North Carolina Enacts Provisions Regarding Registration System for Processors or Underwriters not Engaged in the Mortgage Business

By Brian Castine
Effective as of November 1, 2015 the state of North Carolina has updated the registration system for individuals that are solely involved in processing or underwriting of residential mortgage loans. These provisions explicitly exclude those involved in the mortgage business. These updates include license issuance and renewal, applications fees, bond requirements, recordkeeping, and reporting.  The new updates are as follows:
The General Assembly of North Carolina enacts House Bill 126:  SECTION 1. Article 19B of Chapter 53 of the General Statutes reads as rewritten:

Article 19B. The Secure and Fair Enforcement Mortgage Licensing Act.
§ 53-244.030. Definitions.

For purposes of the Article, the following definitions apply:
“Mortgage lender” means a person engaged in the mortgage business as defined in sub-subdivision b. of subdivision (11) of this section. However, the definition does not include a person who acts as a mortgage lender only in a tablefunding transaction.
“Mortgage origination support registrant” or “registrant” means a person engaged exclusively in the processing or underwriting of residential mortgage loans and not engaged in the mortgage business.
§ 53-244.040. License and registration requirements.
Every person involved in the mortgage industry must register and maintain a valid unique id number that is issued by the Nationwide Mortgage Licensing System and Registry, which will be referred to as NMLS for the remainder of this article.
Anyone wishing to operate in the state of North Carolina is obligated to register with the Commissioner. Once the registrant has done so, they may sponsor and employ licensed mortgage loan originators or transitional mortgage loan originators, or underwriters. Nothing in this subsection shall be construed as authorizing a registrant to engage in the mortgage business.
Anyone that is licensed under this Article must register with the NMLS a form acceptable to the Commissioner indicating the licensee’s designation and acceptance of their respective responsibilities. Each mortgage broker, lender, or servicer licensed under this Article, or registrant shall notify the Commissioner within 15 days of any changes regarding their qualifying individual. If one is operating as a sole proprietorship, one is considered the qualifying individual.

§ 53-244.050. License and registration application; claim of exemption.
All applicants must apply through the NMLS on a form acceptable to the Commissioner.
If applying as a mortgage, mortgage lender, or mortgage servicer, or registration as a registrant, at the time of application shall comply with the following requirements:

Sole proprietors must have at least three years of experience or meet competency requirements as the Commissioner may impose. This also applies to Corporations, limited liability companies, general or limited partnerships, branch managers, associations, or other groups; which at least of one of the general partners, principal officers, or managers must meet the requirements.
In connection with applying for licensure, individuals will provide the following to the NMLS:

  1. Fingerprints, for a criminal history background check
  2. Personal history and experience, which includes independent credit reports, or any actions taken upon you by a jurisdiction, whether civil, administrative or criminal. The Commissioner may request a criminal background check for any person who has applied for or holds a license. The applicant’s fingerprints will be sent to the State Bureau of Investigation to verify any criminal history in the state, after which they may be forwarded to the F.B.I. for a national check.

§ 53-244.060. Issuance of license or registration
If an applicant satisfies the requirements of G.S. 53-244.050, the Commissioner shall issue a license unless the Commissioner finds any of the following:

  1. The applicant has had a license revoked in any governmental jurisdiction, except that a subsequent formal vacation of the revocation shall not be deemed a revocation.
  2. The applicant has a proven a lack of financial responsibility or the lack of character needed to perform one’s duties and uphold one’s responsibilities. A lack of financial responsibility may include the following:
    a. Outstanding judgments.
    b. Outstanding tax liens or other government liens and filings.
    c. Foreclosures within the past three years.
    d. A pattern of serious delinquent accounts within the past three years.

§ 53-244.090. License Application fees.
Applicants shall pay the following nonrefundable filing fees for their particular license:

  • a) ($1,250) for a broker, mortgage lender, or mortgage servicer.
  • b) ($300.00) for an exclusive mortgage broker.
  • c) ($125.00) for a mortgage loan originator or transitional mortgage loan originator.
  • d) Initial registration for mortgage origination support shall pay:
  • ($250.00) for applicants who employ or contract with fewer than a total of five individuals   engaged solely as loan processors or underwriters.
  • ($1,000) for applicants who employ or contract with between a total of five and 30 individuals engaged solely as loan processors or underwriters.
  • e) ($2,000) for applicants that employ or contract with more than a total of 30 individuals engaged solely as loan processors or underwriters.
  • f) Additionally, applicants for initial licensure are responsible for the cost of their credit report, criminal background check, and any processing fees required by the NMLS
  • § 53-244.100. Active license or registration requirements and assignability.

    • (a) It is unlawful for anyone to compensate, employ, or appoint a person that has not already obtained a license. Persons defined in G.S. 53-244.030(8) or G.S. 53-244.030(29) are not subject to this subsection.
    • (b) Mortgage loan originators and transitional loan originators licenses are in effect when that person is employed by a mortgage lender, broker, or servicer, for the purpose of supervising and controlling loan processors or underwriters. When not employed by the above, the licensure is not effective. Additionally, a mortgage loan originator or transitional mortgage loan originator may not be employed by more than one mortgage lender, broker, servicer, or support registrant at one time. Additionally, if employment should end, the employer must promptly, in writing, inform the Commissioner with a statement explaining the reason for termination.
    • (c) Employers must also create and maintain a file that is provided to the Commissioner, which includes a list of all the employed mortgage loan originators and transitional mortgage loan originators.
    • (d) No one may act as a mortgage loan originator or support registrant unless that person is licensed and has registered in accordance with this article.
    • (e) Any license or registration under this article is issued on an individual basis and is not assignable. Additionally, acquiring a license or registration via stock purchase, merger, or other means is not permissible without the prior consent of the Commissioner.

    § 53-244.101. License and registration renewal.

    • (a) All licenses and registrations issued by the Commissioner expire annually on the 31st day of December, after which it is invalid unless renewed.
    • (b) A license or registration may be renewed on or after November 1st of each year. The renewal fees are as follows.  A mortgage loan originator shall pay ($125.00) plus the cost of reports, criminal history record checks and processing fees to the NMLS. A mortgage origination support registrant shall pay ($125.00) if they employ or contract with fewer than five hundred people that handle loan processors or underwriters exclusively,  ($500.00) for those that employ or contract with between a total of five and 30 individuals engaged solely as loan processors or underwriters, or ($1,000) for registrants who employ or contract with more than a total of 30 individuals engaged solely as loan processors or underwriters.
    • (c) Licensees may apply to renew their license if they can demonstrate the following:
    • (i) The applicant still meets the initial minimum standards for licensure or registration.
    • (ii) The applicant has met the continuing education requirements.
    • (iii) The applicant has paid all required fees.
    • (iv) The following are the nonrefundable late fees for renewal:
    • 1. Mortgage loan origination support applicants will pay a nonrefundable ($250) late fee.
    • 2. Mortgage loan originator applicants will pay a nonrefundable ($100.00) late fee.

    In addition, if the licensee fails to obtain a reinstatement of the license prior to March 1, the licensee must go through the process as if obtaining a license for the first time.
    (d1) Mortgage origination support registrants that are not renewed by the expiration date will pay renewal fees as well as an additional ($62.50) for registrants who employ or contract with less than a total of five individuals engaged solely as loan processors or underwriters,  ($250.00) for persons who employ or contract with between a total of five and 30 individuals engaged solely as loan processors or underwriters, or ($500.00) for those that employ or contract with up to 30 individuals engaged solely as loan processors or underwriters.

    • 781-402-6415

    Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.

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