Q: Where can I sign up to receive electronic updates of the Mortgage Newsletter?

A: Sign up to receive electronic updates of our Mortgage Newsletter by sending a blank email to join-mortgagenews@nclist.com.

Q:  What is the Mortgage Lending Act (the “Act”)? And, when date does it take effect?

A: The Act (S.L. 2001-393; SB 904) is found in Chapter 53, Article 19A of the North Carolina General Statutes. It requires all persons and companies who make or broker loans secured by mortgages/deeds of trust on owner-occupied residential properties located in North Carolina to be licensed by the Commissioner of Banks unless exempted. Also, all employees of the licensee who accept or offer to accept applications on the licensee's behalf must be licensed as “Loan Officers”. This Act was effective July 1, 2002.

Q: Who is exempt?

A: Generally, those entities that are regulated by another agency or government organization are exempt from the requirement to be licensed to make or broker loans in North Carolina. For example, banks, savings banks, savings and loans, credit unions, certain non profits organized to further home ownership are exempt. For further information, see NCGS §53-243.01(8). Since they are depository institutions, they are exempt from licensing and should file a claim of exemption form. Persons employed as Loan Officers by exempt entities do not need to be licensed nor do they need to file individually to claim exempt status.

Q:  Section 7 of SB 904 states that, to the extent not inconsistent with the Act, the NCCOB's rules under Article 19 (4 N.C.A.C. Subchapter 3) stay in place until superseded by new rules. Now that your office has issued Temporary Rules can we assume that all of the old rules are now gone?

A: Yes, the office adopted new rules for Article 19A and all of the old rules applicable to Article 19 have been repealed.  This does not mean that some of the concepts contained in the old rules are not still applicable. For example under the old rules a lender or broker was required to provide an applicant/borrower a form disclosing what the lender/broker was going to do for the applicant/borrower in order to earn their fee. If the fee, if paid up front, was refundable if they were unable to produce a loan on the terms desired by the borrower as set forth in the application. This disclosure concept is still strongly suggested to be followed and should be set out in a firm’s policy and procedure manual and the procedure should be followed. Examiners will expect to see such items.