The NC SAFE Act – Seven Years Later

THE NC SAFE ACT- SEVEN YEARS LATER
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The North Carolina Secure and Fair Enforcement Mortgage Licensing Act (“NC SAFE Act”)
replaced the North Carolina Mortgage Lending act in 2009 and is found in Chapter 53, Article
19B of the North Carolina General Statutes. The NC SAFE Act requires individuals and
companies who engage in the mortgage business to be licensed by the Commissioner of
Banks. It imposes duties upon Mortgage Brokers and Mortgage Servicers; prohibits any
person from engaging in certain activities, and gives the Commissioner the authority to enact
rules, require disgorgement, impose civil money penalties and enforce the Act. Over the past
seven years, the Commissioner of Banks has used its authority under the NC SAFE Act to
perform audits on those licensed entities to ensure compliance with not only the NC SAFE
Act, but with other provisions of the North Carolina General Statutes, including the
Emergency Foreclosure Prevention Program enacted in 2008. Violations of the NC SAFE Act
could result in penalties up to $25,000 per finding.

Some of the areas being reviewed by the Commissioner are:

1.   Failure to properly assess late charges: loans are reviewed to ensure the proper late fee is
       being assessed to each loan account. There are statutory limitations on the allowable late
      fee charge in NC, even in instances where the terms of the contract allow for a higher rate.

2.   Failure to provide schedule of ranges of fees and costs: servicers are required to provide a
       notice to borrowers during the onboarding period of the range of fees and costs you charge
       borrowers. This notice must also be sent to the Commissioner of Banks annually upon
       renewal of a servicer’s license.

3.   Failure to provide a NC license and complaint information disclosure: servicers are required
       to provide a notice to borrowers during the onboarding period that the servicer is licensed
       by the Commissioner and that complaints about the servicer may be submitted to the Commissioner.

4.   Failure to provide a detailed breakdown of all fees and costs assessed to an account within 30 days:
       Pursuant to N.C.G.S § 45-91 any fee incurred by a servicer must be assessed to
       an account (including attorney fees and costs once the loan is in default) within 45 days of
       the date it is incurred or charged by either the attorney or trustee and it must be explained
       clearly and conspicuously in a statement mailed to the borrower within thirty (30) days.

     Failure to send this notice requires a waiver of any incurred fees and costs.

5.   Failure to send a 45 day breach letter or register the loan with the North Carolina Housing
       Finance Agency (NCHFA): Pursuant to N.C.G.S § 45-102, home loans have to be
       registered with the NCHFA and a 45 day letter sent prior to initiating foreclosure. The 45
       day letter must contain certain information, including an itemized breakdown of all amounts

due to bring the account current. Line items such as “unpaid charges or other charges” are
not considered specific enough to meet the definition of itemized.

For more information on the NC Safe Act, contact our North Carolina Office at 704-444- 8460.