MORTGAGE CASES

                                                          Glutkowski v. Equity One 360 N.J. Super. 1 (App. Div. 2003) federal and state laws on mortgage

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         17. Transfer of the Property or a Beneficial Interest in Borrower. If all or any part of the Property or any interest in it is sold or transferred . . . without Lender's prior written consent, Lender may, at its option, require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Lender if exercise is prohibited by federal law as of the date of this Security Instrument.

        If Lender exercises this option, Lender shall give Borrower notice of acceleration. The notice shall provide a period of not less than 30 days from the date the notice is delivered or mailed within which Borrower must pay all sums secured by this Security Instrument. If Borrower fails to pay these sums prior to the expiration of this period, Lender may invoke any remedies permitted by this Security Instrument without further notice or demand on Borrower.

 

    On or about April 11, 2001 defendant provided a payoff statement to plaintiff, stating that the mortgage was in default and if not brought current, could be referred to an attorney for foreclosure. The Payoff Statement reflected the amount needed to prepay the mortgage in full, which included the remaining principal balance, interest, various fees and late charges, plus a prepayment fee of $1,427.97. Plaintiff sold the property, and on April 19, 2001 paid the amount indicated in the Payoff Statement, including the prepayment fee.
 

    In addition, the Prepayment Law provides that no provision of a mortgage which denies the rights conferred by the above sections [N.J.S.A. 46:10B-2 and N.J.S.A. 46:10B-3] shall be enforceable, N.J.S.A. 46:10B-4, and that any prepayment fees collected in knowing violation of the statute must be repaid, with interest calculated at six percent per annum. N.J.S.A. 46:10B-5.
    Finally, the Prepayment Law provides that:
 

        This act shall not apply to loans secured by a mortgage on real property the prepayment of which is governed by any other statute of this State or of the United States, nor shall it apply to any loans, secured by mortgage on real property, made pursuant to any statute of this State or of the United States expressly authorizing interest charges in excess of 6% per annum.

        [N.J.S.A. 46:10B-9.]

        a. An individual borrower may prepay a loan in full at any time without payment of any prepayment charge.

        b. If a borrower wishes to prepay a loan, a lender shall not use the "rule of 78's" to calculate the amount of interest owed by the borrower. The lender shall use a simple interest basis to calculate the amount of interest owed by the borrower.

        [N.J.S.A. 17:3B-22.]

 

        (1) the term "alternative mortgage transaction" means a loan or credit sale secured by an interest in residential real property, a dwelling, all stock allocated to a dwelling unit in a residential cooperative housing corporation, or a residential manufactured home . . .

            (A) in which the interest rate or finance charge may be adjusted or renegotiated;

            (B) involving a fixed-rate, but which implicitly permits rate adjustments by having the debt mature at the end of an interval shorter than the term of the amortization schedule; or

            (C) involving any similar type of rate, method of determining return, term, repayment, or other variation not common to traditional fixed- rate, fixed-term transactions, including without limitation, transactions that involve the sharing of equity or appreciation;

        [ 12 U.S.C.A. §3802(1).]

        An alternative mortgage transaction may be made by a housing creditor in accordance with this section, notwithstanding any State constitution, law, or regulation.

        [ 12 U.S.C.A. §3803(c).]

    The statute further provided for a limited time-frame, after the effective date of the Parity Act, during which states could choose to opt out of the Parity Act. In order to opt out, during that limited time-frame, states were required to pass a law stating "explicitly and by its terms that such State does not want the preemption provided in [ 12 U.S.C.A. §3803] to apply with respect to alternative mortgage transactions (or to any class or type of alternative mortgage transaction) subject to the laws of such State . . ." 12 U.S.C.A. §3804(a).
    New Jersey did not opt out of the Parity Act. This fact has been acknowledged by the Office of the Attorney General of the State of New Jersey, in an extensive formal opinion of March 6, 1987, and was recognized in Shinn, 96 F. Supp. 2d at 424. Plaintiff also admits this in his brief. Plaintiff's relatively brief argument, claiming that New Jersey did opt out of the Parity Act, is specious and is rejected. We also note that the statute plaintiff identifies as New Jersey's official "opt-out" of the Parity Act, the Market Rate Consumer Loan Act, does not explicitly state that New Jersey was opting out of Parity Act preemption. Indeed, the statute contains no reference whatsoever to the Parity Act. N.J.S.A. 17:3B-4 to -27. Therefore, it does not constitute an "opt-out" of Parity Act preemption, as defined by 12 U.S.C.A. §3804(a).
 

        Any prepayment on a real estate loan must be applied directly to reduce the principal balance on the loan unless the loan contract or the borrower specifies otherwise. Subject to the terms of the loan contract, a Federal savings and loan association may impose a fee for any prepayment of a loan.
        [(emphasis added).]

 

        (a) The provision of the constitution of any State expressly limiting the rate or amount of interest, discount points, or other charges which may be charged, taken, received, or reserved by lenders and the provisions of any State law expressly limiting the rate or amount of interest, discount points, or other charges which may be charged, taken, received, or reserved shall not apply to any loan, mortgage, or advance which is insured under title I or II of this chapter .

        (b) The provisions of subsection (a) shall apply to loans, mortgages, or advances made or executed in any State until the effective date (after December 21, 1979) of a provision of law of that State limiting the rate or amount of interest, discount points, or other charges on any such loan, mortgage, or advance.

        [ 12 U.S.C.A. §1735f-7.]

    DIDA's preemption provision is different from the Parity Act's in one significant respect. Clearly, DIDA's preemption provision was not intended to prevent state limitations on prepayment charges. Grunbeck, 74 F. 3d at 340, citing 1980 U.S.C.C.A.N. at 255. This fact is confirmed in the applicable federal regulation, which provides that nothing in DIDA "preempts limitations in state laws on prepayment charges, attorneys' fees, late charges or other provisions designed to protect borrowers." 12 C.F.R. § 590.3(c).
    Plaintiff's additional contention, that DIDA is relevant to the Parity Act, because the two statutes overlap, is technically accurate. However, that statutory overlap is of no significance. Specifically, the Parity Act provides that Section 501(c)(1) of DIDA, 12 U.S.C.A. §1735f-7a(c)(1), shall not apply to transactions subject to the Parity Act. 12 U.S.C.A. §3805. Roughly, Section 501(c)(1) of DIDA provides that DIDA preemption shall not apply to a mortgage which is secured by a first lien on a manufactured residential home, unless the terms and conditions of that mortgage comply with the consumer protection provisions specified in regulations prescribed by the Federal Home Loan Bank Board (FHLBB), regarding, for example, balloon payments, prepayment penalties, late charges, and deferral fees. 12 U.S.C.A. §1735f-7a(c).
    Thus, all the Parity Act intended, by stating that Section 501(c)(1) of DIDA does not apply to transactions subject to the Parity Act, is that "certain federal consumer protection provisions with respect to balloon payments, prepayment penalties, late charges and deferral fees that are applicable in connection with mobile home transactions are not applicable to transactions authorized by the [Parity] Act." Alan S. Kaplinsky, "Federal Usury Law Developments," Practicing Law Institute, Commercial Law and Practice Course Handbook Series, Consumer Financial Services Litigation (1998).
    Neither party in the present case contends that the mortgage transaction involved a mobile home. Therefore, neither 501(c)(1) of DIDA, nor 12 U.S.C.A. §3805 are implicated.
 

        Absent explicit preemptive language, Congress' intent to supersede state law altogether may be inferred because "[t]he scheme of federal regulation may be so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it," because "the Act of Congress may touch a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject," or because "the object sought to be obtained by federal law and the character of obligations imposed by it may reveal the same purpose."

        [Id., 458 U.S. at 153, 102 S. Ct. at 3022, 73 L. Ed. 2d at 675 (quoting Rice, 331 U.S. at 230, 67 S. Ct. at 1152, 91 L. Ed. at 1459).]

 

Accord, Turner, 162 N.J. at 87-88.
    Even where Congress has not completely displaced state regulation in a particular subject matter, state law will be nullified to the extent it actually conflicts with federal law, i.e., to the extent compliance with both federal and state law is a physical impossibility, or to the extent state law is an obstacle to the accomplishment of Congressional objectives. Fidelity, 458 U.S. at 153, 102 S. Ct. at 3022, 73 L. Ed. 2d at 675.
 

        Where Congress has directed an administrator to exercise his discretion, his judgments are subject to judicial review only to determine whether he has exceeded his statutory authority or acted arbitrarily. United States v. Shimer, 367 U.S. 374, 381-82, 81 S. Ct. 1554, 1559-60, 6 L. Ed.2d 908, 913-14 (1961). When the administrator promulgates regulations intended to pre-empt state law, the court's inquiry is similarly limited:

            "If [h]is choice represents a reasonable accommodation of conflicting policies that were committed to the agency's care by the statute, we should not disturb it unless it appears from the statute or its legislative history that the accommodation is not one that Congress would have sanctioned." Id., 367 U.S. at 383, 81 S. Ct. at 1560, 6 L. Ed. 2d at 915.

        [Fidelity, 458 U.S. at 154, 102 S. Ct. at 3023, 73 L. Ed. 2d at 675.]

 

Accord, Leary v. United States, 395 U.S. 6, 23-24, 89 S. Ct. 1532, 1541-42, 23 L. Ed.2d 57, 74 (1969); Brown & Williamson Tobacco Corp. v. Food and Drug Admin., 153 F.3d 155, 161 (4th Cir. 1998), aff'd, 529 U.S. 120, 120 S. Ct. 1291, 146 L. Ed.2d 121 (2000); Ayers v. Philadelphia Hous. Auth., 908 F.2d 1184, 1189 (3d Cir. 1990), cert. denied, 498 U.S. 1103, 111 S. Ct. 1003, 112 L. Ed.2d 1086 (1991); Natural Res. Def. Council v. U.S. E.P.A., 822 F.2d 104, 111-12 (D.C. Cir. 1987). See also Turner, 162 N.J. at 88 (as long as federal agency intended to preempt state law, and acted within scope of delegated authority, federal regulations have same preemptive effect as federal statutes).
 

        An alternative mortgage transaction may be made by a housing creditor in accordance with this section, notwithstanding any State constitution, law, or regulation.

        [ 12 U.S.C.A. §3803(c).]

The question presented by this case is: to what extent did Congress, through the Parity Act, intend to preempt state laws? This question involves an interpretation of the scope of the Parity Act's preemption clause. Cipollone v. Liggett Group, Inc., 505 U.S. 504, 517, 112 S. Ct. 2608, 2618, 120 L. Ed.2d 407, 423 (1992).
    Similarly, there is no question that, in passing 12 C.F.R. § 560.220, the OTS intended to preempt state law, pursuant to the authority delegated to the agency, by Congress, under the Parity Act. That is evident from the language of 12 C.F.R. § 560.220 in which the OTS stated that non-federally chartered housing creditors could make AMTs, in accordance with this regulation, "notwithstanding any state constitution, law, or regulation."
    Moreover, there is no question that 12 C.F.R. § 560.220 actually conflicts with New Jersey law. Specifically, New Jersey's Prepayment Law expressly prohibits prepayment penalties on residential mortgages. N.J.S.A. 46:10B-2. However, in 12 C.F.R. § 560.220, the OTS determined that state-chartered housing creditors, like their federal counterparts, are authorized to charge prepayment penalties on AMTs. Specifically, in 12 C.F.R. § 560.220, the OTS determined that 12 C.F.R. § 560.34 should be applied to AMTs issued by state-chartered housing creditors, under the Parity Act. 12 C.F.R. § 560.34 provides that "subject to the terms of the loan contract, a Federal savings and loan association may impose a fee for any prepayment of a loan."
    Thus, in the present case, the heart of the preemption issue is whether 12 C.F.R. § 560.220 constitutes a valid exercise of the OTS's regulatory authority. In other words, in implementing 12 C.F.R. § 560.220, in 1996, did the OTS exceed the bounds of authority, delegated to it by Congress, under the Parity Act? Turner, 162 N.J. at 88. See also, Thomas v. North Carolina Dept. of Human Res., 478 S.E.2d 816, 823-24 (N.C. Ct. App. 1996) (under federal system, states possess sovereignty concurrent with that of federal government, subject only to limitations imposed by Supremacy Clause; therefore, state court had jurisdiction to interpret federal statute and invalidate federal regulation which conflicted with it), aff'd, 485 S.E.2d 295 (N.C. 1997).

        Contrary to plaintiffs' characterization of the [Parity] Act, the Court finds that [12 U.S.C.A.] § 3803(c) does not limit the preemptive effect of the [Parity] Act to state laws which would completely prohibit or obstruct the creation of AMTs. Section 3803(c) states only that "[a]n alternative mortgage transaction may be made by a housing creditor in accordance with this section, notwithstanding any State constitution, law, or regulation." The language of this section does not support plaintiffs' narrow interpretation of [the Parity Act's] preemptive effect. Nor does the Court agree that the sole purpose of the [Parity] Act is to enable state lenders to engage in AMTs. A paramount purpose of the [Parity] Act is [to] create parity between state and federal lenders who engage in AMTs. The Court finds that the [OTS 1996 Opinion Letter] and the OTS's regulations governing prepayment penalties [12 C.F.R. § 560.220] are, to the extent they preempt state law, a permissible interpretation of the congressional authority vested in the OTS under the Parity Act.

        [Id. at 425.]

 

        prepayment . . . fee provisions are not intrinsic to the ability to offer alternative mortgages.

        [Id. at 24,670.]

While the OTS recognized that state housing creditors might view its Proposed Rulemaking as having a discriminatory impact on their ability to offer alternative mortgages, the OTS noted that:

Moreover, the OTS examined the intent of the Parity Act, and the scope of the Parity Act's preemption clause, stating as follows:
 

        One of the congressional findings underlying the Parity Act was that OTS and the other federal regulators had adopted regulations authorizing their federally chartered institutions to offer alternative mortgages, and that the purpose of the Act was to eliminate the discriminatory impact of those regulations. [The] OTS regulation[] on prepayment penalties [12 C.F.R. § 560.34] . . . however, [was] not adopted to enable federal thrifts to engage in alternative mortgage financing, but rather to permit federal thrifts the flexibility to exercise their lending powers under a uniform federal scheme. See 12 C.F.R. 560.2(a). Therefore, OTS does not believe that Congress intended that regulations such as [12 C.F.R. § 560.34] would offer a basis for claiming discriminatory treatment or were needed to provide parity with federally-chartered institutions. Indeed, OTS broadly allows federal thrifts to impose loan-related fees (e.g., initial charges and servicing fees) on any loan including alternative mortgages, notwithstanding any state law to the contrary. OTS also allows federal thrifts to process and originate any loan including alternative mortgages, without regard to state law. There is no basis for distinguishing prepayment penalties . . . from these other OTS rules that apply generally to loans.

        [Ibid. (footnotes omitted) (emphasis added).]

        Respondents argue that . . . the purpose of the Parity Act is the achievement of absolutely parity with federally chartered lending institutions. . . .

        We are not persuaded by respondents' expansive view of Congress's purpose in enacting the Parity Act. Of course, absolute parity would achieve the results that Congress sought, but so would much less, such as simply authorizing non-federally chartered housing creditors to engage in alternative mortgage financing. The statute as a whole, in particular the permission retained by the states to regulate housing creditors (see 12 U.S.C. §3802(2)), counsels against respondents' generous interpretation of congressional purpose, an interpretation that would permit non-federally chartered housing creditors to present information to borrowers in a misleading, distorted or even inaccurate fashion with impunity because of the lack of federal regulation.

        For similar reasons, respondents' contention that the goal of the Parity Act is national uniformity in the regulation of state- chartered housing lenders with respect to alternative mortgage transactions is also flawed. Given the dearth of applicable federal regulations, the national uniform standard for state-chartered housing lenders would be "anything goes." That is hardly a uniform standard.

        [Black, 112 Cal. Rptr. 2d at 457 (emphasis added).]

    To recognize federal regulations as the exclusive regulation of AMTs would create an intolerable situation, whereby housing creditors could attempt to structure their mortgage loans to make them AMTs, thereby avoiding state consumer protection laws, applicable to all mortgage transactions, in favor of the "no holds barred" federal scheme applicable to AMTs. The OTS noted this effect in its Proposed Rulemaking, remarking that consumer groups and States had complained that "state housing creditors are taking advantage of OTS regulations on prepayment penalties . . . by structuring otherwise fixed-rate, fixed term loans with features to make them alternative mortgages and thus avoid state restrictions on these charges," thereby piggybacking on federal preemption to facilitate predatory practices. Alternative Mortgage Transaction Parity Act; Preemption, 67 Fed. Reg. at 20,469.
    Finally, supporting a finding that the Parity Act has a limited purpose to create a national market for AMTs, and not a broad purpose to regulate the terms of all AMTs issued throughout the nation, is the fact that the Parity Act makes no mention at all of the specific terms which must be available for AMTs, and makes no mention whatsoever of fees or charges which must be allowed for AMTs. The OTS noted the significance of this fact in its Proposed Rulemaking, stating specifically: "It is of note that the Parity Act makes no reference to fees or penalties nor does it direct the federal regulators to consider their impact on alternative mortgages." Id. at 20,470, n.19.
    Indeed, one could read the Parity Act as anticipating that there would be diversity in the terms offered by AMTs, because the Parity Act: (1) expressly grants states the authority to opt out of the federal scheme, 12 U.S.C.A. §3804(a); and (2) provides that three different federal agencies have regulatory authority in this area of law, depending upon the nature of the entity being regulated (bank, credit union, or "all other housing creditors"). 12 U.S.C.A. §3803(a).See footnote 2² This is something the OTS noted in its Final Rulemaking. Alternative Mortgage Transaction Parity Act; Preemption, 67 Fed. Reg. at 60,545-46.
    Given Congress's limited purpose in enacting the Parity Act, to create a national market for AMTs, we cannot conclude that 12 C.F.R. § 560.220 may be viewed as a valid exercise of the authority delegated to the OTS by Congress, under the Parity Act .. at least to the extent 12 C.F.R. § 560.220 purports to regulate state- chartered housing creditors' assessment of prepayment penalties on AMTs covered by the Parity Act, by incorporating 12 C.F.R. § 560.34. Section 12 C.F.R. § 560.220's incorporation and application of 12 C.F.R. § 560.34 to state-chartered housing creditors goes well beyond the intent of Congress to create a national market for AMTs. It reflects a purpose not intended by Congress, to regulate the market for AMTs created by the Parity Act. We find it invalid.
 

        susceptible to at least two interpretations. On the one hand, the phrase "state constitution, law, or regulation" is modified with the adjective "any," supporting the argument that the preemption provision precludes all state regulations of alternative mortgage transactions involving state- chartered housing creditors.

        On the other hand, the phrase "any state constitution, law, or regulation" can be interpreted as implicitly limited to those that prohibit or impede alternative mortgage transactions or that conflict with federal regulations deemed applicable to non-federally chartered housing creditors, i.e., the regulations that the transaction must be made "in accordance with."

        [Id. at 455.]

 

That court went on to recognize that other provisions of the Parity Act supported the latter, narrower interpretation of the preemption clause. Therefore, the court adopted this narrower interpretation. Id. at 455-58.
    Through the Parity Act, Congress clearly granted OTS regulatory authority to preempt state law, 12 U.S.C.A. §3801(a)(3) and 3803(a). However, that regulatory authority must be viewed as limited by Congress's limited preemptive intent, as expressed in the Parity Act's preemption clause, 12 U.S.C.A. §3803(c), to preempt only those state laws which prohibit or interfere with a housing creditor's ability to "make, purchase, [or] enforce" AMTs, 12 U.S.C.A. §3801.
    Under this limited view of the Parity Act's preemption clause, it is clear to us that 12 C.F.R. § 560.220 goes well beyond Congress's preemptive intent, to the extent it incorporates 12 C.F.R. § 560.34, because prepayment penalties do not prohibit or interfere with a housing creditor's ability to make, purchase, or enforce AMTs. Indeed, prepayment fees are not unique to AMTs. They are common to traditional mortgages, as well as other consumer loans. Thus, prepayment fees cannot be viewed as limiting the availability of AMTs, any more than they may be viewed as limiting the availability of traditional mortgages or other forms of consumer financing.
    The OTS recognized this fact in both its recent Proposed Rulemaking and Final Rulemaking. Specifically, the OTS remarked that: (1) state prohibitions against or limitations of prepayment fees are not directed at prohibiting or limiting the availability of AMTs; and (2) the OTS regulation, authorizing prepayment penalties, 12 C.F.R. § 560.34, was not adopted by the OTS in order to enable federally chartered housing creditors to engage in AMTs. Thus, there is no legitimate reason to apply 12 C.F.R. § 560.34 to state-chartered housing creditors, with respect to AMTs covered by the Parity Act, as the OTS did in 1996, by incorporating 12 C.F.R. § 560.34 into 12 C.F.R. § 560.220. Alternative Mortgage Transaction Parity Act; Preemption, 67 Fed. Reg. at 20,470; Alternative Mortgage Transaction Parity Act; Preemption, 67 Fed. Reg. at 60,544-46.
    Indeed, it is extremely significant that the OTS's 1996 incorporation of 12 C.F.R. § 560.34 into 12 C.F.R. § 560.220, and thus its decision to regulate prepayment fees with respect to state-chartered housing creditors' AMTs, represented a significant change in policy, and a significant expansion of the OTS's jurisdiction. As plaintiff's brief points out, contrary to the OTS's 1996 position, in 1983, the FHLBB took a much more limited view of its role in regulating state-chartered housing creditors' AMTs, under the Parity Act. Specifically, the FHLBB took the position that, under the Parity Act, it should apply to state- chartered housing creditors, only " those regulatory provisions that describe and define alternative mortgage transactions ," and not "those provisions that apply generally to mortgage loans" such as prepayment penalties. Implementation of New Powers; Limitation on Loans to One Borrower, 48 Fed. Reg. 23032, 23058 (May 23, 1983) (emphasis added). The FHLBB's more limited approach was "premised on the clear statement of Congressional intent that [the Parity Act] 'does not place non-federally chartered housing creditors under the supervision of the federal agencies, but instead merely enables them to follow a federal program as an alternative to state law.'" Ibid. (quoting S. Rep. No. 97-463, 97th Cong., 2d Sess. 55)).
    Thus, because it conflicts with the OTS's prior interpretation, the OTS's decision in 1996 to regulate prepayment fees with respect to AMTs by incorporating 12 C.F.R. § 560.34 into 12 C.F.R. § 560.220 is "'entitled to considerably less deference'" from this court. Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 417, 113 S. Ct. 2151, 2161, 124 L. Ed.2d 368, 383 (1993) (quoting Watt v. Alaska, 451 U.S. 259, 273, 101 S. Ct. 1673, 1681, 68 L. Ed.2d 80, 92 (1981)). See also, Brown & Williamson, 153 F. 3d at 162 (closer scrutiny suggested where an agency is attempting to expand the scope of its jurisdiction).
    Finally, defendant's reliance upon Turner, 162 N.J. 75, as to the broad scope of the OTS's delegated authority, is inapposite, and somewhat misleading. In Turner, our Supreme Court recognized that, under the HOLA, Congress granted the OTS broad authority to regulate federal savings and loan associations, and the OTS occupied the field of lending regulation for federal savings and loan associations. Therefore, there was no room for state regulation of federal savings and loan associations. Id. at 88-94. That is not the question posed in the present case. Here, the question is the scope of authority delegated to the OTS, under the Parity Act, to regulate AMTs issued by state-chartered housing creditors.
 

        In determining retroactive application of a new rule, four judicial options are available: (1) make the new rule of law purely prospective, applying it only to cases whose operative facts arise after the new rule is announced; (2) apply the new rule to future cases and to the parties in the case announcing the new rule, while applying the old rule to all other pending and past litigation; (3) grant the new rule limited retroactivity, applying it to cases in (1) and (2) as well as to pending cases where the parties have not yet exhausted all avenues of direct review [pipeline retroactivity]; and, finally, (4) give the new rule complete retroactive effect, applying it to all cases, even those where final judgments have been entered and all avenues of direct review exhausted.

        [State v. Yanovsky, 340 N.J. Super. 1, 8 (App. Div. 2001), quoting State v. Burstein, 85 N.J. 394, 402-03 (1981).]

"The determination of retroactive application is generally guided by three factors: '(1) the purpose of the rule and whether it would be furthered by a retroactive application, (2) the degree of reliance placed on the old rule by those who administered it, and (3) the effect a retroactive application would have on the administration of justice.'" Id. at 9 (quoting State v. Knight, 145 N.J. 233, 251 (1996) (citation and internal quotations omitted)). See also, Alderiso v. Medical Center, 167 N.J. 191 (2001); Sasco 1997 NI,LLC v. Zudkewich, 166 N.J. 579, 596 (2201).
    The issue of retroactivity raises questions which have not been addressed by the parties. We leave this issue to the Law Division judge, in the first instance.
    Affirmed in part; reversed in part, and remanded.

        Prepayment of a mortgage loan may be made by or on behalf of a mortgagor at any time without penalty.

        A mortgagor shall have the right, during any 6 month period beginning with the date of the mortgage loan, to pay, without charge or penalty, an additional sum of $50.00, or multiples thereof, on account of the principal amount owing on a mortgage loan, provided that the additional sums so paid and the principal payments required to be made by the terms of such mortgage loan during such 6 month period do not together exceed in any such 6 month period 33 1/3% of the face amount of such mortgage loan. The right to make additional payments as provided by this section shall not be cumulative, and to the extent that it is not exercised during any 6 month period, shall lapse.

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