CHAPTER 03 ‑ BANKING COMMISSION

 

SUBCHAPTER 03A ‑ ORGANIZATION

 

SECTION .0100 ‑ GENERAL INFORMATION

 

04 NCAC 03A .0101         NAME: LOCATION AND ADDRESS

The Office of the Commissioner of Banks is located at 316 West Edenton Street, Raleigh, North Carolina. The mailing address for the Office of the Commissioner of Banks and all of its officers and employees is 4309 Mail Service Center, Raleigh, North Carolina 27699-4309. The office is open to the public Monday through Friday, 8:00 a.m. to 5:00 p.m.

 

History Note:        Authority G.S. 53C-2-1; 53C-2-2;

Eff. February 1, 1976;

Amended Eff. September 1, 2006; July 1, 1990; February 9, 1978;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03A .0102         GENERAL PURPOSES

04 NCAC 03A .0103         AREAS OF RESPONSIBILITY

04 NCAC 03A .0104         FUNCTIONS

04 NCAC 03A .0105         CONFIDENTIAL RECORDS

04 NCAC 03A .0106         CHARGES FOR SERVICES

04 NCAC 03A .0107         CHECKS FOR FEES: ETC.

 

History Note:        Authority G.S. 53‑92; 53‑99; 53‑104; 53‑122(3); 53‑125; 150A‑10; 150A‑11(1);

Eff. February 1, 1976;

Amended Eff. September 26, 1979;

Repealed Eff. January 1, 1985.

 

SECTION .0200 ‑ STRUCTURE OF BANKING COMMISSION

 

04 NCAC 03A .0201         COMPOSITION AND AUTHORITY

04 NCAC 03A .0202         MEETINGS

04 NCAC 03A .0203         AGENDA

04 NCAC 03A .0204         HEARING OFFICER

04 NCAC 03A .0205         OWNERSHIP OF BANK STOCK: DISCLOSURE

04 NCAC 03A .0206         PARTICIPATION OF COMMISSIONERS IN COMMISSION ACTION

 

History Note:        Authority G.S. 53‑92; 53‑104; 143A‑177; 150B‑10;

Eff. February 1, 1976;

Amended Eff. February 9, 1978;

Repealed Eff. January 1, 1985.

 

SECTION .0300 ‑ STRUCTURE OF THE OFFICE OF THE COMMISSIONER OF BANKS

 

04 NCAC 03A .0301         COMMISSIONER OF BANKS

04 NCAC 03A .0302         DEPUTY COMMISSIONER OF BANKS

04 NCAC 03A .0303         CONSUMER FINANCE ADMINISTRATOR

04 NCAC 03A .0304         BANK EXAMINERS

04 NCAC 03A .0305         CLERICAL STAFF

 

History Note:        Authority G.S. 53‑92; 53‑101; 150B‑10;

Eff. February 1, 1976;

Repealed Eff. January 1, 1985.

 

 

SUBCHAPTER 03B ‑ RULE‑MAKING AND CONTESTED CASES

 

SECTION .0100 ‑ RULE‑MAKING

 

04 NCAC 03B .0101          PETITIONS

(a)  Any person wishing to submit a petition requesting the adoption, amendment, or repeal of a rule by the Banking Commission shall address a petition to:

Office of The Commissioner of Banks

4309 Mail Service Center

Raleigh, North Carolina 27699-4309

Attention: Rule-making Coordinator

(b)  The Commissioner of Banks will determine, based on a study of the facts stated in the petition, whether the public interest will be served by granting it. He will consider all the contents of the submitted petition, plus any additional information he deems relevant.

 

History Note:        Authority G.S. 53C-2-1; 53C-2-2; 150B‑20;

Eff. February 1, 1976;

Amended Eff. August 1, 2004; April 1, 1999;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0102          NOTICE

(a)  Any person or agency desiring to be placed on the mailing list for Banking Commission rule‑making notices may file a request in writing, furnishing their name and mailing address to:

Office of The Commissioner of Banks

4309 Mail Service Center

Raleigh, North Carolina 27699-4309

Attention: Rule-making Coordinator

The request must state the subject areas within the authority of the Banking Commission for which notice is requested.

(b)  Persons desiring information in addition to that provided in a particular rule‑making notice may contact:

Office of The Commissioner of Banks

4309 Mail Service Center

Raleigh, North Carolina 27699-4309

Attention: Rule-making Coordinator

 

History Note:        Authority G.S. 53C-2-1; 53C-2-2; 150B‑20;

Eff. February 1, 1976;

Amended Eff. August 1, 2004; April 1, 1999; August 1, 1988;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0103          HEARINGS

(a)  Unless otherwise stated in a particular rule‑making notice, hearings before the Banking Commission shall be held in Raleigh, North Carolina, at regular scheduled or special called meetings of the Banking Commission.

(b)  Any person desiring to present oral data, views, or arguments on the proposed rule must, before the hearing, file a notice with:

Office of The Commissioner of Banks

4309 Mail Service Center

Raleigh, North Carolina 27699-4309.

Attention: Rule-making Coordinator

Any person permitted to make an oral presentation may submit a written copy of the presentation to the above‑named person prior to or at the hearing.

(c)  A request to make an oral presentation must contain a brief summary of the individual's views with respect thereto, and a statement of the length of time the individual wants to speak. Presentations may not exceed 15 minutes unless, upon request, either before or at the hearing, the Commissioner of Banks or the presiding officer determines that fundamental fairness and procedural due process require an extension of time.

(d)  Upon receipt of a request to make an oral presentation the Commissioner of Banks shall acknowledge receipt of the request, and inform the person requesting of the imposition of any limitations deemed necessary to the end of a full and effective public hearing on the proposed rule.

(e)  Upon receipt of such written comments prompt acknowledgment shall be made including a statement that the comments therein shall be considered fully by the Banking Commission.

(f)  The presiding officer at the hearing shall have complete control of the proceedings, including: extensions of any time requirements, recognition of speakers, time allotments for presentations, direction of the flow of the discussion, and the management of the hearing. The presiding officer, at all times, shall take care that each person participating in the hearing is given a fair opportunity to present views, data, and comments.

 

History Note:        Authority G.S. 53C-2-1; 53C-2-2; 150B‑21.2;

Eff. February 1, 1976;

Amended Eff. September 1, 2004; April 1, 1999; August 1, 1988;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0104          TEMPORARY RULES

 

History Note:        Authority G.S. 53‑77.3; 53‑92; 150B‑13;

Eff. February 1, 1976;

Repealed Eff. September 1, 1988.

 

04 NCAC 03B .0105          DECLARATORY RULINGS

(a)  Any person substantially affected by a statute administered or rule promulgated by the Commissioner of Banks or the Banking Commission may request a declaratory ruling as to:

(1)           whether, and if so how, the statute or rule applies to a given factual situation, or

(2)           whether a particular agency rule is valid.

All decisions of the Commissioner of Banks relative to declaratory rulings shall be subject to review by the Banking Commission upon written application of any aggrieved party.

(b)  The Commissioner of Banks shall have the sole power to make such declaratory rulings. All requests for declaratory rulings shall be written and mailed to:

Office of The Commissioner of Banks

4309 Mail Service Center

Raleigh, North Carolina 27699-4309.

Attention: Legal Division

(c)  All requests for a declaratory ruling must include the following information:

(1)           name and address of petitioner;

(2)           statute or rule to which petition relates;

(3)           concise statement of the manner in which petitioner is aggrieved by the rule or statute or its potential application to him;

(4)           a statement of whether an oral hearing is desired, and if so the reasons for such an oral hearing.

(d)  Whenever the Commissioner of Banks believes for good cause that the issuance of a declaratory ruling is undesirable, he may refuse to do so. When good cause for refusing to issue a declaratory ruling is deemed to exist, the Commissioner of Banks shall notify the petitioner of his decision in writing, stating reasons for the denial of a declaratory ruling.

(e)  Where a declaratory ruling is deemed appropriate, the Commissioner of Banks shall issue the ruling within 60 days of receipt of the petition.

(f)  A declaratory ruling procedure may consist of written submissions, oral hearings, or such other procedures as may be appropriate in a particular case.

 

History Note:        Authority G.S. 53C-2-1; 53C-2-2;

Eff. February 1, 1976;

Amended Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

SECTION .0200 ‑ CONTESTED CASES

 

04 NCAC 03B .0201          BANKING COMMISSION HEARINGS

04 NCAC 03B .0202          HEARINGS BEFORE THE COMMISSIONER OF BANKS

04 NCAC 03B .0203          REQUEST FOR HEARING

04 NCAC 03B .0204          NOTICE

04 NCAC 03B .0205          WRITTEN ANSWERS TO NOTICE

04 NCAC 03B .0206          REPRESENTATION BY AN ATTORNEY

 

History Note:        Authority G.S. 53‑92; 150B‑2(2);

Eff. February 1, 1976;

Amended Eff. September 1, 1988;

Repealed Eff. August 1, 2004.

 

04 NCAC 03B .0207          WAIVER

 

History Note:        Authority G.S. 53‑92; 150B‑40(a);

Eff. February 1, 1976;

Repealed Eff. August 1, 1988.

 

04 NCAC 03B .0208          DEPOSITIONS

 

History Note:        Authority G.S. 53‑91; 150B‑39(a);

Eff. February 1, 1976;

Repealed Eff. August 1, 1988.

 

04 NCAC 03B .0209          DISCOVERY

04 NCAC 03B .0210          RULES OF EVIDENCE

04 NCAC 03B .0211          PRE‑HEARING CONFERENCE

04 NCAC 03B .0212          PLACE AND FORUM FOR CONTESTED CASES

04 NCAC 03B .0213          FAILURE TO APPEAR FOR A CONTESTED CASE

04 NCAC 03B .0214          CONSOLIDATION OF CONTESTED CASES

04 NCAC 03B .0215          INTERVENTION OF A NEW PARTY INTO A CONTESTED CASE

04 NCAC 03B .0216          DISQUALIFICATION OF HEARING OFFICER

04 NCAC 03B .0217          SUBPOENAS

04 NCAC 03B .0218          PUBLIC INSPECTION OF FILES

 

History Note:        Authority G.S. 53‑92; 53‑99; 53‑125; 150B-24; 150B-38; 150B-38(f); 150B‑39; 150B-40; 150B-41;

Eff. February 1, 1976;

Amended Eff. August 1, 1998;

Repealed Eff. August 1, 2004.

 

04 NCAC 03B .0219          DEFINITIONS

As used in this Subchapter:

(1)           "Appellate panel" means an appellate review panel appointed pursuant to G.S. 53C-2-6(b).

(2)           "Commission" means the North Carolina State Banking Commission.

(3)           "Commissioner" means the North Carolina Commissioner of Banks.

(4)           "Court" means a North Carolina District or Superior Court.

(5)           "Day" means a calendar day, other than a Saturday, Sunday or North Carolina state holiday.

(6)           "Hearing officer" means the Commissioner or an individual appointed by the Commissioner pursuant to G.S. 53C-2-6(c).

(7)           "Rules of Civil Procedure" means the North Carolina Rules of Civil Procedure, G.S. 1A-1, et seq., as the same may be amended from time to time.

(8)           Terms used herein which are defined by G.S. 150B shall be defined as in G.S. 150B.

 

History Note:        Authority G.S. 53C-2-5; 53C-2-6;

Eff. August 1, 2004;

Amended Eff. November 1, 2013;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0220          HEARINGS

Whenever the Commissioner is authorized or required by law to hold a hearing, the hearing officer shall conduct the hearing in accordance with the applicable provisions of law, the Rules of Civil Procedure, the Rules of Evidence and the procedures set forth in this Subchapter.

 

History Note:        Authority G.S. 53C-2-1; 53C-2-2; 53C-2-6; 53-186; 53-208.10; 53-208.23; 53-224.25; 53-228; 53-244.113; 53-244.116; 53-251; 53-271(c); 53-284; 53-321; 53-327; 53-369; 53-370; 53-412; 150B-38(h);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0221          APPLICATION OF THE RULES OF CIVIL PROCEDURE

Except as otherwise provided in this Subchapter or in G.S. 150B, the Rules of Civil Procedure shall apply in hearings and prehearing proceedings governed by this Subchapter to the same extent as though the hearing or prehearing proceeding was pending in a Court.

 

History Note:        Authority G.S. 53C-2-2; 53C-2-6; 150B-38(h);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0222          FILING OF DOCUMENTS

(a)  All requests for hearing, written answers, motions, responses to motions or other papers required or permitted to be filed in any contested case shall be signed by the party or the party's attorney and the original thereof filed with the Commissioner addressed as follows:

If filed via the United States Postal Service:

Office of the Commissioner of Banks

4309 Mail Service Center

Raleigh, NC 27699-4309

Attn: Legal Division

If filed via a private overnight mail service or via hand delivery:

Office of the Commissioner of Banks

316 W. Edenton Street

Raleigh, NC 27603-1716

Attn: Legal Division

(b)  A copy of any papers filed with the Commissioner, together with any attachments, shall be served upon all parties in any manner permitted by the Rules of Civil Procedure.

(c)  Any paper required or permitted to be filed pursuant to this Rule shall be considered filed on the date it is actually received at the address above.

 

History Note:        Authority G.S. 53C-2-2; 53C-2-6; 150B-38(h);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0223          REQUEST FOR A HEARING

(a)  A person aggrieved may request a hearing, which shall be conducted by a hearing officer. The request shall be made in writing, state all statutory or other legal bases for the request, describe the events or circumstances giving rise to the request and shall include a copy of any supporting documents or other papers supporting the request. If applicable, the request may (but need not) include a statement of pertinent legal issues or questions.

(b)  If the Commissioner determines that it is appropriate to do so, he may direct his staff to schedule a hearing, notwithstanding the fact that no request for a hearing has been received. In such cases, the Commissioner's direction shall be treated as a request for a hearing.

 

History Note:        Authority G.S. 53C-2-2; 53C-2-6; 53-208.10(c); 53-208.23; 53-244-113(a); 150B-38(h);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0224          DATE, TIME AND LOCATION OF HEARING; MOTIONS TO CONTINUE

(a)  The date, time and location of any hearing under this Subchapter shall be set forth in the notice of hearing or other paper which commences the hearing process.

(b)  Any party may move to continue the hearing.

(c)  The hearing officer shall rule on any motion to continue. Unless oral argument is requested by the hearing officer, motions to continue shall be decided based upon the written submissions of the parties.

 

History Note:        Authority G.S. 53C-2-2; 53C-2-6; 150B-38(h);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0225          MOTIONS

(a)  Any party may file any motion which would be permitted under the Rules of Civil Procedure if the contested case was pending in a Court.

(b)  The opposing party may file such response as is permitted by the Rules of Civil Procedure to any such motion within five days of the date that it is filed with the Commissioner.

(c)  The hearing officer shall rule on any such motion. The hearing officer may rule on any motion with or without oral argument. If the hearing officer determines that oral argument is appropriate, he shall notify the parties of the date for such argument. The notice shall indicate whether the argument is to be conducted in person or by conference call.

 

History Note:        Authority G.S. 53C-2-2; 53C-2-6(c); 150B-38(h);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0226          PRE-HEARING CONFERENCE

(a)  If the hearing officer determines that to do so would aid in the prompt and efficient resolution of any contested case, the hearing officer may order that the parties attend a pre-hearing conference. The notice of the conference shall either be included in the document referred to in Rule .0224(a) of this Section or in a separate written order. The purpose of a pre-hearing conference is to:

(1)           explore any grounds upon which a contested case may be resolved without the need for a hearing;

(2)           determine the scope of discovery each party wishes to pursue;

(3)           exchange exhibits and other evidence;

(4)           reach stipulations or other agreements; and

(5)           pursue any other matters which will reduce the cost, save time, simplify the issues to be heard, or otherwise aid in the expeditious disposition of the matters to be addressed by the hearing.

(b)  The pre-hearing conference may be conducted informally between the parties. At the request of either party, the pre-hearing conference may be conducted by a member of the Commissioner's legal staff.

 

History Note:        Authority G.S. 53C-2-2; 53C-2-6(c); 150B-41(c);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0227          HEARINGS

(a)  Prior to the commencement of a hearing, the hearing officer shall rule on any outstanding motions.

(b)  Once a hearing has begun the hearing officer, may adjourn the hearing and reconvene the same at a later time or date.

(c)  Hearings are open to the public, except as to any testimony or other evidence regarding matters made confidential by law.

(d)  Hearings shall be conducted in a manner which conforms to the Rules of Civil Procedure and the Rules of Evidence. The order of evidence shall be determined by the hearing officer.

(e)  Persons permitted to intervene pursuant to the Rules of Civil Procedure shall be permitted to participate in the hearing only to the extent the hearing officer determines is necessary for a full and fair adjudication of the case.

 

History Note:        Authority G.S. 53C-2-2; 53C-2-6; 150B-38(h);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0228          STIPULATIONS

Parties may by written stipulation agree upon the facts or any portion thereof and their stipulation may be regarded and used as evidence at the hearing. However, the hearing officer shall not be precluded from requiring or allowing the introduction of additional evidence concerning the issues to which the parties have stipulated.

 

History Note:        Authority G.S. 53C-2-2; 53C-2-6; 150B-38(h);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

SECTION .0300 - APPEALS TO THE STATE BANKING COMMISSION

 

04 NCAC 03B .0301          APPOINTMENT OF APPELLATE PANEL

In the event the Chairman of the Commission, pursuant to G.S. 53C-2-6(b) appoints an appellant panel to consider an appeal and make a recommended decision to the State Banking Commission, the Commissioner's staff shall send all parties written notice of that appointment.

 

History Note:        Authority G.S. 53C-2-1(e); 53C-2-6(b); 53-215; 53-224.30; 53-231; 53-232.17; 53-244.121; 53-252; 53-272; 53-289; 53-350; 53-410; 53-412(d);

Eff. August 1, 2004;

Amended Eff. November 1, 2013;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0302          RECORD ON APPEAL; HEARING DATE; MEMORANDA OF LAW

(a)  The record on appeal shall consist of the official agency record as set forth in G.S. 150B-42.

(b)  The Commissioner's counsel, after consulting with the chair of the Commission or Appellate Panel, shall provide each party with written instructions setting forth the deadlines by which memoranda of law shall be filed by the parties, when the appeal will be considered by the Commission or Appellate Panel, and whether oral argument will be heard.

 

History Note:        Authority G.S. 53C-2-1(e); 53C-2-6(b); 150B-38(h);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0303          ORAL ARGUMENT

(a)  The decision to hear oral argument in an appeal to the Commission shall be in the discretion of the Commission or Appellate Panel. If oral argument is permitted, the chair of the Commission or Appellate Panel shall notify the Commissioner, who shall notify all parties and set a date and time for same.

(b)  If oral argument is permitted, each party shall be allowed a maximum of 30 minutes for oral argument, including rebuttal arguments.

 

History Note:        Authority G.S. 53C-2-1: 53C-2-6(b); 150B-38(h);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03B .0304          COMMISSION REViEW OF APPELLATE PANEL'S RECOMMENDED DECISION

(a)  If an appeal is heard by an Appellate Panel, that Appellate Panel, after reviewing the record on appeal, memoranda of law and hearing oral arguments, if any, shall make a recommended decision to the Commission. The Commission shall, by a vote of the majority of its members present and voting at any regular or special meeting, either affirm, affirm with modifications or reject the recommended decision of the Appellate Panel.

(b)  If the Commission rejects the Appellate Panel's recommended decision, it shall specify the actions the Appellate Panel or the Commissioner shall take with regard to the appeal.

(c)  A decision to affirm or to affirm with modifications shall be considered a "final agency decision" for purposes of G.S.150B-42.

 

History Note:        Authority G.S. 53C-2-1; 53C-2-6; 150B-38(h);

Eff. August 1, 2004;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

 

 

SUBCHAPTER 03C - BANKS

 

SECTION .0100 - ORGANIZATION AND CHARTERING

 

04 NCAC 03C .0101         APPLICATION

04 NCAC 03C .0102         EXAMINATION BY COMMISSIONER

04 NCAC 03C .0103         REPORT TO BANKING COMMISSION

04 NCAC 03C .0104         REVIEW BY BANKING COMMISSION

 

History Note:        Authority G.S. 53C-2-5; 53C-3-1(a); 53C-3-1(b); 53C-3-4; 53C-3-5; 53C-3-6; 53-137; 53-333;

Eff. February 1, 1976;

Amended Eff. January 1, 2013; September 1, 2006; September 1, 1990; November 1, 1982; July 24, 1979; August 1, 1978;

Repealed Eff. October 1, 2014.

 

04 NCAC 03C .0105         STATEMENT FILED BEFORE BEGINNING BUSINESS

04 NCAC 03C .0106         CERTIFICATION TO THE SECRETARY OF STATE

 

History Note:        Authority G.S. 53‑4; 53‑5; 53‑7; 53‑92; 150A‑11(1);

Eff. February 1, 1976;

Repealed Eff. January 1, 1985.

 

04 NCAC 03C .0107         BANK CERTIFICATE

 

History Note:        Authority G.S. 53C-2-5; 53C-3-7;

Eff. February 1, 1976;

Amended Eff. January 1, 2013;

Repealed Eff. October 1, 2014.

 

04 NCAC 03C .0108         JUDICIAL REVIEW

 

History Note:        Authority G.S. 53‑92; 150A‑11(1); 150A‑43;

Eff. February 1, 1976;

Repealed Eff. January 1, 1985.

 

04 NCAC 03C .0109         APPLICATION TO ESTABLISH BANK: CONDITIONAL APPROVAL

 

History Note:        Authority G.S. 53‑5; 53‑92; 53‑104; 150A‑11(1);

Eff. February 1, 1976;

Repealed Eff. November 1, 1982.

 

04 NCAC 03C .0110         ORGANIZATIONAL EXPENSES

 

History Note:        Authority G.S. 53-2; 53-92; 53-104;

Eff. February 1, 1976;

Amended Eff. July 1, 1991; September 1, 1990;

Repealed Eff. January 1, 2013.

 

04 NCAC 03C .0111         NATIONAL BANK CONVERSION

 

History Note:        Authority G.S. 53C-2-5; 53C-7-301;

Eff. September 26, 1979;

Amended Eff. January 1, 2013; September 1, 2006; September 1, 1990; August 1, 1988;

Repealed Eff. October 1, 2014.

 

04 NCAC 03C .0112         ELIMINATION OF DIRECTOR LIABILITY

 

History Note:        Authority G.S 53C-2-5; 53C-4-6; 55-2-02(b)(3); 55-8-30;

Eff. June 1, 1995;

Amended Eff. January 1, 2013;

Repealed Eff. October 1, 2014.

 

SECTION .0200 - BRANCHES

 

04 NCAC 03C .0201         ESTABLISHMENT OF BRANCHES

 

History Note:        Authority G.S. 53C-2-5; 53C-6-15;

Eff. February 1, 1976;

Amended Eff. January 1, 2013; September 1, 2006; June 1, 1995; July 1, 1991; October 1, 1990; November 1, 1982;

Repealed Eff. October 1, 2014.

 

04 NCAC 03C .0202         DISCONTINUANCE

 

History Note:        Authority G.S. 53-4; 53-62; 53-92; 53-104;

Eff. February 1, 1976;

Amended Eff. September 1, 2006; June 1, 1995; October 1, 1990; November 1, 1982;

Repealed Eff. January 1, 2013.

 

04 NCAC 03C .0203         DISCONTINUANCE OF A LIMITED SERVICE FACILITY

04 NCAC 03C .0204         CONVERSION OF BRANCH TO LIMITED SERVICE FACILITY

 

History Note:        Authority G.S. 53-62; 53-92; 53-104; 53-122(3);

Eff. September 1, 1990;

Amended Eff. September 1, 2006; June 1, 1995;

Repealed Eff. January 1, 2013.

 

SUBCHAPTER 03C ‑ BANKS

 

SECTION .0300 ‑ CHANGE OF LOCATION

 

04 NCAC 03C .0301         CHANGE OF LOCATION OF MAIN OFFICE, BRANCH OR LTD SVC FACILITY

 

History Note:        Authority G.S. 53‑62; 53‑92; 53‑104; 53‑122(3);

Eff. February 1, 1976;

Amended Eff. September 1, 2006; June 1, 1995; September 1, 1990; November 1, 1982; August 1, 1978;

Repealed Eff. February 1, 2013.

 

04 NCAC 03C .0302         EXAMINATION BY COMMISSIONER

04 NCAC 03C .0303         REPORT

04 NCAC 03C .0304         REVIEW BY BANKING COMMISSION

04 NCAC 03C .0305         FINAL ORDER BY COMMISSIONER

04 NCAC 03C .0306         CERTIFICATE

 

History Note:        Authority G.S. 53‑62; 53‑92; 150A‑11(1);

Eff. February 1, 1976;

Amended Eff. March 15, 1978;

Repealed Eff. November 1, 1982.

 

SECTION .0400 ‑ CONSOLIDATION OF BANKS

 

04 NCAC 03C .0401         APPLICATION

 

History Note:        Authority G.S. 53‑12; 53‑92;

Eff. February 1, 1976;

Amended Eff. September 1, 2006; September 1, 1990; July 24, 1979;

Repealed Eff. February 1, 2013.

 

04 NCAC 03C .0402         PUBLICATION

 

History Note:        Authority G.S. 53‑12; 53‑92; 150B‑11(1);

Eff. February 1, 1976;

Repealed Eff. August 1, 1988.

 

04 NCAC 03C .0403         INVESTIGATION

04 NCAC 03C .0404         ORDER

04 NCAC 03C .0405         REVIEW BY THE BANKING COMMISSION

 

History Note:        Authority G.S. 53C-2-5; 53C-7-202; 53C-7-203; 53C-7-209;

Eff. February 1, 1976;

Amended Eff. January 1, 2013; September 1, 1990;

Repealed Eff. October 1, 2014.

 

04 NCAC 03C .0406         FILING WITH SECRETARY OF STATE

 

History Note:        Authority G.S. 53‑13; 53‑92;

Eff. February 1, 1976;

Amended Eff. September 1, 1990;

Repealed Eff. February 1, 2013.

 

04 NCAC 03C .0407         WAIVER BY COMMISSIONER

 

History Note:        Authority G.S. 53C-2-5; 53C-2-1; 53C-9-101;

Eff. November 1, 1982;

Amended Eff. January 1, 2013;

Repealed Eff. October 1, 2014.

 

SECTION .0500 ‑ WORK WEEK

 

04 NCAC 03C .0501         OPERATION OF BANKS ON A FIVE‑DAY WEEK BASIS

04 NCAC 03C .0502         BANKS REVERTING TO A SIX‑DAY WEEK BASIS

 

History Note:        Authority G.S. 53‑77.1; 53‑92; 150B‑11(1);

Eff. February 1, 1976;

Repealed Eff. July 1, 1990.

 

04 NCAC 03C .0503         DAYS AND HOURS OF REGULAR OPERATION

 

History Note:        Authority G.S. 53-77.1A(d); 53-92;

Eff. July 1, 1990;

Repealed Eff. January 1, 2013.

 

SECTION .0600 ‑ EXAMINATION OF BANKS

 

04 NCAC 03C .0601         EXAMINATION

04 NCAC 03C .0602         REPORT

 

History Note:        Authority G.S. 53‑92; 53‑99; 53‑109; 53‑117; 53‑123; 53‑125; 150A‑11(1);

Eff. February 1, 1976;

Repealed Eff. January 1, 1985.

 

SECTION .0700 ‑ REPORTS REQUIRED BY COMMISSIONER OF BANKS

 

04 NCAC 03C .0701         EXAMINING COMMITTEE REPORT

04 NCAC 03C .0702         REPORTS OF CONDITION AND INCOME

04 NCAC 03C .0703         PUBLISHER'S COPY, REPORT OF CONDITION AND INCOME

 

History Note:        Authority G.S. 53‑83; 53‑92; 53‑99; 53-105;

Eff. February 1, 1976;

Amended Eff. September 1, 2006; July 1, 1990; September 26, 1979;

Repealed Eff. April 1, 2007.

 

04 NCAC 03C .0704         CONSOLIDATED REPORT OF INCOME

04 NCAC 03C .0705         REPORT OF MANAGEMENT AND PERSONNEL

 

History Note:        Authority G.S. 53‑92; 53‑106; 53‑107; 150B‑11(1);

Eff. February 1, 1976;

Amended Eff. September 26, 1979;

Repealed Eff. July 1, 1990.

 

SECTION .0800 - MISCELLANEOUS REPORTS AND APPROVALS

 

04 NCAC 03C .0801         OATH OF DIRECTORS

04 NCAC 03C .0802         DEPOSITORY BANKS

04 NCAC 03C .0803         OTHER REAL ESTATE

04 NCAC 03C .0804         SUSPENSION OF INVESTMENT AND LOAN LIMITATION

 

History Note:        Authority G.S. 53-43(3)c; 53-49; 53-80; 53-81; 53-84; 53-92; 53-99;

Eff. February 1, 1976;

Amended Eff. September 1, 2006; May 1, 1992; September 26, 1979;

Repealed Eff. January 1, 2013.

 

04 NCAC 03C .0805         STOCKHOLDERS LIST

04 NCAC 03C .0806         CHANGES IN OWNERSHIP AND MANAGEMENT

 

History Note:        Authority G.S. 53‑42.1; 53‑85; 53‑92; 53‑108; 150A‑11(1);

Eff. February 1, 1976;

Amended Eff. September 26, 1979;

Repealed Eff. January 1, 1985.

 

04 NCAC 03C .0807         SUBSIDIARY INVESTMENT APPROVAL

 

History Note:        Authority G.S. 53-47; 53-93; 53-95; 53-104;

Eff. May 1, 1992;

Amended Eff. December 1, 2011; June 1, 1995;

Repealed Eff. January 1, 2013.

 

Section .0900 – OPERATIONS

 

04 NCAC 03C .0901         BOOKS AND RECORDS

(a)  Each bank, each affiliate of the bank, and the bank's parent holding company, shall keep, and make available for examination by the representatives of the Commissioner of Banks, books and records that reflect all the transactions of the bank in its true financial condition. Such records shall be kept so as to permit and facilitate a speedy examination, by the representatives of the Commissioner of Banks. Without implying that these are the only books and records to be kept, the following books and records shall be kept at the bank, or at its parent holding company, unless another storage site is approved by the Commissioner of Banks in writing by letter or other written agreement:

(1)           Alphabetical direct and indirect liability ledgers. Each bank shall keep an alphabetical direct and indirect liability ledger. The alphabetical direct liability ledger shall show a customer's direct obligations owed to the bank by loan name or account number and the balance outstanding under each account. The alphabetical indirect liability ledger shall show a customer's indirect obligations owed to the bank by loan name or account number and the balance outstanding under each account. The alphabetical direct liability ledger shall be kept in balance with the general ledger control. The alphabetical indirect liability ledger shall be updated at least monthly. Where the aggregate total of a customer's direct and indirect obligations to the bank do not exceed twenty thousand dollars ($20,000), the indirect obligations of that customer may be omitted from the alphabetical indirect liability ledger. In a bank whose automated record system is not able to produce an alphabetical liability ledger, the bank shall produce an alphabetical listing of borrowers showing all of a customer's loan or account numbers and the amount outstanding under each number when called upon by representatives of the Commissioner of Banks. Each bank shall have the ability to produce both the direct and indirect liability ledgers in hard copy form upon request by representatives of the Commissioner of Banks.

(2)           Monthly reconciliation of accounts with correspondent banks. A record shall be kept, showing the monthly reconciliation of each account with correspondent banks. A signed review of such reconciliations shall be made by an officer or employee of the bank other than the person responsible for preparing the reconciliation.

(3)           Purchases and sales of securities. A record shall be kept of purchases and sales of securities. The record shall include the following:

(A)          dates of purchases and sales;

(B)          interest rates;

(C)          maturities;

(D)          par value;

(E)           cost value;

(F)           all write-ups or write-downs;

(G)          a full description of the security;

(H)          from whom purchased;

(I)            to whom sold;

(J)            purchase price;

(K)          selling price; and

(L)           when, where, and why pledged or deposited.

This record shall be maintained in balance with the general ledger control.

(4)           Charge-offs. A record shall be kept of all items charged off and of all recoveries. All charge-offs shall be authorized or approved by the executive committee or by the board of directors and such action recorded in their minutes. The charge-off record shall show the date of the charge-off, a description of the asset, and the amount of the charge-off. The record shall be supported by the actual charged-off items, or the final disposition of any charged-off item. The record of recoveries shall show the date and amount of each recovery.

(5)           Records of real estate. A record shall be kept on all parcels owned, including the banking house. The record shall show when the property was acquired, how the property was acquired, the cost of the property, the book value of the property, and detailed income and expense reports relating to the property. This record shall be supported by appraisals, title certificates showing assessed value, tax receipts, and hazard insurance policies relating to the property.

(6)           Meeting minutes and consent to action. Minutes of all board of directors meetings, board committee meetings, and stockholders meetings (including each consent to action without a meeting), shall be kept showing any action resulting from the meeting. All minutes shall be signed by the chairman and the secretary of such meeting.

(7)           Cash items held over. A daily record shall be kept of all cash items held over from the day's business, including all checks that would cause an overdraft if handled in the regular way. This record shall be kept in balance with the general ledger control and shall identify the account on which the item is drawn or is obligated for payment, the reason the item is being held, the date the item was placed in the cash items account, and the amount of the item.

(8)           Record of income and expenses. A detailed record of income and expenses shall be kept and balanced monthly. A report of this record shall be made to the executive committee or board of directors, and the receipt of same noted in their minutes.

(9)           Industrial bank reports of condition. Each industrial bank, when preparing a report of condition and income, shall include and make a part of its report a list of those whose aggregate direct and indirect obligations to the bank, including paper purchased by the bank, are in excess of ten percent of the industrial bank's capital, surplus, and undivided profits. In lieu of this list, the industrial bank may maintain a direct and indirect liability ledger in accordance with Subparagraph (a)(1) of this Rule.

(b)  Unless another storage site is approved by the Commissioner of Banks in writing by letter or other written agreement, a bank's books and records and the books and records of the bank's parent holding company shall be kept at the bank or at the bank's parent holding company; and the books and records of an affiliate of the bank shall be kept at the affiliate, the bank, or the bank's parent holding company.

(c)  Based upon the condition of a bank as determined by examination or otherwise, the Commissioner of Banks may require a bank to prepare or maintain different or additional books, records, and reports.

 

History Note:        Authority G.S. 53C-8-6;

Eff. February 1, 1976;

Amended Eff. October 1, 2014; June 1, 1995; May 1, 1992; October 1, 1990; September 1, 1983;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03C .0902         REQUIRED ACCOUNTS

To ensure that the books and records of the bank properly reflect all of its liabilities, the following reserve accounts shall be set up and maintained by all banks:

(1)           Reserve for Interest Due Depositors. This reserve shall be set up and proper entries made at least once each month. As interest is paid to depositors, payments shall be charged to this account. Each month, as credits are made to this reserve, the amount shall be charged to interest paid to depositors' accounts.

(2)           Reserve for Unearned Interest on Loans. All interest collected on notes shall be credited to this account on the day it is collected. At least once each month, earned interest shall be computed, charged to this account, and credited to earned interest account. This Subparagraph shall not apply to loans where interest is accounted for through an income-earned-not-collected account.

(3)           Bond Income Earned; Not Collected. At least once each month, the income on bonds earned during the month shall be charged to this account and credited to the bond income account. As coupons are collected, they shall be credited to this account.

 

History Note:        Authority G.S. 53C-8-1; 53C-8-6;

Eff. February 1, 1976;

Amended Eff. October 1, 2014; September 1, 1990;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03C .0903         RETENTION: REPRODUCTION AND DISPOSITION OF BANK RECORDS

(a)  Each bank, at a location with secured access, shall keep and retain books, ledgers, records, and documents set forth for the periods specified.

Bank Records                                                                                                                   Minimum

to be Retained                                                                                                             Retention Period

 

ACCOUNTING

 

1.             Daily Reserve Calculation and Averages                                                                        3 years

2.             Difference Records (Over/Short)                                                                                      2 years

3.             Paid Bills and Invoices                                                                                                      3 years

4.             Quarterly Report of Condition and Income and Supporting Work Papers               5 years

 

ADMINISTRATIVE

 

1.             Documentation of Charged-off Assets                                                                            10 years

2.             Escheat Reports and Records                                                                                            10 years

3.             Minutes of Meetings of Stockholders, Directors, and

Board Committees                                                                                                                         Permanent

 

AUDIT

 

1.             Audit Reports (Internal and External)                                                                             3 years

2.             Audit Work Papers (Internal)                                                                                            3 years

 

BANK PROPERTIES

 

1.             Fixed Assets-Evidence of Ownership (After Acquisition)                                           5 years

2.             Fixed Assets-Leases (After Termination)                                                                       5 years

3.             Real Estate-Construction Records                                                                                   5 years

4.             Real Estate-Deeds                                                                                                 Until conveyed

5.             Real Estate-Leases (After Termination)                                                                         5 years

 

CAPITAL

1.             Capital Stock Certificate Books, Stubs, or Interleaves                                          Permanent

2.             Capital Stock Ledger                                                                                                    Permanent

3.             Capital Stock Transfer Register                                                                                  Permanent

4.             Proxies                                                                                                                                   3 years

 

COLLECTIONS

 

1.             Collection Registers (Incoming and Outgoing)              3 years after item paid or returned

2.             Receipts and Advices (After Closed)                                                                               1 year

 

CREDIT CARDS

 

1.             Borrowing Authority Resolutions (After Closed)                                                         3 years

2.             Customer Application (After Closed)                                                                              1 year

3.             Disclosure and Compliance Documents                                                                   25 months

4.             Merchants' Agreement (After Closed)                                                                             2 years

5.             Posting or Transaction Journal                                                                                         2 years

6.             Sales Tickets or Drafts                                                                                                       3 years

7.             Statement of Account                                                                                                         5 years

 

DEMAND DEPOSIT AND TRANSACTION ACCOUNTS

 

1.             Checks and Debits                                                                                                               5 years

2.             Daily Report on Overdrafts                                                                                               2 years

3.             Deposit Resolutions (After Closed)                                                                                3 years

4.             Deposit Tickets and Credits                                                                                              5 years

5.             Ledgers, Statements, or Stubs                                                                                           5 years

6.             Letters of Administration                                                                                                   5 years

7.             Posting or Transaction Journals                                                                                       5 years

8.             Powers of Attorney                                                                                     5 years after closing

9.             Return Item Records                                                                                                           1 year

10.          Signature Cards (After Closed)                                                                                         5 years

11.          Stop Payment Orders                                                                                                          1 year

12.          Undelivered Statements                                                                                                     1 year

13.          Unidentified or Unclaimed Deposit Records                                                 Until escheated

 

DUE FROM BANKS

 

1.             Advice of Entry (After Cleared)                                                                                  3 months

2.             Drafts (After Paid)                                                                                                              5 years

3.             Draft Register                                                                                                                 Until paid

4.             Reconcilements                                                                                                                   5 years

5.             Statements                                                                                                                            3 years

 

GENERAL LEDGER

 

1.             Daily Statement of Condition                                                                                           5 years

2.             General Journal (If Book of Original Entries, with Descriptions)                              15 years

3.             General Ledgers                                                                                                                   15 years

4.             General Ledger Tickets                                                                                                      5 years

 

INSURANCE

 

1.             Bankers Blanket Bond and Excess                                                                                   5 years

2.             General Casualty Liability Policies Expired                                                                  5 years

 

INTERNATIONAL

 

1.             Bankers Acceptances                                                                                                         3 years

2.             Collection Records                                                              3 years after item paid or returned

3.             Letters of Credit and Documents                                                       3 years after expiration

4.             Transfer Orders (Wire or Written)                                                                                    1 year

 

INVESTMENTS

 

1.             Accrual and Bond Amortization or Accretion Records (After Period Ends)           3 years

2.             Brokers' Confirmations, Invoices, Statements                                                              3 years

3.             Ledgers                                                                                                                                  3 years

4.             Records of Purchases and Sales of Securities                                                                 5 years

 

LEASE RECEIVABLES (OTHER THAN REAL ESTATE)

 

1.             Lease Agreements and Documents (After Termination)                                             5 years

2.             Rental Payment Records                                                                                                    5 years

3.             Record of Disposition of Property                                                                                   5 years

 

LEGAL JUDICIAL AUTHORIZATION

 

1.             Attachments or Garnishments                                                                                           10 years

2.             Court Case Records (After Final Disposition)                                                                10 years

3.             Probate Court Appointment (After Closed)                                                                    10 years

 

LOANS (COMMERCIAL, CONSUMER, MORTGAGE)

 

1.             Appraisals, Financing Statements, and                                                                       Until paid

Title Opinions Pertaining to Collateral

2.             Borrowing Resolutions                                                                 3 years after payment of debt

3.             Credit Files (Financial Statements, Applications, Correspondence)

(After Paid)                                                                                           2 years

4.             Collateral Records (After Released)                                                                               5 years

5.             Interest Rebate Records                                                                                                       1 year

6.             Liability Cards or Ledgers (After Closed)                                                                      3 years

7.             Loan Ledger Cards or History Sheets (After Paid)                                                       3 years

8.             Loan Proceeds Disbursement Records                                                                       Until paid

9.             Loans Paid Record                                                                                                              3 years

10.          Mortgage Files and Supporting Documents (After Paid)                                             2 years

11.          Note or Loan Register (After Paid)                                                                                  3 years

12.          Posting or Transaction Journal                                                                                         2 years

 

MAIL

 

1.             Insurance Records of Registered and Certified                                                              1 year

2.             Registered and Certified Records (In and Out)                                                              1 year

3.             Return Receipt Record                                                                                                       1 year

 

MISCELLANEOUS

 

1.             Cash and Security Vault Records-Opening, Closing                                                 6 months

2.             Taxes-Returns and Supporting Papers                                             3 years or until cleared by

IRS and Dept. of Revenue

3.             Travelers Checks-Applications                                                                                         1 year

 

MONEY TRANSFER

 

1.             Copy of Incoming and Outgoing Transfers                                                                    1 year

2.             General Correspondence                                                                                                   1 year

3.             Receipts and Advices (After Closed)                                                                               1 year

4.             Transfer Request Records                                                                                                  1 year

 

NIGHT DEPOSITORY

 

1.             Customer Agreement (After Closed)                                                                               1 year

2.             Customer Receipt                                                                                                                              1 year

3.             Daily Inventory                                                                                                                   1 year

 

OFFICIAL CHECKS

 

1.             Official Checks (Dividend, Cashiers, Expense, Loan) and Money Orders

(After Paid)                                                                                           5 years

2.             Official Check Register or Carbon Copy                                           Until paid or escheated

3.             Certified Checks or Receipts (After Paid)                                                                      5 years

4.             Certified Check Register or File Copy                                                Until paid or escheated

5.             Affidavits and Indemnity pertaining to Issuance of Duplicate Checks               Permanent

 

PROOF AND TRANSIT

 

1.             Advice of Correction                                                                                                      6 months

2.             Cash Tickets                                                                                                                     6 months

3.             Outgoing Cash Letters and Accompanying Items (Microfilm)                                   2 years

4.             Proof Sheets, Tapes, and Listings                                                                                     2 years

 

SAFE DEPOSIT

 

1.             Access Records (After Closed)                                                                                         3 years

2.             Box History Card                                                                                                          Permanent

3.             Contracts and Agreements (After Closed)                                                                      3 years

4.             Forced Entry Records                                                                                                         10 years

 

SAFEKEEPING AND CUSTOMER SECURITIES

 

1.             Broker Confirmations, Invoices, Statements                                                                 3 years

2.             Buy and Sell Orders                                                                                                            3 years

3.             Customer Contracts and Agreements (After Closed)                                                    3 years

4.             In and Out Records (Movement of Securities)                                                               3 years

5.             Safekeeping Receipts (After Closed)                                                                               3 years

 

SAVINGS AND TIME DEPOSITS

 

1.             Certificates of Deposit Paid                                                                                               5 years

2.             Certificates of Deposit Records (Register, Ledger, Copy)          Until paid or escheated

3.             Daily Report of Overdrafts                                                                                                2 years

4.             Debits and Withdrawals                                                                                                     5 years

5.             Deposit and Credit Tickets                                                                                              5 years

6.             Deposit Resolution (After Closed)                                                                                   3 years

7.             Ledgers or Statements                                                                                                       5 years

8.             Posting or Transaction Journal                                                                                         1 year

9.             Signature Cards, Contracts, and Agreements (After Closed)                                      5 years

10.          Undelivered Statements                                                                                                     1 year

11.          Unidentified or Unclaimed Deposit Records                                                 Until escheated

 

TELLERS

 

1.             Balance Sheets, Recaps, or Records                                                                               1 year

2.             Cash Item Report                                                                                                                1 year

3.             Machine Tapes, Cash Ticket Copies, Posting or Transaction Journals     6 months

4.             Daily Record of Cash Items Held Over                                                                           1 year

 

TRUST (Corporate)

 

1.             Account Ledger or Record                                7 years after account closed

2.             Posting or Transaction Journal                                                                                         7 years

3.             Bonds of Indemnity                                                                                                     Permanent

4.             Stock Certificates (Cancelled)                                                    until returned to corporation

5.             Dividend Checks – Paid                                                                                                     5 years

6.             Dividend Check Register or Carbon Copy                                                               Until paid

7.             Bonds and Coupons –                                                                                                7 years after

Cancelled or Cremation Certificates                                             paid or until returned to corporation

8.             Resolutions and Authorizations                                                    7 years after account closed

 

TRUST (Employee Benefit)

 

1.             Accountings                                                                                    6 years after account closed

2.             Agreements, Authorizations, and Resolutions                         6 years after account closed

3.             Account Ledger or Record                                                         6 years after account closed

4.             Disbursement Checks                                                                                                         6 years

5.             Check Register or Carbon Copy                                                                                Until Paid

6.             Bonds of Indemnity                                                                                                      Permanent

 

TRUST (Personal)

 

1.             Accountings                                                                                     3 years after account closed

2.             Agreements and Authorizations                                                  5 years after account closed

3.             Account Ledger or Record                                                          7 years after account closed

4.             Minutes of Committee Meetings                                                                                Permanent

5.             Receipts for Assets Delivered                                                       3 years after account closed

6.             Tax Return                                                                                        10 years or until IRS clears

7.             Disbursement Checks                                                                                                         5 years

8.             Check Register or Carbon Copy                                                                                Until paid

9.             Bonds of Indemnity                                                                                                     Permanent

 

(b)  Nothing in these Rules shall prohibit any bank or branch thereof from keeping and maintaining any and all of its records for a longer period of time than set forth by the minimum retention period.

(c)  Paragraph (a) of this Rule sets forth state minimum records retention requirements and does not include nor cover records required to be kept by federal agencies such as federal bank supervisory agencies, and other federal agencies. Banks shall also observe the requirements of such federal agencies in retention of records required by such agencies.

(d)  Nothing in these Rules shall prohibit any bank or branch from causing any or all of its records, whether permanent records or records designated to be retained for a minimum period of time, to be maintained pursuant to G.S. 53C-6-14.

 

History Note:        Authority G.S. 53C-2-5; 53C-6-14; 53C-8-1;

Eff. February 1, 1976;

Amended Eff. October 1, 2014; January 1, 2013; May 1, 1992; September 1, 1990; January 1, 1985;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03C .0904         LETTERS OF CREDIT

The bank shall maintain supporting records on all letters of credit issued and outstanding, except for letters of credit sold for cash, and shall show the following information:

(1)           the name of the account party for whom the letter of credit is established;

(2)           the name of the beneficiary;

(3)           the amount;

(4)           the expiration date; and

(5)           the terms under which payment is authorized.

 

History Note:        Authority 53C-8-1;

Eff. April 21, 1979;

Amended Eff. October 1, 2014;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03C .0905         investment authority

A bank may invest in mutual funds to the same extent and within the same limitation as permitted for national banks by statute, regulation, or interpretation of the applicable federal regulator, as reflected in the U.S. Office of the Comptroller of Currency "Investment Securities: Comptroller's Handbook" (Section 203) or their written interpretations that is hereby incorporated by reference and shall include any later amendments and editions of the referenced material. This information may be obtained from the Office of the Comptroller of Currency website at http://www.occ.gov/publications/publications-by-type/comptrollers-handbook/investsecurities1.pdf at no cost at the time of adoption of this Rule.

 

History Note:        Authority G.S. 53C-5-2;

Eff. October 1, 2014;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

SECTION .1000 ‑ LOAN ADMINISTRATION AND LEASING

 

04 NCAC 03C .1001         LOAN DOCUMENTATION

Unless otherwise provided, each bank shall maintain on file the following loan documentation:

(1)           Financial Statements. Financial statements shall be required from any person who is a maker, co-maker, guarantor, endorser, or surety on any unsecured loans or other unsecured extensions of credit in an amount of fifty thousand dollars ($50,000) or more in the aggregate. Financial statements required by this Item shall:

(a)           be signed or otherwise properly executed;

(b)           be dated within 18 months preceding the origination date of the credit obligation;

(c)           be renewed within 18 months after the date of the last financial statement on file;

(d)           be addressed to, or made for the lending bank; and

(e)           include information reflecting the assets, liabilities, net worth, and income of the borrower.

(2)           Financial Statement Exceptions. A bank may waive the financial statement required by Item (1) of this Rule for credit granted under a credit card. For an individual whose unsecured obligations consist of consumer loans scheduled to be repaid in at least quarterly installments, a bank may substitute a current credit bureau report for the financial statement required by Item (1) of this Rule. A credit bureau report shall be current if not more than 18 months have passed from its date of issue.

(3)           Personal Property Appraisals. Appraisals on personal property used as collateral for a loan shall be obtained and shall be completed as follows:

(a)           Except as otherwise provided below, a written appraisal of personal property used to collateralize any loan shall be made or approved by the executive committee or loan committee of the bank or any branch thereof, branch, or other reliable persons familiar with the value of the property. Except as provided, all appraisals shall be renewed every 24 months.

(b)           Requirements. The appraisal required by this Item shall include:

(i)            the name of the borrower;

(ii)           the date the appraisal was made;

(iii)          the value of the collateral;

(iv)          the signatures of at least two persons making the appraisal;

(v)           a brief description of the property;

(vi)          the amount of any prior lien and holder of the lien, if any; and

(vii)         the original amount or outstanding balance of the loan which the property is used to secure.

(c)           Appraisal Exceptions. No appraisal shall be required under the following circumstances:

(i)            on collateral to notes of less than fifty thousand dollars ($50,000);

(ii)           on loans fully secured by obligations of the United States or the State of North Carolina;

(iii)          on loans fully secured by deposits in the bank maintaining the loan account;

(iv)          on loans fully secured by the cash surrender or loan value of life insurance policies;

(v)           on loans fully secured by bonded warehouse receipts;

(vi)          on floor plan loans to dealers fully secured by motor vehicles;

(vii)         on discounted notes for a dealer where the note is given as the purchase price of a motor vehicle or other consumer goods; or

(viii)        on loans fully secured by listed securities, unless such loans are within the provisions of the Securities Exchange Act of 1934 as defined by Regulation "U," as amended from time to time by the Board of Governors of the Federal Reserve System. On loans secured by such collateral, the appraisal shall be made and kept on file until the loan is paid in full.

(d)           Renewal Exceptions. Appraisals need not be renewed biennially where a motor vehicle or mobile home is the sole or partial collateral for a loan.

(e)           Single Signature Exception. An appraisal may be performed and signed by only one person where a motor vehicle or mobile home is the sole collateral for a loan.

(4)           Real Estate Appraisals. Unless otherwise provided, all real estate taken as security for loans shall be appraised in the form and manner set forth in Sub-item (4)(a) through (4)(c) of this Rule. In addition, the appraisal shall be independent in that the appraiser shall not be involved in the loan transaction secured by the property being appraised and shall have no interest, financial or otherwise, in the property.

(a)           The bank may elect to waive the requirement for an appraisal of real estate given as security for loans of fifty thousand dollars ($50,000) or less.

(b)           Appraisals of real estate given as security for loans over fifty thousand dollars ($50,000), but not exceeding two hundred fifty thousand dollars ($250,000), whether directly or indirectly pledged as collateral shall be prepared by one of the following methods:

(i)            Two members of the executive or loan committee who are familiar with real estate values in the community where the property is located;

(ii)           Two bank employees who are familiar with real estate values in the community where the property is located, provided that one of the two employees shall not be involved in the loan transaction secured by the property being appraised;

(iii)          A state-licensed real estate appraiser or state-certified real estate appraiser, or a person certified as a real estate appraiser by an appraisal trade organization approved by the bank to perform the appraisal; or

(iv)          In lieu of an appraisal as provided by Sub-items 4(b)(i) through (iii) of this Rule, for loans less than two hundred fifty thousand dollars ($250,000), a bank may elect to accept a copy of the most recent real property tax notice from the tax administrator's office in the county in which the property is located provided that such notice states the assessed ad valorem tax value of the real estate, and any improvements thereon, separate from the personal property; and the loan officer shall include with the tax notice a memorandum to file that he or she has obtained the notice from the county tax administrator and is of the opinion that such notice reflects the real property values.

(c)           Except as noted, appraisals required by Sub-items (4)(b)(i), (ii), and (iii) of this Rule shall be in writing, and signed and dated by the person or persons making the appraisal. Additionally, the appraisal shall identify the loan transaction for which it was made; identify the current balance of any prior lien and the identity of the holder of the lien, if any; segregate values of improvements from values of the land; and describe the property so as to make it easily identifiable. If a professional appraisal form is used that does not include this information, the bank shall complete and attach to such appraisal its own appraisal summary form disclosing the required information. The appraisal shall state the basis or approach used to determine the value of the property. Acceptable approaches to determining the value of real property are:

(i)            the current cost of replacing a property, less depreciation relating to deterioration from functional or economic obsolescence;

(ii)           the value indicated by recent sales of comparable properties in the market and other market factors such as listings and offers to sell; or

(iii)          the value that the property's net earning power will support, based on a capitalization of net income.

(d)           All real estate given as security for loans in an amount over two hundred fifty thousand dollars ($250,000), whether directly or indirectly pledged as collateral shall be appraised and such appraisal shall be subject to the provisions of 12 C.F.R. 323.1 through 12 C.F.R. 323.7, which are hereby incorporated by reference and includes subsequent amendments or additions. This information is available at the U.S. Printing Office website at http://www.ecfr.gov/cgi-bin/text-idx?SID=cb59b820da3e668ebb333139d429ce0c&node=pt12.5.323&rgn=div5 at no cost at the time of adoption of this Rule.

(5)           Certificate of Title. A title opinion furnished by an attorney at law, a title report or title insurance policy issued by a company licensed by the Commissioner of Insurance, or other insurance coverage that provides the bank similar protection against loss from title defects, errors or omissions at closing, or other loan-related risks, shall be obtained in connection with each deed of trust or mortgage given as security on each real estate-secured loan when:

(a)           the loan is primarily secured by real property and only secondarily by the borrower's general credit-worthiness; and

(b)           the amount of the loan secured by the real property is fifty thousand dollars ($50,000) or more.

(6)           Stock Certificate and Stock Powers. Where stock certificates, or similar negotiable securities, are accepted as collateral for a loan, each certificate shall be endorsed and witnessed in ink, or accompanied by a stock power signed and witnessed in ink. Where such collateral is in the name of someone other than the maker or endorser of the note, there shall be on file in the bank written authority from the collateral owner permitting the hypothecation of the collateral.

(7)           Corporate Resolutions. A loan made directly to a corporation shall be supported by a certified copy of a resolution of the board of directors of the corporation, authorizing the loan transaction.

(8)           Partnership Declaration. A loan made directly to a partnership shall be supported by a declaration of the general partners showing the composition of the partnership and unless all partners sign the note, the authority of the partner(s) executing the note to bind the partnership.

(9)           Limited Liability Company Certification. A loan made directly to a limited liability company shall be supported by a certification of a manager thereof that the loan has been duly authorized by the limited liability company.

(10)         Unlisted Securities. Full credit information on all unlisted securities, now owned or hereafter acquired, shall be kept on file in the bank.

 

History Note:        Authority G.S. 53C-6-1; 53C-8-1;

Eff. February 1, 1976;

Amended Eff. October 1, 2014; December 1, 2011; April 1, 2007; June 1, 1995; May 1, 1992; September 1, 1990; September 1, 1983;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03C .1002         LEASING OF PERSONAL PROPERTY

Each bank acquiring and leasing personal property or, acquiring personal property that is subject to an existing lease together with the lessor's interest therein and incurring such additional obligations as may be incident to becoming an owner and lessor of such property, may do so only when subject to the following restrictions:

(1)           Before the acquisition, upon the specific request and for the use of the customer, the prospective lessee shall execute an agreement to lease such property;

(2)           During the minimum period of the lease, the terms of the lease shall require payment to the bank by the lessee of rentals that, in the aggregate shall exceed the total expenditures by the bank for or in connection with the ownership, maintenance, and protection of the property. In determining the total expenditures under this Rule, a bank may deduct a realistic residual value in determining the rentals to be charged during the term of a lease agreement. Any unguaranteed portion of the estimated residual value relied upon by the bank to calculate total expenditures under this Rule may not exceed 25 percent of the original cost of the property to the lessor. The amount of any estimated residual value guaranteed by a manufacturer, the lessee, or a third party that is not an affiliate of the bank may exceed 25 percent of the original cost of the property where the bank determines and provides supporting documentation that the guarantor has the resources to meet the guarantee;

(3)           The total leasing obligations or rentals to any bank of any person, partnership, association, corporation, or limited liability company shall at no time exceed the legal limit permitted by G.S. 53C-6-1;

(4)           The overall investment of the bank in such property leased to all lessees shall at no time exceed 200 percent of its capital;

(5)           The bank shall at all times maintain protection by way of insurance or indemnity provided by the lessee;

(6)           No lease or other agreement shall obligate the bank to maintain, repair, or service personal property in connection with any lease held by it;

(7)           No personal property acquired pursuant to the ownership or lease of personal property shall be included in the computable investment in fixed assets under G.S. 53C-5-2;

(8)           Rental payments collected by the bank under lease arrangements shall be rent and shall not be deemed to be interest or compensation for the use of money loaned;

(9)           Upon expiration of any lease, whether by virtue of the lease agreement or by virtue of the retaking of possession by the bank, such personal property shall be re-let, sold, otherwise disposed of, or charged off within one year from the time of expiration of such lease; and

(10)         Upon written request, the Commissioner of Banks may waive or modify any of the foregoing restrictions. In evaluating such a request, the Commissioner of Banks shall consider the following factors:

(a)           the bank's size, profitability, capital sufficiency, risk profile, market, and operational capabilities, especially with a view towards the bank's involvement in lease financing;

(b)           current best practices of financial institutions engaged in lease financing;

(c)           the nature, size, duration, aggregate amount, and other risks attendant to the bank's lease financing transactions; and

(d)           the risk of significant loss to the bank if the Commissioner of Banks does not grant the request.

 

History Note:        Authority G.S. 53C-2-5; 53C-5-2; 53C-8-1;

Eff. February 1, 1976;

Amended Eff. October 1, 2014; January 1, 2013; April 1, 2007; September 1, 1990; September 1, 1983; May 1, 1982;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

SECTION .1100 ‑ CAPITAL

 

04 NCAC 03C .1101         DEFINITIONS: ISSUANCE OF CAPITAL NOTES AND DEBENTURES

04 NCAC 03C .1102         CAPITAL DEBENTURES AND NOTES

 

History Note:        Authority G.S. 53-1; 53‑43.4; 53‑92; 53‑104;

Eff. February 1, 1976;

Amended Eff. June 1, 1995; September 26, 1979;

Repealed Eff. April 1, 2007.

 

04 NCAC 03C .1103         CAPITAL STOCK

04 NCAC 03C .1104         MAINTENANCE OF CAPITAL SURPLUS

04 NCAC 03C .1105         NOTICE OF IMPAIRMENT

 

History Note:        Authority G.S. 53-1(3)d; 53-2(4); 53-42; 53-104;

Eff. May 1, 1992;

Repealed Eff. January 1, 2013.

 

SECTION .1200 - DEPOSITS

 

04 NCAC 03C .1201         SCHOOL THRIFT OR SAVINGS PLAN

04 NCAC 03C .1202         RESUME OF THE PLAN

 

History Note:        Authority G.S. 53-43.6; 53-92; 53-104;

Eff. February 1, 1976;

Repealed Eff. January 1, 2013.

 

SECTION .1300 ‑ BANK PERSONNEL

 

04 NCAC 03C .1301         ANNUAL VACATION

 

History Note:        Authority G.S. 53‑92; 53‑104;

Eff. February 1, 1976;

Amended Eff. June 1, 1995; October 1, 1990;

Repealed Eff. April 1, 2007.

 

04 NCAC 03C .1302         SHARE PURCHASE AND OPTION PLANS

 

History Note:        Authority G.S. 53-10; 53-43; 53-43.3; 53-104;

Eff. February 1, 1976;

Amended Eff. October 1, 2011; June 1, 1995; July 1, 1990;

Repealed Eff. January 1, 2013.

 

04 NCAC 03C .1303         INSIDER TRANSACTIONS

 

History Note:        Authority G.S. 53‑92; 53‑95; 53‑104; 53‑106; 53‑110;

Eff. April 21, 1979;

Repealed Eff. January 1, 1984.

 

SECTION .1400 ‑ LEGAL RESERVE

 

04 NCAC 03C .1401         REQUIREMENT OF RESERVE FUND

(a)  The amount of the reserve fund which shall be established and maintained shall at all times equal the reserves required by the Federal Reserve System for non‑member banks.

(b)  In the event the reservable liabilities of any bank are such that no reserve is required of that bank by the Federal Reserve System, such bank shall maintain a reserve fund equal to three percent of its total deposits of every kind which are not secured by a deposit of bonds, notes, bills, and certificates of indebtedness of the United States, or agency thereof, or other obligations guaranteed by the United States Government, or the bond obligations of the State of North Carolina, its counties, municipalities, and other political subdivisions thereof.

 

History Note:        Authority G.S. 53C-4-11;

Eff. February 1, 1976;

Amended Eff. July 1, 1990; August 6, 1981;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03C .1402         BASIS FOR COMPUTATION AND MAINTENANCE

Required reserves shall be computed on the basis of the daily average deposit balance during a 14-day period ending every second Monday (the "computation period"). The method for determining the amount of reserve required is set forth in Rule .1401 of this Section. The reserves that are required to be maintained shall be maintained during a corresponding 14-day period (the "maintenance period") that begins on the second Thursday following the end of a given computation period and ends on the second Wednesday thereafter. For non-business days, deposit figures of the prior banking day shall be used.

 

History Note:        Authority 53C-4-11;

Eff. February 1, 1976;

Amended Eff. October 1, 2014; July 1, 1990; August 6, 1981;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03C .1403         RESERVE FUND DEFINED

 

History Note:        Authority G.S. 53-51; 53-92; 53-104;

Eff. September 26, 1979;

Amended Eff. August 6, 1981;

Repealed Eff. January 1, 2013.

 

SECTION .1500 ‑ AUTOMATION AND DATA PROCESSING

 

04 NCAC 03C .1501         CUSTOMER‑BANK COMMUNICATION TERMINALS

04 NCAC 03C .1502         LIMITATIONS

 

History Note:        Authority G.S. 53‑62; 53‑92; 53‑104;

Eff. February 1, 1976;

Amended Eff. May 1, 1992; September 1, 1990;

Repealed Eff. April 1, 2001.

 

SECTION .1600 – FEES

 

04 NCAC 03C .1601         FEES, COPIES AND PUBLICATION COSTS

(a)  For applications, petitions, and other proceedings to be filed with the Commissioner of Banks, the following fees shall be paid to the Commissioner of Banks at the time of filing:

(1)           Application for the Formation of a New Bank or State Trust Institution                 $8,000.00

(2)           Application to Merge or Consolidate Banks, State Trust

Institutions, or Bank Holding Companies      (fee is per institution)                          $5,000.00

(3)           Application for Reorganization Into a Bank Holding Company Through                               $3,000.00

an Interim Bank                                                  (fee is per bank)

(4)           Application for Bank or Bank Holding Company Change in Control                       $5,000.00

(5)           Application for Conversion of a National Bank to State Charter                               $2,500.00

(6)           Application for Voluntary Liquidation                                                                           $3,000.00

(7)           Application for Conversion of a Savings and Loan Association or a Savings         $2,500.00

Bank to a State Bank

(b)  The fees set forth in Paragraph (a) of this Rule are for standard applications, petitions, and other proceedings filed and considered in the ordinary course of business. Any application, petition, or other proceeding that in the opinion of the Commissioner of Banks requires extraordinary review, investigation, or special examination shall be subject to the actual costs of additional expenses and the hourly rate for the staff's time to be determined annually by the Banking Commission. The Commissioner of Banks shall advise an applicant or petitioner in advance of any additional work required and the hourly rate for the same. The hourly rate shall be:

(1)           For Senior Administrative staff                                                                                       $75.00

(2)           For Senior Examination Staff                                                                                          $50.00

(3)           For Financial Program Manager                                                                                      $35.00

(4)           For Financial Examiner                                                                                                     $25.00

(c)  Unless otherwise stated, publications externally printed may be obtained at a cost equal to the actual cost of printing plus shipping and handling. All other publications or public record copies are available at the "actual cost" as defined in G.S. 132-6.2(b) for making the copy and mailing cost if applicable. The Office of the Commissioner of Banks shall provide its "actual cost" on the agency's website.

 

History Note:        Authority G.S. 53C-3-1; 53C-5-2; 53C-7-101; 53C-7-201; 53C-7-207; 53C-7-301; 53C-10-102; 53C-10-103; 53C-10-201; 54B-34.2; 54C-47;

Eff. July 1, 1990;

Amended Eff. October 1, 2014; June 1, 2004; June 1, 1995; May 1, 1992; July 1, 1991;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

SECTION .1700 – NON-Branch Bank business office

 

04 NCAC 03C .1701         DEFINITIONS

 

History Note:        Authority G.S. 53-104; 53-115; 53-127;

Eff. June 1, 1995;

Repealed Eff. January 1, 2013.

 

04 NCAC 03C .1702         ESTABLISHMENT OF A NON-BRANCH BANK BUSINESS OFFICE (nbbo)

(a)  A bank may establish or relocate a NBBO as defined in G.S. 53C-1-4(46) upon giving written notice to the Commissioner of Banks. The notice shall acknowledge:

(1)           The NBBO may be used to solicit loans, assemble credit information, make property inspections and appraisals, complete loan applications, perform preliminary paper work in preparation for the making of loans, and provide banking related services and products, other than the taking of deposits;

(2)           Loans may not be approved and loan proceeds may not be disbursed through the NBBO;

(3)           The NBBO may not be used to accept deposits; and

(4)           The NBBO may be inspected by the Commissioner of Banks for compliance with the written notice, and the cost of the inspection shall be borne by the bank.

(b)  The bank shall provide written notice to the Commissioner of Banks when relocating or closing any NBBO.

(c)  If required by the Secretary of State, the NBBO shall obtain a certificate of authority to do business in North Carolina.

 

History Note:        Authority G.S. 53C-1-4(46); 53C-6-18; 53C-8-2(3);

Eff. June 1, 1995;

Amended Eff. October 1, 2014;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03C .1703         ESTABLISHMENT OF LOCKBOX SERVICES

04 NCAC 03C .1704         ESTABLISHMENT OF A TRUST REPRESENTATIVE OFFICE (TRO)

 

History Note:        Authority G.S. 53-104; 53-115; 53-127;

Eff. June 1, 1995;

Repealed Eff. January 1, 2013.

 

SECTION .1800 - COURIER SERVICE

 

04 NCAC 03C .1801         ESTABLISHMENT OF COURIER SERVICES

A bank may provide a courier or messenger service to its customers only if:

(1)           the bank complies with the requirements imposed by the Private Protective Services Act G.S. 74C-1. Et. Seq.; and

(2)           a written agreement between the bank and the customers contains the following:

(a)           a statement that the courier is the agent of the customer and not the agent of the bank;

(b)           a statement that deposits collected by the courier or messenger are received by the bank when the deposits have been delivered to a teller at the bank's premises or a location that is eligible and designated by the bank to receive deposits;

(c)           a statement that negotiable instruments collected by the courier or messenger are paid at the bank when delivered to the courier or messenger; and

(d)           an acknowledgment by the customer that transactions conducted by a courier service are not insured by the FDIC.

 

History Note:        Authority G.S. 53C-5-1; 53C-8-1;

Eff. June 1, 1995;

Amended Eff. October 1, 2014;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03C .1802         COMPLIANCE AND DISCLOSURE REQUIREMENTS

 

History Note:        Authority G.S. 53C-5-1; 53C-8-1;

Eff. June 1, 1995;

Repealed Eff. October 1, 2014.

 

 

 

SUBCHAPTER 03D ‑ SUPERVISION OF STATE TRUST ENTITIES

 

SECTION .0100 ‑ LICENSING

 

04 NCAC 03D .0101         APPLICATION

 

History Note:        Authority G.S. 53-92; 53-160;

Eff. February 1, 1976.

Amended Eff. September 1, 2006;

Repealed Eff. October 1, 2012 pursuant to G.S. 150B-21.7.

 

04 NCAC 03D .0102         ISSUANCE

04 NCAC 03D .0103         CERTIFICATE OF SOLVENCY

04 NCAC 03D .0104         REVOCATION

 

History Note:        Authority G.S. 53‑92; 53‑160; 53‑161; 53‑162; 53‑163; 150A‑11(1);

Eff. February 1, 1976;

Repealed Eff. January 1, 1985.

 

04 NCAC 03D .0105         DEFINITIONs

As used in this Subchapter:

(1)           "Board of Directors" shall have the same meaning as defined in G.S. 53-301(a)(6a).

(2)           "Collective investment fund" shall mean any fund established pursuant to 12 C.F.R. 9.18, which is incorporated by reference in Rule .0304 of this Subchapter.

(3)           "State trust entity" shall mean a "state bank" or "state trust company" as defined in G.S. 53-301(a)(43) and (45).

(4)           "Trust business" shall have the same meaning as defined in G.S. 53-301(a)(50).

 

History Note:        Authority G.S. 53-366; 53C-2-5;

Eff. April 1, 2015;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

section .0200 - REPORTS REQUIRED BY COMMISSIONER OF BANKS

 

04 NCAC 03D .0201         reports OF condition of state TRUST entities

Each state trust entity, on a form or forms provided by the Office of the Commissioner of Banks, shall submit reports of condition that shall include information on operations, statutory and regulatory requirements, supervisory standards, and assets under management. The form or forms shall be obtained from and filed with:

Office of the Commissioner of Banks

316 West Edenton Street

4309 Mail Service Center

Raleigh, North Carolina 27699-4309.

Forms 29TC, 29A, and TARS© may be submitted electronically at:

http://www.nccob.gov/Public/financialinstitutions/banks/banksff.aspx.

 

History Note:        Authority G.S. 53-366; 53-367; 53C-2-5; 53C-8-3;

Eff. February 1, 1976;

Amended Eff. April 1, 2015; September 1, 2006; September 26, 1979;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03D .0202         REPORT OF TRUST DEPARTMENT

 

History Note:        Authority G.S. 53-92; 53-106;

Eff. February 1, 1976;

Amended Eff. September 1, 2006; September 26, 1979;

Repealed Eff. October 1, 2012 pursuant to G.S. 150B-21.7.

 

SECTION .0300 ‑ TRUST DEPARTMENT

 

04 NCAC 03D .0301         DEFINITIONS

 

History Note:        Authority G.S. 53-92; 53-104;

Eff. February 1, 1976;

Amended Eff. September 1, 1990;

Repealed Eff. October 1, 2012 pursuant to G.S. 150B-21.7.

 

04 NCAC 03D .0302         ADMINISTRATION OF trust business

(a)  A state trust entity shall conduct its trust business separate and apart from any other business it conducts. A state trust entity may, however, utilize personnel and facilities of other departments of the state trust entity and other departments of the state trust entity may utilize its trust personnel and facilities to the extent not prohibited by law.

(b)  Board of Directors

(1)           The trust business of a state trust entity shall be managed by or under the direction of its board of directors. In discharging this responsibility, the board of directors may assign, by action duly entered in the minutes, the administration of the state trust entity's trust business as it may consider proper to assign to such director(s), officers(s), or employee(s), who are qualified and competent to administer trust business, and it may designate and appoint such committees of director(s) or officer(s) as it deems advisable to supervise the trust business.

(2)           No trust business shall be accepted without the prior approval of the board of directors, or of the director(s), officer(s), or committee(s) to whom the board of directors may have designated the performance of that responsibility. A written record shall be made of such acceptances and of the relinquishment or closing out of each account. Upon the acceptance of an account for which the state trust entity has investment responsibility, a review of the assets shall be made. The board of directors shall also ensure that at least once during every calendar year thereafter, and within 15 months of the last review, all the assets held in each account that the state trust entity has investment responsibilities for are reviewed to determine the advisability of retaining or disposing of such assets.

(c)  All officers and employees taking part in the administration of trust business shall be adequately bonded.

(d)  Every state trust entity shall designate, employ, or retain competent legal counsel who shall be readily available to advise on the trust business it conducts.

(e)  Negotiable and tangible assets held by the state trust entity in its own vaults shall be placed in the joint custody of at least two or more bonded officers or employees designated by the board of directors.

(f)  Funds held by a state trust entity in a fiduciary capacity awaiting investment or distribution shall be invested, pursuant to the provisions of G.S. 53-163.1.

(g)  Trust business investments by a state trust entity in its own depository accounts shall be secured in the manner and to the extent required by G.S. 53-163.1 and G.S. 53-163.3.

 

History Note:        Authority G.S. 53-163.1; 53-163.3; 53-356; 53-366; 53C-2-5; 53C-4-6;

Eff. February 1, 1976;

Amended Eff. April 1, 2015; May 1, 1992; September 26, 1979;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03D .0303         BOOKS AND RECORDS

Books and Records. Each state trust entity shall keep the following:

(1)           a separate and distinct set of books and records showing all receipts and disbursements of funds, receipts, purchases and sales of assets, and other transactions engaged in, in connection with trust business; and showing at all times the ownership of all moneys, funds, investments and property in that connection held by the state trust entity;

(2)           files containing the original instruments creating each trust or authenticated copies; and

(3)           a permanent record of minutes for each committee, showing its actions. All minutes shall be signed by the committee's chairman and its secretary.

 

History Note:        Authority G.S. 53-366; 53-367; 53C-2-5; 53-320(a);

Eff. February 1, 1976;

Amended Eff. April 1, 2015; May 1, 1992; September 26, 1979;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03D .0304         COLLECTIVE INVESTMENT

(a)  Funds held for trust business accounts by a state trust entity may be invested collectively in one or more collective investment funds to the extent permissible for the accounts. Such funds shall be organized and administered in accordance with the provisions of 12 C.F.R. 9.18.

(b)  12 C.F.R. 9.18 is herein incorporated by reference, including all subsequent amendments and editions, and may be accessed at the U.S. Printing Office website at http://www.ecfr.gov/cgi-bin/text-idx?SID=10db9d6d7ecd62689d768e1b0c9a2199&node=se12.1.9_118&rgn=div8

at no cost at the time of adoption of this Rule. However, any reference in the regulation to "Comptroller of Currency" shall, for the purpose of state trust entities, be deemed to refer to the "Commissioner of Banks."

 

History Note:        Authority G.S. 53-163.7; 53-366; 53C-2-5;

Eff. February 1, 1976;

Amended Eff. April 1, 2015; May 1, 1992; November 1, 1982; September 26, 1979;

Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. October 3, 2017.

 

04 NCAC 03D .0305         USE OF SECURITIES CLEARING CORPORATIONS

 

History Note:        Authority G.S. 53-92; 53-104; 53-110; 53-159.1;

Eff. February 1, 1976;

Repealed Eff. October 1, 2012 pursuant to G.S. 150B-21.7.

 

 

 

SUBCHAPTER 03E ‑ LICENSEES UNDER NORTH CAROLINA CONSUMER FINANCE ACT

 

SECTION .0100 – LICENSING

 

04 NCAC 03E .0101          APPLICATION

(a)  No person shall make loans under the provisions of the North Carolina Consumer Finance Act without first obtaining a license from the Commissioner of Banks.  The application for a consumer finance license shall contain a request for a license to operate a business under the North Carolina Consumer Finance Act, incorporate all statutory requirements and criteria, and include payment of the statutory fee.  The form shall be obtained from and filed with:

Office of the Commissioner of Banks

316 West Edenton Street

4309 Mail Service Center

Raleigh, North Carolina  27699-4309.

 

(b)  Upon receipt of an application for a consumer finance license, the Commissioner of Banks shall give written notice of the application to all licensees operating within the community proposed to be served as described in the application.  Where a licensee holds two or more licenses the notification is to be mailed to the home office of such licensee.  The notification may be by copy of acknowledgment to the applicant.

(c)  Following an investigation of the application pursuant to G.S. 53-168, the Commissioner of Banks shall decide as to:

(1)           approval of the application,

(2)           denial of the application.

 

History Note:        Authority G.S. 53‑92; 53‑95; 53‑104; 53‑168; 53‑185; 150B‑21.2;

Eff. February 1, 1976;

Amended Eff. September 1, 2006; January 1, 1993; August 1, 1978.

04 NCAC 03E .0102          APPROVAL

(a)  Upon approval by the Commissioner of Banks of an application for a consumer finance license, he will notify the applicant in writing.

(b)  If no written objection is submitted to the Commissioner within 20 days following the date of his approval, he shall issue a license, Form NCCF 4.

(c)  In the event a written objection is submitted to the Commissioner within 20 days following the date of his approval, the application and approval shall be referred to the Banking Commission in compliance with Section .0200 of this Subchapter.

 

History Note:        Authority G.S. 53‑92; 53‑95; 53‑104; 53‑168; 58‑169; 53‑185; 53‑188;

Eff. February 1, 1976;

Amended Eff. June 1, 1995; August 1, 1978.

 

04 NCAC 03E .0103          DENIAL

04 NCAC 03E .0104          REVOCATION OR SUSPENSION

04 NCAC 03E .0105          SURRENDER

 

History Note:        Authority G.S. 53‑92; 53‑168(b); 53‑171; 53‑185; 150A‑11;

Eff. February 1, 1976;

Repealed Eff. January 1, 1985.

 

04 NCAC 03E .0106          MOTOR VEHICLE LENDERS

 

History Note:        Authority G.S. 53‑92; 53‑176.1; 53‑185;

Eff. February 1, 1976;

Repealed Eff. January 1, 1993.

 

SECTION .0200 ‑ ACTIONS REQUIRING APPROVAL OF COMMISSIONER OF BANKS

 

04 NCAC 03E .0201          OPERATION OF OTHER BUSINESS IN SAME OFFICE

(a)  No licensee shall operate any other business in the same office with its consumer finance business except upon written approval of the Commissioner of Banks pursuant to G.S. 53-172(b).

(b)  Any other loan business conducted at the same location where a licensee makes loans pursuant to Chapter 53, Article 15 of the North Carolina General Statutes, must be operated through a separate corporate entity.

(c)  Application for other business authority shall be made upon a form provided by the Office of the Commissioner of Banks and shall be accompanied by a fee of twenty five dollars ($25.00).  The form shall be obtained from and filed with:

Office of the Commissioner of Banks

316 West Edenton Street

4309 Mail Service Center

Raleigh, North Carolina  27699-4309.

 

(d)  Upon approval of the application, the Commissioner of Banks will issue a Certificate of Authority which shall be posted in a public area of a licensee's office.

 

History Note:        Authority G.S. 53‑92; 53-122(3); 53‑168; 53‑172; 53‑185; 150B-21.2;

Eff. February 1, 1976;

Amended Eff. September 1, 2006; January 1, 1993.

 

04 NCAC 03E .0202          CHANGE OF LOCATION

04 NCAC 03E .0203          ALTERNATE METHOD OF OPERATION

 

History Note:        Authority G.S. 53‑92; 53‑170; 53‑176; 53‑185; 150A‑11;

Eff. February 1, 1976;

Repealed Eff. January 1, 1985.

 

04 NCAC 03E .0204          TRANSFER OF LICENSE AND CHANGE OF LOCATION

(a)  Transfer or assignment.  Before a licensee may transfer or assign its license to another entity, the licensee shall apply to the Commissioner of Banks for authority to do so.  Request shall be by letter which shall set forth the name, address and telephone number of the proposed transferee or assignee, the reasons for the transfer or assignment and the date upon which the licensee proposes to make the transfer or assignment.  The request letter shall also be accompanied by a fee of one hundred dollars ($100.00) payable to the Commissioner of Banks for each license proposed for transfer or assignment together with written acknowledgement of the proposed transaction by the transferee or assignee.  Transfer or assignments to other than existing licensees will not be approved.  If the request is approved, the licensee shall surrender to the Commissioner of Banks its consumer finance license for reissuance to the transferee or assignee.

(b)  Change of Location.  Prior to any change in the business location of a licensee, the licensee shall apply to the Commissioner of Banks for authority to do so.  The request shall be by letter setting forth the address  of the new location and shall be accompanied by a fee of twenty five dollars ($25.00) payable to the Commissioner of Banks.  If the request is approved, the licensee shall submit to the Commissioner of Banks its license for amendment.

 

History Note:        Authority G.S. 53‑122(3); 53‑168(e); 53‑170(a); 150B‑21.2;

Eff. January 1, 1993.

 

SECTION .0300 ‑ REPORTS REQUIRED BY COMMISSIONER OF BANKS

 

04 NCAC 03E .0301          CHANGE OF OWNERSHIP OR MANAGEMENT

 

History Note:        Authority G.S. 53‑92; 53‑170; 53‑185; 150A‑11;

Eff. February 1, 1976;

Repealed Eff. January 1, 1985.

 

04 NCAC 03E .0302          ANNUAL REPORT

Each licensee under the North Carolina Consumer Finance Act, on a form provided by the Office of the Commissioner of Banks, shall file an annual report with the Commissioner of Banks on or before March 31 each year.  The form shall contain various schedules which reflect the financial condition of the licensee as well as the results of its operations.  The form along with necessary instructions relative to its execution shall be obtained from and filed with:

Office of the Commissioner of Banks

316 West Edenton Street

4309 Mail Service Center

Raleigh, North Carolina  27699-4309.

 

History Note:        Authority G.S. 53‑92; 53‑184(b); 53‑185; 150B-21.1;

Eff. February 1, 1976;

Amended Eff. September 1, 2006; January 1, 1993; September 26, 1979.

 

SECTION .0400 ‑ EXAMINATION

 

04 NCAC 03E .0401          EXAMINATION

The Commissioner of Banks shall make such examination of the books and records and affairs of licensees under this act at such times as he may deem necessary or desirable.

 

History Note:        Authority G.S. 53‑92; 53‑184; 53‑185;

Eff. February 1, 1976.

 

04 NCAC 03E .0402          REPORTS OF EXAMINATION

Following the examination of a licensee under this act, a report covering the results of such examination is prepared by the examiner making the examination.  That report includes a manager's questionnaire and appropriate comments relative to the affairs of the licensee and any apparent violations of the North Carolina Consumer Finance Act or of the rules and regulations issued by the Commissioner of Banks or the Banking Commission.  A copy of that report is forwarded by the Commissioner of Banks to the licensed office and to company officials of such licensee when deemed desirable.  This report and the information contained therein is confidential and neither the report nor any of its contents shall be made available to the public.

 

History Note:        Authority G.S. 53‑92; 53‑99; 53‑184; 53‑185;

Eff. February 1, 1976.

 

SECTION .0500 ‑ ENFORCEMENT

 

04 NCAC 03E .0501          HEARINGS BY COMMISSIONER OF BANKS

04 NCAC 03E .0502          CEASE AND DESIST ORDERS

 

History Note:        Authority G.S. 53‑92; 53‑185; 53‑186; 53‑187; 150A‑11;

Eff. February 1, 1976;

Repealed Eff. January 1, 1985.

 

SECTION .0600 ‑ CONSUMER FINANCE OFFICES

 

04 NCAC 03E .0601          BOOKS AND RECORDS

Each consumer finance office licensed by the Commissioner of Banks shall keep the following books and accounting records. Except as may be permitted by G.S. 53-184(a), these records shall be maintained in each office and be readily available to the Commissioner of Banks or his authorized agent.  No books or records of the licensee shall show any account or reflect any transaction other than those directly related to the making and collecting of loans within the provisions of the Consumer Finance Act.

Where a licensee is also an installment paper dealer, completely separate books and records shall be maintained, including for general ledger purposes a separate cash account.  Allocation of expenses shall be made monthly according to appropriate and reasonable accounting principles.

All books and records covered by these Rules must be retained for a period of not less than three years after the last transaction:

(1)           Cash Transaction Journal.  The cash transaction journal shall be the book of original entry in which all transactions of receipts and disbursements of any nature or amount whatsoever shall be itemized.  Each transaction made in connection with a loan shall be identified with the loan by the name or account number of the borrower and shall clearly define the nature of each charge, collection, or refund made in connection with such loan.  All entries shall be made as of the exact date the transactions occur.

(2)           General Ledger.  The general ledger shall be double entry, showing in full detail the total of assets, liabilities, capital, income, and expenses.  Each account shall be clearly and appropriately designated.  No net or "wash" entries shall be made to any account.  The general ledger shall be posted at least once each month and such posting shall include all transactions through the last business day of the month.  The actual posting must be completed by the 20th day of each ensuing month for the previous month's business.  In instances where an organization operates two or more offices, the general ledger may be maintained in a central accounting office of the organization, provided a trial balance shall be made as of the last business day of each month and a copy placed on file in each office not later than the last business day of the following month.  Each debit or credit entry appearing on the general ledger each month shall appear on the trial balance.  A detailed description of each general ledger entry originating outside of a local office and not reflected on the cash book of that office shall be on file in each office to support such entries appearing on the general ledger.  This shall include adjusting and closing entries.  If any account on the general ledger does not agree with the corresponding account on the annual report to the Commissioner of Banks, a supplement to the annual report shall be furnished which reconciles or explains any differences.

(3)           Individual Account Record.  A separate account record shall be maintained for each loan made.  Each account record shall provide the following information:

(a)           name and address of borrower, spouse's name, and name of any other person obligated directly or indirectly on the loan;

(b)           cross reference to other loans of the borrower, or spouse, or endorser, guarantor, or surety, or to any joint obligation of the borrower;

(c)           account number;

(d)           date of loan and maturity;

(e)           length of contract;

(f)            the cash advance, finance charge, number of payments and amount of each;

(g)           date and amount of each payment, an allocation between principal and interest for each payment, and the remaining loan balance after each payment;

(h)           brief description of security;

(i)            type of insurance, insurance origination fees and amount of insurance premium for each coverage written;

(j)            amount of recording fee or non‑filing charges;

(k)           amount of any other charge whatsoever made in connection with the loan;

(l)            amount of unearned insurance premium refunded for each coverage written;

(m)          if refunds are paid by cash or check, acknowledgment of receipt of refund by signature of borrower; and

(n)           contract interest rate and the annual percentage rate computed under Regulation Z, if different.

(4)           Index of Borrowers.  Each office shall keep an index record on which all loans to each individual shall be entered in order, showing date made, account number, amount of loan, and date of cancellation.  This record shall be maintained on individual index cards or on the face of the borrower's individual file, "shuck," "jacket," or folder and shall be filed alphabetically or by account number, provided where the account number is used an alphabetical cross index be available to the examiner.

(5)           Loan Documents.  After January 1, 1994, loans made by a licensee shall on the loan contract contain the following statement printed in a conspicuous manner:  "This loan is regulated by the provisions of Chapter 53, Article 15 of the North Carolina General Statutes."

(6)           Judgments.  When a loan has been reduced to judgment, all of the following provisions shall be complied with:

(a)           the individual account record maintained pursuant to Subpart (3) of this Rule shall clearly be designated a judgment account;

(b)           payments received shall be identified and applied on the judgment account record;

(c)           the licensee shall maintain in the office from which the judgment account originated a copy of the judgment and any other court documents which are necessary to disclose the following information:

(i)            judgment date;

(ii)           name of licensee;

(iii)          judgment debtor's name;

(iv)          date suit was filed;

(v)           nature of the suit;

(vi)          name and location of the court;

(vii)         amount of the judgment, specifying principal, interest charges, and court costs; and

(viii)        disposition of the case;

(d)           a licensee which charges a borrower for court costs it incurred on a judgment account shall itemize such costs on the individual account record and retain a receipt or other document substantiating the costs;

(e)           a licensee shall retain a copy of the sheriff's return of execution issued when property is sold pursuant to a judgment.

(7)           Repossessions.  When property is taken in accordance with the terms of a security agreement or by judicial process or abandonment, the individual account record shall be clearly designated as a repossession account and shall state when and how possession of the security was obtained and shall identify the proceeds of the sale of the property.  The licensee shall also retain in the office in which the repossession account originated, all of the following:

(a)           a copy of any agreement entered into with the borrower with respect to the terms of surrender;

(b)           a copy of the notice of sale, together with evidence of mailing or personal delivery;

(c)           an inventory of the property taken, unless it otherwise appears in detail on the notice of sale;

(d)           a signed statement from the purchasers, or from the auctioneer if the sale was public, describing the collateral purchased and showing the amounts paid;

(e)           evidence that the sale took place on the date set forth in the notice of sale, including a notice of any bids received;

(f)            copy of a detailed final accounting sent to the borrower setting forth the disposition of the proceeds of sale and the principal balance due, if any, on the account; and

(g)           paid receipts evidencing costs incurred in the repossession and sale of the security which have been charged to the borrower.

(8)           Insurance Records.  A licensee shall maintain in each office where a loan account originated, a record of any claims paid under insurance written in connection with a consumer finance loan.  The records shall include:

(a)           the loan number and name of debtor;

(b)           description of the insurance claim, i.e., whether death claim, property damage, or claim for benefits under accident and health insurance; and

(c)           in the case of claims under credit life insurance, a copy of the certified death certificate.

 

History Note:        Authority G.S. 53‑92; 53‑104; 53‑184; 53‑185; 150B-21.2;

Eff. February 1, 1976;

Amended Eff. January 1, 1993.

 

04 NCAC 03E .0602          COLLECTION PRACTICES

No licensee or agent, officer or employee of a licensee, under the North Carolina Consumer Finance Act, the same being Article 15 of Chapter 53 of the General Statutes, shall, in collecting or attempting to collect any claim of money owed said licensee, either:

(1)           violate any criminal law of this state;

(2)           do any act which would tend to hold up a borrower from said licensee to public ridicule, or unreasonably degrade him in the presence of any neighbor or business associate;

(3)           request or demand payment from anyone who is not obligated by, or the duly authorized agent of a person obligated by, the loan contract;

(4)           make any collection attempt through any written or printed communication unless such communication is enclosed in a sealed envelope and mailed to or left only at the home or place of business of a person obligated on the loan contract;

(5)           engage in any other unreasonably harsh or oppressive collection attempts or tactics.

 

History Note:        Authority G.S. 53C-2-1; 53C-2-2; 53-180; 53‑185;

Eff. February 1, 1976.

 

04 NCAC 03E .0603          DEFERMENT CHARGES

 

History Note:        Authority G.S. 53‑92; 53‑104; 53‑173(6); 53‑185;

Eff. February 1, 1976;

Repealed Eff. January 1, 1993.

 

 

 

SUBCHAPTER 3F ‑ LICENSEES UNDER MONEY TRANSMITTERS ACT

 

04 NCAC 03F .0101          APPLICATION FOR LICENSE

04 NCAC 03F .0102          ISSUANCE OF LICENSE

04 NCAC 03F .0103          REQUIRED REPORTS

 

History Note:        Authority G.S. 53‑92; 53‑194; 53‑196; 53‑197; 53‑198; 53‑200; 53‑204;

Eff. February 1, 1976;

Repealed Eff. February 1, 1993.

04 NCAC 03F .0104          REVOCATION OF LICENSE

04 NCAC 03F .0105          DENIAL OR REVOCATION OF LICENSE: HEARING: APPEAL

 

History Note:        Authority G.S. 53‑92; 53‑206; 53‑207; 150A‑11(1);

Eff. February 1, 1976;

Repealed Eff. January 1, 1985.

 

SECTION .0200 ‑ ADMINISTRATIVE

 

04 NCAC 03F .0201          DEFINITIONS

(a)  As used in this Subchapter, unless the context clearly requires otherwise:

(1)           "Agent" shall mean a person, partnership, corporation, or other entity authorized by a licensee to sell or issue checks of the licensee in this State as a service or for a fee or other consideration on the behalf of the licensee;

(2)           "Applicant" shall mean a person who applies for a license under the Money Transmitters Act;

(3)           "Controlling person" shall mean any person as defined in G.S. 53-208.2(16) who owns or holds with the power to vote 10% or more of the equity securities of the applicant or licensee, or who has the power to direct the management and policy of the applicant or licensee;

(4)           "Executive officer" shall have the same meaning as set forth in Regulation "O," promulgated by the Board of Governors of the Federal Reserve System and codified in the Code of Federal Regulations at Title 12, Chapter II, Subchapter A, Part 215.2;

(5)           "Location" shall mean any place of business within this State operated by the licensee or the licensee's agent at which checks of the licensee are issued or sold;

(6)           "Money Transmitters Act" shall mean the Money Transmitters Act codified at Chapter 53, Article 16A of the North Carolina General Statutes (G.S. 53-208.1,et seq.);

(7)           "State" shall mean the State of North Carolina;

(8)           Terms defined in G.S. 53-208.2 shall have the same meaning in this Subchapter.

(b)  An application for a license, amendment to the application, annual statement, notice, or any other document which is required by law or rule to be filed with the Commissioner shall be addressed as follows:

Mailing Address:

Office of the Commissioner of Banks

4309 Mail Service Center

Raleigh, North Carolina  27699-4309.

 

Street Address:

Office of the Commissioner of Banks

316 West Edenton Street

Raleigh, North Carolina  27603

 

History Note:        Authority G.S. 53-208.27;

Eff. February 1, 1993;

Amended Eff. November 1, 2013; September 1, 2006; June 1, 1995.

 

04 NCAC 03F .0202          PERMISSIBLE INVESTMENTS

 

History Note:        Authority G.S. 53-193; 53-206.1;

Eff. March 1, 1994;

Repealed Eff. October 1, 2011.

 

SECTION .0300 ‑ LICENSING

 

04 NCAC 03F .0301          APPLICATION FOR A LICENSE

(a)  Any person who wishes to sell or issue checks in this State pursuant to the Money Transmitters Act must first obtain a license issued by the Commissioner.  An application for a license can be obtained from and shall be filed pursuant to Rule .0201(b) of this Subchapter.

(b)  An application for a Money Transmitters' license shall include information required by G.S. 53-208.5 through G.S. 53-208.10 of Chapter 53, Article 16A.  The application must be submitted on a form provided by the Commissioner.

(c)  In addition to the documents and information listed in Paragraph (b) of this Rule, the Commissioner may require additional information necessary to complete an investigation pursuant to G.S. 53-208.10.

(d)  Incomplete application files shall be closed and deemed denied without prejudice when the applicant has not submitted information requested by the Commissioner within 30 days of such request.

 

History Note:        Authority G.S. 53-208.3; 53-208.27;

Eff. February 1, 1993;

Amended Eff. November 1, 2013.

 

04 NCAC 03F .0302          issuance of a license

04 NCAC 03F .0303          LICENSE FEES

04 NCAC 03F .0304          AGENT LOCATION FEE

 

History Note:        Authority G.S. 53-197; 53-200; 53-202; 53-206.1; 150B-21.2;

Eff. February 1, 1993;

Amended June 1, 1995;

Repealed Eff. October 1, 2011.

 

SECTION .0400 - OPERATIONS

 

04 NCAC 03F .0401          CERTIFICATE OF AUTHORITY

 

History Note:        Authority G.S. 53-203; 53-206.1; 150B-21.2;

Eff. February 1, 1993;

Repealed Eff. October 1, 2011.

 

04 NCAC 03F .0402          SURRENDER OF LICENSE

A licensee shall surrender its license to the Commissioner no later than 30 days after it has ceased operations in this State.

 

History Note:        Authority G.S. 53-208.27;

Eff. February 1, 1993.

 

SECTION .0500 - REPORTING AND NOTIFICATIONS

 

04 NCAC 03F .0501          GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

For the purposes of the Money Transmitters Act and this Subchapter, all required financial statements shall be prepared according to generally accepted accounting principles.

 

History Note:        Authority G.S. 53-208.27;

Eff. February 1, 1993.

 

04 NCAC 03F .0502          STATEMENT OF NET WORTH

04 NCAC 03F .0503          ANNUAL STATEMENT

 

History Note:        Authority G.S. 53-198; 53-199(b); 53-204(a); 53-206.1; 150B-21.2;

Eff. February 1, 1993;

Amended Eff. June 1, 1995;

Repealed Eff. October 1, 2011.

 

04 NCAC 03F .0504          AGENT ACTIVITY REPORTS

A licensee shall file each quarter of the calendar year, a quarterly report of agent activity no later than 60 days after the quarter has ended.  The quarterly report shall contain the following information:

(1)           The total number of agents or subagents in this State;

(2)           The total number and dollar amount of the checks sold or issued by each agent or subagent in this State.

 

History Note:        Authority G.S. 53-208.27;

Eff. February 1, 1993;

Amended Eff. June 1, 1995.

 

04 NCAC 03F .0505          AMENDMENTS TO APPLICATION

A licensee must maintain a current application with the Commissioner.  If the information contained in the application is or becomes inaccurate in any material respect, the licensee shall file a correcting amendment as soon as practicable, but in no event later than 30 days after the effective date of such change.  An amendment to the application can be obtained from and shall be filed pursuant to Rule .0201(b) of this Subchapter.

 

History Note:        Authority G.S. 53-208.27;

Eff. February 1, 1993.

 

04 NCAC 03F .0506          REVOCATION OR CANCELLATION OF SURETY BOND

(a)  No later than 30 days after the renewal of its surety bond, a licensee shall file pursuant to Rule .0201(b) of this Subchapter:

(1)           a certificate of continuation of the surety bond required by G.S. 53-208.8; or

(2)           evidence of continued compliance with G.S. 53-208.8(b) which shall consist of a safekeeping receipt received directly from the trustee of securities with a par value equal to the amount of the surety bond in G.S. 53-208.8.

(b)  A licensee shall notify the Commissioner in writing of revocation or cancellation of its surety bond furnished pursuant to G.S. 53-208.8.

 

History Note:        Authority 53-208.8; 53-208.27;

Eff. February 1, 1993;

Amended Eff. November 1, 2013; June 1, 1995.

 

04 NCAC 03F .0507          CEASING OPERATIONS

A licensee shall immediately notify the Commissioner in writing of its decision to cease operations in this State under the Money Transmitters Act.

 

History Note:        Authority G.S. 53-208.27;

Eff. February 1, 1993.

 

04 NCAC 03F .0508          IMPAIRMENT OF MINIMUM NET WORTH

A licensee shall notify the Commissioner in writing if, at any time, it fails to meet the minimum net worth requirement of G.S. 53-208.5(a).  The notification shall be accompanied by a plan to restore the minimum net worth.

 

History Note:        Authority 53-208.5; 53-208.27;

Eff. February 1, 1993;

Amended Eff. November 1, 2013.

 

04 NCAC 03F .0509          DISHONOR OR DEFAULT IN PAYMENT INSTRUMENT

A licensee shall immediately notify the Commissioner in writing if it dishonors or defaults in the payment of any check sold or issued because it lacks the funds to honor the check.

 

History Note:        Authority G.S. 53-208.27;

Eff. February 1, 1993.

 

SECTION .0600 - EXAMINATION; BOOKS AND RECORDS

 

04 NCAC 03F .0601          RECORD AND BOOKKEEPING REQUIREMENTS

(a)  Licensee.  Each licensee shall maintain at an office information required by G.S. 53-208.16(a) of Chapter 53, Article 16A.

(b)  Authorized delegate.  Each authorized delegate shall maintain at its office a record of the disposition of all transactions or monetary instruments received from the licensee.  The record shall contain an accounting of all proceeds from those transactions or monetary instruments paid to the licensee and all proceeds due to the licensee.

 

History Note:        Authority 53-208.16; 53-208.20; 53-208.27;

Eff. February 1, 1993;

Amended Eff. November 1, 2013.

 

04 NCAC 03F .0602          EXAMINATION FEE

Each licensee shall pay the cost of an examination conducted by the Commissioner or his designee pursuant to G.S. 53-208.15.  The cost of such examination shall be the hourly rate established pursuant to 04 NCAC 03C .1601 plus travel expenses and the per diem subsistence allowance provided for State employees pursuant to G.S. 138-5 through G.S. 138-7, and any rules promulgated thereunder.

 

History Note:        Authority 53-208.15; 53-208.27; 53-282(c);

Eff. February 1, 1993;

Amended Eff. November 1, 2013.

 

SECTION .0700 - LICENSE REVOCATION

 

04 NCAC 03F .0701          HEARINGS

 

History Note:        Authority G.S. 53-206; 53-206.1; 53-207; 150B-21.2;

Eff. February 1, 1993;

Repealed Eff. October 1, 2011.

 

 

 

SUBCHAPTER 3G ‑ FUNERAL AND BURIAL TRUST FUNDS

 

SECTION .0100 ‑ ADMINISTRATIVE

 

 

04 NCAC 03G .0101         APPLICATION FOR LICENSE

04 NCAC 03G .0102         ISSUANCE OF LICENSE

04 NCAC 03G .0103         PRENEED BURIAL CONTRACTS

 

History Note:        Authority G.S. 53‑92; 90‑210.31(e); 90‑210.34; 90‑210.34(b); 90‑210.36;

Eff. February 1, 1976;

Amended Eff. August 1, 1988; March 15, 1978;

Repealed Eff. May 1, 1991.

04 NCAC 03G .0104         DEFINITIONS; FILINGS

 

History Note:        Authority G.S. 90‑210.30; 90‑210.34; 90‑210.36;

Eff. May 1, 1991;

Repealed Eff. February 1, 1995.

 

SECTION .0200 ‑ LICENSING

 

04 NCAC 03G .0201         APPLICATION FOR LICENSE

04 NCAC 03G .0202         ISSUANCE OF A LICENSE

 

History Note:        Authority G.S. 90‑210.34(a); 90‑210.34(b); 90‑210.36;

Eff. May 1, 1991;

Repealed Eff. February 1, 1995.

 

04 NCAC 03G .0203         EXPIRATION AND RENEWAL

 

History Note:        Authority G.S. 90‑210.34; 90‑210.36;

Eff. June 1, 1991;

Repealed Eff. February 1, 1995.

 

SECTION .0300 ‑ PRENEED BURIAL CONTRACTS

 

04 NCAC 03G .0301         TYPES AND REVOCABILITY OF CONTRACTS

04 NCAC 03G .0302         RETAINAGE

04 NCAC 03G .0303         APPROVED CONTRACTS AND OTHER FORMS

 

History Note:        Authority G.S. 90‑210.31; 90‑210.31(a1); 90‑210.31(e); 90‑210.32(d); 90‑210.36;

Eff. May 1, 1991;

Repealed Eff. February 1, 1995.

 

SECTION .0400 ‑ DEATH OF THE PRENEED BURIAL TRUST CONTRACT BENEFICIARY

 

04 NCAC 03G .0401         PERFORMANCE BY A CONTRACTING LICENSEE

04 NCAC 03G .0402         PERFORMANCE BY NON‑CONTRACTING FUNERAL HOME

04 NCAC 03G .0403         EXCESS FUNDS

 

History Note:        Authority G.S. 90‑210.31(c); 90‑210.31(c1); 90‑210.36;

Eff. May 1, 1991;

Repealed Eff. February 1, 1995.

 

SECTION .0500 ‑ OPERATIONS

 

04 NCAC 03G .0501         RECORD AND BOOKKEEPING REQUIREMENTS

 

History Note:        Authority G.S. 90‑210.31; 90‑210.35(a); 90‑210.36;

Eff. May 1, 1991;

Repealed Eff. February 1, 1995.

 

04 NCAC 03G .0502         ANNUAL REPORT

 

History Note:        Authority G.S. 90‑210.36;

Eff. June 1, 1991;

Repealed Eff. February 1, 1995.

 

04 NCAC 03G .0503         NOTICE OF TRANSFER

04 NCAC 03G .0504         ASSIGNMENT AND TERMINATION

 

History Note:        Authority G.S. 90‑210.35(b); 90‑210.35(c); 90‑210.36;

Eff. May 1, 1991;

Repealed Eff. February 1, 1995.

 

SECTION .0600 ‑ LICENSE REVOCATION OR SUSPENSION

 

04 NCAC 03G .0601         REVOCATION OR SUSPENSION; HEARINGS

 

History Note:        Authority G.S. 90‑210.31; 90‑210.32; 90‑210.33; 90‑210.36;

Eff. June 1, 1991;

Repealed Eff. February 1, 1995.

 

 

 

SUBCHAPTER 3H ‑ APPLICATIONS BY REGIONAL BANK HOLDING COMPANIES

 

SECTION .0100 - REGIONAL BANK HOLDING COMPANIES

 

 

04 NCAC 03H .0101         APPLICATION FEES

 

History Note:        Authority G.S. 53‑214(b);

Eff. September 1, 1985;

Repealed Eff. May 1, 1992.

04 NCAC 03H .0102         REGIONAL BANK HOLDING COMPANY ACQUISITIONS

(a)  Regional bank holding companies may acquire North Carolina banks or bank holding companies upon written approval of the Commissioner of Banks pursuant to G.S. 53-211.

(b)  Application.  An application to acquire a North Carolina bank or bank holding company must be submitted in writing on a form provided by the Office of the Commissioner of Banks.  The application must be filed with:

Office of the Commissioner of Banks

4309 Mail Service Center

Raleigh, North Carolina 27699-4309.

(c)  Application fees.  The application fees required by statute for acquisition by a regional bank holding company in North Carolina under the North Carolina Regional Reciprocal Banking Act shall be tendered upon application.

(d)  Notice of filing/written comments.  Within 30 days of acceptance of a completed application for filing, the Commissioner of Banks shall publish a notice of the filing of the application as set forth in G.S. 53‑211(d).  Within 14 days of the published notice, any interested person may submit written comments and information concerning the application to the Commissioner of Banks.  All written comments received during the comment period shall become a part of the official record compiled with respect to the application.  The Commissioner of Banks may extend the comment period if, on the basis of information already available, or upon the nature or volume of initial public comment, he determines that the public need or the intent of the statute is best served by an extension of such comment period.

(e)  Examination by Commissioner.  Upon receipt of a completed application, the Commissioner of Banks shall conduct an examination into all the facts connected with the proposed acquisition in accordance with Articles 17 and 18 of Chapter 53.

(f)  Action by Commissioner.  No final decision may be made by the Commissioner of Banks until the comment period has expired.  The final decision of the Commissioner of Banks on an application shall be in writing and include findings of fact and conclusions of law.

(g)  Notification of Commissioner's action.  The applicant and all persons who have made written requests for such notice shall be given notice of the Commissioner of Banks' final decision on each application.

 

History Note:        Authority G.S. 53‑211; 53‑214(b);

Eff. May 1, 1992;

Amended Eff. September 1, 2006; April 1, 1999.

 

04 NCAC 03H .0103         BANK HOLDING COMPANY REGISTRATION

Bank holding companies controlling North Carolina federally chartered or state chartered banks, or which control nonbank subsidiaries (direct or indirect) having offices located in the state shall register with the Commissioner of Banks on a form provided by the Office of the Commissioner of Banks.  Initial registrations shall be completed no later than 180 days after becoming a bank holding company as set forth in G.S. 53‑227 and annual registrations shall be completed not later than July 1st of each year thereafter, continuing until such time that the bank holding company no longer meets the registration requirements as set forth in G.S. 53‑227.  Forms may be obtained from and shall be filed along with associated fees with:

Office of the Commissioner of Banks

316 West Edenton Street

4309 Mail Service Center

Raleigh, North Carolina 27699-4309.

 

History Note:        Authority G.S. 53‑227; 53‑230;

Eff. May 1, 1992;

Amended Eff. September 1, 2006.

 

 

 

SUBCHAPTER 03i - MORTGAGE BANKER/BROKER

 

SECTION .0100 – ADMINISTRATIVE

 

04 NCAC 03I .0101           DEFINITIONS; FILINGS

 

History Note:        Authority G.S. 53-233; 53-234; 53-241;

Eff. November 1, 1993;

Amended Eff. May 1, 1995;

Repealed Eff. April 1, 2003.

SECTION .0200 - FINANCIAL REQUIREMENTS

 

04 NCAC 03I .0201           FINANCIAL REQUIREMENTS FOR MORTGAGE BANKERS AND MORTGAGE BROKERS

 

History Note:        Authority G.S. 53-236(b); 53-241;

Eff. November 1, 1993;

Amended Eff. May 1, 1995;

Repealed Eff. April 1, 2003.

 

04 NCAC 03I .0202           MINIMUM NET WORTH REQUIREMENT FOR MORTGAGE BROKERS

04 NCAC 03I .0203           LIQUIDITY OF MORTGAGE BANKERS AND BROKERS

 

History Note:        Authority G.S. 53-236(b); 53-241;

Eff. November 1, 1993;

Repealed Eff. May 1, 1995.

 

04 NCAC 03I .0204           SURETY BOND

 

History Note:        Authority G.S. 53-236(b); 53-241;

Eff. November 1, 1993;

Amended Eff. May 1, 1995;

Repealed Eff. April 1, 2003.

 

04 NCAC 03I .0205           IRREVOCABLE LETTER OF CREDIT; PLEDGE OF SECURITIES

04 NCAC 03I .0206           NETWORTH

 

History Note:        Authority G.S. 53-236(b); 53-241;

Eff. May 1, 1995;

Repealed Eff. April 1, 2003.

 

SECTION .0300 - REGISTRATION OF MORTGAGE BANKERS AND MORTGAGE BROKERS

 

04 NCAC 03I .0301           APPLICATION FOR REGISTRATION AS A MORTGAGE BANKER OR BROKER

04 NCAC 03I .0302           EXEMPT PERSONS OR ORGANIZATIONS

04 NCAC 03I .0303           EXPERIENCE REQUIREMENTS FOR MORTGAGE BANKERS

04 NCAC 03I .0304           EXPERIENCE REQUIREMENTS FOR MORTGAGE BROKERS

04 NCAC 03I .0305           ISSUANCE OF CERTIFICATE OF REGISTRATION

04 NCAC 03I .0306           NONTRANSFERABILITY OF CERTIFICATE OF REGISTRATION

 

History Note:        Authority G.S. 53-234(6)(a); 53-235; 53-236; 53-236(b); 53-237(a); 53-237(c); 53-241; 53-242;

Eff. November 1, 1993;

Amended Eff. May 1, 1995;

Repealed Eff. April 1, 2003.

 

SECTION .0400 - OPERATIONS

 

04 NCAC 03I .0401           ANNUAL REGISTRATION FEE

04 NCAC 03I .0402           ANNUAL REPORT

04 NCAC 03I .0403           SEGREGATION OF FEES

04 NCAC 03I .0404           REFUNDS

04 NCAC 03I .0405           RECORD AND BOOKKEEPING REQUIREMENTS

04 NCAC 03I .0406           DISPLAY OF CERTIFICATE OF REGISTRATION

 

History Note:        Authority G.S. 53-122(3); 53-234(1); 53-234(2); 53-237(c); 53-238; 53-238(5); 53-238(6); 53-239; 53-239(c); 53-241; 53-242;

Eff. November 1, 1993;

Amended Eff. May 1, 1995;

Repealed Eff. April 1, 2003.

 

SECTION .0500 - REPORTING AND NOTIFICATION REQUIREMENTS

 

04 NCAC 03I .0501           AMENDMENTS TO INFORMATION ON FILE WITH THE COMMISSIONER

04 NCAC 03I .0502           WITHDRAWAL/TERMINATION/REGISTRATION/MTGE BANKER/MTGE BROKER

04 NCAC 03I .0503           IMPAIRMENT OF FINANCIAL REQUIREMENTS

 

History Note:        Authority G.S. 53-236(b); 53-241;

Eff. November 1, 1993;

Amended Eff. May 1, 1995;

Repealed Eff. April 1, 2003.

 

SECTION .0600 - PROHIBITED ACTS AND PRACTICES; INVESTIGATIONS

 

04 NCAC 03I .0601           PROHIBITED CONDUCT AND PRACTICES

04 NCAC 03I .0602           SOLICITATION AND ADVERTISING

04 NCAC 03I .0603           EXAMINATIONS, INVESTIGATION

04 NCAC 03I .0604           ENFORCEMENT ACTIONS

04 NCAC 03I .0605           HEARINGS

 

History Note:        Authority G.S. 53-238; 53-239; 53-240; 53-241;

Eff. November 1, 1993;

Amended Eff. May 1, 1995;

Repealed Eff. April 1, 2003.

 

SECTION .0700 - DISCLOSURE REQUIREMENTS

 

04 NCAC 03I .0701           CONFLICTS OF INTEREST

04 NCAC 03I .0702           MORTGAGE BROKER APPLICATION DISCLOSURES

04 NCAC 03I .0703           MORTGAGE BANKER APPLICATION DISCLOSURES

04 NCAC 03I .0704           DISCLOSURE ARRGMTS BETWEEN MORTGAGE BANKERS/MORTGAGE BROKERS

04 NCAC 03I .0705           COMMITMENT DISCLOSURES

04 NCAC 03I .0706           MORTGAGE LOCK-IN AGREEMENT

 

History Note:        Authority G.S. 53-238; 53-241;

Eff. November 1, 1993;

Amended Eff. May 1, 1995;

Repealed Eff. April 1, 2003.

 

 

 

SUBCHAPTER 03J ‑ REFUND ANTICIPATION LOAN

 

SECTION .0100 ‑ ADMINISTRATIVE

 

04 NCAC 03J .0101          DEFINITIONS; FILINGS

(a)  As used in this Subchapter, unless the context clearly requires otherwise:

(1)           "Applicant" shall have the same meaning as set forth in G.S. 53-246(1).

(2)           "Commission" shall have the same meaning as set forth in G.S. 53-246(2).

(3)           "Commissioner" shall have the same meaning as set forth in G.S. 53-246(3).

(4)           "Controlling person" shall mean any person as defined in G.S. 53-246(7) who owns or holds with the power to vote 10% or more of the equity securities of the registrant, or who has the power to direct the management and policy of the registrant.

(5)           "Creditor" shall have the same meaning as set forth in G.S. 53-246(4).

(6)           "Creditor fee" shall mean the fee imposed by the creditor which funds the refund anticipation loan in consideration for funding the refund anticipation loan.

(7)           "Debtor" shall have the same meaning as set forth in G.S. 53-246(5).

(8)           "Electronic filing fee" shall mean the fee imposed by the facilitator in consideration for the electronic filing of a tax return.

(9)           "Executive officer" shall have the same meaning as such term is defined in Regulation "O" promulgated by the Board of Governors of the Federal Reserve System, and codified in the Code of Federal Regulations at Title 12, Chapter II, Part 215.

(10)         "Facilitator" shall have the same meaning as set forth in G.S. 53-246(6).

(11)         "Facilitator loan fee" shall mean the fee imposed by the facilitator in consideration for assisting the debtor in obtaining the refund anticipation loan.

(12)         "Income tax return preparation fee" shall mean the fee imposed by a person in consideration for preparation of the debtor's tax returns.

(13)         "Loan-related fee" shall mean any fee other than a creditor fee, facilitator loan fee or electronic filing fee paid by the debtor for transmittal to third persons who provide services in connection with the refund anticipation loan.

(14)         "Person" shall have the same meaning as set forth in G.S. 53-246(7).

(15)         "Refund anticipation loan" shall have the same meaning as set forth in G.S. 53-246(8).

(16)         "Refund Anticipation Loan Act" shall mean the Refund Anticipation Loan Act codified at Chapter 53, Article 20 of the North Carolina General Statutes (G.S. 53-245, et seq.).

(17)         "Refund anticipation loan fee" shall have the same meaning as set forth in G.S. 53-246(9) and shall include a creditor fee, facilitator loan fee, and loan-related fee as defined herein.

(18)         "Registrant" shall have the same meaning as set forth in G.S. 53-246(10).

(19)         "Transmitter" shall mean any person as defined herein who transmits electronic returns directly to the Internal Revenue Service.  This term shall include persons who receive information to be reformatted and transmitted to the Internal Revenue Service, i.e., third-party transmitters.

(b)  An application for registration or any report, notice, form or other document which is required by law or rule to be filed with the Commissioner shall be addressed as follows:

Office of the Commissioner of Banks

4309 Mail Service Center

Raleigh, North Carolina  27699-4309.

 

History Note:        Authority G.S. 53-245; 53-246; 53-248; 53-253; 150B-21.2;

Eff. September 1, 1993;

Amended Eff. September 1, 2006.

SECTION .0200 - APPLICATION AND RENEWAL

 

04 NCAC 03J .0201          APPLICATION FOR REGISTRATION AS A FACILITATOR

(a)  Any person who would like to engage in business as a facilitator pursuant to the Refund Anticipation Loan Act shall first be registered with the Commissioner, unless such person is exempt from registration pursuant to G.S. 53-247(c) or G.S. 53-254.  An application for registration shall be obtained from the Commissioner and shall be filed pursuant to Rule .0101(b) of this Subchapter.

(b)  The application for registration as a facilitator shall include the following:

(1)           A description of the applicant's organizational structure, including the name, business and residence address and business telephone number of the applicant, its partners, executive officers, directors and controlling persons;

(2)           Copies of the following documents, where applicable:

(A)          The applicant's Articles of Incorporation, or general or limited partnership agreement;

(B)          A Certificate of Existence or Certificate of Good Standing not more than 90 days old from the applicant's state of incorporation;

(C)          A Certificate of Authority to do business in this State;

(D)          A copy of the applicant's Certificate of Assumed Name;

(3)           A description of the applicant's operations, including the names and addresses of the banks which will fund refund anticipation loans to its customers, and the names and addresses of transmitters and any other intermediary parties involved in the process of facilitating refund anticipation loans;

(4)           A description of the business(es) in which the applicant is primarily engaged;

(5)           The applicant's Electronic Filer Identification Number (EFIN) as provided by the Internal Revenue Service;

(6)           Proof that the applicant has been accepted by the Internal Revenue Service to participate in its electronic filing program for the present tax year;

(7)           Disclosure of any civil judgments entered against the applicant, its partners, executive officers, directors or controlling persons during the past 10 years which have remained partially or wholly unpaid;

(8)           Disclosure of any civil proceedings pending against or civil judgments entered against the applicant, its partners, executive officers, directors or controlling persons which involve fraud or dishonesty;

(9)           Disclosure of any felony convictions entered against the applicant, its partners, executive officers, directors or controlling persons;

(10)         Disclosure of any misdemeanor convictions entered against the applicant, its partners, executive officers, directors or controlling persons which involve theft, fraud, or dishonesty;

(11)         Disclosure of any enforcement proceeding brought against the applicant, its partners, executive officers, directors or controlling persons by any agency or department of this State, the Federal government or any other state which involves the revocation or suspension of any business license;

(12)         Disclosure of whether the applicant, any partner, executive officer, director, or controlling person has been denied acceptance in or suspended from the Electronic Filing Program of the Internal Revenue Service;

(13)         Disclosure of whether the applicant is, or has ever been, the subject of the following proceedings: bankruptcy, assignment for the benefit of creditors, receivership, conservatorship, or similar proceeding;

(14)         Three business references, including one bank reference;

(15)         The address of each office in this State at which the applicant intends to facilitate refund anticipation loans.

(c)  The application for registration as a facilitator shall be accompanied by a fee made payable to the Commissioner in the amount set forth in G.S. 53-248(a).

(d)  The application shall be in writing and verified.

(e)  Incomplete application files shall be closed and deemed denied without prejudice when the applicant has not submitted information requested by the Commissioner within 30 days of request.

 

History Note:        Authority G.S. 53-245(b); 53-247(a); 53-248(a); 53-253; 150B-21.2;

Eff. September 1, 1993.

 

04 NCAC 03J .0202          ISSUANCE OF A CERTIFICATE OF REGISTRATION

Upon receipt of a completed application and payment of the fee required by G.S. 53-248(a), the Commissioner shall review the application and conduct such investigation of the applicant as necessary to make the findings required by G.S. 53-248(a).  If the Commissioner finds that the applicant has met the conditions of G.S. 53-248(a), the Commissioner shall issue the applicant a renewable Certificate of Registration.

 

History Note:        Authority G.S. 53-248(a), (b); 53-253; 150B-21.2;

Eff. September 1, 1993.

 

04 NCAC 03J .0203          EXPIRATION AND RENEWAL

(a)  A Certificate of Registration shall be valid from the date of issuance and, unless timely renewed, shall expire on December 31 of each year.

(b)  Thirty days prior to the date of expiration, each registrant that would like to renew its Certificate of Registration shall submit a renewal application to the Commissioner.  The renewal application shall be obtained from the Commissioner and shall be filed pursuant to Rule .0101(b) of this Subchapter.

(c)  Unless the registrant timely renews its Certificate of Registration, the registrant shall not, after the date of expiration, engage in business as a facilitator in this State.

(d)  If the Certificate of Registration expires, the registrant shall apply for a Certificate of Registration pursuant to Rule .0201 of this Section if it wishes to engage in business as a facilitator in this State.

 

History Note:        Authority G.S. 53-248(b); 53-253; 150B-21.2;

Eff. September 1, 1993.

 

04 NCAC 03J .0204          APPLICATION FOR RENEWAL OF CERTIFICATE OF REGISTRATION

(a)  The application for renewal of the Certificate of Registration shall include the following:

(1)           Where applicable, any amendments to the application for registration filed pursuant to Rule .0201 of this Subchapter;

(2)           A written verification of the accuracy of the application for Certificate of Registration filed pursuant to Rule .0201 of this Subchapter and any amendments filed pursuant to Rules .0204(a)(1) and .0305 of this Subchapter.

(b)  The application for renewal of the Certificate of Registration shall be accompanied by a fee made payable to the Commissioner in the amount set forth in G.S. 53-248(b) for each office at which the registrant intends to facilitate refund anticipation loans during the succeeding year.

(c)  Incomplete applications for renewal of the Certificate of Registration shall be closed and the application for renewal deemed denied without prejudice when the registrant has not submitted information requested by the Commissioner within 30 days of such request.

 

History Note:        Authority G.S. 53-248(a),(b); 53-253; 150B-21.2;

Eff. September 1, 1993.

 

04 NCAC 03J .0205          NONTRANSFERABILITY OF CERTIFICATE OF REGISTRATION

(a)  A Certificate of Registration shall be neither transferable nor assignable.

(b)  The circumstances under which the Commissioner shall deem a change in the registrant's organizational structure to constitute a transfer or assignment of the Certificate of Registration shall include, but not be limited to, the following:

(1)           If the registrant is a corporation:

(A)          A change in ownership of 50% or more of the registrant's stock;

(B)          The conversion of the corporation into a general or limited partnership or proprietorship;

(2)           If the registrant is a general or limited partnership:

(A)          A change in one of the registrant's general partners;

(B)          The conversion of the general partnership into a limited partnership, corporation or proprietorship;

(C)          The conversion of the limited partnership into a general partnership, corporation or proprietorship;

(3)           If the registrant is a proprietor:

(A)          The conversion of the proprietorship into a general or limited partnership or corporation;

(B)          The sale of all of the assets of the registrant's business to another person.

(c)  Upon a change in organization as set forth in Paragraph (b) of this Rule, the Certificate of Registration shall become void and the registrant shall surrender its Certificate of Registration to the Commissioner within 30 days of such change.  If the entity which results from the change in the registrant's organization would like to engage in business as a facilitator in this State, it shall apply for a Certificate of Registration pursuant to Rule .0201 of this Section.

 

History Note:        Authority G.S. 53-253; 150B-21.2;

Eff. September 1, 1993.

 

SECTION .0300 - OPERATIONS, REPORTING REQUIREMENTS, NOTIFICATIONS

 

04 NCAC 03J .0301          CHECK CASHING SERVICES

A registrant which offers check cashing services shall not require a debtor to use such services for cashing a check which represents the proceeds of a refund anticipation loan.

 

History Note:        Authority G.S. 53-250(5); 53-253; 150B-21.2;

Eff. September 1, 1993.

 

04 NCAC 03J .0302          RECORD AND BOOKKEEPING REQUIREMENTS

(a)  A registrant shall maintain the following records with respect to each application for a refund anticipation loan in this State.  These records shall be kept in an office or offices of the registrant in this State.  This Rule shall not be interpreted to require a registrant to maintain one central office at which all records required herein are located:

(1)           Name of applicant for a refund anticipation loan;

(2)           Social security number of applicant for a refund anticipation loan;

(3)           Date of application;

(4)           Disposition of application, e.g., whether loan was funded, denied, etc.;

(5)           The gross amount of the refund anticipation loan;

(6)           The amount of the creditor fee;

(7)           The amount of the facilitator loan fee, if any;

(8)           The amount of the loan-related fees, if any;

(9)           The amount of the electronic filing fee;

(10)         The amount of refund anticipation loan proceeds disbursed by the registrant to the debtor;

(11)         The date on which refund anticipation loan proceeds were disbursed by the registrant to the debtor;

(12)         The identity of the registrant's executive officer, partner or employee originating the application for the refund anticipation loan;

(13)         The number, identity of drawer and amount of the check delivered to the debtor in payment of the proceeds of the refund anticipation loan;

(14)         A copy of Internal Revenue Service Form No. 8453 or any successor Form.

(b)  An original (where the drawer is the registrant) or a copy of all checks delivered by the registrant to each debtor in payment of the proceeds of the refund anticipation loan shall be available upon request by the Commissioner.

(c)  All records required by Paragraph (a) of this Rule may be maintained in any reasonable manner that the registrant selects.  Where applicable, the information required by Paragraph (a) of this Rule may be maintained by the retention of copies of forms used to comply with state or federal statutes, rules and regulations.

(d)  All records required to be kept pursuant to Paragraph (a) of this Rule may be maintained in the form of magnetic tape, magnetic disk or other form of computer, electronic or microfilm media.  However, records kept in this manner shall be convertible into clearly legible, tangible documents within 24 hours of request.  This time period shall be extended for an additional reasonable time by the Commissioner if the registrant demonstrates to the satisfaction of the Commissioner that it cannot provide the records requested within 24 hours of request.

(e)  All records required to be kept pursuant to Paragraph (a) of this Rule shall be kept for a period of at least three years.

 

History Note:        Authority G.S. 53-249; 53-250; 53-253; 150B-21.2;

Eff. September 1, 1993.

 

04 NCAC 03J .0303          FILING AND POSTING OF FEE SCHEDULE

(a)  The fee schedule required by G.S. 53-249(a) shall be obtained from the Commissioner and shall be filed pursuant to Rule .0101(b) of this Subchapter.

(b)  The fee schedule referenced in Paragraph (a) of this Rule shall include the following fees:

(1)           The creditor fee;

(2)           The facilitator loan fee;

(3)           Any loan-related fee;

(4)           The electronic filing fee.

(c)  Pursuant to G.S. 53-249(c), the registrant shall display the following fees:

(1)           The creditor fee;

(2)           The facilitator loan fee;

(3)           All loan-related fees;

(4)           The electronic filing fee.

 

History Note:        Authority G.S. 53-249(a), (c); 53-253; 150B-21.2;

Eff. September 1, 1993.

 

04 NCAC 03J .0304          DISCLOSURES

(a)  For the purposes of G.S. 53-249(d)(1), (2), the registrant shall disclose to the debtor the following fees:

(1)           The creditor fee;

(2)           The facilitator loan fee;

(3)           All loan-related fees;

(4)           The electronic filing fee;

(5)           The total dollar amount of the fees disclosed pursuant to Subparagraphs (a)(1)-(3) of this Rule.

(b)  For the purposes of G.S. 53-249(d)(5), the term "appropriate taxing authority" shall mean the Internal Revenue Service.

(c)  All disclosures made pursuant to G.S. 53-249(d) shall be made on a form or forms detached from the application.  The registrant shall provide an applicant for a refund anticipation loan with a copy of all such disclosure forms.  In the case of an application for a refund anticipation loan by a married couple who are filing a joint tax return, the registrant may satisfy this provision by providing one copy of all such disclosure forms to the couple.

 

History Note:        Authority G.S. 53-249(d); 53-253; 150B-21.2;

Eff. September 1, 1993.

 

04 NCAC 03J .0305          AMENDMENTS TO APPLICATION

(a)  A registrant shall maintain a current application with the Commissioner.  If there is a change in the information contained in the application, the registrant shall notify the Commissioner within 30 days of the effective date of such change.  Notification to the Commissioner shall be accomplished either by letter or by revision of the applicable pages of the application filed pursuant to Rule .0201 of this Subchapter.  If the registrant elects to comply with this Rule by revising its application, it shall obtain the applicable pages of the application from the Commissioner.

(b)  If a registrant decides to open a new office in this State at which it intends to facilitate refund anticipation loans, it shall notify the Commissioner of the opening of the new office at least 30 days before it begins business as a facilitator in the new office.  The notification shall comply with Paragraph (a) of this Rule and shall be accompanied by a fee made payable to the Commissioner in the amount set forth in G.S. 53‑248(a) for each new office in this State at which the registrant facilitates refund anticipation loans.

 

History Note:        Authority G.S. 53-253; 150B-21.2;

Eff. September 1, 1993.

 

04 NCAC 03J .0306          CESSATION OF OPERATIONS

(a)  A registrant shall notify the Commissioner in writing of its decision to cease operations as a facilitator in this State.

(b)  A registrant shall surrender its Certificate of Registration to the Commissioner no later than 30 days after it has ceased operations in this State.

 

History Note:        Authority G.S. 53-253; 150B-21.2;

Eff. September 1, 1993.

 

SECTION .0400 - ENFORCEMENT

 

04 NCAC 03J .0401          HEARINGS

Any hearing conducted pursuant to G.S. 53-251 shall proceed in accordance with 4 NCAC 3B .0200, et seq., and G.S. 150B.

 

History Note:        Authority G.S. 53-251; 53-253; 150B-21.2;

Eff. September 1, 1993.

 

04 NCAC 03J .0402          EXAMINATIONS, AUDITS

The Commissioner may conduct or cause to be conducted an examination or audit of the books and records of any registrant at any time when considered proper.

 

History Note:        Authority G.S. 53-253; 150B-21.2;

Eff. September 1, 1993.

 

 

 

SUBCHAPTER 03K - REVERSE MORTGAGES

 

SECTION .0100 - ADMINISTRATIVE

 

04 NCAC 03K .0101         DEFINITIONS; FILINGS

(a)  As used in this Subchapter, unless the context clearly requires otherwise:

(1)           Terms defined in G.S. 53-257 shall have the same meaning as set forth therein;

(2)           "Accounting period" shall mean either a period of 12 months (or less in the first year of operation) ending December 31 or a fiscal year of not more than 12 months (or less in the first year of operation) ending on the last day of any month except December;

(3)           "Application fee" shall mean any fee accepted by an authorized lender or lenders in connection with an application for a reverse mortgage loan including any charge for soliciting, processing, placing or negotiating a reverse mortgage loan.  The term does not include a third-party fee as such term is defined in Subparagraph (a)(8) of this Rule;

(4)           "Certified Financial Statements" shall mean the Statement of Financial Position, Income Statement, Statement of Cash Flows, and Statement of Retained Earnings which have been attested by a certified public accountant;

(5)           "Person" shall mean an individual, corporation, partnership, trust, association, or other entity;

(6)           "Regulation Z" shall mean Regulation Z as promulgated by the Board of Governors of the Federal Reserve System and codified at 12 CFR Part 226, et seq.;

(7)           "RESPA" shall mean the Real Estate Settlement Procedures Act, codified at 12 USC 2601, et seq.;

(8)           "Third-Party fee" shall mean the fees or charges paid by the borrower for a mortgage loan to the lender for transmittal to third persons who provide services in connection with the mortgage loan, including, but not limited to, recording taxes and fees, reconveyance or releasing fees, appraisal fees, credit report fees, attorney's fees, fees for title reports and title searches, title insurance premiums, surveys and similar charges;

(9)           "Truth In Lending Act" shall mean Title I of the Consumer Credit Protection Act, as amended, and codified at 15 USC 1601, et seq..

(b)  Any application for authorization to make reverse mortgage loans, or any report, annual statement, amendment to application, notice or other document which is required by law or rule shall be filed with the Commissioner of Banks located at 316 West Edenton Street, Raleigh, North Carolina  27603.  The mailing address is 4309 Mail Service Center, Raleigh, North Carolina  27699-4309.

 

History Note:        Authority G.S. 53-257; 53-259; 53-271(a);

Eff. January 1, 1995;

Amended Eff. September 1, 2006.

SECTION .0200 - AUTHORIZATION OF REVERSE MORTGAGE LENDERS

 

04 NCAC 03K .0201         APPLICATION FOR AUTHORIZATION AS A REVERSE MORTGAGE LENDER

(a)  No person shall make reverse mortgage loans pursuant to the Reverse Mortgage Act without first obtaining authorization from the Commissioner.  An application for authorization to make reverse mortgage loans shall be obtained from the Commissioner and shall be filed pursuant to Rule .0101(b) of this Subchapter.

(b)  The following fees shall be submitted with the application for authorization to make reverse mortgage loans:

(1)           A non-refundable application fee made payable to the Commissioner in the amount set forth in G.S. 53-258(b);

(2)           An annual fee made payable to the Commissioner as set forth in G.S. 53-258(d).

(c)  The application shall be in writing and verified by the oath of the applicant.

(d)  The application shall include:

(1)           The applicant's Articles of Incorporation, or General or Limited Partnership Agreement;

(2)           A Certificate of Existence or Certificate of Good Standing, not more than 90 days old, from the applicant's state of incorporation;

(3)           A Certificate of Authority to do business in this State;

(4)           A copy of the applicant's Certificate of Assumed Name;

(5)           Disclosure of any criminal proceedings pending against or criminal convictions entered against the applicant, its partners, directors, principal officers or controlling persons;

(6)           Disclosure of any civil proceedings pending against or civil judgments entered against the applicant, its partners, directors, principal officers or controlling persons which involve fraud or dishonesty;

(7)           Disclosure of any civil judgments entered against the applicant, its partners, directors, principal officers or controlling persons during the past 10 years which have remained partially or wholly unpaid;

(8)           Disclosure of the following proceedings involving the applicant: bankruptcy, assignment for the benefit of creditors, receivership, conservatorship or similar proceeding;

(9)           Disclosure of enforcement proceedings by the Federal Housing Administration, Veterans Administration, Federal National Mortgage Association, or any other federal or state agency against the applicant, its partners, directors, principal officers or controlling persons which involve licensure or business activities as a mortgage broker or mortgage banker;

(10)         A description of the applicant's business operations and organizational structure;

(11)         The addresses at which the applicant intends to engage in business as a reverse mortgage lender, including branch offices and the name of the branch manager at each branch office;

(12)         A description of the business experience, current business activities and education of the applicant, its partners, directors, principal officers and controlling persons;

(13)         Three business references, including one bank reference.

(e)  In addition to the documents and information described in Paragraph (d) of this Rule, the Commissioner may require additional information as necessary to make the findings required by G.S. 53-258 and G.S. 53-271.

(f)  In the event of denial of an application, the Commissioner shall refund in full any annual fee paid pursuant to G.S. 53-258(d).

(g)  Incomplete application files may be closed and deemed denied without prejudice when the applicant has not submitted information requested by the Commissioner within 30 days of the request.

 

History Note:        Authority G.S. 53-258(a),(b),(d); 53-259; 53‑271(a);

Eff. January 1, 1995.

 

04 NCAC 03K .0202         NOTIFICATION OF INTENT TO ENGAGE IN REVERSE MORTGAGE LENDING

Any person not required to obtain authorization as a reverse mortgage lender pursuant to G.S. 53-258(a) shall notify the Commissioner of its intent to engage in reverse mortgage lending.  Notification shall be made on a form obtained from the Commissioner and shall be filed pursuant to Rule .0101 of this Subchapter.

 

History Note:        Authority G.S. 53-258(a)(c); 53-259; 53-271(a);

Eff. January 1, 1995.

 

04 NCAC 03K .0203         CURRENT AUTHORIZED LENDER INFORMATION

(a)  An authorized lender shall notify the Commissioner within 30 days of the effective date of any material changes to the information on file with the Commissioner.

(b)  Notification to the Commissioner of all material changes shall be made on the authorized lender's letterhead and filed pursuant to Rule .0101(b) of this Subchapter.

(c)  For the purposes of this Rule, the term "material" shall mean any information which would be likely to influence the granting of authorization to engage in reverse mortgage lending.  The term "material" shall also include but not be limited to information concerning changes in the address of the authorized lenders, directors, corporate officers, partners, or the business structure.  It shall also include changes in the address of the authorized lender's main or branch offices and any names under which the applicant operates.

 

History Note:        Authority G.S. 53‑258(b),(d); 53-259; 53-271;

Eff. January 1, 1995.

 

04 NCAC 03K .0204         ANNUAL REGISTRATION FEE

(a)  On or before December 31 of each year, each authorized lender shall pay the annual fee set forth in G.S. 53-258(d).

(b)  Failure of an authorized lender to pay the annual fee as of the date specified in Paragraph (a) of this Rule shall be grounds for revocation of its authorization.

 

History Note:        Authority G.S. 53-258(d); 53-259; 53-271(a);

Eff. January 1, 1995.

 

04 NCAC 03K .0205         CERTIFICATE OF AUTHORIZATION

(a)  Upon receipt of a completed application and compliance with Sections .0200 and .0300 of this Subchapter, and payment of the fees, the Commissioner shall investigate the applicant pursuant to G.S. 53-258.  If the Commissioner finds the applicant has met the provisions of G.S. 53-258, the Commissioner shall authorize the applicant as a reverse mortgage lender.

(b)  An authorized lender shall post its Certificate of Authorization in plain view of its customers at its principal office, each of its branch offices in this State and any branch offices outside of this State at which reverse mortgage loans are to be originated or made on residential real property located in North Carolina.

(c)  An authorized lender shall notify the Commissioner of a change in the name under which it operates or the address of its principal office and any branch office as set forth in Paragraph (a) of this Rule.  Notification shall be made at least 30 days prior to the effective date of such change, and shall consist of:

(1)           the new name or address; and

(2)           a reissuance fee of twenty-five dollars ($25.00) per certificate issued payable to the Commissioner.

(d)  Upon receipt of a Certificate of Authorization which contains the new address, an authorized lender shall surrender its former Certificate of Authorization to the Commissioner.

(e)  Failure to surrender the former Certificate of Authorization may result in suspension of authorization as a reverse mortgage lender pursuant to Rule .0702 of this Subchapter.

 

History Note:        Authority G.S. 53-122(3); 53-258(b)(d); 53-259; 53-271(a);

Eff. January 1, 1995.

 

04 NCAC 03K .0206         NONTRANSFERABILITY OF CERTIFICATE OF AUTHORIZATION

(a)  A Certificate of Authorization shall be neither transferrable nor assignable.

(b)  The circumstances under which the Commissioner shall deem a change in the authorized lender's organizational structure to constitute a transfer or assignment of the Certificate of Authorization shall include, but not be limited to, the following:

(1)           If the authorized lender is a corporation:

(A)          A change in ownership of 50% or more of the authorized lender's stock;

(B)          The conversion of the corporation into a general or limited partnership or sole proprietorship.

(2)           If the authorized lender is a general or limited partnership:

(A)          A change in one of the authorized lender's general partners;

(B)          The conversion of the general partnership into a limited partnership, corporation or sole proprietorship;

(C)          The conversion of the limited partnership into a general partnership, corporation or sole proprietorship.

(3)           If the authorized lender is a sole proprietor:

(A)          The conversion of the sole proprietorship into a general or limited partnership or corporation;

(B)          The sale of all of the assets of the authorized lender's business to another person.

(c)  Upon a change in organization as set forth in Paragraph (b) of this Rule, the authorized lender's registration shall become void and the authorized lender shall surrender its Certificate of Authorization to the Commissioner within 30 days of such change.  If the entity which results from the change in the authorized lender's organizational structure would like to engage in business as a reverse mortgage lender in this State, it shall apply for authorization pursuant to Rule .0201 of this Section.

 

History Note:        Authority G.S. 53-258(d); 53-259; 53-271(a);

Eff. January 1, 1995.

 

SECTION .0300 - REQUIREMENTS FOR AUTHORIZATION

 

04 NCAC 03K .0301         MINIMUM NET WORTH REQUIREMENT FOR AUTHORIZED LENDER OR LENDERS

(a)  All authorized lenders shall have, at all times, a net worth of at least five hundred thousand dollars ($500,000).

(b)  For any year in which a lender seeks to rely on the capital of its parent to satisfy the requirements of Paragraph (a) of this Rule, it shall provide to the Commissioner:

(1)           Certified financial statements of the parent showing a net worth of at least one million dollars ($1,000,000) as of the close of its most recent fiscal year; and

(2)           A binding written commitment from the parent to the lender to make a minimum of one million dollars ($1,000,000) available to the lender as a capital contribution in connection with its reverse mortgage lending program.

 

History Note:        Authority G.S. 53-258(b); 53-259; 53-271(a);

Eff. January 1, 1995.

 

04 NCAC 03K .0302         SURETY BONDS

(a)  All authorized lenders shall post a surety bond in the amount of one hundred thousand dollars ($100,000) with the Commissioner which shall run to the benefit of the Commissioner.  The bond shall be executed by an insurance company authorized to do business in North Carolina and not affiliated with the lender.  The bond shall be conditioned upon the authorized lender's compliance with the provisions of Article 21 of Chapter 53 of the General Statutes and all rules adopted thereunder.

(b)  All authorized lenders which are approved by the Commissioner on or after the effective date of this rule shall meet the requirements of this Rule upon approval.  Authorized lenders which were approved by the Commissioner before the effective date of this Rule shall have until March 31, 1995 to comply with this Rule.

 

History Note:        Authority G.S. 53-258(b); 53-259; 53-271(a);

Eff. January 1, 1995.

 

SECTION .0400 - OPERATIONS, NOTIFICATIONS, AND REPORTING

 

04 NCAC 03K .0401         CERTIFIED FINANCIAL STATEMENTS

(a)  No later than 90 days after the end of the authorized lender's accounting period, certified financial statements shall be filed with the Commissioner, and shall be filed pursuant to Rule .0101 of this Subchapter.

(b)  Failure of an authorized lender to submit certified financial statements in the manner required by this Rule shall be grounds for revocation of its authorization.

 

History Note:        Authority G.S. 53-259; 53-271(a);

Eff. January 1, 1995.

 

04 NCAC 03K .0402         RECORD AND BOOKKEEPING REQUIREMENTS

(a)  All lenders shall maintain their books and records relating to the making of reverse mortgage loans for a period of three years after payment of the debt in a manner permitting inspection by the Commissioner.

(b)  All financial records required by Paragraph (a) of this Rule shall be prepared in accordance with generally accepted accounting principles.

(c)  An authorized lender shall notify the Commissioner of any change in the location of its books and records.

(d)  In the case of an out-of-state lender, the lender shall designate the Commissioner as agent for service of process in connection with any reverse mortgage loan transaction.

 

History Note:        Authority G.S. 53-259; 53-270; 53-271(a);

Eff. January 1, 1995.

 

04 NCAC 03K .0403         EXAMINATIONS

The Commissioner may make such examination of the books, records and affairs of authorized lenders under Article 21 of Chapter 53 of the General Statutes at such times as he may deem necessary or desirable.

 

History Note:        Authority G.S. 53-259; 53-270; 53-271(a);

Eff. January 1, 1995.

 

04 NCAC 03K .0404         WITHDRAWAL/TERMINATION OF AUTHORIZATION AS REVERSE MTG. LENDER

(a)  An authorized lender shall notify the Commissioner in writing of its decision to cease operations as a reverse mortgage lender in this State within 30 days of such decision.

(b)  An authorized lender shall surrender its Certificate of Authorization to the Commissioner no later than 30 days after it has ceased operations in this State or upon revocation, temporarily or permanently, of the reverse mortgage lender's authorization.

(c)  Failure to comply may result in a fine to the principal officers, partners, directors, controlling persons, pursuant to G.S. 53-271.

 

History Note:        Authority G.S. 53-259; 53-271;

Eff. January 1, 1995.

 

04 NCAC 03K .0405         IMPAIRMENT OF MINIMUM NET WORTH, AND SURETY BOND

(a)  An applicant shall notify the Commissioner in writing if, at any time, it fails to meet the minimum net worth requirements of Rule .0301 of this Subchapter.

(b)  An applicant shall immediately notify the Commissioner in writing of any cancellation or suspension of the surety bond required by Rule .0302 of this Subchapter.

(c)  For the purposes of this Rule, immediately means within three business days of discovery of the failure to meet the minimum net worth, and bonding requirements of Section .0300 of this Subchapter.

(d)  If an applicant fails to meet the minimum net worth, and surety bond requirements, the Commissioner may revoke or suspend authorization of an authorized lender or lender to engage in reverse mortgages.

 

History Note:        Authority G.S. 53-258(b); 53-259; 53-271(a)(c);

Eff. January 1, 1995.

 

SECTION .0500 - DISCLOSURE REQUIREMENTS

 

04 NCAC 03K .0501         REVERSE MORTGAGE LENDER APPLICATION DISCLOSURE

(a)  Authorized lenders shall disclose to the borrower all terms and conditions of the reverse mortgage loan in accordance with the Truth In Lending Act, RESPA, and Regulation Z, and any other applicable federal or state laws and regulations.

(b)  The items required to be disclosed by Paragraph (a) of this Rule may be incorporated into one or more forms required by State or Federal law, rules or regulations, or such items may be contained on a separate form.

 

History Note:        Authority G.S. 53-259; 53-264; 53-265(a); 53-271(a);

Eff. January 1, 1995.

 

04 NCAC 03K .0502         PERMITTED FEES

Prior to the closing of a reverse mortgage loan, the only charge a lender may collect from a borrower is an application fee which must be designated as such and which may not be a percentage of the principal amount of the loan or amount financed.  The fee shall be reasonable and related to the services to be performed.

 

History Note:        Authority G.S. 53-259; 53-270; 53-271(a);

Eff. January 1, 1995.

 

SECTION - .0600 COUNSELING

 

04 NCAC 03K .0601         COUNSELING

The counselor shall provide the authorized lender or lender and borrower with a certificate stating that the borrower has received counseling.

 

History Note:        Authority G.S. 53-259; 53-260; 53-264; 53-271(a);

Eff. January 1, 1995.

 

SECTION .0700 - PROHIBITED ACTS AND PRACTICES; ENFORCEMENT ACTIONS

 

04 NCAC 03K .0701         PROHIBITED ACTS

(a)  For the purposes of G.S. 53-270, the term "material facts" shall mean any term, fact, factor or condition which is likely to influence, persuade or induce a borrower for a reverse mortgage loan to take a particular action.

(b)  All lenders shall be prohibited from using or attaching any property or asset of the borrower, except the real property securing the reverse mortgage loan, in satisfaction of the reverse mortgage obligation.

 

History Note:        Authority G.S. 53-259; 53-270; 53-271(a);

Eff. January 1, 1995.

 

04 NCAC 03K .0702         ENFORCEMENT ACTIONS

The grounds upon which the Commissioner may either revoke or suspend authorization of a lender to engage in reverse mortgage loans shall include, but not be limited to the following:

(1)           The making of any false statement in an application for authorization, if the false statement would have been grounds for denial of the application; or

(2)           The making of any false statement on any form or document requested by the Commissioner; or

(3)           One or more violations of the Reverse Mortgage Act or provisions of this Subchapter; or

(4)           The conviction of any crime which would have a bearing upon the fitness or ability of the authorized lender to conduct its business; or

(5)           The commission of any action which involves dishonesty, fraud, or misrepresentation.  This Subparagraph shall not be construed to apply to bona fide errors.

(6)           The failure to pay the annual fee pursuant to Rule .0204 of this Subchapter.

 

History Note:        Authority G.S. 53-259; 53-270; 53-271(a)(c);

Eff. January 1, 1995.

 

04 NCAC 03K .0703         HEARINGS

All hearings conducted pursuant to this Subchapter or the Reverse Mortgage Act shall proceed in accordance with G.S. 150B and 4 NCAC 3B .0200.  The Commissioner may subpoena witnesses at all such hearings.

 

History Note:        Authority G.S. 53-259; 53-270; 53-271; 53-272;

Eff. January 1, 1995.

 

 

 

SUBCHAPTER 03L - CHECK-CASHING BUSINESSES

 

SECTION .0100 – ADMINISTRATIVE

 

04 NCAC 03L .0101          DEFINITIONS

(a)  As used in this Subchapter unless the context or the language of G.S. 53, Article 22 indicates a contrary intention, the following definitions shall apply:

(1)           "Any one maker" shall mean any single signatory on a personal checking account.

(2)           "Branch location" shall mean any location, including a mobile unit, but not the principal place of business, where the licensee holds itself out to the public as engaging in a check-cashing business.

(3)           "Business day" shall mean a calendar day, other than Saturday, Sunday or holiday.

(4)           "Check" shall mean a draft (other than a draft payable upon presentation of documentation such as securities) payable on demand and drawn on a bank.  The term "check" may also include any cashier's check or teller's check or other check, draft, or money order, but shall not include travelers checks or foreign denomination payment instruments.

(5)           "Conspicuously posted" shall mean placed in plain public view in such a location and in such a way and of such form and size and typeface that any person seeking the services of a licensee could easily see and read the contents of the posted notice.

(6)           "Controlling person" shall mean any person who owns or holds with the power to vote 10% or more of the equity securities of an applicant or licensee, or who has the power to direct the management and policy of the licensee.

(7)           "Draft" shall mean a written order to pay money signed by one person, the drawer who signs the document, to another person, the drawee.

(8)           "Liquid assets" shall mean cash, bank deposit accounts, and money market accounts or similar property owned by the applicant or licensee, plus undeposited checks cashed by a licensee, less any returned checks doubtful of collection and cash remittances due others.

(9)           "Location" shall mean any place of business where check-cashing activity is conducted.

(10)         "Mobile unit" shall mean a vehicle or other movable means from which the business of check cashing is conducted.

(11)         "Principal" shall mean any person who controls directly, or indirectly through one or more intermediaries, alone or in concert with others, a 10% or greater interest in a partnership, company, association or corporation; the owner of a sole proprietorship; any natural person acting with apparent authority for or on behalf of an owner, officer, member, or director of a licensee; or any natural person who directs the performance of other employees as manager of a branch of any licensee.

(12)         "Principal place of business" shall mean the location where the licensee holds itself out to the public as engaging in a check cashing business and which the licensee has declared to the Commissioner to be its main site of business operations.

(13)         "Receipt" shall mean a written record of the check-cashing transaction.

(b)  Unless a term is defined herein or in G.S. 53, Article 22, that term shall have the meaning given it, if any, by Article 3 "Negotiable Instruments" of Chapter 25, North Carolina Uniform Commercial Code.

 

History Note:        Authority G.S. 53C-2-1; 53C-2-2; 53-288;

Eff. July 1, 2000;

Amended Eff. November 1, 2013.

04 NCAC 03L .0102          FILINGS

Any application for a license, or any report, application for annual renewal, amendment to application, renewal notice or other document which is required by law or rule to be filed with the Commissioner shall be addressed as follows:

Office of the Commissioner of Banks

4309 Mail Service Center

Raleigh, North Carolina 27699-4309

or, if not mailed, then delivered to:

Office of the Commissioner of Banks

316 West Edenton Street

Raleigh, North Carolina  27603.

 

History Note:        Authority G.S. 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000;

Amended Eff. September 1, 2006.

 

SECTION .0200 - APPLICATION

 

04 NCAC 03L .0201          APPLICATION FOR LICENSE

(a)  Any person intending to engage in a check-cashing business pursuant to G.S. 53, Article 22 shall first be licensed by the Commissioner. An application shall be made on a form obtained from the Commissioner, and the completed application shall be filed pursuant to Rule .0102 of this Subchapter.

(b)  The application for license as a check-cashing business shall include a financial statement that is sufficient to show liquid assets of fifty thousand dollars ($50,000) as required by G.S. 53-279(a). 

(c)  The application for license as a check-cashing business shall further include:

(1)           the business address in North Carolina, mailing address, business telephone number, facsimile number, and  name of the supervisor or manager for the principal place of business and for each branch location;

(2)           the address where books and records for the business will be kept;

(3)           name, title, and business telephone number and facsimile number for the application contact person;

(4)           the applicant's federal employer identification number;

(5)           a declaration as to whether the applicant's business will be conducted as a sole proprietorship, a partnership, a limited liability company, or a corporation.

(d)  Each applicant shall provide a signed statement authorizing the Commissioner to run a credit report on the applicant and on each owner, partner, director, principal, controlling person thereof.

(e)  Each applicant shall provide a signed statement making full disclosure to the Commissioner concerning the following:

(1)           Any criminal proceedings pending against or criminal convictions entered against the applicant, its partners, directors, principal officers or controlling persons;

(2)           Any civil proceedings pending against or civil judgments entered against the applicant, its partners, directors, principal officers or controlling persons which involve fraud or dishonesty;

(3)           Any civil judgments entered against the applicant, its partners, directors, principal officers or controlling persons during the past 10 years which have remained partially or wholly unpaid;

(4)           Any of the following proceedings involving the applicant, its partners, directors, principal officers or controlling persons: bankruptcy, assignment for the benefit of creditors, receivership, consevatorship or similar proceeding;

(5)           Any proceedings brought by a state or federal administrative agency against the applicant, its partners, directors, principal officers or controlling persons;

(6)           Any judgments entered by state or federal administrative agency against the applicant, its partners, directors, principal officers, or controlling persons which involve fraud, dishonesty, or that reflect on the applicants' character and fitness to command the confidence of the public;

(7)           A description of the business experience, current business activities and education of the applicant, its partners, directors, principal officers and controlling persons.

(f)  The application shall be in writing and shall be verified by the oath of the applicant.

(g)  In addition to the documents and information described in this Rule, the Commissioner may require such additional information as he may deem necessary or helpful in order to perform the investigation required by required by G.S. 53-278 and to make the findings required by G.S. 53-279.

(h)  Incomplete application files may be closed and may be deemed denied without prejudice when the applicant has not submitted information requested by the Commissioner within 30 days of request.

 

History Note:        Authority G.S. 53-276; 53-278; 53-279; 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000.

 

04 NCAC 03L .0202          FEES

(a)  The initial fees required by G.S. 53-278(c) shall be submitted with the application for license and shall be made payable to the Commissioner.

(b)  The annual renewal fees required by G.S. 53-278(d) shall be submitted with the request for renewal of the license and shall be made payable to the Commissioner.

 

History Note:        Authority G.S. 53-278; 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000.

 

SECTION .0300 - LICENSING

 

04 NCAC 03L .0301          ISSUANCE

Upon receipt of a completed application and payment of the investigation fee required by G.S. 53-278 the Commissioner shall investigate the applicant pursuant to G.S. 53-278 and G.S. 53-279. If the Commissioner finds that the applicant has met the provisions of G.S. 53-279, the Commissioner shall issue the applicant a license for use at the declared location.

 

History Note:        Authority G.S. 53-278; 53-279; 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000.

 

04 NCAC 03L .0302          NONTRANSFERABILITY OF LICENSE

(a)  A license granted hereunder shall be neither transferable nor assignable.

(b)  The circumstances under which the Commissioner shall deem a change in the licensee's organizational structure to constitute a transfer or assignment of the license shall include, but not be limited to, the following:

(1)           If the licensee is a corporation or limited liability company:

(A)          A change in ownership of 50% or more of the licensee's stock;

(B)          The conversion of the corporation or company into a general or limited partnership or sole proprietorship;

(2)           If the licensee is a general or limited partnership:

(A)          A change in one of the licensee's general partners;

(B)          The conversion of the general partnership into a limited partnership, corporation or sole proprietorship;

C)            The conversion of the limited partnership into a general partnership, corporation or sole proprietorship;

(3)           If the licensee is a sole proprietor:

(A)          The conversion of the sole proprietorship into a general or limited partnership or corporation;

(B)          The sale or assignment of all of the assets of the licensee's business to another person.

(c)  Upon a change in organization as set forth in Paragraph (b) of this Rule, the licensee's license shall become void and the licensee shall surrender its licensee to the Commissioner within 10 days of such change.  If the entity which results from the change in the licensee's organizational structure desires and intends to engage in a check-cashing business in this State, it shall apply for a license pursuant to Section .0200 of this Subchapter, and this application may be made prior to the effective date of said change.

 

History Note:        Authority G.S. 53-276; 53-278; 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000.

 

04 NCAC 03L .0303          ANNUAL RENEWAL OF LICENSE

On or before September 1 of each year, a licensee may renew its license by filing with the Commissioner an application for license renewal on a form available from the Commissioner, along with payment of renewal fees required under G.S. 53-278(d).  Absent such renewal each year, the license shall expire and become void on September 30 without further action by the Commissioner.

 

History Note:        Authority G.S. 53-276; 53-278; 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000.

 

SECTION .0400 - OPERATIONS

 

04 NCAC 03L .0401          POSTING OF LICENSE OR BRANCH CERTIFICATE

A licensee shall obtain a branch location certificate for each location other than its principal place of business at which its business of cashing checks is conducted. The license or certificate must be conspicuously posted.

 

History Note:        Authority G.S. 53-276; 53-278; 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000.

 

04 NCAC 03L .0402          SURRENDER OF LICENSE

A licensee shall notify the Commissioner in writing of its decision to cease operations as a check-cashing business in this State within seven days of such decision.  A licensee shall surrender its license and branch certificates, if any, to the Commissioner no later than 30 days after it has voluntarily ceased operations in this State and within such shorter time as the Commissioner may order if operations end involuntarily.

 

History Note:        Authority G.S. 53-276; 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000.

 

04 NCAC 03L .0403          POSTING OF FEES

(a)  The notice of fees required by G.S. 53-280(c) shall be clear, legible, and in bold and blocked letters and numbers not less than one inch in height.  The information shall be posted in a conspicuous location in the unobstructed view of the public within the check casher's premises. 

(b)  A licensee shall file with the Commissioner on paper 8 1/2 x 11 inches a scaled duplicate of the notice required by G.S. 53-280(c) and Paragraph (a) of this Rule.

 

History Note:        Authority G.S. 53C-2-1; 53C-2-2; 53-280; 53-288;

Eff. July 1, 2000;

Amended Eff. November 1, 2013.

 

04 NCAC 03L .0404          CASH-OUT TRANSACTIONS

04 NCAC 03L .0405          LIMITATION ON DELAYED DEPOSIT CHECK CASHING

 

History Note:        Authority G.S. 53-92; 53-93; 53-281; 53-282; 53-288;

Eff. July 1, 2000;

Repealed Eff. January 1, 2013.

 

SECTION .0500 - BOOKS AND RECORDS: EXAMINATIONS

 

04 NCAC 03L .0501          BOOKS AND RECORDS

(a)  Each check-cashing business licensed by the Commissioner of Banks shall record all transactions of receipts and disbursements pertaining to checks cashed.  All entries shall be made as of the exact date the transactions occur.  A licensee shall maintain books and accounting records which shall include, at a minimum:

(1)           a daily transaction journal, or equivalent record, which shall show the customer's name for each transaction;

(2)           the written receipt required by G.S. 53-282(b); and

(3)           the bank statements of the licensee. If the statements are not maintained on the premises of the licensee, they must be made available upon request by the Office of the Commissioner of Banks.

(b)  These records shall be maintained at each business location and shall be made available by the close of business on the next business day upon request to the Commissioner of Banks or his designee for inspection or examination for a period of not less than three years from the date of final entry.

(c)  No books or records of the licensee required hereunder shall show any account or reflect any transaction other than those related to the check-cashing business within the provisions of the Check-Cashing Businesses Act.

(d)  Books and records retained by a licensee which arise from or relate to a prior accounting period may be maintained in the form of magnetic tape, magnetic disk, or other form of computer, electronic or microfilm media available for examination on the basis of computer printed reproduction, video display, or other medium so long as any books and records kept in such manner are convertible into legible, tangible documents within 72 hours of request of the Commissioner.  The time for such conversion may be extended if the Commissioner determines that the burden to the licensee of such conversion exceeds the benefit to the Commissioner and the public. 

 

History Note:        Authority G.S. 53C-2-1; 53C-2-2; 53-282; 53-288;

Eff. July 1, 2000;

Amended Eff. November 1, 2013.

 

04 NCAC 03L .0502          EXAMINATIONS; INVESTIGATIONS

(a)  The Commissioner of Banks may make such examination of the books, records, business locations, and operations of any licensee and at such times as may seem necessary or desirable to the Commissioner or his designee. Such examinations may be with or without advance notice to the licensee.

(b)  In addition to examinations authorized by G.S. 53-278(b) or G.S. 53-282(c), the Commissioner may request from licensees hereunder such reports and at such times as to him shall be necessary or advisable for the purpose of determining the general results of operations under G.S. 53, Article 22.  The Commissioner or his designee may also examine or investigate a licensee when the Commissioner has reasonable grounds to believe that a registrant has violated any law or regulation of this State, the Federal government or any agency thereof.

(c)  If a licensee fails to pay the costs of examination or investigation to the Commissioner within a reasonable time as required by G.S. 53-282(c), then the Commissioner may proceed to remedies contemplated by G.S. 53-284 et seq.

 

History Note:        Authority G.S. 53-278; 53-282; 53-284; 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000.

 

SECTION .0600 - REPORTING AND NOTIFICATION REQUIREMENTS

 

04 NCAC 03L .0601          AMENDMENTS TO INFORMATION ON FILE WITH THE COMMISSIONER

(a)  A licensee shall notify the Commissioner within 30 days of any material change to information which it submitted to the Commissioner, whether provided in its initial application, in its request for annual renewal, or in any other report or information otherwise provided to the Commissioner.

(b)  Notification shall be accomplished by letter or by revision or modification of the appropriate portions of the application (whether initial or renewal).  If the licensee elects to revise or modify its initial application or annual renewal statement, it shall do so on pages obtained from the Commissioner.

(c)  For the purposes of this Rule, the term "material" shall mean any information which would be likely to influence the granting, revocation, or expiration of a license hereunder.  The term "material" shall include, but not be limited to:

(1)           changes in the licensee's corporate officers, partners, or business structure;

(2)           changes in the address of the licensee's main or branch offices and any names under which the licensee operates; or

(3)           changes which would render untrue, inaccurate, or misleading any of the disclosures made by the licensee in its application pursuant to Rule .0201 of this Subchapter.

 

History Note:        Authority G.S. 53-278; 53-283; 53-284; 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000.

 

04 NCAC 03L .0602          EXPANSION OR RELOCATION

A licensee shall notify the Commissioner of the opening of any new branch office or the relocation of its principal place of business or of any branch office at least 20 days prior to the effective date of such change.  The notification shall be on a form obtained from the Commissioner.  The notification shall provide an explanation of the reasons for such change and shall be accompanied by a certificate fee for the new branch certificate in the amount of fifty dollars ($50.00).  The Commissioner shall issue a revised branch certificate upon his receipt of the required notification, the satisfactory explanation, and the filing fee, and upon surrender of the licensee's inaccurate certificate.

 

History Note:        Authority G.S. 53-276; 53-278; 53-279; 53-283; 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000.

 

04 NCAC 03L .0603          IMPAIRMENT OF FINANCIAL REQUIREMENTS

A licensee shall immediately notify the Commissioner in writing if, at any time, it fails to meet the minimum liquid asset requirement of G.S. 53-279(a).

 

History Note:        Authority G.S. 53-279; 53-288; 53C-2-1; 53C-2-2;

Eff. July 1, 2000.

 

04 NCAC 03L .0604          REPORT OF INFORMATION TO COMMISSIONER FOR THE GENERAL ASSEMBLY

 

History Note:        Authority G.S. 53-92; 53-93;

Eff. July 1, 2000;

Repealed Eff. November 1, 2013.

 

 

 

Subchapter 03M – Mortgage lending

 

SECTION .0100 – GENERAL

 

04 NCAC 03M .0101        DEFINITIONS

As used in this Subchapter, unless a contrary definition is provided or required by the context:

(1)           Terms used in this Subchapter which are defined in the Act have the same meaning as set forth in the Act.

(2)           When any term in this Subchapter is defined by reference to or incorporation of a regulation or rule of a federal or state agency, board, commission or other regulatory body other than the Commissioner, the reference shall be deemed to be to the regulation or rule as it is in effect and interpreted in its most current version.

(3)           "Act" means Article 19B of Chapter 53 of the North Carolina General Statutes, commonly known as the "North Carolina Secure and Fair Enforcement (S.A.F.E.) Mortgage Licensing Act," or "NC SAFE Act."

(4)           "Advertisement" means material used or intended to be used to induce the public to apply for a mortgage loan.  The term includes any printed or published material, or descriptive literature concerning a mortgage loan to be solicited, processed, negotiated or funded by a licensee or exempt entity whether disseminated by direct mail, newspaper, magazine, radio or television broadcast, electronic mail or other electronic means, billboard or similar display.  The term does not include any disclosures, program descriptions, or other materials prepared or authorized by any state or federal government agency, nor does the term include any material or communication which has been excluded for purposes of any regulation of the Board of Governors of the Federal Reserve System regulating consumer credit disclosures.

(5)           "Call Report" means a report of condition on a company and its operations which includes financial and loan activity information.

(6)           "Commission" means the North Carolina Banking Commission.  For purposes of complying with these Rules by credit unions, Banking Commission means the North Carolina Credit Union Commission.

(7)           "Controlling person" means a person who, with regard to a licensee:

(a)           has the ability to exercise "control", as the term is defined in G.S. 53-244.030(7), or

(b)           otherwise has the power to direct the management and policy of the licensee.

(8)           "Instructor" means an individual who is employed by a provider and who is responsible for teaching a program.

(9)           "License" means a mortgage lender, mortgage servicer, mortgage broker, exclusive mortgage broker, or mortgage loan originator license issued pursuant to the Act and this Subchapter. 

(10)         "Material" when used in connection with facts or information provided to the Commissioner by a licensee or applicant, means facts or information that a reasonable person knows, or should know, would be likely to influence a decision to grant, suspend, condition, limit, renew, or revoke a license or to take other disciplinary action against a licensee or exempt person, including:

(a)           notice of a pending administrative action involving the licensee or applicant for licensure by any state or federal authority to which the licensee is subject;

(b)           the issuance of an administrative order against the licensee or applicant for licensure by any state or federal authority to which the licensee is subject;

(c)           notice of a pending criminal charge against the licensee or applicant for actions related to financial services or moral turpitude;

(d)           the entry of a conviction or one of the following on a criminal charge against the licensee or applicant for licensure for a felony or other criminal charge for actions related to financial services or moral turpitude:

(i)            plea of guilty;

(ii)           plea of no contest or nolo contendere;

(iii)          prayer for judgment continued;

(iv)          deferred prosecution agreement;

(v)           an adjudication or verdict of guilty by a domestic, foreign, military, or other court of competent jurisdiction;

(vi)          the equivalent of any of the foregoing in a domestic, foreign, military, or other court of competent jurisdiction; or

(vii)         any other classification that is deemed a conviction pursuant to the  applicable law  in the jurisdiction where the criminal charge was brought.

(e)           a change in status to the licensee's bond, including the reduction or cancellation of such bond; and

(11)         "Material" when used in connection with facts or information provided to the Commissioner, by a licensee or applicant for licensure, also means facts and information  regarding the licensee's identity and contact information, including:

(a)           the licensee's primary phone number, mailing address, and principal office address;

(b)           any assumed name, trade name, or d/b/a (doing business as) under which the licensee may be operating;

(c)           the address at which files or documents retained pursuant to the Act or the rules in this Subchapter are stored;

(d)           the identity of the licensee's bonding company or carrier, and bond number;

(e)           for corporate licensees, the identity of any affiliated mortgage lender, mortgage broker, mortgage servicer, or provider of settlement services; and

(f)            for corporate licensees, the identity of the licensee's owners, officers, directors, qualifying individual, branch manager(s), or control persons.

(12)         "Material" when used in connection with facts or information provided to a borrower, means facts or information that a reasonable person knows, or should know, would reasonably be expected to influence a borrower's decision with regard to one or more loans, including:

(a)           the total compensation the mortgage broker expects to receive from all sources in connection with each loan option presented to the borrower;

(b)           the terms of each loan option presented to the borrower;

(c)           the anticipated monthly payment (including property tax and insurance payments) for each loan option presented to the borrower;

(d)           if the loan contains a variable rate feature or other terms which may result in a change to the borrower's monthly payments over the life of the loan, the circumstances upon which the terms or payments will change and the impact of the changes upon the borrower's required monthly payments; and

(e)           any affiliate relationships that may exist between the licensee and any party or parties to the sale or financing of the subject property, or any provider of settlement services.

(13)         "Material" when used in connection with the word "change" or "changes," means a change to any material facts or information.

(14)         "Nationwide Mortgage Licensing System and Registry" or "NMLS&R" has the same meaning as in the NC SAFE Act.

(15)         "Prelicensing Education" means a classroom or classroom equivalent education program required by G.S. 53-244.070.

(16)         "Program" means a prelicensing program.

(17)         "Provider" means any person who provides a program.

(18)         "Qualified Written Test" means the mortgage prelicensing qualified written test required by G.S. 53-244.080.

(19)         "Settlement Services" has the same meaning as defined in federal Real Estate Procedures Act (RESPA) 12 U.S.C. Sec. 2601 et. seq. Regulation X, 24 C.F.R. Part 3500 et. seq.

(20)         "Testing Provider" means an organization approved by the NMLS&R to administer the qualified written test.

 

History Note:        Authority G.S. 53-244.118;

Temporary Adoption Eff. July 1, 2002;

Eff. April 1, 2003;

Amended Eff. July 1, 2010; July 18, 2008.

 

04 NCAC 03M .0102        NOTICES

(a)  Except as otherwise required by G.S. 53-244.113(b), Article 3A, Chapter 150B of the General Statutes, or by the rules of the North Carolina Office of Administrative Hearings, any document, decision or other communication required or permitted to be given by the Commissioner to a licensee, an applicant for a license or an exempt person is considered given when either:

(1)           deposited in the United States mail with sufficient first class postage affixed, addressed to the most recent principal office address provided by the addressee to the Office of the Commissioner of Banks; or

(2)           transmitted through electronic mail to the address provided by the addressee to the Office of the Commissioner of Banks.

(b)  Any application for licensure, report, annual statement, amendment to application, notice or other document which is required or permitted by law or rule to be filed with the Commissioner shall be in writing, and submitted in an electronic format through the NMLS&R.

(c)  Where the NMLS&R does not make available submission of any document required or permitted by law to be filed with the Commissioner, such a document may be filed by electronic submission through the Office of the Commissioner of Bank's website (www.nccob.gov), if the Commissioner makes such electronic submission available.

 

History Note:        Authority G.S. 53-244.118;

Temporary Adoption Eff. July 1, 2002;

Eff. April 1, 2003;

Amended Eff. May 1, 2010.

 

SECTION .0200 - LICENSING

 

04 NCAC 03M .0201        APPLICATION

(a)  All fees required by G.S. 53-244.090 or 53-244.101 shall be submitted with an application for licensure or renewal of license as a mortgage lender, mortgage broker, mortgage servicer, exclusive mortgage broker or mortgage loan originator.  The fees are nonrefundable.

(b)  Each type of application required by the rules in this Subchapter or the Act shall be filed through the NMLS&R and shall be verified by the oath or affirmation of the applicant or a principal officer thereof.

(c)  In addition to the documents and information required by the rules in this Subchapter, the Commissioner or his or her staff may require additional information according to the Rules in order to enable the Commissioner to determine that the applicant meets or the licensee continues to meet the requirements of G.S. 53-244.040, 53-244.050, 53-244.060, 53-244.070, 53-244.080, 53-244.100, 53-244.101, 53-244.102, 53-244.103, 53-244.104, and 53-244.105.

(d)  Applications submitted without the required fees or which are missing material information shall be held in pending status for a period of 30 calendar days after written notice to the applicant specifying the nature of the deficiency.  If any such deficiency remains outstanding for more than 30 days, the application shall automatically be considered withdrawn without further action by the Commissioner, and the applicant shall submit a new application and pay all fees associated therewith.

 

History Note:        Authority G.S. 53-244.040, 53-244.050; 53-244.060; 53-244.070, 53-244.080, 53-244.100; 53-244.101; 53-244.102; 53-244.103; 53-244.104; 53-244.118;

Temporary Adoption Eff. July 1, 2002;

Eff. April 1, 2003;

Amended Eff. May 1, 2010.

 

04 NCAC 03M .0202        NONTRANSFERABILITY

(a)  Any attempt to transfer or assign a license through a change of control without the prior consent of the Commissioner shall:

(1)           be ineffective;

(2)           be grounds for summary suspension, or revocation of the license or other remedies available to the Commissioner; and

(3)           render the licensee jointly and severally liable with the assignee for any actions or omissions of its assignee which occur while acting under the apparent authority of the license.

(b)  A change in the identity of a licensee's controlling person or any material change in the licensee's organizational structure shall be considered a transfer or assignment of the license.  However, the Commissioner shall permit the change without requiring the licensee to apply for a new license, provided:

(1)           the licensee gives notice to the Commissioner at least 60 days in advance of the effective date of the proposed change; and

(2)           the Commissioner determines that permitting the licensee to continue to operate under its existing license would not be inconsistent with the purposes of the Act.

(c)  A notice pursuant to Subparagraph (b)(1) of this Rule shall include sufficient detail to enable the Commissioner to make the determination described in that Subparagraph (b)(2) of this Rule.

(d)  The Commissioner shall waive or reduce the advance notice requirement of Subparagraph (b)(1) of this Rule if the Commissioner determines that:

(1)           circumstances beyond the licensee's reasonable control would make compliance therewith unduly burdensome to the licensee;

(2)           consumers would not be harmed by such a waiver or reduction of the advance notice requirement;

(3)           the licensee has otherwise satisfied the requirements of this Rule; and

(4)           waiver of the requirement of Subparagraph (b)(1) is in the public interest.

 

History Note:        Authority G.S. 53-244.050; 53-244.060; 53-244.100; 53-244.118;

Temporary Adoption Eff. July 1, 2002;

Eff. April 1, 2003;

Amended Eff. May 1, 2010.

 

04 NCAC 03M .0203        NAME CHANGES

A licensee may, with the prior approval of the Commissioner, change its corporate name or the name under which it operates, provided:

(1)           the licensee and the proposed new name satisfies all applicable laws pertaining to corporate, fictitious and trade names (including, but not limited to, G.S. 53-127);

(2)           the licensee has given the Commissioner at least 30 days prior notice of the proposed new name; and

(3)           the Commissioner determines that the new name is not likely to result in confusion among the general banking public regarding the licensee's identity or powers.

 

History Note:        Authority G.S. 53-244.118;

Temporary Adoption Eff. July 1, 2002;

Eff. April 1, 2003.

 

04 NCAC 03M .0204        EXPERIENCE

As used in G.S. 53-244.050(b)(2), a person is considered to have acquired "experience in residential mortgage lending" during any documented period in which:

(1)           that person's employment income was principally derived from employment in the mortgage lending, mortgage servicing, or mortgage brokerage industry; and

(2)           that person had actual responsibility for job functions in each area of study included in a prelicensing education program.

 

History Note:        Authority G.S. 244-118;

Eff. April 1, 2003;

Amended Eff. May 1, 2010; April 1, 2008.

 

04 NCAC 03M .0205        financial responsibility

(a)  In order for applicants to be deemed to have the financial responsibility such as to command the confidence of the community and to warrant belief that the business will be operated honestly and fairly under G.S. 53-244.60(4), the applicant shall:

(1)           If a mortgage lender:

(A)          provide an audited statement of financial condition that demonstrates a net worth of at least $100,000;

(B)          provide evidence of warehouse line of credit of $1,000,000 or other evidence of funding capacity to conduct mortgage originations;

(C)          demonstrate a history of satisfying debt obligations, as indicated by a trade or personal credit report(s) that does not contain evidence of outstanding judgments or tax liens against applicant, its officers or directors, by creditors; and

(D)          provide an explanation of the corporate or ownership structure of the applicant, including information regarding any required distributions to investors or owners.

(2)           If a mortgage broker:

(A)          provide a certified statement of financial condition that demonstrates a net worth of at least $25,000;

(B)          demonstrate a history of satisfying debt obligations, as indicated by a trade or personal credit report(s) that does not contain evidence of outstanding judgments or tax liens against applicant, its officers or directors, by creditors; and

(C)          provide evidence (in the form of a copy of a bank statement or other verifiable document) that the broker owns and holds on a continual basis cash or other liquid assets in a demand deposit account under the firm's name of at least ten thousand dollars ($10,000.00) in an FDIC-insured financial institution.

(3)           If a mortgage loan originator:

(A)          have a credit score from any of the three major credit rating agencies (Experian, TransUnion or Equifax) of 600 or greater;

(B)          demonstrate a history of satisfying debt obligations, as indicated by an absence of outstanding tax liens, other government liens or filings, outstanding judgments, except judgments resulting solely from medical expenses, by creditors; and

(C)          not have any foreclosures or accounts delinquent in excess of 90-days within the past three years.

(4)           If a mortgage servicer:

(A)          provide an audited statement of financial condition that demonstrates a net worth of at least $100,000.00;

(B)          demonstrate a history of satisfying debt obligations, as indicated by a trade or personal credit report(s) that does not contain evidence of outstanding judgments or tax liens against applicant, its officers or directors, by creditors; and

(C)          provide an explanation of the corporate or ownership structure of the applicant, including information regarding any required distributions to investors or owners.

(b)  The Commissioner shall not waive any requirement listed in Paragraph (a) of this Rule unless he believes the predominant weight of the evidence supports a determination that the applicant has the financial responsibility necessary to command the confidence of the community and to warrant belief that the business will be operated honestly and fairly.

(c)  Financial Responsibility is an ongoing requirement and upon issuance of a license, a licensee must continue to meet the requirements of Paragraph (a) of this Rule.

 

History Note:        Authority G.S. 53-92; 53-104; 53-244.060(4); 53-244.118;

Eff. July 18, 2008;

Amended Eff. July 1, 2010.

 

04 NCAC 03M .0206        SURETY BOND

(a)  All licensees with surety bonds under G.S. 53-244.103 must ensure that full amount of the surety bond is in effect at all times.  In the event of a claim against the bond, the licensee has 30 days to reinstate the bond to the level required in G.S. 53-244.103.  Failure to maintain the surety bond at the level required in G.S. 53-244.103 is grounds for immediate suspension of licensure.

(b)  All licensees with surety bonds under G.S. 53-244.103 must report any claims made against the surety bond to the Commissioner within 10 business days upon receipt of notice of any claim.

(c)  All surety bonds under G.S. 53-244.103 shall:

(1)           require the bonding company to report all claims and any claims paid on the bond to the Commissioner within 10 days of such claim or payment;

(2)           require the bonding company to pay within 30 days any amount which the Commissioner orders the bonding company to pay upon a determination by the Commissioner that the licensee has failed to faithfully perform the licensee's obligations; and

(3)           remain in effect for a minimum of five years after lapse or termination of the bond in order to satisfy possible claims for failure to faithfully fulfill obligations during the term of the bond.

 

History Note:        Authority G.S. 53-103;

Eff. April 1, 2008;

Amended Eff. May 1, 2010.

 

SECTION .0300 - EDUCATION AND EXAMINATIONS

 

04 NCAC 03M .0301        APPROVAL OF PROVIDERS AND COURSES OF STUDY; PROVIDER REQUIREMENTS; QUALIFIED WRITTEN TEST

 

History Note:        Authority G.S. 53-244.060; 53-244.070; 53-244.080; 53-244.118;

Temporary Adoption Eff. July 1, 2002;

Eff. April 1, 2003;

Amended Eff. July 1, 2010; July 18, 2008.

Expired Eff. November 1, 2017 pursuant to G.S. 150B-21.3A.

 

04 NCAC 03M .0302        LOAN OFFICER EXAMINATION

04 NCAC 03M .0303        REQUIREMENTS FOR PROVIDERS

 

History Note:        Authority G.S. 53-243.05; 53-243.07; 53-243.13;

Temporary Adoption Eff. July 1, 2002;

Eff. April 1, 2003;

Repealed Eff. May 1, 2010.

 

SECTION .0400 - REPORTING AND NOTIFICATION REQUIREMENTS

 

04 NCAC 03M .0401        REPORTING REQUIREMENTS

(a)  No later than 90 days after the end of the calendar year, mortgage lenders, mortgage servicers and mortgage brokers shall file an annual report in a format required by the NMLS&R unless the Commissioner determines that the report is not in the public interest.  The annual report shall be supplemented with additional information about operations, characteristics of loans made, or other similar composite data if the Commissioner determines that this additional information is necessary in order to safeguard the interests of the borrowing public (See N.C. Gen. Stat. 53-244.118). Mortgage brokers shall as a part of the annual report provide certification from the insured financial institution holding the account required under  04 NCAC 03M .0205(a)(2)(C) that the account exists and that the account has contained an average daily balance, for the previous year covered by the annual report of ten thousand dollars $10,000 or more.  Failure to timely submit an annual report is grounds for summary suspension pursuant to G.S. 53-244.114.

(b)  Mortgage lenders, mortgage servicers, and mortgage brokers shall provide an audited statement of financial condition or a certified statement of financial condition as required by 04 NCAC 03M.0205(a) within 90 days of the end of the licensee's fiscal year.  If not shown in the audited statement of financial condition, mortgage lenders shall provide evidence of available warehouse lines of credit or other funding facilities. 

(c)  Beginning on January 1, 2011, mortgage lenders and mortgage brokers shall provide information on the characteristics of loan originations in an electronic format prescribed by the Commissioner on a quarterly basis within 45 days after the close of the calendar quarter.  Mortgage lenders shall provide:

(1)           Information sufficient to identify the mortgage loan and the unique identifier of the mortgage loan originator, mortgage broker (if applicable), and mortgage lender for the loan;

(2)           Information sufficient to enable a computation of key items in the federal Truth in Lending disclosures, including the annual percentage rate, finance charge, and a schedule of payments, and any deviations between the final disclosures and the most recent disclosures issued prior to the final disclosures;

(3)           Information included in the "Good Faith Estimate" (GFE) disclosure required under the federal Real Estate Settlement Procedures Act including the rate, the date of any interest rate lock, itemization of settlement charges and all broker compensation;

(4)           Information included in the final HUD-1 Settlement Statement, if maintained by the mortgage lender in an electronic format;

(5)           Information related to the terms of the loans, including adjustable rate loan features (including timing of adjustments, indices used in setting rates, maximum and minimum adjustments, floors and ceilings of adjustments), the undiscounted interest rate (if maintained by the mortgage lender in an electronic format), penalties for late payments, and penalties for prepayment (including computation of the penalty amount, duration of prepayment penalty, the maximum amount of penalty);

(6)           Information typically used in underwriting, including the appraised value of the property, sales price of the property (if a purchase loan), borrowers' income, monthly payment amount, housing debt-to-income ratio, total debt-to-income ratio, and credit score(s) of borrowers; and

(7)           Information included in a Loan Application Register for mortgage lenders required to submit information pursuant to the federal Home Mortgage Disclosure Act,

Mortgage brokers shall provide information identified above unless such information is not prepared or known by the mortgage broker and the mortgage broker does not reasonably have access to the information in an electronic format.  The Commissioner shall permit mortgage lenders and mortgage brokers to utilize compatible third-party software to provide information required under this Paragraph. 

(d)  On a quarterly basis, mortgage lenders and mortgage brokers shall provide call reports containing financial and loan activity information in an electronic format through the NMLS&R.

(e)  Mortgage lenders, mortgage servicers, mortgage brokers, exclusive mortgage brokers, and mortgage loan originators shall report within 30 days the name of any person suspected of making a material misstatement in connection with the mortgage lending or servicing process to the Commissioner. Mortgage lenders and mortgage brokers shall report within 30 days any loan repurchased due to a material misstatement made in connection with the mortgage lending process.

(f)  Mortgage lenders, mortgage servicers, mortgage brokers, exclusive mortgage broker, and mortgage loan originators shall report within 30 days the name of any person suspected of making a material misstatement in connection with an inquiry, investigation, or examination to the Commissioner.

 

History Note:        Authority G.S. 53-244.108; 53-244.118;

Eff. April 1, 2003;

Amended Eff. July 1, 2010; July 3, 2008.

 

04 NCAC 03M .0402        AMENDMENTS TO INFORMATION ON FILE WITH THE COMMISSIONER

(a)  A licensee shall notify the Commissioner within 30 days of any material change in any document or information previously submitted to, or otherwise filed with, the Commissioner.

(b)  Upon a licensee's discovery of an information security breach as defined in G.S. 75-61(14), the licensee shall within one business day provide to the Commissioner a copy of any notification which the licensee is required to give under G.S. 75-65.

(c)  Notification shall be in accordance with Rule .0102 of this Subchapter.

 

History Note:        Authority G.S. 53-244.105(b); 53-244.118;

Eff. April 1, 2003;

Amended Eff. May 1, 2010; April 1, 2008.

 

04 NCAC 03M .0403        TERMINATION OF OPERATIONS

(a)  A licensee shall notify the Commissioner in writing of its decision to cease operations as a mortgage lender, mortgage servicer, or mortgage broker in this State, and the anticipated effective date of the cessation of operations, at least 15 days before the cessation.

(b)  A mortgage lender, mortgage servicer, or mortgage broker that has not originated or serviced a mortgage loan within a 12 month period is considered to have ceased operations.  Cessation of operations is grounds for summary suspension pursuant to G.S. 53-244.114(b); provided, however, that suspension for cessation of operations shall not extend or revive any license that would otherwise terminate on December 31st based on the licensee's failure to renew its license or the Commissioner's refusal to renew the licensee's license.

 

History Note:        Authority G.S. 53-244.118;

Eff. April 1, 2003;

Amended Eff. May 1, 2010; April 1, 2008.

 

SECTION .0500 - RECORD AND BOOKKEEPING REQUIREMENTS

 

04 NCAC 03M .0501        RECORDS TO BE MAINTAINED

(a)  A licensee shall maintain or cause to be maintained a record of all cash, checks or other monetary instruments received in connection with each mortgage loan application showing the identity of the payor, date received, amount, and purpose.

(b)  A licensee shall maintain a record showing a sequential listing of checks written for each bank account relating to the licensee's business as a mortgage broker or mortgage lender, showing at least the payee, amount, date, and purpose of payment, including identification of the loan to which it relates, if any.  The licensee shall reconcile the bank accounts monthly.  Financial records must be kept in a manner to permit efficient review by examiners.

(c)  A licensed mortgage lender or mortgage broker shall maintain a current listing of all mortgage loan applications in an electronic, searchable and sortable format that permits a timely review of information by the Commissioner.

(d)  A licensed mortgage lender or mortgage broker shall create and retain a file for each mortgage loan application that contains as applicable;

(1)           the applicant's name;

(2)           date the application was taken;

(3)           name of the person taking the application;

(4)           the application itself; and

(5)           if the loan was closed,

(A)          the 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, other information utilized in the origination of the mortgage loan; and

(E)           all disclosures required by State or Federal law.

(e)  A licensed mortgage servicer shall create and retain a file for each mortgage loan which it services, which shall contain, as applicable:

(1)           the borrower or borrowers names;

(2)           a copy of the original note and Deed of Trust;

(3)           a copy of any disclosures or notifications provided to the borrower required by State or Federal law;

(4)           a copy of all written requests for information received from the borrower and the servicer's response to such requests as required by State or Federal law;

(5)           a record of all payments received from the borrower which contains all information required to be provided to a borrower upon request under G.S. 45-92(2)b;

(6)           a copy of any bankruptcy plan approved in a proceeding filed by the borrower or a co-owner of the property subject to the mortgage;

(7)           a communications log, if maintained by the servicer, which documents all verbal communication with the borrower or the borrower's representative;

(8)           a record of all efforts by the servicer to comply with the duties required under G.S. 53-244.110(7) including all information utilized in the servicer's determination regarding loss mitigation proposals offered to the borrower;

(9)           a copy of  all notices sent to the borrower related to any foreclosure proceeding filed against the encumbered property; and

(10)         records regarding the final disposition of the loan including a copy of any collateral release document, records of servicing transfers, charge-off information, or REO disposition.

(f)  A licensee shall maintain a record of samples of each piece of advertising relating to the licensee's business of mortgage lending or mortgage brokerage in North Carolina for a period of 12 months.

(g)  A licensee shall maintain copies of all contracts, agreements and escrow instructions to or with any depository institution, any mortgage lender, mortgage servicer, or mortgage broker, any warehouse lender or other funding facility, any servicer of mortgage loans, and any investor, for a period of not less than three years after expiration of any such contract or agreement.

 

History Note:        Authority G.S. 53-244.105; 53-244.115; 53-244.118;

Eff. April 1, 2003;

Amended Eff. May 1, 2010; April 1, 2008.

 

04 NCAC 03M .0502        FORM AND LOCATION of records

(a)  Except for samples of advertising materials retained pursuant to 4 NCAC 03M .0501(f), all records required by this Section shall be kept for a period of at least three years, and shall be available for inspection and copying upon request by the Commissioner.

(b)  The records may be maintained in the form of magnetic tape, magnetic disk or other form of computer, electronic or microfilm media available for examination on the basis of computer printed reproduction, video display or other medium that is easily convertible by the Commissioner into legible, tangible documents.

(c)  All records required by this Rule shall be prepared in accordance with generally accepted accounting principles, where applicable.

(d)  All records required to be maintained shall be secured against unauthorized access and damage in a location within the State of North Carolina accessible to the Commissioner.  However, a mortgage banking licensee which maintains a centralized out-of-state storage facility for the records from multiple states may request the Commissioner to approve its storage of such records in such out-of-state location.  The requests will be approved provided that:

(1)           The Commissioner determines that the proposed storage will ensure that the records are secured against unauthorized access and damage; and

(2)           The licensee agrees in writing to make available at its expense for inspection and copying upon request by the Commissioner copies of all requested records in a form which satisfies the requirements of Paragraph (b) of this Rule.

(e)  If the Commissioner subsequently has reason to believe that records are not or will not be adequately secured against unauthorized access or damage, the Commissioner shall summarily revoke any approval previously granted under Paragraph (d) of this Rule.

(f)  A licensee shall notify the Commissioner of any change in the location of its books and records within 10 days following such change.

 

History Note:        Authority G.S. 53-244.105; 53-244.115; 53-244.118;

Eff. April 1, 2003;

Amended Eff. May 1, 2010.

 

SECTION .0600 – ORIGINATION PRACTICES

 

04 NCAC 03M .0601        RESERVED FOR FUTURE CODIFICATION

 

04 NCAC 03M .0602        SELLER DISCOUNTS FOR USE OF AFFILIATED MORTGAGE LENDER OR BROKER

(a)  A mortgage lender or mortgage broker shall not originate a mortgage loan if the use of that mortgage lender or mortgage broker is a condition for the borrower to receive a discount or thing of value from a seller affiliated with the mortgage lender or mortgage broker, unless:

(1)           the discount conditioned on the use of the mortgage lender or mortgage broker is disclosed separately from any other discount provided by the seller in a written document that informs the borrower that the choice of a lender not affiliated with the seller will not affect any other concessions or discounts separately offered to the borrower for the purchase of the home, other than the incentive offered for the use of the affiliated lender;

(2)           the discount conditioned on the use of the mortgage lender or mortgage broker may be used to pay only the following:

(A)          bona fide and reasonable closing costs associated with the loan as permitted under G.S. 24-8(d); and

(B)          bona fide discount points, which are knowingly paid by the borrower for the purpose of reducing the interest rate below the market rate for that loan product and which in fact reduces the interest rate below the market rate for that loan product; and

(3)           the discount does not exceed three percent of the final sales price.

(b)  For any discount used as described in Part (a)(2)(B) of this Rule, the following documents must be maintained in the individual loan file:

(1)           the disclosure required under Subparagraph (a)(1) of this Rule;

(2)           the rate sheet used by the mortgage lender or mortgage broker to inform the borrower of the available interest rate of the loan; and

(3)           the signed lock-in agreement that demonstrates the below-market rate chosen by the borrower.

(c)  For any discount used as described in Part (a)(2)(B) of this Rule, the mortgage lender must maintain written policies and procedures related to the charging of discount points, which include the method of informing borrowers of the benefits and costs of discount points and a commercially-reasonable method for determining the amount by which the interest rate will be reduced for the payment of a discount point.

(d)  The discount provided for in Paragraph (a) of this Rule shall not be applied in a manner that would exceed amounts which may be directly imposed under North Carolina or Federal law, regardless of whether a party affiliated with lender directly or indirectly pays for any portion of such charges.

 

History Note:        Authority G.S. 53-244.111(1); 53-244.111(8), 53-244.118(a);

Eff. April 1, 2011.

 

Section .0700 - Servicing

 

04 NCAC 03M .0701        transfer of servicing rights

A person shall not transfer servicing rights or obligations to a person unless that person holds a mortgage servicing license or is a person otherwise exempt from the Act.

 

History Note:        Authority 53-244.100(a); 53-244.110(1); 53-244.110(3);

Eff. May 1, 2010.

 

04 NCAC 03M .0702        Requirements for Mortgage Servicers to Communicate Effectively with Borrowers Regarding Loss Mitigation

(a)  A mortgage servicer shall acknowledge, in writing, a borrower's loss mitigation request no later than 10 business days after the request.  The acknowledgement must identify any information needed from the borrower in order for the mortgage servicer to consider the borrower's loss mitigation request.  For purposes of this Rule and Rule .0703 of this Subchapter, a loss mitigation request is considered received by a servicer upon the borrower or the borrower's agent contacting the servicer at the address, phone or other contact information required to be provided to borrowers in a notice complying with G.S. 53-244.111(22).

(b)  A mortgage servicer shall respond to a loss mitigation request from a borrower no later than 30 business days after the receipt of all information necessary from the borrower to assess whether or not a borrower qualifies for any loss mitigation programs offered by the mortgage servicer.

(c)  A mortgage servicer shall include in a final response denying a loss mitigation request the reason for the denial and contact information for a person at the mortgage servicer with authority to reconsider the denial.  In addition, the denial shall also include the following statement, in a boldface type and in a print no smaller than the largest print used elsewhere in the main body of the denial:  "If you believe the loss mitigation request has been wrongly denied, you may file a complaint with the North Carolina Office of the Commissioner of Banks website, www.nccob.gov."

 

History Note:        Authority G.S. 53-244.110(7); 53-244.118(a);

Eff. June 1, 2010.

 

04 NCAC 03M .0703        Cessation of Foreclosure Activity During Pendency of Loss Mitigation REquest

(a)  A mortgage servicer shall not initiate or further a foreclosure proceeding or impose a charge incident to a foreclosure proceeding during the pendency of a loss mitigation request; provided however, that this requirement does not apply if:

(1)           the borrower has failed to comply with the terms of a loss mitigation plan within the previous 12 months, if the loss mitigation plan:

(A)          was implemented pursuant to a federal or state foreclosure prevention program, including the Home Affordable Modification Program; or

(B)          reduced the monthly payment of loan by six percent from the scheduled monthly payment and resulted in a monthly payment of principal, interest, taxes, and insurance of less than 31 percent of the borrower's household income;

(2)           the mortgage servicer has provided a final response regarding a loss mitigation request within the last 12 months and reasonably believes that the current loss mitigation request was not made in good faith;

(3)           the borrower has failed to comply with a Chapter 13 bankruptcy repayment plan or has any bankruptcy proceedings dismissed for abuse of process within the last 12 months;

(4)           the loss mitigation request is received by the servicer after the time for appealing an order granting foreclosure of the secured residential real estate has passed in accordance with Article 2A of Chapter 45; or

(5)           the servicing contract or the terms of the mortgage loan, entered into prior to October 1, 2009, prohibits such a delay.

(b)  Nothing in this Rule shall prevent a mortgage servicer, in order to avoid dismissal or any other adverse order in a foreclosure proceeding which was initiated prior to the loss mitigation request being received, from filing or causing to be filed any pleading or notice which is required under Article 2A of Chapter 45, the Rules of Civil Procedure, or the Local Rules of Court to continue or delay further proceedings.

 

History Note:        Authority G.S. 53-244.110(7); 53-244.118(a);

Eff. June 1, 2010.