Regulatory Authority

Recommendation

04 N.C.A.C. 03M .0501(c)

Retain copies of all agreements or contracts with the applicant, including any commitment and lock-in agreements, and all disclosures required by State and Federal law. 

Closed loan files should be in a consistent stacking order and contain, as applicable, applicant's name, date, name of person taking the application, signed HUD-1 Settlement Statements, copies of all agreements or contracts with the applicant, including any commitment and lock-in agreements, and all disclosures required by State and Federal law.  This includes but is not limited to a signed application, Note, Deed of Trust, and, if applicable, a Right of Rescission. 

The Gramm-Leach-Bliley Act

Develop written policies and practices in compliance with the Federal Trade Commission’s (FTC) Safeguards and Disposal Rules.

The Gramm-Leach-Bliley (GLB) Act requires financial institutions to ensure the security and confidentiality of personal information collected from their customers.  As part of its implementation of the GLB Act, the FTC has issued the Safeguards Rule.  This Rule requires financial institutions under FTC jurisdiction to secure customers records and information.  Written policies and practices should be implemented to comply with the Safeguards Rule.  Information concerning this Rule was provided during this examination’s exit interview and is posted at http://www.ftc.gov/privacy/privacyinitiatives/glbact.html

In an effort of protect the privacy of consumer information and reduce the risk of fraud and identity theft, the FTC’s Disposal Rule requires that businesses take appropriate measures to dispose of sensitive information derived from consumer reports.  The Rule became effective June 1, 2005.  Written policies and practices should be implemented to comply with the Disposal Rule.  Information concerning this Rule was provided during this examination’s exit interview and can be viewed at Disposal Rule .

Add a statement to the company’s policy/procedure handbook and/or employment contract that establishes file ownership and theft prosecution.

An example of such a statement:

All loan files, applications, customer lists, names, and documents are the property of the employer and it is the duty of the employee upon termination of employment to relinquish any and all information relating to loan files. This includes, but is not limited to, computer files, disks, original documentation, and photocopies. The employee acknowledges that failure to comply with this provision is a violation of the NC General Statutes and will result in prosecution to the fullest extent of the law.

The Office of Commissioner Banks strongly encourages that a mortgage company’s principal place of business not be in an individual’s home.

A principal place of business shall consist of at least one enclosed room or building of stationary construction in which negotiations of mortgage loan transactions of others may be conducted and carried on in privacy and in which all of the books, records, and files pertaining to mortgage loan transactions relating to borrowers in this State are maintained secured against unauthorized access and damage.

24 CRF § 3500.7 (c).

Disclose yield spread premiums as a dollar amount or percentage range on all Good Faith Estimate Disclosures.

24 CFR §3500.15 of Regulation X. 

Provide applicants with an Affiliated Business Disclosure, when applicable.

15 USC § 1681m

When taking adverse action with respect to any applicant that is based in whole or in part on any information contained in a consumer report the Statement of Credit Denial, Termination or Change shall contain the name, address and telephone number of the consumer reporting agency.

24 CFR § 110.10B (c)

Display the Federal Housing Act poster in clear public view. 

N.C. Gen. Stat. § 53‑243.12 (a)(2)(g)

Submit a written business plan to NCCOB outlining the procedure the company will take to obtain a positive net worth.

N.C. Gen. Stat. § 24-1-1E (5) (b).

The high-cost home loan statute provides that if the borrower has a right to select an attorney from an approved list then attorneys’ fees are excluded from the calculation as to whether it is a high cost loan.  Therefore, the suggested practice is for the broker/lender to provide the borrower with a list of acceptable attorneys from which they may choose in writing.  We recommend that a NC Attorney Selection Notice be provided to applicants. 

04 NCAC 03M.0502 (a)

Except for samples of advertising materials retained pursuant to 4 NCAC 03M.0501(d), all records required by the North Carolina Administrative Code shall be kept for a period of at least three years and shall be available for inspection and copying upon request by OCOB.

The State of North Carolina has no provision available to place a company under an “inactive” status. As such, in the case of a company that is not conducting business as a mortgage lender or broker the company has the option of:

• Surrendering their company license and re-applying for licensure upon a decision to operate as a mortgage broker/lender.
• Conducting adequate business as to be considered operational in the mortgage broker/lender industry.

04 NCAC 03M .0402

A licensee shall notify the OCOB within 30 days of any material change in any document or information previously submitted to the OCOB during the application process, upon filing the annual statement, or otherwise filed with the OCOB.  Notification shall be accomplished by letter or by submission of revised pages of the application or annual report.