NC Mortgage Lender/Broker Examinations

Examination Overview

Pursuant to N.C. Gen. Stat. § 53-244.115, the NC Commissioner of Banks ("NCCOB") may conduct routine examinations of the books and records of any licensee to determine compliance with the “North Carolina Secure and Fair Enforcement (S.A.F.E.) Mortgage Licensing Act” (NC SAFE Act) as codified in NCGS Chapter 53, Article 19B.

Licensees should develop internal procedures concerning state examinations to ensure staff have the ability to assist regulators with the examination process.

North Carolina law requires licensees to provide the NCCOB with complete access to all premises, books, records, and information that the NCCOB deems necessary. Failure to comply may result in disciplinary action including the assessment of civil penalties pursuant to N.C. Gen. Stat. § 53-244.116

Procedures should be implemented to ensure staff has the ability to comply with examination requests.

Frequently Asked Question page

Examination Process

  • 1


    Licensees typically receive a notification letter several weeks prior to the examination. 

    Sample notification letter 

    Note: Advance notice is not required by OCOB to conduct an examination.

  • 2


    The primary contact and/or qualifying individual identified in NMLS will receive the examination notice.

  • 3

    Examination Location

    Examinations may be conducted on-site or digitally. Most examinations include an on-site portion and are conducted where the examination documentation is stored. Typically, this is the licensee’s principal office but may be at a branch.

  • 4

    Examination Types

    The purpose of an examination is to determine a licensee’s compliance with state and federal mortgage lending laws and regulations.  Examination types fall within three general categories shown below:

    • Entrance examinations are typically conducted within the first 18 months of licensure.
    • Limited scope/oversight examinations are based upon the licensee’s business model, breadth of operations, electronic submission of loan data, or other pre-determined topics. Licensees are generally required to provide a small sample of loan level documentation and select policies and procedures.
    • Full-scope examinations generally involves both off-site and on-site functions. A full scope examination will include loan level documentation, policies, procedures, and interviews with personnel. 
  • 5

    Examination Report

    The licensee will receive a Report of Examination upon completion of NCCOB's review. A response may be required from the licensee.

  • 6


    Examinations conducted approximately every 60 months.

  • 7


    Licensees will be asked to complete a post-examination survey. The survey form will be sent electronically and may be completed online.  


    Helpful Exam Information

    Tab/Accordion Items

    Regulatory Authority  Recommendation
    04 N.C.A.C. 03M .0501(c) & (d)  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. 
    Title 16, Chapter I, Subchapter C, Part 314 of the CFR Financial institutions are required to develop, implement, and maintain a comprehensive information security program that is written in one or more readily accessible parts and contains administrative, technical, and physical safeguards that are appropriate to the size and complexity of the business, the nature and scope of activities, and the sensitivity of any customer information at issue. Safeguards must include the elements set forth in §314.4 and be reasonably designed to achieve the objectives of this part. 
    N.C. Gen. Stat. § 53 244.030 (4) & (26)  The NC SAFE Act does not allow a mortgage company’s principal place of business or any branch offices to be located at an individual’s home or residence. 
    A principal place of business must consist of at least one enclosed room or building of stationary construction in which negotiations of mortgage loan transactions 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. A principal office shall not be located at an individual's home or residence. 
    A branch office of a mortgage broker or lender must be separate and distinct from the mortgage broker's or lender's principal office and is where employees engage in the mortgage business. A branch office shall not be located at an individual's home or residence
    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 must contain the name, address and telephone number of the consumer reporting agency. 
    04 NCAC 03M .0502 (a)  Except for samples of advertising materials retained pursuant to 4 NCAC 03M.0501(f), all records required by the North Carolina Administrative Code shall be kept for a period of at least three years and must be available for inspection and copying upon request by NCCOB. 
    04 NCAC 03M .0403 

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

    • Surrender the company license and re-apply for licensure upon a decision to operate as a mortgage broker/lender. 
    • Conduct adequate business as to be considered operational in the mortgage broker/lender industry.


    Regulatory Authority  Summary 
    N.C. Gen. Stat. § 53244.040 (a) Licensee allowed individuals to solicit and accept applications for mortgage loans without first obtaining a license as a mortgage loan originator. 
    N.C. Gen. Stat. § 24-1-1A (c) (1) (f)  Licensee collected miscellaneous fees exceeding statutory limit (.25% of loan amount or $150, whichever is greater). 
    N.C. Gen. Stat. § 53-244.109(5)  Licensee failed to timely and clearly disclose to the borrower material information, including the total broker compensation, expected to influence the borrower’s decision. 
    Title 31, Part 1029 of the Code of Federal Regulations (CFR)  Anti-money laundering (AML) program requirements not met. Each loan or finance company must develop and implement a written AML program that is reasonably designed to prevent the loan or finance company from being used to facilitate money laundering or the financing of terrorist activities.
    N.C. Gen. Stat. § 24 10(g)  Licensee collected fees on subordinate lien mortgages exceeding the statutory limit (2% of loan amount). 
    1) 04 N.C.A.C. 03M .0501(c). 
    2) Regulation B, Equal Credit Opportunity Act (15 USC 1691), 202.9 Notifications. 
    3) Fair Credit Reporting Act (FCRA), 15 U.S.C.
    Licensee failed to notify individuals of adverse action taken on credit applications or did not notify individuals in a timely manner.
    N.C. Gen. Stat. § 53-244.111 (8)  Borrowers are paying a premium for discount points yet deriving little benefit in return.
    N.C. Gen. Stat. § 53-244.107  Licensee did not clearly display the unique identifier (NMLS Entity ID) of any MLO engaged in the mortgage business on all loan application forms, solicitations, and advertisements, including websites and social media.
    N.C. Gen. Stat. § 45-102  Licensee did not, at least 45 days prior to filling a notice of hearing in a foreclosure proceeding, provide written notice to the borrower including resources to avoid foreclosure and an itemization of any chargers that must be paid to bring the loan current. 



    A licensed mortgage lender or mortgage broker must create and retain a file for each mortgage loan application that contains the following, as applicable: (1) the applicant's name; (2) date the application was taken; (3) name of the person taking the application; (4) the executed application itself; and (5) if the loan was closed; (A) the Closing Disclosure or HUD-1 Settlement Statement; (B) the loan note; (C) the deed of trust; (D) all agreements or contracts with the applicant, including any commitment and lock-in agreements, and other information utilized in the origination of the mortgage loan; and (E) all disclosures required by State or Federal law (04 NCAC 03M .0501 (d)) 

    Discloser Stacking Order document

    Keeping consumers’ confidential information private is critical to fighting identity theft. Such information includes, but is not limited to, social security numbers, employer identification numbers, driver’s license or state identification numbers, passport numbers, financial information such as a checking, savings, credit or debit card numbers, personal identification numbers (PIN), digital signatures, biometric data, fingerprints, or any number that can be used to access financial resources. 

    Title 16, Chapter I, Subchapter C, Part 314 of the CFR requires financial institutions to develop, implement, and maintain a comprehensive information security program that includes appropriate safeguards to protect consumer confidential records maintained by licensees.  In addition, appropriate safeguards to protect disposal of consumer confidential information is required.  

    Disposing of a consumer’s confidential information in an unsecure manner is illegal under North Carolina’s Identity Theft Protection Act. This law requires businesses that operate in North Carolina or possess such information for North Carolina residents to protect that information from unauthorized access or use. Even dated records containing personal and financial information must be disposed of properly. Businesses may, subject to compliance with the Identity Theft Protection Act, contract with document destruction companies for this purpose. For more information on identity theft, visit

    Mortgage brokers, lenders, and servicers are required to keep the accounts, correspondence, memoranda, papers, books, and other records as prescribed in rules adopted by the Commissioner. All records must be preserved for three years unless the Commissioner, by rule, prescribes otherwise for particular types of records (N.C.G.S. § 53-244.105). In addition, the North Carolina Administrative Code, 04 NCAC 03M .0502, provides that such records “…shall be secured against unauthorized access and damage in an accessible location within the State of North Carolina…” 

    In the event of a data breach, each item of confidential information may be considered a separate violation. Civil penalties of up to $25,000 may be assessed for each violation of the NC SAFE Act. 

    The following items should be included in a licensee’s examination procedures: 

    • Complete the Management Questionnaire, upload requested documentation, and respond to examiner requests by the indicated due date. Ask clarifying questions if the request is unclear.  

    • Provide the examiner with adequate and private workspace. 

    • Introduce examiner to key personnel in the office who can assist and who will be available to answer questions that may arise. 

    • Provide the examiner a tour of the location, including secure file storage. 

    • Immediately notify the examiner of any office or branch closings. 

    • Have all company licenses, loan originator licenses, and Federal Housing Act poster displayed in clear public view. 

    • Submit all loan files in a consistent stacking order. 

    • Ask questions. One of our responsibilities as mortgage examiners is to assist licensees with maintaining compliance.