August 29, 2001 - North Carolina Mortgage Lending Act

Policy Name: North Carolina Mortgage Lending Act

Date: August 29, 2001 (signed); July 1, 2002 (effective)

Bill Information: Session Law 2001-393, Senate Bill 904

Code Information: formerly Section A of Article 19 of Chapter 53 of the North Carolina General Statues: Mortgage Lending Act. (N.C. G.S. § 53-19A)

Summary:

The North Carolina Mortgage Lending Act (MLA) amended Article 19 of Chapter 53 of the North Carolina General Statutes. Enacted a few years after the North Carolina Predatory Lending Law in 1999, the MLA sought to protect North Carolina homeowners from abusive lending practices by strengthening the loan underwriting process.

This law set new licensing standards for mortgage bankers, mortgage brokers, and mortgage loan officers in North Carolina. These requirements included an application that mandated truthful answers to questions about an applicant’s financial condition, relevant qualifications, and criminal history. Additionally, this law required mortgage brokers to make reasonable efforts to secure “reasonably advantageous” loans for the borrower. Lastly, the MLA prohibited several practices within the mortgage industry, including brokering a loan without a license, misrepresenting facts regarding a mortgage, and failing to deliver money in a timely manner.

This law also granted the North Carolina Commissioner of Banks broad enforcement powers, such as the power to impose monetary penalties and suspend or revoke mortgage licenses. In 2009, the Secure and Fair Enforcement (SAFE) Mortgage Licensing Act repealed and replaced the MLA.