The North Carolina Secure and Fair Enforcement Mortgage Licensing Act modernization, effective October 1, 2025
***ATTENTION***
Legislative changes to the North Carolina Secure and Fair Enforcement (S.A.F.E) Mortgage Licensing Act (NC SAFE Act), were passed on July 1, 2025, and are effective October 1, 2025
***See House Bill 762***
NCCOB provides the following to highlight NC SAFE Act updates with red font indicating change. Refer to House Bill 762 for a comprehensive view. Many updates were made for clarity and consistency related to structure and terminology across the Act while other changes require more in-depth consideration.
Disclaimer: The following is not legal advice and is not an exhaustive list of all updates; the reader is responsible for ensuring accurate and complete understanding through independent review of the NC SAFE Act.
· NCGS § 53-244.030. Definitions
o (2b) Bona fide nonprofit. – Has the same meaning as in 12 C.F.R. § 1008.103(e)(7)(ii)
o (3) Branch manager – A mortgage loan originator who meets the requirements of G.S. 53-244.050(b), has at least three years of residential mortgage lending experience, and is assigned to, in charge of, and responsible for the business operations of a branch office.
o (4) Branch office – An office of a mortgage broker or mortgage lender that is open to the public, separate and distinct from the principal office, and consists of at least one enclosed room or building of stationary construction from which its employees engage in the mortgage business. A branch office shall not be located at an individual's home or residence.
o (10) Employee – An individual who has an employment relationship with a mortgage broker, mortgage lender, mortgage servicer, or mortgage origination support registrant, who is treated as a common law employee for purposes of compliance with the federal income tax laws, and whose income is reported on IRS Form W-2.
o (11) c. "Engaging in the mortgage business…. For compensation or gain from another or on one's own behalf, pursuant to the terms of a residential mortgage loan or the servicing documents or contract, to do any of the following:
· To collect or receive payments on existing obligations due and owing to the mortgage lender or mortgage servicer, including payments of principal, interest, escrow amounts, and other amounts due.
· To collect fees due to the mortgage lender or mortgage servicer.
· To work with the borrower and the mortgage lender or mortgage servicer to collect data and make decisions necessary to modify certain terms of those obligations either temporarily or permanently.
· To finalize collection through the foreclosure process under Chapter 45 of the General Statutes, forfeiture under Chapter 47H of the General Statutes, or repossession.
· To service a reverse mortgage loan…”
o (16) Loan processor or underwriter. “…– An individual who performs clerical or support duties as an employee at the direction of and subject to the supervision and instruction of a person licensed, registered, or exempt from licensing under this Article. Clerical or support duties may include, subsequent to the receipt of an application, both of the following…”
o (17) Loss mitigation specialist. – An employee of a mortgage lender or mortgage servicer authorized to (i) collect or receive payments, including payments of principal, interest, escrow amounts, and other amounts due on existing residential mortgage loans when the borrower is in default or in reasonably foreseeable likelihood of default, or when default is imminent, (ii) work with the borrower to collect data, or (iii) make decisions necessary to modify, either temporarily or permanently, certain terms of those residential mortgage loans or to otherwise finalize collection through the foreclosure process. These decisions include any change in the principal amount of the debt, the rate of annual interest charged, the term of the loan, the waiver of any fees or charges, including late charges, the deferral of payments, or any other similar matter
o (27) Qualifying individual. – An individual who meets the requirements of G.S. 53-244.050(b) has at least three years of residential mortgage lending or servicing experience, and who agrees to be primarily responsible for the operations of a licensee or registrant.
o (30) Residential mortgage loan. – Any loan or obligation made or represented to be made to a natural person or persons one or more individuals primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling located within this State or residential real estate upon which is constructed or intended to be constructed a dwelling. This term includes reverse mortgage loans under Article 21 of this Chapter and contracts for deed under Chapter 47H of the General Statutes
· 53-244.040. License and registration requirements.
o (a)… Except as provided in subdivision (c1) of this section, no person shall act as a mortgage origination support registrant with respect to any dwelling located in this State without first obtaining and maintaining a registration under this Article. It is unlawful for any person, other than an exempt person, to act as a mortgage origination support registrant without registration that authorizes a registrant to sponsor and employ licensed mortgage loan originators to control and supervise the registrant's loan processors or underwriters in accordance with this Article, 12 U.S.C. § 5102(5), and 12 U.S.C. § 5103(b).
o ... (a1) In anticipation of satisfaction of all requirements necessary to obtain a license as a mortgage loan originator under this Article, an individual is deemed to have temporary authority to act as a mortgage loan originator in this State to the extent authorized by, and subject to the terms and conditions prescribed in, 12 U.S.C. § 5117….
o (b) Five types of licenses are granted to persons under this Article, and it is unlawful for any person, other than an exempt person, to engage in the mortgage business without one of the following licenses…
o (d) The following are exempt…
(9) A person, as defined in 12 C.F.R. § 1026.2(a)(22), that as seller, receives in one calendar year no more than three residential mortgage loans as security for purchase money obligations, as specified in 12 C.F.R. § 1026.36(a)(4).
(10) An estate or trust that, as seller, receives in one calendar year no more than one residential mortgage loan as security for a purchase money obligation, as specified in 12 C.F.R. § 1026.36(a)(5).
(11) Any agency of the federal government or any state, local, or municipal government, or their subsidiaries, making or servicing residential mortgage loans under specific authority of the laws of any state, territory, or the United States.
(12) Any bona fide nonprofit corporation qualifying under section 501(c)(3) of the Internal Revenue Code that makes or services residential mortgage loans to promote home ownership or home improvements for disadvantaged homeowners upon filing of a notice of exemption with the Commissioner as specified in G.S. 53-244.050(g), so long as the corporation is not primarily in the business of soliciting, brokering, making, or servicing residential mortgage loans. Pursuant to 12 C.F.R. § 1008.103(e)(7)(i), mortgage loan originators employed by a bona fide nonprofit corporation are not required to be licensed under this Article.
(13) A trust institution when acting in a fiduciary capacity, as defined in G.S. 53-301(a)(2), upon filing of a notice of exemption with the Commissioner as specified in G.S. 53-244.050(g).
(14) A trustee of a trust created under the laws of any state or territory of the United States that makes a residential mortgage loan to a qualified beneficiary of the trust or an immediate family member of the grantor of the trust, upon filing of a notice of exemption with the Commissioner as specified in G.S. 53-244.050(g).
o …(e) Each mortgage broker, mortgage lender, mortgage servicer, or registrant licensed or registered under this Article, shall do all of the following:
· (1) Have a qualifying individual who operates the business under that individual's full charge, control, and supervision.
· (2) File through the NMLS a form acceptable to the Commissioner designating a qualifying individual and the qualifying individual's acceptance of the responsibility.
· (3) Notify the Commissioner within 15 days of any change in its designated qualifying individual. Any individual licensee or registrant who operates as a sole proprietorship shall qualify as and be the qualifying individual for the purposes of this subsection.
o …(f) Mortgage lenders and mortgage brokers shall not operate branch offices, except as permitted by this Article. Branch offices shall be located in the United States. Each branch office of a mortgage broker or mortgage lender registered under this Article shall
§ 53-244.050. License and registration application; claim of exemption.
o (a) Applicants shall have a principal office located in the United States and shall apply through the NMLS on a form acceptable to the Commissioner. An application shall include the following information:…
o (a)(4)b. Any conviction, within the past five years, of a misdemeanor involving any fraud, false statement or omission, any theft or wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or conspiracy to commit any of these offenses, or involving any financial service or financial service-related business.
o (b)(1)b. Have satisfactorily completed, within the three years immediately preceding the date of application, the mortgage lending prelicensing education as required under G.S. 53-244.070. However, an individual applicant holding a valid mortgage loan originator license in any other state or territory shall receive credit for the education completed under G.S. 53-244.070(e) if the individual has completed all required continuing education for the preceding year. This sub-subdivision does not apply to a qualifying individual for a mortgage servicer.
o (b)(1)c. Have passed, within the five years immediately preceding the date of application, the test required under G.S. 53-244.080. However, an individual applicant holding a valid mortgage loan originator license in any other state or territory or a registered mortgage loan originator shall receive credit for the passage of the test under G.S. 53-244.080, except as otherwise provided in G.S. 53-244.080(e). This sub-subdivision does not apply to a qualifying individual for a mortgage servicer.
o (b)(1b) Each applicant for licensure as a mortgage lender, mortgage broker, or mortgage servicer and each applicant for registration as a registrant shall employ a qualifying individual.
o (b)(1c) Each applicant shall register any branch office of a mortgage lender or mortgage broker and shall employ a branch manager.
o …(f) For purposes of this section, the Commissioner may request and the State Bureau of Investigation may provide a criminal record check to the Commissioner for any individual who has applied for or holds a mortgage loan originator license or is a control person, executive officer, qualifying individual, or branch manager of a person licensed or registered under this Article. The Commissioner shall provide the individual's fingerprints, a signed consent form, and any additional information required by the State Bureau of Investigation. The individual's fingerprints shall be used by the State Bureau of Investigation for a search of the State's criminal records, and the State Bureau of Investigation shall forward a set of the fingerprints to the Federal Bureau of Investigation for a national criminal record check. The State Bureau of Investigation may charge a fee for the services authorized by this section.
§ 53-244.070. Educational requirements for mortgage loan originators.
o …(e) If an individual successfully completes the prelicensing educational requirements in another state and the requirements have been approved by the NMLS, the applicant shall be given credit for those hours toward the completion of the prelicensing requirements in this State, other than the hours required under subdivision (a)(4) of this section.
§ 53-244.080. Testing requirements for mortgage loan originators.
o …(e) An applicant may retake a test three consecutive times with each consecutive test occurring at least 30 days after the preceding test. After failing three consecutive tests, an applicant shall wait at least six months before retaking the test. A formerly licensed mortgage loan originator who fails to maintain a valid license for a period of five years or longer shall retake the test.
§ 53-244.090. Application fees.
o (a)Initial applicants for registration as a mortgage origination support registrant that are engaged exclusively as loan processors or underwriters shall pay a nonrefundable filing fee based upon the number of individuals they employ as loan processors or underwriters: (i) two hundred fifty dollars ($250.00) for fewer than five individuals, (ii) one thousand dollars ($1,000) for between five and 30 individuals, or (iii) two thousand dollars ($2,000) for more than 30 individuals.
o …(b) A licensed mortgage broker or mortgage lender shall register each branch office, including the address and designated branch manager, with the Commissioner through the NMLS. In addition, the mortgage broker or mortgage lender shall pay the actual cost of obtaining a credit report, state and national criminal history record checks, and the processing fees required by the NMLS for the designated branch manager.
§ 53-244.100. Active license or registration requirements and assignability.
o …(b) When a mortgage loan originator ceases to be employed by a mortgage lender, mortgage broker, mortgage servicer, or mortgage origination support registrant the mortgage loan originator and the mortgage lender, mortgage broker, mortgage servicer, or the servicer, or mortgage origination support registrant shall promptly notify the Commissioner in writing within 30 days. The mortgage lender, mortgage broker, mortgage servicer, or mortgage origination support registrant shall include a statement of the specific reason for the termination of the mortgage loan originator's employment. A mortgage loan originator or transitional mortgage loan originator shall not be employed simultaneously by more than one mortgage lender, mortgage broker, mortgage servicer, or mortgage origination support registrant licensed or registered under this Article.
§ 53-244.102. Continuing education for mortgage loan originators.
o (a) A licensed mortgage loan originator shall annually complete at least eight hours of continuing education approved in accordance with subsection (b) of this section, including all of the following:
· (1) Three hours of federal statutes and regulations.
· (2) Two hours of ethics, including instruction on fraud, consumer protection, and fair lending issues.
· (3) Two hours of training related to lending standards for the nontraditional mortgage product marketplace.
· (4) One hour of State statutes and rules.
§ 53-244.104. Minimum net worth requirements
o (a)…(2) A mortgage servicer shall maintain a net worth of at least one hundred thousand dollars ($100,000), not including monies in any escrow accounts held for others as documented by an unqualified audited statement of financial condition.
(2a) Covered institutions, as defined in G.S. 53-244.141, shall meet the requirements of Part 2 of this Article. Part 2 of this Article does not apply to mortgage servicers that are not covered institutions, as defined in G.S. 53-244.141.
§ 53-244.106. Display of license.
o Section deleted
§ 53-244.107. Unique identifier shown
o The unique identifier of any mortgage loan originator or person engaged in the mortgage business as defined in G.S. 53-244.030 shall be clearly shown on all residential mortgage loan application forms, solicitations, advertisements, business cards, websites, other electronic means, and any other documents as established by rule or order of the Commissioner. In addition, mortgage lenders and mortgage brokers shall include a link to NMLS Consumer Access on their websites.
§ 53-244.109. Mortgage broker and mortgage lender duties.
o Any mortgage broker or mortgage lender engaged in the mortgage business as defined by G.S. 53-244.030(11)a. or b., in addition to duties imposed by other statutes or at common law, shall do all of the following: … (5) When initial disclosures are made under RESPA, a mortgage broker shall clearly disclose to the borrower material information that may be expected to influence the borrower's decision and is reasonably accessible to the mortgage broker. This information includes the total compensation the mortgage broker expects to receive from any and all sources in connection with each loan option presented to the borrower that are reasonably known at that time. This subdivision applies to mortgage brokers only.
§ 53-244.111. Prohibited acts
o In addition to the activities prohibited under other provisions of this Article, it is unlawful for any person in the course of any residential mortgage loan transaction to do any of the following: …
· (20) To fail to provide to the borrower a refund of unearned premiums paid by a borrower or charged to the borrower for force-placed hazard, homeowner's, or flood insurance if the borrower provides reasonable proof that the borrower has obtained coverage such that the forced placement is no longer necessary and
· (22) To fail to mail, at least 45 days before foreclosure, forfeiture, or repossession is initiated, a notice addressed to the borrower at the borrower's last known address with the following information:…
Part 2. Prudential Standards for Mortgage Servicers.
o New section, see Bill