Amends Article 19B (The Secure and Fair Enforcement Mortgage Licensing Act) of GS Chapter 53 by adding a new Part 1, Application, Licensing, Examination, and Enforcement. Makes the following changes to statutes within that Part and Article.

Amends GS 53-244.020 by making part of the Act’s primary purpose to be to protect consumers seeking residential mortgages (was, seeking mortgages). Makes conforming changes throughout by referring to "residential mortgage" instead of "mortgage."

Amends GS 53-244.030 by amending the definitions as used in the Article as follows. Amends the term Banking Commission by no longer specifying that the term means the North Carolina Credit Union Commission for the purpose of compliance with the Article by credit unions, only defining the term to mean the North Carolina Banking Commission (Commission). Amends the definition of branch manager to now mean a mortgage loan originator who meets the requirements of GS 53-244.050(b), has at least three years of residential mortgage lending experience, and is assigned to, in charge of, and responsible for the business operations of a branch office (was, an individual who is assigned to, in charge of, and is responsible for the business operations of a branch office of a mortgage broker or mortgage lender). Amends the definition of branch office to now require that it be open to the public, and separate and distinct from the principal office (was, from the mortgage broker’s or lenders’ principal office); adds the requirement that it consist of at least one enclosed room or building of stationary construction. Amends the definition of Commissioner by no longer specifying that the term means the Administrator of the Credit Union Division of the Department of Commerce for the purpose of compliance with the Article by credit unions, only defining the term to mean the North Carolina Commissioner of Banks and their designee (Commissioner). Amends the definition of employee so that it also includes those in an employment relationship with a mortgage orientation support registrant. Expands upon the definition of engaging in the mortgage business to also include, for compensation or gain from another or on one’s own behalf, pursuant to the terms of a residential mortgage loan or the service documents or contract, (1) collecting or receiving payments on existing obligations due and owing to the mortgage lender or mortgage servicer, including payments of principal, interest, escrow amounts, and other amounts due; (2) collecting fees due to the mortgage lender or mortgage servicer; (3) working with the borrower and the mortgage lender or mortgage servicer to collect data and make decisions necessary to modify certain terms of those obligations either temporarily or permanently; (4) finalizing collection through the foreclosure process under GS Chapter 45, forfeiture under GS Chapter 47H, or repossession; or (5) servicing a reverse mortgage loan. Specifies that the term does not include timeshare instruments. Amends the definition of federal baking agency by removing the Office of Thrift Supervision. Changes the definition of individual person to a human being. Amends the definition of licensee by removing a transitional mortgage loan originator and adding an exclusive mortgage broker. Amends the definition of loan processor or underwriter to include those performing duties as an employee at the direction of and subject to the supervision and instruction of a person registered under this Article (in addition to those licensed or exempt from licensing). Amends the definition of loss mitigation specialist to include employees of mortgage lenders in addition to employees of mortgage servicers. Amends the definition of mortgage loan originator to no longer include those who negotiate the term or conditions of mortgage loans, but includes a person who takes a residential mortgage loan application or offers or negotiates the terms or conditions of a residential mortgage loan; now excludes from the term an individual acting solely as a loss mitigation specialist unless the Consumer Financial Protection Bureau amends the federal provision to provide that acting as a loss mitigation specialist constitutes taking a loan application. Amends the definition of mortgage service to explicitly include master servicers. Amends the term Nationwide Mortgage Licensing System and Registry to now refer to it as the NMLS and makes conforming changes throughout the Article to refer to the NMLS; also expands upon the definition by giving its alternate name and also includes the State Examination and other electronic successor systems, and also includes within the scope of those systems the supervision of persons (in addition to licensing and registration of persons). Amends the definition of qualifying individual to require that the person have at least three years of residential mortgage lending or servicing experience. Amends the definition of residential mortgage loan by no longer including mortgage loan in the term, adding obligations in addition to loans, and by specifying that the term includes reverse mortgage loans and contracts for deed. Adds and defines bona fide nonprofit. Removes the term transitional mortgage loan originator. Makes conforming, clarifying, and technical changes.

Amends GS 53-244.040 as follows. Requires a person to register before acting as a mortgage origination support registrant with respect to dwellings located in this state. Makes it illegal to act as a mortgage origination support registrant without registration that authorizes a registrant to sponsor and employ licensed mortgage loan originators to control and supervise the registrant's loan processors or underwriters in accordance with this Article and specified federal law. Removes provisions allowing for a transitional mortgage loan originator license and instead refers to temporary authority to act as a mortgage loan originator and sets out related requirements for those individuals. Expands upon the types of licenses granted under the Article to also include a mortgage loan originator license. Provides that a mortgage lender license also allows a person to act as a registrant; provides that upon notice, a licensed mortgage lender may also act as a mortgage servicer. Allows people exempt from this Article to also service residential mortgage loans. No longer exempts from the Article state or federally chartered credit unions who have filed a notice of exemption. Adds an exemption from the Article for the following: (1) a person, that as seller, receives in one calendar year no more than three (was, five) residential mortgage loans as security for purchase money obligations; (2) an estate or trust that, as seller, receives in one calendar year no more than one residential mortgage loan as security for a purchase money obligation; (3) any agency of the federal government or any state, local, or municipal government, or their subsidiaries, making or servicing residential mortgage loans under specific legal authority; (4) a nonprofit corporation that makes or services residential mortgage loans to promote home ownership or home improvements for disadvantaged homeowners upon filing of a notice of exemption, so long as the corporation is not primarily in the business of soliciting, brokering, making, or servicing residential mortgage loans; (5) a trust institution when acting in a fiduciary capacity, upon filing of a notice of exemption; and (6) a trustee of a trust that makes a residential mortgage loan to a qualified trust beneficiary or an immediate family member of the grantor of the trust, upon filing of a notice of exemption. Requires branch offices to be located in the United States. Requires each branch office of a mortgage broker or lender to have a branch manager who meets the experience requirements; if the lender or broker does not have a branch office, its qualifying individuals must be licensed as mortgage loan originators to oversee the origination activities conducted at the principal office.

Amends GS 53-244.050 to require applicants for licensure or registration to have a principal office in the United States. Amends the information that must be on a license application as follows: (1) requires providing the applicant’s (and any partner’s, officer’s, director’s, or persons in a similar status’s) conviction within the past five (was, 10) years of a misdemeanor involving any of the specified types of crimes but removes moral turpitude from that list and (2) requires the financial condition, credit history, and business history for applicants for all types of licensure. Amends the eligibility requirements as follows: (1) requires applicants for licensure as a mortgage loan originator or qualifying individual (except for mortgage servicers) by giving credit to individuals holding a valid mortgage loan originator license in another state for education and passage of the required test; (2) requires applicants for licensure as a mortgage lender, mortgage broker, or mortgage servicer and applicants for registration as a registrant to employ a qualifying individual; (3) requires applicants to register any branch office of a mortgage lender or broker and to employ a branch manager; and (4) removes specified provisions for sole proprietors. Amends the provisions requiring certain information about the applicant’s identity when the application is for licensing as a mortgage loan originator, mortgage lender, mortgage broker, mortgage servicer, or registration as a registrant, by removing provisions related to fingerprints and personal history; allows the Commissioner, for good cause, to allow equivalent information to be provided instead of the identity information required by the statute. Allows the Commissioner to request a criminal record check for applicants or holders of a mortgage loan originator license or who is a control person, executive officer, qualifying individual, or branch manager of a person licensed or registered (was, a mortgage lender, mortgage broker, mortgage servicer, mortgage loan originator).

Amends GS 53-244.060 by amending the conditions under which a license or registration will not be issued to include when an exclusive mortgage broker applicant has failed to meet the surety bond requirements.

Amends GS 53-244.070 by amending the prelicensing education courses and the course providers to now only require that they be approved by the NCMLS, and removing additional requirements, including approval by the Commissioner. Amends GS 53-244.080 to no longer require NMLS to have developed the test. No longer requires the payment of the $300 fee and NMLS processing fee for each branch office and instead requires paying the actual cost of obtaining a credit report, criminal history record checks, and processing fees.

Amends GS 53-244.100 to require notifying the Commisioner within 30 days (previously no timeframe was specified) when a mortgage loan originator ceases to be employed.

Amends GS 53-244.100A to also require an exclusive mortgage broker to pay the listed assessment and includes the late fee provisions in GS 53-244.101. Adds that assessments may be reduced as provided by GS 53C-8-2 (bank assessments and fees).

Amends GS 53-244.102, concerning continuing education for mortgage loan originators, by no longer requiring approval of the course to include approval of the course provider. Removes provisions specifying that the statute does not preclude any approved course that is provided by the employer, and specifying the manner in which the courses may be offered.

Amends GS 53-244.103 by amending the surety bond requirements for mortgage lenders, mortgage brokers, exclusive mortgage brokers, and mortgage servicers.

Amends GS 53-244.104 by amending the minimum net worth requirements to require the network of mortgage services be documented by an unqualified audited statement of financial condition. Adds that covered institutions must meet the requirements of new Part 2 (Prudential Standards for Mortgage Servicers) of this Article, which does not apply to mortgage servicers that are not covered institutions.

Amends GS 53-244.105 to make record keeping requirements applicable to mortgage lenders, mortgage brokers, mortgage servicers, or registrants. Adds the requirement of notifying the Commissioner of where the records will be stored. Removes the provision allowing the Commissioner to impose terms and conditions on where the records and files may be maintained outside of this state. Specifies that the statute is deemed to be complied with if the requirements of the specified federal regulations are met. Requires keeping the information security plan as part of the books and records.

Removes GS 53-244.106 concerning the display of the license.

Amends GS 53-244.107 to require mortgage lenders and brokers to include a link to NMLS Consumer Access on their websites.

Amends GS 53-244.109 by making the duties of mortgage brokers also applicable to mortgage lenders. Makes the provision on initial disclosures made under RESPA applicable to mortgage brokers only.  

Makes the provisions of GS 53-244.110, concerning the duties of mortgage servicers, applicable to all licensees. Amends the requirements for disclosure when accepting assignment of servicing rights for mortgage loans to no longer include a schedule of the ranges and categories of costs and fees for servicing-related activities, notice of licensure and how to submit complaints, and other specified notices.

Amends GS 53-244.113 to also deem the Commissioner to have complied with the requirements concerning service of process by depositing with a delivery service any notice required or permitted to a licensee or registrant; makes conforming changes. Adds that a person subject to this Article who is not licensed or registered must be served as specified in GS 150B-38.

Amends GS 53-244.115 to allow the Commissioner to enter into agreements or sharing arrangements with other governmental agencies or associations representing governmental agencies and to share otherwise confidential information under these written agreements, but only to the extent allowed by GS 53C-2-7(d). Specifies that information shared pursuant to these agreements retains any and all applicable privilege and related confidentiality protections.

Amends GS 53-244.119 by amending the requirements for participation in the NMLS to allow the Commissioner to participate and require all persons to be licensed or registered through the NMLS.

Enacts new GS 53-244.122 allowing the Commissioner to temporarily waive or suspend requirements for Article 1 during an emergency.

Makes additional conforming, clarifying, and technical changes throughout the Part.

Adds new Part 2, consisting of the following new statutes.

Enacts new GS 53-244.141, setting out 24 definitions. Defines agency as Fannie Mae, Freddie Mac, and Ginnie Mae. Defines covered institution as a mortgage servicer with servicing portfolios of 2,000 or more one- to four-unit residential mortgage loans serviced or subserviced for others, excluding whole loans owned, and loans being "interim" serviced prior to sale as of the most recent calendar year end, reported in the NMLS Mortgage Call Report.

Enacts GS 53-244.142 making Part 1 and this Part applicable to covered institutions; sets out exclusions.

Enacts new GS 53-244.143 setting out capital and liquidity requirements for covered institutions.

Enacts new GS 53-244.144 requiring covered institutions to establish and maintain a board of directors responsible for oversight. Allows covered institutions not approved to service loans by a GSE or Ginnie Mae, or if these federal agencies have granted approval for a board alternative, a covered institution to establish a similar body constituted to exercise oversight and fulfill the board of directors' responsibilities in this statute. Makes the board of directors responsible for: (1) establishing a written corporate governance framework, including appropriate internal controls designed to monitor corporate governance and assess compliance with the corporate governance framework, available to the Commissioner upon request; (2) monitoring and ensuring institution compliance with the corporate governance framework and this Part; and (3) accurate and timely regulatory reporting, including the requirements for filing the Mortgage Call Report. Sets out internal auditing requirements and also requires covered institutions to undergo external audits, subject to the specified minimum requirements. Requires a covered institution to establish a risk management program overseen by the board of directors and available to the Commissioner who identifies, measures, monitors, and mitigates financial risks and changes to the risk profile of the mortgage servicer and assets being serviced. Requires the program to be able to manage credit risks, liquidity risks, operational risks, market risks, compliance risks, legal risks, and reputation risks, as described. Requires conducting an annual risk management assessment, including a formal report to the board of directors, available to the Commissioner.

Effective October 1, 2025.