Review carefully the certification FAQs for Education and Testing to determine if you have met the requirements for compliance.

1.    Q: Under NC SAFE, what types of licenses can an individual obtain?

A: Under NC SAFE, NCCOB is authorized to issue the following licenses to individuals:

a.    A “Mortgage Loan Originator” license, which authorizes an individual, while a W-2 employee by a licensed Mortgage Lender or Mortgage Broker

·   To take residential mortgage loan applications or offer to negotiate terms of residential mortgage loan,

·   Accept or offer to accept applications for residential mortgage loans,

·   Solicit or offer to solicit a mortgage loan,

·   Negotiate the terms and conditions of a residential mortgage loan, or

·   Issue mortgage loan commitments or interest rate guarantee agreements to prospective borrowers.

b.    An “Exclusive Mortgage Broker” license, which authorizes an individual to act as a Mortgage Broker exclusively for a single mortgage broker or lender or a single exempt mortgage lender.  Exclusive Mortgage Brokers are not required to be W-2 employees of the mortgage lender or broker for whom they broker loan as agent, nor are they required to have three years of experience in residential mortgage lending.  However, Exclusive Mortgage Brokers must also hold a Mortgage Loan Originator license and both the mortgage lender and mortgage are subject to additional requirements and limitations discussed below.

2.    Q: Who must have a Mortgage Loan Originator license?

A: The Mortgage Loan Originator licensing process, including the application, education and examination components, is designed to ensure that only honest, knowledgeable employees have contact with consumers concerning specific terms of actual or potential loans. A person must therefore be licensed as a Mortgage Loan Originator if by any oral or written means, he or she communicates to a consumer, information regarding a pending or potential application. Such communications include, but are not limited to:

(i)           Explanations or recommendations regarding specific terms, conditions or benefits of any loan available from or through his or her employer, whether or not the consumer has made or later makes an application,

(ii)          Explanations of any term or aspect of any disclosure or agreement given at or after an application is received,

(iii)         Offers to make or solicit a loan on terms or conditions different from those for which the consumer applied.

Persons whose communications with consumers are solely for the purpose of obtaining or collecting information needed to complete or process an application need not be licensed. Marketing or promotional communications limited to general information regarding the licensee or its loan products are also not covered.

Some activities are specifically excluded from the definition of “Mortgage Loan Originator” and not required to be licensed.

a.    An individual engaged solely as a loan processor or underwriter.  See Q. 3 below.

b.    A licensed and registered Real Estate Broker, only when performing real estate brokerage activities and not compensated by a lender, broker or mortgage loan originator, and agent of the same;

c.    Individuals involved solely in the extension of credit or sale of time share instruments relating to time-share plans as defined by N.C. G.S. 93A-41(9a).  (Please refer to the Real Estate Commission for guidance on what constitutes a “Time-share instrument” under that section);

d.    An individual who only informs borrowers of the availability of other persons engaged in the mortgage and does not take or assist in the completion of a loan application.  To the extent these individuals take a consumers social security number, credit score, credit or employment history or the specific rate of a desired mortgage loan, they are likely to be subject to NC SAFE’s licensure requirements.

e.    Very limited involvement by sales person employed by licensed mobile home dealers (see Q. 5 below).

3.    Q: I work for a Mortgage Lender. I am an "underwriter" who analyzes the application and other credit-related data submitted by the broker and the borrower. I then approve or deny the loan. I never speak to a borrower - just the broker who sends us loans to fund. Do I have to get a Mortgage Loan Originator License?

A: The fact that the communication with the consumer occurs through an intermediary does not necessarily exempt you from the licensure requirement. However, if your communication is limited to advising the broker whether your employer will make or purchase the loan as submitted by the broker, you will not need a license.

4.    Q: If I am licensed as a Mortgage Loan Originator, must I be employed by a licensed company to use my license?

A: Yes.  A Mortgage Loan Originator’s license is only effective when that individual is employed by a licensed Mortgage Lender or Mortgage Broker.

5.    Q: I am a sales person for a licensed Mobile Home dealer, are there any mortgage loan origination activities (described in Q. 1 above) I can engage in without having an effective MLO license?

A: NC SAFE limits a sales person for a licensed mobile home dealer’s involvement in the loan process to physically handling or transmitting to a licensed Mortgage Loan Originator an application that has already been completed by a prospective borrower with no assistance from the sales person.  At the written request of a licensed MLO, and after the prospective borrower has completed the application, a sales person may pull and transmit the prospective borrower’s credit report to the MLO.

6.    Q: May I be employed as a mortgage loan originator by more than one licensed company?   Provide services to a Mortgage Lender or Mortgage Broker other than my employer?

A: No.  A Mortgage Loan Originator may be employed by only one licensed Mortgage Lender or Mortgage Broker at a time.  A Mortgage Loan Originator’s license is only effective as to services performed on behalf of, and supervised by, that MLO’s W-2 employer.

7.    Q:  I am a "freelance" Mortgage Loan Originator who solicits loans for (but is not an employee of) one or more lenders. Will I need a Mortgage Broker and/or a Mortgage Loan Originator License?

A: Yes, you will need a Mortgage Loan Originator license and need to be employed with a licensed mortgage lender or broker. Since you are self-employed, you are not an "employee" under the Act and you may not legally solicit applications unless you are licensed as a sole proprietor Mortgage Broker and also, hold a MLO license.

8.    Q:  Is it legally permissible for a licensed Mortgage Loan Originator to offer to pay a referral fee to a real estate agent who sells property and refers his buyer/client to me for a mortgage loan?

A: No. If the real estate agent is not a licensed Mortgage Broker then the payment of the fee would be in violation of the Act. The Real Estate Agent is only exempt from the Act if he or she is not collecting any compensation in connection with the mortgage transaction except his or her real estate sales commission. Additionally, Mortgage Lender or Broker licensees are subject to discipline under the Act for knowingly making a payment to an unlicensed (and not exempt) person.

9.    Q:  Our company is a licensed Mortgage Lender who works solely through internet applications. Applicants log onto our website and insert information into a form. The application is credit scored and the system generates an e-mail or form letter advising the applicant if approved and on what terms and conditions. Following verification of the information (income, employment, etc.) submitted by the applicant and the satisfaction of any conditions (title insurance, payoff of other debts, etc.) the loan is closed. Individuals in our office talk to an applicant only to find out if the requested information or conditions have been sent or met. Who in our organization needs to be licensed as a Mortgage Loan Originator?

A: If all customer communications are limited to contact in a clerical capacity and there is no solicitation, negotiation or explanation of loan terms, it would appear that you do not need to license any Mortgage Loan Originators. However, the signatory on the e-mail or form letter committing to the loan (or the person identified for the customer to contact in the event of questions) should be licensed as a Mortgage Loan Originator.

10. Q: Our Company uses Tele-marketers to call prospective borrowers and encourage them to get a loan from our company. The Tele-marketer does not do anything except take information from the applicant, which is plugged into the computer. If the applicant qualifies, then a licensed Mortgage Loan Originator will underwrite the loan and follow-up to make the loan. Does the Tele-marketer have to be licensed as a Mortgage Loan Originator?

A:  Yes. Under NC SAFE, a Tele-marketer would need to be licensed to (a) solicit or to solicit a mortgage loan; (b) accept or offer to accept an application for a mortgage loans or (c) take a residential mortgage loan application.  

11. Q: Are the employees of a licensed Mortgage Servicer or a Mortgage Lender who communicate with borrowers concerning their existing mortgage loans serviced by the servicer required to obtain a Mortgage Loan Originator’s license?

A: An employee of a Mortgage Servicer or Mortgage Lender who only communicates with borrowers regarding collecting or receiving payments and other amounts due on existing mortgage loans, or collects data and makes decisions necessary to modify certain terms of an existing loan or otherwise finalize collection through the foreclosure process, is a “Loss Mitigation Specialist.”  These individuals are currently not required to be licensed under NC SAFE, though the U.S. Department of Housing and Urban Development may determine in the future that such individuals are required to be licensed as MLOs. 

Regardless of the whether some of an employee’s activities fall under the definition of “loss mitigation specialist,”  any individual who discusses, solicits, negotiates or takes an application for the refinancing of an existing loan must be licensed.

12.  Q:  Our company uses self-employed sales representatives to call on Real Estate Agents and leave loan application forms and information regarding our loans. A potential borrower never sees one of our representatives. They call us or contact us via the Internet to file their loan application. Do these sales representatives need a Mortgage Loan Originator license?

A: The sales representatives activity would be permissible without a license, if they received no compensation based upon the number of loans originated through this sales practice, have no contact with borrowers and do not explain the terms of or otherwise solicit the loan directly from the borrowers.

The Real Estate Agent should also refrain from assisting the buyer or borrower in completing the application or they may be engaging in activities for which they need a license. Likewise without a Mortgage Broker license the Realtor should accept no fee other than his/her real estate sales commission or fee. If the Real Estate Agent receives any type of referral fee, such agent should be licensed under the Act and should perform sufficient work in connection with mortgage transaction to warrant receipt of a fee.

Also, NC SAFE requires that a unique identifier be shown on all residential mortgage loan applications, solicitations or advertisements or any other documents as established by rule or order of the Commissioner.[i]

13. Q: Can a Mortgage Loan Originator’s compensation be reported on Form 1099-MISC rather than Form W-2?

A:  No.  In order to have an effective license under NC SAFE, a Mortgage Loan Originators must be a W-2 employee of a licensed mortgage lender or mortgage broker[ii].   The reporting of compensation on Form 1099-MISC will be treated as demonstrating that the individual compensated is an independent contractor and not an employee.  Acting as a Mortgage Loan Originator during any period which that license is ineffective violates NC SAFE. 

A licensed mortgage lender or mortgage broker who compensates a Mortgage Loan Originator who is not a W-2 employee will be subject to (1) regulatory action (i.e., license suspension or revocation), (2) criminal referral to local prosecuting authorities, and (3) reporting of such practices to Federal and State taxing authorities.