NC Pre-License Class          Pre-License Online          Audit a Class          Find a Broker/Banker          Prof. Organizations          Affiliates          Industry Partners          50 State Map          Who is Paul Donohue          Our Instructor/Trainers          Founder’s Vision          All Testimonials	An Act to rewrite North Carolina’s Mortgage Lending Act Keep in mind, the preliminary draft of this bill has not been referred to the General Assembly. We don’t know who the sponsors will be and meaningful dialogue is still ongoing with the OCOB to modify some of the most repressive provisions of this bill. With that said and understood, here is my initial insight... In my review of the proposed draft of this bill, I found more than twenty questions, concerns or outright disagreements with the legislation. There are a few very significant changes to the MLA being proposed that will: Adversely affect mortgage broker’s ability to continue business; Increase exposure to personal risk for licensees; Drop education standards, lowering the bar of entry to out-of-state entities and expose NC consumers to poorly educated out-of-state competitors. Let’s look at these issues one at a time: Adversely affect mortgage broker’s ability to continue business It is proposed that the Surety Bond for licensed mortgage brokers will be raised to $150,000 for shops that originate less than $10 million in loan volume annually; $250,000 for shops that originate between $10 million and $50 million annually; and $500,000 for shops that originate more than $50 million in loan volume annually. I understand that some bonding companies will require a 2:1 net worth ratio for the new bond. That means that a shop that does $50,000,000 in loan volume per year will have to have a net worth of at least $1 million. Think about it. That is only about 20 loans per month! Even the lower bonding amount will have a major impact on the small broker/owner. These bonds could cost from $3,000 to $10,000 per year. It is my fear many brokers won’t qualify and if they could, won’t be able to afford the additional cost. Increase exposure to personal risk for licensees The proposed MLA amendments include language that allows for a “Private Right of Action.” That is a lawsuit brought directly by a borrower. Under the current law, only the Commissioner or the Attorney General’s office can bring a lawsuit against a licensee to enforce the MLA. Under the new proposal, a consumer can seek damages for a violation of any of the 25 prohibited acts of the current MLA. This will dramatically increase the licensee’s exposure to risk from consumer lawsuits. NCAMP has has positive discussions with the NCCOB and we are hopeful that we can affect a change. Howeve, it is not a done deal and you need to be aware that this provision, as originally drafted, would not be good for you or our business. We'll keep you informed as things develop. Dropping education standards, lowering the bar of entry to out-of-state entities and expose NC consumers to poorly educated out-of-state competitors. For the sake of uniformity with the national licensing guidelines, North Carolina is considering dropping its pre-licensing education standards. They are considering allowing 24 hours of online education courses to qualify for an originator’s license. The OCOB is heavily involved with creating standards for the NMLS and national compliance with the SAFE Act. Despite Commissioner Joseph Smith’s impassioned speech regarding state sovereignty and the rights of state officials to protect consumers when federal laws are found to be inadequate, the NCCOB may succumb to pressures on the national level to lower their pre-licensing education standards to the lowest common denominator. This would not be good for you or North Carolina consumers. I am a strong advocate for limited and appropriate use of online education. However, we are all well aware of the mockery online delivery has made of mortgage education. They would be lowering information standards at the same time they continue to make North Carolina’s mortgage laws more complex. The laws are increasingly difficult to understand even in the most deliberate and effective classroom setting. Even as I know that it would be more beneficial to me in my business as an educator to allow all education to be taken online, I feel very strongly that allowing online education for pre-licensing would be an irresponsible step backwards. Consider this... The OCOB would, in effect, open the flood gates for every NMLS licensed entity from across the country into the North Carolina market. All an originator would have to do is sit in front of a computer and take four hours of NC education, pass an exam and BINGO, they are in your backyard “drinking your milkshake.” Not only do these out-of-state originators not care about North Carolina homeowners, they are at an inconvenient distance and out of sight of the OCOB. You think you have competition now; you haven’t seen anything yet. Do you really think these market-starved mortgage companies are going to care or understand NC’s intricate consumer protection laws? These will be people who, up to this point, did not care enough about NC to come here to get licensed. But if pre-licensing were online... How many incompetent originators would be unleashed on NC consumers? It is my opinion that if the OCOB makes this unnecessary step backwards and they would be failing in their duties to protect homeowners here in North Carolina. It is my hope that they will reconsider this provision and require all pre-licensing education to be in a live classroom setting. They have the power, authority and responsibility to do so. Its my belief the NCCOB will do the right thing, but we must watch this closely. Again, this is my opinion. What can you do? Understanding that this bill has not been finalized and there are still ongoing discussions to be had with NCAMP and MBAC about these and other issues. It is not time to react just yet. But, there are two things you can do. First, in preparation for an aggressive response in support of a better bill, find out the names and contact information of your state representatives in your district. (Click here to go to the look up page.) Have this information ready, and be prepared to get involved locally and, in Raleigh, when the time comes. We may have to fight to save our industry and to protect NC consumers. And; Secondly, join the North Carolina Association of Mortgage Professionals (NCAMP). They are the professional association fighting for your rights to stay in business. Without them, we wouldn’t even know about this legislation until it was too late to do anything about it. It will be critical to have as many members as possible when NCAMP’s leadership has to go in front of the general assembly and makes our case to lawmakers. Click here for more information and to join NCAMP now! Thirdly, join us on an upcoming conference call with NCAMP and concerned mortgage professionals all across the state. In the next few days a link will be provided to you so you can read-up on the six topics about which we are cooperatively discussing with the NCCOB. There will be two teleconference calls to choose from in the next week. Keep a watch out for the times, and do your best to listen in. It’s time to get involved; it’s time to unite and take a stand. Right now, it looks like we are heading for a fight. We don’t want one, but we did not pick this fight. Best case scenario would be that the OCOB will hear our concerns and respond with some compromises we can live with (and keep our businesses). But you should be ready to stand up and make your voice heard if and when the time comes. I will keep you informed as well as I can. There is more to come... Until then, you have my fondest regards. Back to top