wp-content/uploads/2025/05/NJ-SB-3525-05-13-25.pdf
