The North Carolina legislature in it’s 2008 session made changes to the Mortgage Lending Act (MLA). The Commissioner of Banks (COB) also proposed a variety of changes to the Administrative Code that are now, currently effective.

One of the objectives of the MLA was to create a line of accountability and responsibility among licensees within an organization. The COB's examiners will enforce this objective by examining your company’s management structure and the proper supervision of loan originators.

To raise the quality standards of licensees, to protect consumers and to ensure proper supervision, the following are samples of the recent rule changes:

1. Clarifies that a branch office must be established in a “commercial” space. Residential properties or homes will no longer be eligible to be licensed either as a principal or a branch office.
   Note: Examiners will require evidence that loan officers are not working from home. The COB has established an acceptable driving distance of 60 miles from the office, and will require loan officers to regularly come in to the branch to originate and process their loans.



2. Redefines “managing principal” to be “qualifying individual” in order to be in conformity with the Nationwide Mortgage Licensing System (NMLS) terminology.



3. Requires companies that service mortgage loans to obtain a license, as of January 1, 2009. These licensed servicers must comply with the prohibited activities provisions of Chapter 53.



4. Requires loan officers to receive 24 hours of pre-licensure education and pass a 100-question exam before applying for a license.

Note: We have an exceptional new 24-hour course approved and ready to roll out on October 1, 2008.
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Last Call: There are two final dates for the 8-hour fundamentals course before the deadline.
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…Also, they have expanded the definition of “licensed loan officer.”


5. Revises definition of loan officer to include; solicitation of loan, negotiation of loan, issuance of loan commitment or interest rate lock, whether done by telephone, electronically, mail or in person. Remember: No person can be compensated for the closing of a loan without being licensed. It is believed that many processors and inside sales people are performing duties and are being compensated out of compliance according to this expanded definition.



6. Clarifies that loan officers must be paid as W-2 employees. This is in order to set up proper supervision and management.
   Critical Note: In addition to these state laws, all bona fide employees must be paid in accordance with the Department of Labor, Wage and Hour Rules. Check with a competent labor attorney before establishing any exception to paying minimum wage and overtime.



7. Imposes increased financial responsibilities on Brokers, Bankers and Loan Officers. Click here for details.

1. It’s critical to know your new compliance responsibilities in order to protect yourself and your organization.
2. It’s paramount to have products to close and to develop product expertise in order to make your living today.

• To keep you informed and help you to make the adjustments necessary to protect yourself;
• To provide you the knowledge and the subject matter experts critical for closing more loans.