GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2003
SESSION LAW 2004-171
SENATE BILL 676
AN ACT TO AMEND certain BANKING LAWS OF NORTH CAROLINA and to authorize the legislative research commission to study the need for further amendments to the state banking laws.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 53-48 reads as rewritten:
"§ 53-48. Limitation of loans.
(a) The total loans and
extensions of credit, both direct and indirect, by a bank to a person, other
than a municipal corporation for money borrowed, including in the liabilities
of a firm the liabilities of the several members thereof, outstanding at one
time and not fully secured, as determined in a manner consistent with
subsection (b) of this section, by collateral having a market value at least
equal to the amount of the loan or extension of credit shall not exceed the
greater of fifteen percent (15%) of the unimpaired capital fund of the bank.bank
or the percentage permitted for national banks in this State by statute or
regulation of the Comptroller of the Currency.
(b) The total loans and
extensions of credit, both direct and indirect, by a bank to a person
outstanding at one time and fully secured by readily marketable collateral
having a market value, as determined by reliable and continuously available
price quotations, at least equal to the amount of the fundsloan or
extension of credit outstanding shall not exceed the greater of ten
percent (10%) of the unimpaired capital fund of the bank.bank or the
percentage permitted for national banks by statute or regulation of the
Comptroller of the Currency. This limitation shall be separate from and in
addition to the limitation contained in subsection (a) above.of this
section.
(c) The discount of bills of exchange drawn in good faith against actual existing values, the discount of solvent trade acceptances or other solvent commercial or business paper actually owned by the person negotiating the same, loans or extensions of credit secured by a segregated deposit account in the lending bank, the purchase of bankers acceptances of the kind described in section 13 of the Federal Reserve Act and issued by other banks, and the purchase of any notes and the making of any loans, secured by not less than a like face amount of bonds of the United States, or an agency of the United States, or other obligations guaranteed by the United States Government, or State of North Carolina or certificates of indebtedness of the United States, or agency thereof, or other obligations guaranteed by the United States Government, shall not be considered as money borrowed within the meaning of this section: Provided, however, that the limitations of this section shall not apply to loans or obligations to the extent that they are secured or covered by guarantees or by commitments or agreements to take over or purchase the same, made by any federal reserve bank or by the United States or any department, board, bureau, commission or establishment of the United States, including any corporation wholly owned directly or indirectly by the United States.
(d) For purposes of this section, the term "person" shall be deemed to include an individual, or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity not specifically listed herein. Loans or extensions of credit to one person include loans made to other persons when the proceeds of the loans or extensions of credit are to be used for the direct benefit of the first person or the persons are engaged in a common enterprise. The Commissioner of Banks shall monitor the lending activities of banks under this section for undue credit concentrations and inadequate risk diversification which could adversely affect the safety and soundness of such banks."
SECTION 2. G.S. 53-67 reads as rewritten:
"§ 53-67. Banks controlled by boards of directors.
The corporate powers, business, and property of banks doing
business under this Chapter shall be exercised, conducted, and controlled by
its board of directors, which shall meet at least quarterly. Such board shall
consist of not less than five directors, to be chosen by the stockholders, and
shall hold office for the term for which they are elected, and until their
successors are elected and qualified. The annual meeting of stockholders for
the election of directors shall be held at such time as may be designated by
the charter or the bylaws of the bank but shall be held not later than the
thirtieth day of June in each year. June 30 each year; provided,
however, that any bank which has been open for business for fewer than 12
months as of June 30 of the current year shall hold its first annual meeting by
not later than June 30 of the following year. In addition to the foregoing
powers relating to the fixing of the number and the election of directors, the
stockholders of a bank, at any stockholders' meeting, special or annual, may
authorize not more than two additional directorships which may be left unfilled
and to be filled in the discretion of the directors of the institution during
the interval between such stockholders' meetings. Aside from the specific
provisions of this section, the number, election, term and classification of
the directors of banks doing business under this Chapter shall be governed by
the provisions of the North Carolina Business Corporation Act."
SECTION 3. G.S. 53-99(b)(7b) reads as rewritten:
"(7b) Records of applications, examinationsexaminations,
and investigations of registrants applicants, licensees, and exempt
persons under the Mortgage Lending Act, Article 19A of this Chapter;".
SECTION 4. G.S. 53-115 reads as rewritten:
"§ 53-115.
State Banking Commission to make rules and regulations. adopt rules.
(a) The State
Banking Commission is hereby authorized, empowered and directed to make all
necessary rules and regulations, and to give all necessary instructions with
respect to such actions of banking corporations which the Commissioner of Banks
may authorize, permit and/or direct and require to be conducted under the
provisions of G.S. 53-77, 53-114, 53-115, and 53-116. And it shall be the
duty of all such banking corporations and their officers, agents and employees,
to comply fully with any and all such rules, regulations and instructions,
established and promulgated by the State Banking Commission with respect to
such banking corporations under the terms of G.S. 53-77, 53-114, 53-115,
and 53-116; and such orders, rules, and regulations shall have the same force
and effect as rules, regulations and instructions promulgated under the
existing banking laws.with respect to the establishment, operation,
conduct, and termination of any and all activities and businesses that are
subject to licensing, regulation, supervision, or examination by the
Commissioner of Banks under this Chapter.
(b) The rule-making authority conferred on the State Banking Commission by this section shall be in addition to and not in derogation of any specific rule-making authority by any other provision of this Chapter."
SECTION 5. G.S. 53-160 reads as rewritten:
"§ 53-160. License to do business.
Before any such bank or trust company is authorized to act in
any fiduciary capacity without bond, it must be licensed by the Commissioner of
Banks of the State. For such license the licenseelicensee, for the
purpose of defraying necessary expenses of the Commissioner of Banks and the
Commissioner's agents in supervising and examining the licensee, shall pay
to the State Banking Commission an annual license fee of two hundred dollars
($200.00), which shall be remitted to the State Treasurer for the use of the
Commissioner of Banks in the supervision of banks and trust companies acting in
a fiduciary capacity, insofar as it may be necessary, and the surplus, if any,
shall remain in the State treasury for the use of the general fund of the
State: Commissioner of Banks an annual license fee not to exceed five
hundred dollars ($500.00) as required by rule of the State Banking Commission. Provided,
however, that a A national bank which has been granted trust powers
by the Comptroller of the Currency or his duly authorized agent shall be
annually licensed as required in this section and shall be granted a
certificate of solvency which will meet the provisions of G.S. 53-162
without examination by the Commissioner of Banks as required in G.S. 53-161."
SECTION 6. G.S. 53-208.12 reads as rewritten:
"§ 53-208.12. Quarterly reports.
A licensee shall file for each calendar quarter, no later than 60 days after the quarter has ended, a report which contains the total number of authorized delegates in this State. In addition, a licensee shall promptly provide any additional information regarding any or all of its current and prior authorized delegates requested by the Commissioner."
SECTION 7. G.S. 53-243.02(c) reads as rewritten:
"(c) The license of a loan officer is not effective during any period when that person is not employed by a mortgage broker or mortgage banker licensed under this Article. The license of an exclusive mortgage broker is not effective during any period when that person is not authorized to act as a single licensee or exempt person pursuant to G.S. 53-243.05(c)(1a).
When a loan officer ceases to be employed by a mortgage broker or mortgage banker licensed under this Article, the loan officer and the mortgage broker or mortgage banker licensed under this Article by whom that person is employed shall promptly notify the Commissioner in writing. When the authority of an exclusive mortgage broker to act on behalf of the principal licensee or exempt person identified in G.S. 53-243.05(c)(1a) has been terminated, the exclusive mortgage broker and the licensee or exempt person for whom the exclusive mortgage broker is an agent shall promptly notify the Commissioner in writing. The mortgage broker, mortgage banker, or exempt person's notice shall include a statement of the specific reason or reasons for, as applicable, the termination of the loan officer's employment or exclusive mortgage broker's authority.
A loan officer shall not be employed simultaneously by more than one mortgage broker or mortgage banker licensed under this Article."
SECTION 8. G.S. 53-243.05(a)(6) reads as rewritten:
"(6) The applicant's
consent to a federal and State criminal history record check and a set
of the applicant's fingerprints in a form acceptable to the Commissioner. In
the case of an applicant that is a corporation, partnership, limited liability
company, association, or trust, each individual who has control of the
applicant or who is the managing principal or a branch manager shall consent to
a federal and State criminal history record check and submit a set of that
individual's fingerprints pursuant to this subdivision. Refusal to consent
to a criminal history record check may constituteconstitutes
grounds for the Commissioner to deny licensure to the applicant.applicant
as well as to any entity (i) by whom or by which the applicant is employed,
(ii) over which the applicant has control, or (iii) as to which the applicant
is the current or proposed managing principal or a current or proposed branch
manager."
SECTION 9. G.S. 53-243.06(b1) reads as rewritten:
"(b1) When required by the
Commissioner, the licensee each individual described in G.S. 53-245.05(a)(6)
shall furnish to the Commissioner the licensee's his or her consent
to a criminal history record check and a set of the licensee's his or
her fingerprints in a form acceptable to the Commissioner. Refusal to
consent to a criminal history record check may constitute grounds for the
Commissioner to deny renewal of licensure to the licensee.the license
of the person as well as the license of any other person by which he or she is
employed, over which he or she has control, or as to which he or she is the
current or proposed managing principal or a current or proposed branch manager."
SECTION 10. G.S. 53-243.11 is amended by adding a new subdivision to read:
"(12) To fail to comply with the mortgage loan servicing transfer, escrow account administration, or borrower inquiry response requirements imposed by sections 6 and 10 of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2605 and § 2609, and regulations adopted thereunder by the Secretary of the Department of Housing and Urban Development."
SECTION 11. G.S. 53-243.12(a)(2) reads as rewritten:
"(2) That any of the
following circumstances apply to the applicant, licensee, or any partner,
member, manager, officer, director, loan officer, managing broker, principal,
or any person occupying a similar status or performing similar functions or any
person directly or indirectly controlling the applicant or licensee. The
person:
a. Has filed an application for license that, as of its effective date or as of any date after filing, contained any statement that, in light of the circumstances under which it was made, is false or misleading with respect to any material fact.
b. Has violated or failed to comply with any provision of this Article, rule adopted by the Commissioner, or order of the Commissioner.
c. Has been convicted of any felony, or, within the past 10 years, has been convicted of any misdemeanor involving mortgage lending or any aspect of the mortgage lending business, or any offense involving breach of trust, moral turpitude, or fraudulent or dishonest dealing.
d. Is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the mortgage lending business.
e. Is the subject of an order of the Commissioner denying, suspending, or revoking that person's license as a mortgage broker or mortgage banker.
f. Is the subject of an order entered within the past five years by the authority of any state with jurisdiction over that state's mortgage brokerage or mortgage banking industry denying or revoking that person's license as a mortgage broker or mortgage banking industry or denying or revoking that person's license as a mortgage broker or mortgage banker.
g. Does not meet the qualifications or the financial responsibility, character, or general fitness requirements under G.S. 53-243.05 or any bond or capital requirements under this Article.
h. Has been the executive officer or controlling shareholder or owned a controlling interest in any mortgage broker or mortgage banker who has been subject to an order or injunction described in sub-subdivision d., e., or f. of this subdivision.
i. Has failed to pay the proper filing or renewal fee under this Article. However, the Commissioner may enter only a denial order under this sub-subdivision, and the Commissioner shall vacate the order when the deficiency has been corrected."
SECTION 12. G.S. 53-243.12(g) reads as rewritten:
"(g) If the Commissioner has reasonable grounds to believe that a licensee or other person has violated the provisions of this Article or that facts exist that would be the basis for an order against a licensee or other person, the Commissioner may at any time, either personally or by a person duly designated by the Commissioner, investigate or examine the loans and business of the licensee and examine the books, accounts, records, and files of any licensee or other person relating to the complaint or matter under investigation. The Commissioner may require any licensee or other person to submit a consent to a criminal history record check and a set of that person's fingerprints in a form acceptable to the Commissioner in connection with any examination or investigation. Refusal to submit the requested criminal history record check or a set of fingerprints shall be grounds for disciplinary action. The reasonable cost of this investigation or examination shall be charged against the licensee."
SECTION 13. G.S. 53-243.12(k) reads as rewritten:
"(k) If the Commissioner
finds that the managing principal, branch manager, or loan officer of a
licensee had knowledge of or reasonably should have had knowledge of, or
participated in, any activity that results in the entry of an order under this
section suspending or withdrawing the license of a licensee, the Commissioner
may prohibit the branch manager, managing broker principal,
or loan officer from serving as a branch manager, managing broker principal,
or loan officer for any period of time the Commissioner deems necessary."
SECTION 14. G.S. 53-243.16 reads as rewritten:
"§ 53-243.16. Criminal history record checks.
(a) The Department
of Justice may provide a criminal record check to the Commissioner for a any
person who has applied for or holds a mortgage banker, mortgage broker,
exclusive mortgage broker, or loan officer license through the Commissioner
under this Article.
(b) In addition, if a person described in subsection (a) of this section is a corporation, partnership, limited liability company, association, or trust, the Department of Justice may provide a criminal history record check to the Commissioner for any person who has control of that person, or who is the managing principal or a branch manager of that person.
(c) The
Commissioner shall provide to the Department of Justice, along with the
request, the fingerprints of the applicant, person, any
additional information required by the Department of Justice, and a form signed
by the applicant person consenting to the check of the criminal
record and to the use of the fingerprints and other identifying information
required by the State or national repositories. The applicant'sperson's
fingerprints shall be forwarded to the State Bureau of Investigation for a
search of the State's criminal history record file, and the State Bureau of
Investigation shall forward a set of the fingerprints to the Federal Bureau of
Investigation for a national criminal history check. The Commissioner shall
keep all information pursuant to this section privileged, in accordance with
applicable State law and federal guidelines, and the information shall be
confidential and shall not be a public record under Chapter 132 of the General
Statutes.
The Department of Justice may charge a fee for each applicant
person for conducting the checks of criminal history records
authorized by this section."
SECTION 15. G.S. 53-257(6) reads as rewritten:
"(6) Reverse mortgage loan
or loan. - A loan for a definite or indefinite term (i) secured by a first
mortgage or first deed of trust on the principal residence of the mortgagor,mortgagor
located in North Carolina, (ii) the proceeds of which are disbursed to the
mortgagor in one or more lump sums, or in equal or unequal installments, either
directly by the lender or the lender's agent, and (iii) that requires no
repayment until a future time, upon the earliest occurrence of one or more
events specified in the reverse mortgage loan contract."
SECTION 16. G.S. 53-258 reads as rewritten:
"§ 53-258. Authority and procedures governing reverse mortgage loans.
(a) No Except
as provided in subsection (b1) of this section, no person, firm, or
corporation shall engage in the business of making reverse mortgage loans
without first being approved as an authorized reverse mortgage lender by
the Commissioner, unless the lender is the North Carolina Housing Finance
Agency, or is a bank, savings institution, or credit union authorized to do
business under the laws of this State or authorized to do business under the
laws of the United States and chartered to do business in this State.Commissioner.
Mortgage lenders licensed under Article 19A of this Chapter must also be
authorized under this Article before making reverse mortgage loans.
(b) An application for authorization to make reverse mortgage loans shall be in writing to the Commissioner and in the form prescribed by the Commissioner. The application shall contain the name and complete business address or addresses of the applicant. The application shall also include affirmation of financial solvency and all capitalization requirements that are required by the Commissioner. The application shall be accompanied by a nonrefundable fee, payable to the Commissioner, of five hundred dollars ($500.00).
(b1) Each of the following lenders shall be considered authorized to engage in the business of making reverse mortgage loans without being required to apply pursuant to subsection (b) of this section and may represent to the public that it is so authorized:
(1) The North Carolina Housing Finance Agency.
(2) A bank, savings institution, or credit union formed under the laws of this or any other state or of the United States.
(3) A wholly owned subsidiary of an entity described in subdivision (2) of this subsection.
Each lender listed in this subsection may, upon written request to the Commissioner of Banks, obtain written confirmation of its authority to engage in the business of making reverse mortgage loans. In the case of lenders listed in subdivisions (2) and (3) of this subsection, the request shall be accompanied by the fee set forth in subsection (d) of this section.
(c) The North
Carolina Housing Finance Agency, and any bank, savings institution, or credit
union that is not required to obtain authorization to make reverse mortgage
loans under subsection (a) of this section, shall, prior to making any reverse
mortgage loan, notify the Commissioner of its intent to make reverse mortgage
loans. This notification shall be made on a form prescribed by the Commissioner
and shall contain all information required by the Commissioner.
(d) The Commissioner
shall, upon determination that a lender an applicant should be
authorized to make reverse mortgage loans, issue notice of this authority to
the lender. The authority to issue reverse mortgage loans is valid for the
period of time specified by the Commissioner. A lender to whom a notice of
authority is issued shall display the notice prominently in any and all offices
of the lender that make reverse mortgage loans. Authorizations issued under
this section are nontransferable and subject to nontransferable.
Except for lenders described in subsection (b1) of this section, each lender to
which an authorization is issued shall pay an annual renewal fee of
two hundred fifty dollars ($250.00)."
SECTION 17. The Legislative Research Commission shall undertake a comprehensive study of those laws, including Chapters 53, 54B, and 54C of the General Statutes, which affect the establishment and operation of banks in North Carolina and shall make recommendations to the 2005 General Assembly, prior to the convening of the 2006 Regular Session as to which laws (i) are obsolete, unnecessary, or duplicative, (ii) are unnecessarily inconsistent in the treatment of banks, savings and loan associations, and savings banks, and (iii) unnecessarily restrict, impede, or prohibit activities of banks, savings and loan associations, and savings banks or the ability of the Commissioner of Banks to regulate banks and savings institutions in an effective, efficient, and equitable manner.
In preparing its recommendations, the Commission shall actively solicit and consider information received from representatives of banks, savings and loan associations, savings banks, the State Banking Commission, the Commissioner of Banks and the Commissioner's staff, other interested parties, and the general public.
SECTION 18. This act becomes effective October 1, 2004, and applies to acts occurring and transactions or agreements entered into on or after that date.
In the General Assembly read three times and ratified this the 14th day of July, 2004.
s/ Beverly E. Perdue
President of the Senate
s/ Richard T. Morgan
Speaker of the House of Representatives
s/ Michael F. Easley
Governor
Approved 4:59 p.m. this 2nd day of August, 2004