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.