The NC SAFE Act
What is the NC SAFE Act?
The North Carolina Secure and Fair Enforcement Mortgage Licensing Act (“NC SAFE Act”) is located in Chapter 53, Article 19B of the North Carolina General Statutes. The NC SAFE Act requires licensure or registration for individuals and companies who engage in the mortgage business or process and underwrite mortgage loans, unless an exemption applies. The NC SAFE Act also prohibits certain activities and provides enforcement authority for violations, which may include civil money penalties.
What types of loans are covered by the NC SAFE Act?
The NC SAFE Act applies to "residential mortgage loans"; the Act does not apply to investment and commercial properties. Please refer to the definitions of "residential mortgage loan" and "residential real estate" in N.C. Gen. Stat. §§ 53-244.030(30) and (31)
What types of licenses and registrations are issued under the NC SAFE Act?
Seven types of licenses and registrations are issued:
- Mortgage loan originator (MLO)
- Transitional mortgage loan originator (through November 23, 2018)
- Exclusive mortgage broker
- Mortgage broker
- Mortgage lender
- Mortgage servicer
- Mortgage origination support registrant (MOSR or registrant)
Each type is defined in N.C. Gen. Stat. § 53-244.030.
Are any companies exempt from licensure?
- Credit unions;
- Wholly-owned subsidiaries of banks and credit unions;
- Other subsidiaries of banks and credit unions if certain requirements are met; and
- Institutions regulated by the Farm Credit Administration
Are any individuals exempt from licensure?
Yes, the following are exempt:
- Registered mortgage loan originators;
- Individuals making a loan to immediate family members;
- Individuals selling their own homes;
- Attorneys representing clients in a real estate transaction; and
- Sellers financing no more than five (5) residential mortgage loans per calendar year.
Exemption details are set forth in N.C. Gen. Stat. § 53-244.040(d). If an exemption does not apply, licensure is required.
What is the difference between an exclusive mortgage broker and a traditional mortgage broker?
An exclusive mortgage broker is an individual who acts as a mortgage broker exclusively for a single mortgage lender or mortgage broker. If you need assistance in determining the correct license type, contact us for assistance.
What is a transitional MLO license?
A transitional MLO license gives an individual 120 days to complete pre-licensing education requirements while working for an approved North Carolina mortgage lender or mortgage broker. The MLO must re-apply for a traditional MLO license after their pre-licensing education requirements are met, not to exceed 120 days. Applicants for a transitional license must have an active MLO license in another state (for at least 2 years) and provide certification of employment with a mortgage lender or mortgage broker under the NC SAFE Act. The transitional MLO license applicant must meet all requirements set forth under § 53-244.050(b)(1a). Transitional MLO licenses are only available to individuals who are licensed in another state. On November 24, 2019, the OCOB will cease offering transitional MLO licenses. At that time, temporary authority under 12 U.S.C. § 5117 will be offered to both state-licensed MLOs and Federal Registrants seeking licensure in the State who meet the requirements of the new Federal law.
Applications, Renewals and Education
How do I submit an application?
Does a license or registration expire? If so, is annual renewal required?
All licenses and registrations expire on December 31, regardless of the approval date with one exception. Renewal is not required until the next year when a new application is approved between November 1 and December 31 of the current year. Any application approved prior to November 1 must be renewed for the next year through NMLS.
If a renewal request is not approved by December 31, am I allowed to conduct business?
Yes. If the renewal request is submitted on or before December 31, the licensee or registrant is allowed to continue conducting business until a final decision is made. If a renewal request has not been submitted by December 31, the license expires, and a person may not conduct business until the license is reinstated or a new license is obtained.
My MLO license has expired. What are my options?
Late Renewal: You may apply for late renewal on or before the last day of February if you have completed continuing education for the prior year. A late fee must be paid in addition to the renewal fee. All fees are non-refundable.
You cannot act as an MLO while the license is expired.
Where can I find out about education providers and testing requirements? How may I view the education courses I have already taken?
What are the education requirements?
For initial licensure, qualifying individuals and MLO applicants are required to take twenty-four (24) hours of prelicensure education.
Thereafter, MLOs are required to complete eight (8) hours of approved continuing education each year on or before December 31. Check the course description in NMLS before registering because the same course cannot be taken two years in a row. MLOs will not receive education credits for repeat courses.
Can a branch renewal be approved if the company has not requested renewal?
No. Branches cannot be approved until the company license has been renewed.
Who can call to inquire about the status of an application or renewal?
MLOs: An MLO may call to inquire about the status of his or her own application or renewal. NCCOB cannot share this information with anyone else, including the employer, without a third-party authorization form.
Companies: Only authorized representatives of the company can make such inquiries. The company may, however, grant permission to other employees, including branch managers, by completing a third-party authorization form.
If deficiencies exist, will this prevent my renewal from being approved?
Yes. Deficiencies must be cleared before a renewal request is approved.
I have applied for renewal and have a deficiency related to my credit report. Can NCCOB provide me with a copy of my credit report?
No. The Fair Credit Reporting Act prohibits NCCOB from sharing credit reports with applicants, licensees, and registrants. NMLS uses TransUnion (1-800-888-4213). To obtain a free copy of your credit report, visit https://www.annualcreditreport.com/index.action.
How does NCCOB review credit for an MLO application?
NCCOB cannot review an individual’s credit until an application is submitted and received through NMLS. Credit is reviewed to determine an applicant’s “financial responsibility, character, or general fitness” and the OCOB reviews judgments, tax liens, foreclosures, and/or a pattern and practice of seriously delinquent accounts to determine compliance. N.C. Gen. Stat. § 53-244.060(4).
How do I get a copy of my license or registration?
Licenses and registration certificates may be printed by logging into NCCOB Online.
If a company decides to not renew or to cease operations, does it still need to pay the mortgage assessment invoice?
Yes. Mortgage assessments are billed in arrears and based on the prior year’s reported loan volume.
Do lead generators have to be licensed?
A broker license is required if the lead generator collects consumer information including social security number, credit score, or credit or employment history (see N.C. Gen. Stat. § 53-244.030(21)(c)4).
Are the employees of a licensed servicing company who communicate with borrowers concerning their existing mortgage loans required to be licensed?
No. These employees are loss mitigation specialists. See N.C. Gen. Stat. § 53-244.030(17). If they discuss, solicit, negotiate, or take an application to refinance an existing loan, then an MLO license is required.
Mortgage Loan Originators (N.C. Gen. Stat. § 53-244.030(21))
When can an MLO begin accepting mortgage loan applications?
An MLO can begin accepting mortgage loan applications once they are licensed by the OCOB and employed (sponsored) by a company licensed in North Carolina. To be sponsored, an MLO must be a W-2 employee. The NC SAFE Act prohibits working for more than one North Carolina licensed or registered company at the same time. See N.C. Gen. Stat. §§ 53-244.100 and 53-244.030(10).
As an MLO, may I work from home?
Yes. However, N.C. Gen. Stat. §§ 53-244.105(c) and 53-244.030(4) and (26) do not allow a principal office or licensed branch to be located at an individual’s home or residence, and records must be maintained at a principal office or licensed branch.
Additionally, an MLO employed by a MOSR is permitted to work from a home or residence but cannot originate residential mortgage loans. N.C. Gen. Stat. § 53-244.105(c)
I am a salesperson for a licensed mobile home dealer. Are there any MLO activities I can engage in without having an effective MLO license?
See N.C. Gen. Stat. § 53-244.030(21)c5.
Can a registered MLO apply under the transitional MLO license type if they are changing employment from a bank to a non-depository institution?
No. A registered MLO is not eligible for a transitional license, must meet the testing and pre-licensing education requirements set forth under § 53-244.070 and § 53-244.080 , and apply for a traditional MLO license. However, recent legislation passed by the federal government will allow registered MLOs to obtain temporary authority to operate beginning on November 24, 2019.
Can an MLO work under dual capacity as a real estate agent?
Maybe. Acting in a dual capacity may lead to unlawful activity (state and/or federal). Refer to Regulation X (including but not limited to prohibited acts/practices especially in relation to unearned fees/kickbacks and affiliate relationships) and Regulation Z (including but not limited to prohibited acts/practices especially in relation to MLO compensation). Consulting an attorney knowledgeable in this area may be an appropriate course of action.
Can an MLO accept referral fees?
Is there a maximum distance a N.C. licensed mortgage loan officer can reside from a licensed branch?
Although N.C. General Statute §§ 53-244.030(4) and (26) do not allow a principal office or branch office to be located at an individual’s home or residence, they do not prohibit a mortgage loan originator from working remotely. However, licensees are reminded that business records and files must be maintained at a principal office or licensed branch. The licensee, and its employees, remain responsible for safeguarding all consumer information and ensuring effective oversight of business activities.
What are the requirements for a company to become licensed?
Requirements may be found in the checklists on the NMLS website.
What is a qualifying individual, and what are the requirements to become one?
A qualifying individual (QI) is primarily responsible for the operations of a licensed or registered company. This individual must have at least three years of residential mortgage lending or servicing experience and meet the requirements of N.C. Gen. Stat. § 53-244.050(b)(1) and NCAC 03M .0204.
Must I have a principal or branch office in North Carolina?
My company operates several offices. Is branch licensure required?
Other than the designated principal office, any location operated by the licensee from which loans are originated for North Carolina consumers must be licensed as a branch office and must have a branch manager. A principal office or branch location may not be located at an individual’s home, but a mortgage loan originator may work remotely. If a mortgage loan originator is working remotely all business records and files must be maintained at a principal office or licensed branch. Locations where only processing, underwriting, or servicing activity is conducted do not require a license.
What are the requirements for a branch manager?
Each branch office must have a branch manager that is primarily responsible for branch operations. This individual must have a minimum of three years of residential mortgage lending experience.
I am a sole proprietor licensed as a mortgage broker. Will I also need an MLO license?
You must be licensed as both a mortgage broker and an MLO if you intend to personally engage in origination activities.
What are the requirements for a table funded transaction?
N.C. Gen. Stat. § 53-244.030(33) requires table funded transactions to be assigned to the lender within one (1) business day of the funding of the loan. Otherwise, a mortgage lender license is required.
Does a company need to be licensed as a lender or servicer to sell or purchase residential mortgage loans on the secondary market?
Although a license is not required to sell or purchase such loans on the secondary market, a buyer who intends to service North Carolina residential mortgage loans must be licensed as a servicer or be exempt under the NC SAFE Act. There is no de minimus servicing exemption in North Carolina. A "master servicer" is a company that contracts with a third party to service residential mortgage loans on its behalf. The third-party servicer is a sub-servicer. In North Carolina, master servicers and sub-servicers must hold a servicer license under the NC SAFE Act.
My company is licensed with the NCCOB. Can the bond requirement be waived?
Yes. In the discretion of the Commissioner and upon receipt of a written request, the Commissioner may waive the bond, pursuant to N.C. Gen. Stat. § 53-244.103(d).
My company is licensed as a mortgage lender. Does this license allow me to engage in other business activities?
Under N.C. Gen. Stat. § 53-244.040(b)(2), a separate license or registration is not required to broker, service, or provide processing or underwriting services if you are already licensed as a mortgage lender. However, licensees must notify the Commissioner through NMLS in advance of any changes in business activities.
What evidence must I show to support the minimum liquidity requirements for my mortgage broker license?
Per the NC SAFE Act and adopted rules, mortgage brokers must evidence continued liquidity of $10,000 by providing certification from an insured depository institution under the firm’s name. FinTech companies that partner with banks but are not banks themselves do not meet the definition of “depository institution” for the purposes of the NC SAFE Act. A licensee must show a direct relationship with a depository institution evidenced by bank statements and other account documents between the depository institution and licensee and certification from the depository institution of the company’s liquidity. The FDIC’s bank find tool and the Federal Financial Institutions Examination Council Search Tool are resources that can be used to confirm if an institution is a depository institution.
Mortgage Origination Support Registration (MOSR)
Does a MOSR hold a license under the NC SAFE Act?
No. MOSRs are only required to register. Each registrant must employ at least one licensed MLO or transitional MLO to supervise its loan processors and underwriters.
Do mortgage lenders and brokers who already hold a license under the NC SAFE Act need to register if they employ processors and underwriters?
No. The registration only applies to companies engaged solely in loan processing and underwriting. Individual processors and underwriters who are employees of licensed lenders are not required to register. Employee is defined by the NC SAFE Act as, an individual who has an employment relationship with a mortgage broker, mortgage lender, or mortgage servicer and 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.
Can MOSRs work from a home or residence?
Yes. MOSRs are permitted to work from residence. The supervising MLO may also work from a residence; however, this individual cannot originate residential mortgage loans.
Can MOSRs process and underwrite loans outside of the United States and its territories?
No. MOSRs are not permitted to process and underwrite loans outside of the United States and its territories. MLOs and loan processors and underwriters must be employees of a MOSR, as defined in the NC SAFE Act.
Can examiners visit a company unannounced?
Yes. Examiners may visit any licensed company or branch location at any time.
How long will the examination take?
Time spent at a licensee’s office will vary. Typically, the on-site portion during a mortgage broker examination will last one or two days. For a large mortgage lender, the on-site portion may last a week or longer. The licensee’s compliance systems, documentation provided, response to information requests, and file organization will impact examination timelines including time spent onsite. See N.C. Gen. Stat. § 53-244.115 for information related to the OCOB’s examination authority.
Can an examination be canceled?
No. Examinations cannot be canceled and are typically planned several months in advance. Staff must be able to accommodate examination requests and/or examiners upon arrival. It is not necessary for the owner or branch manager to be available if one or more staff members can assist.
Can we add a signature block and date to the Notice of Information and Examples of Amortization of Home Loans (Notice) to document the consumer’s receipt?
Yes. The Notice may be altered to permit a signature block for the borrower. As an alternative, you may refer to the required Notice in another document that is signed by the borrower at the time of application. If the text is readable, accurate, and complete, you may make necessary or desirable adjustments.
The NC SAFE Act prohibits brokering of loans of $150,000 or less that contain a prepayment penalty. May a mortgage lender make such loans?
No. Licensed mortgage lenders cannot make such loans. Chapter 24 of the North Carolina General Statutes prohibits prepayment penalties on loans of $150,000 or less. The NC SAFE Act also prohibits the charging or collecting of any fee that violates Chapter 24.
Can loss mitigation be performed by contract employees or employees that are outside of the continental United States and its territories?
No. A loss mitigation specialist is defined as an employee of a mortgage servicer under § 53-244.030. An employee is defined as an individual 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 under the same statute.
Both the NC SAFE Act and Chapter 45 of the North Carolina General Statutes require fees charged to borrowers to be itemized or clearly and conspicuously disclosed. What is the appropriate level of detail required to comply with NC law?
Several different servicer communications are subject to this requirement under NC law, including payoff statements, monthly statements, statement of fee letters, and pre-foreclosure letters.
The fee descriptions included in the documents above should use language that informs the borrower of the nature and type of fee charged. The itemization or clear and conspicuous disclosure should use descriptive terms, not accounting or general terms, to explain fee types. Examples of descriptive fee categories are: foreclosure fees, property inspections, and late fees. Examples of overly generic or vague terms that do not inform a borrower of the nature or type of fee charged include, but are not limited to, corporate advance, miscellaneous fee, and other fee assessment.
When disclosing broker compensation, as required by N.C.G.S 53-244-109 (5), how does the NCCOB determine 'timely'?
A broker should disclose to the consumer, in writing, the expected total compensation as soon as the amount is known. It is the duty of the broker to disclose its compensation. This information is material borrower information under 04 NCAC 03M.0101(5) that reasonable person knows, or should know, would reasonably be expected to influence a borrower's decision with regard to one or more loans. While lenders sometimes assist with the disclosure process, the NCCOB has published form MLA18 to provide brokers a specific, broker issued form to support compliance with North Carolina law during the lending process.
How much can a lender charge a borrower for discount points under North Carolina General Statute §24.1-1A?
Discount points that are paid for the purpose of reducing, and in fact result in a bona fide reduction of the interest rate, from which the loan's interest rate will be discounted, may be charged to a borrower by the lender. The licensee must support, through rate policies, processes, and documentation, any discount or other point charged to a consumer. Restrictions on discount points in N.C.G.S. § 24.1-1A do not apply to loans exempted from the fee restrictions in Chapter 24 under N.C.G.S. § 24-9.
How does N.C.G.S. § 24-9 define exempt loans?
"Exempt loan" means a loan in which:
- The loan amount is three hundred thousand dollars ($300,000) or more; or
- The borrower is a person other than a natural person; or
- The loan is obtained by a natural person primarily for a purpose other than a personal, family, or household purpose. Whether a loan is obtained primarily for a purpose other than a personal, family, or household purpose shall be guided by the standards established by the federal Truth In Lending Act (Title 1 of Public Law 90-321; 82 Stat. 146; 15 U.S.C. § 160, et seq.) and all regulations and rulings issued pursuant to that Act, as the same may be amended from time to time.
What discount points can be excluded from the points and fees calculation in relation to a high cost loan under North Carolina General Statute Chapter 24?
Where the loan is a high cost home loan as defined in N.C.G.S. § 24-1.1E, the lender may exclude:
Up to and including two bona fide loan discount points payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan’s interest rate will be discounted does not exceed by more than one percentage point (1%) the required net yield for a 90-day standard mandatory delivery commitment for a reasonably comparable loan from either Fannie Mae or the Federal Home Loan Mortgage Corporation, whichever is greater.
- Up to and including one bona fide loan discount point payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan's interest rate will be discounted does not exceed by more than two percentage points (2%) the required net yield for a 90-day standard mandatory delivery commitment for a reasonably comparable loan from either Fannie Mae or the Federal Home Loan Mortgage Corporation, whichever is greater.
How are seller-paid points and fees treated for the purpose of North Carolina's high cost home loan statute?
In 2008, the NCCOB issued Declaratory Ruling 2008-1 to address seller-paid points.
What documents should I keep in my mortgage loan files and where should they be stored?
Does a loan file register need to be maintained for all applications?
Yes. A "master" loan file register of all applications must be maintained by the licensee even if the loan does not close.
Do licensees need to keep a copy of the loan application in adverse action files?
Yes. See 04 NCAC 03M .0501.
Where can I find the Reverse Mortgage Act and its regulations online?
What is a reverse mortgage loan and who is eligible for this loan?
See N.C. Gen. Stat. § 53-257(6) and (2), respectively.
Who is authorized to conduct business as a reverse mortgage lender? Can mortgage brokers make reverse mortgage loans?
See N.C. Gen. Stat. § 53-258. Only NC SAFE Act licensed mortgage lenders may be authorized to make reverse mortgage loans; brokers are not permitted to make reverse mortgage loans.
What is the application fee for a reverse mortgage lender authorization?
How may I find out if a company is authorized as a reverse mortgage lender in North Carolina?
The Reverse Mortgage Lenders list shows the NC SAFE Act licensed mortgage lenders who are authorized as reverse mortgage lenders. Please note that banks and credit unions are not included in this list.
I am licensed as a lender under the NC SAFE Act - will my company need a separate surety bond under the Reverse Mortgage Act?
Yes. A surety bond of $100,000 is required. See 04 NCAC 03K .0302.
Are MLOs also required to be licensed under the Reverse Mortgage Act?
No. However, MLOs who wish to engage in reverse mortgage lending must be employed by an NC SAFE Act licensed mortgage lender that is authorized to make reverse mortgage loans.
Is telephone counseling permissible under the Reverse Mortgage Act?
Yes. Although HUD Guidelines recommend face-to-face meetings with potential reverse mortgage applicants to discuss their specific financial circumstances and to ensure that applicants understand their options, telephone counseling is permitted. Counselors must advise potential reverse mortgage applicants of the choice to have a face-to-face meeting or through another mutually agreed upon format such as the telephone. Counselors may also visit a reverse mortgage applicant’s home if the applicant is unable to travel to the participating agency’s office. Review the HUD Guidelines for more information. If you have questions, contact the North Carolina Housing Finance Agency at 919-981-2511.
Are there any education requirements to become an authorized reverse mortgage lender?
No. However, HUD training is highly recommended.
Are loan disclosures required by the Reverse Mortgage Act?
Yes. See N.C. Gen. Stat. § 53-264.
I paid my mortgage in full and need help getting a lien released in North Carolina. How do I get the lien released?
NCCOB cannot release a lien, provide a letter stating that a lien should be released, or provide a letter that a loan has been paid. NCCOB cannot take any of the above actions on a consumer’s behalf: The following guidance may be helpful to consumers who need to get a lien released:
- If the company provided you with a certificate of satisfaction, take it to the Register of Deeds office in the county where the property is located for filing. The company may also file this certificate for you.
- If you have not been provided with a certificate of satisfaction, contact the company to request one. If the company is regulated by NCCOB and does not respond to your request within 60 days, you may file a complaint with this agency.
- If the company was previously regulated by NCCOB and is no longer in business, you may request that NCCOB provide a letter confirming this fact.
- If you contact your title insurance company; they may be able to provide assistance.
- You may contact a real estate attorney for assistance. The North Carolina Bar Association offers a Lawyer Referral Service. You may contact them at 919-677-8574 or through the NC Bar Association website.
If I have a mobile home or manufactured home that is not permanently affixed to real property and is titled by the North Carolina Department of Motor Vehicles, how do I get the lien released?
NCCOB cannot release a lien, provide a letter stating that a lien should be released, or provide a letter that a loan has been paid. NCCOB cannot take any of these actions on a consumer’s behalf: The following guidance may be helpful to consumers who need to get a lien release:
- If you do not have documentation showing that the loan has been paid in full, contact the company to request a letter of satisfaction. If the company is regulated by NCCOB and does not respond to your request after 60 days, you may file a complaint with us to request that the company provide the documents needed by DMV to release the lien.
- If the company was previously regulated by NCCOB and is no longer in business, you may request that NCCOB provide a letter to this effect. Articles of dissolution or merger may be available on the North Carolina Department of the Secretary of State’s web site (see below for more information).
- For instructions on how to submit an application for a duplicate title and release a lien, visit NCDMV’s web site. For duplicate title related questions, contact NCDMV directly.
Additional Lien Release Resources:
The following resources may be used to determine whether a company is still operating or is no longer in business, and may provide a successor-in-interest or other contact information if the company was acquired or merged with another institution:
- North Carolina Department of the Secretary of State
- Search for the company and select the one you want to view
- Click "View Filings"
- Look for any of the following:
- Name Change
- Last few annual reports
- Articles of Merger
- Articles of Dissolution
- Articles of Withdrawal
- National Information Center
- Enter the institution’s name; use the other options to narrow the search
- Use the menu options near the top of the screen to check for name changes and/or the successor-in-interest, if applicable
- Nationwide Multistate Licensing System and Registry Consumer Access
- Search for licensed or formerly licensed mortgage and money transmission companies
- Search for a regulated entity on NCCOB’s web site:
- Use Google or other search engines to search for media coverage or other references to a company’s merger, acquisition, etc.
- Mortgage Electronic Registration Systems, Inc. (MERS): For loans registered on MERS, additional information may be available. The Mortgage Identification Number (MIN) is located on the deed of trust recorded in the Register of Deeds office in the county where the property is located.
- Register of Deeds. In the county where the property is located, search for:
- Notice of Substitute Trustee
Fannie Mae Mortgage Loan Lookup: Determine whether Fannie Mae owns your loan.
Freddie Mac Mortgage Loan Lookup: Determine whether Freddie Mac owns your loan.
Credit Report: North Carolina consumers may pull a free copy of their credit report annually from all three reporting agencies.