AN ACT to amend and extend the emergency program to reduce home foreclosures act, to increase and authorize fees under the s.a.f.e. mortgage licensing act, and to revise the definition of certain terms in the predatory lending law.

The General Assembly of North Carolina enacts:

SECTION 1.  Article 11 of Chapter 45 of the General Statutes reads as rewritten:
"Article 11.
"Emergency Program to Reduce Home Foreclosures.
"§ 45‑100.  (For expiration date, see note) Title.
This Article shall be known as the Emergency Program to Reduce Home Foreclosures Act. 
"§ 45‑101.  (For expiration date, see note) Definitions.
The following definitions apply throughout this Article:
(1)	Act as a mortgage servicer. – To engage, whether for compensation or gain from another or on its own behalf, in the business of receiving any scheduled periodic payments from a borrower pursuant to the terms of any mortgage loan, including amounts for escrow accounts, and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the mortgage loan, the mortgage servicing loan documents, or servicing contract.
	
(1b)	Home loan. – A loan that has all of the following characteristics:
a.	The loan is not (i) an equity line of credit as defined in G.S. 24‑9, (ii) a construction loan as defined in G.S. 24‑10, (iii) a reverse mortgage transaction, or (iv) a bridge loan with a term of 12 months or less, such as a loan to purchase a new dwelling where the borrower plans to sell a current dwelling within 12 months.
b.	The borrower is a natural person.
c.	The debt is incurred by the borrower primarily for personal, family, or household purposes.
d.	The principal amount of the loan does not exceed the conforming loan size limit for a single‑family dwelling as established from time to time by Fannie Mae.
e.	The loan is secured by (i) a security interest in a manufactured home, as defined in G.S. 143‑145, in the State which is or will be occupied by the borrower as the borrower's principal dwelling, (ii) a mortgage or deed of trust on real property in the State upon which there is located an existing structure designed principally for occupancy of from one to four families that is or will be occupied by the borrower as the borrower's principal dwelling, or (iii) a mortgage or deed of trust on real property in the State upon which there is to be constructed using the loan proceeds a structure or structures designed principally for occupancy of from one to four families which, when completed, will be occupied by the borrower as the borrower's principal dwelling.
f.	A purpose of the loan is to (i) purchase the dwelling, (ii) construct, repair, rehabilitate, remodel, or improve the dwelling or the real property on which it is located, (iii) satisfy and replace an existing obligation secured by the same real property, or (iv) consolidate existing consumer debts into a new home loan.
(2)	Mortgage lender. – A person engaged in the business of making mortgage loans for compensation or gain.
(3)	Mortgage servicer. – A person who directly or indirectly acts as a mortgage servicer as that term is defined in subdivision (1) of this section or who otherwise meets the definition of the term "servicer" in the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605(i), with respect to mortgage loans.
				
"§ 45‑102.  (For expiration date, see note) Pre‑foreclosure notice for  home loans.
At least 45 days prior to the filing of a notice of hearing in a foreclosure proceeding on a primary residence, mortgage servicers of home loans shall send written notice by mail to the last known address of the borrower to inform the borrower of the availability of resources to avoid foreclosure, including:
(1)	An itemization of all past due amounts causing the loan to be in default.
(2)	An itemization of any other charges that must be paid in order to bring the loan current.
(3)	A statement that the borrower may have options available other than foreclosure and that the borrower may discuss available options with the mortgage lender, the mortgage servicer, or a counselor approved by the U.S. Department of Housing and Urban Development.
(4)	The address, telephone number, and other contact information for the mortgage lender, the mortgage servicer, or the agent for either of them who is authorized to attempt to work with the borrower to avoid foreclosure.
(5)	The name, address, telephone number, and other contact information for one or more HUD‑approved counseling agencies operating to assist borrowers in North Carolina to avoid foreclosure.
(6)	The address, telephone number, and other contact information for the consumer complaint section of the Office of Commissioner of  Banks, or, alternatively, if the loan is serviced by a credit union, the address, telephone number, and other contact information for the consumer complaint section of the Credit Union Division.
"§ 45‑103.  (For expiration date, see note) Pre‑foreclosure information to be filed with the Administrative Office of the Courts for  home loans.
(a)	Within three business days of mailing the notice required by G.S. 45‑102, the mortgage servicer shall file certain information with the Administrative Office of the Courts. The filing shall be in an electronic format, as designated by the Administrative Office of the Courts, and shall contain the name and address of the borrower, the due date of the last scheduled payment made by the borrower, and the date the notice was mailed to the borrower. The Administrative Office of the Courts shall establish an internal database to track information required by this section. The Commissioner of Banks shall design and develop the database, in consultation with the Administrative Office of the Courts. Only the Administrative Office of the Courts, the Office of Commissioner of Banks, and the clerk of court as provided by G.S. 45‑107 shall have access to the database.
(b)	As permitted by applicable State and federal law, optional information may be requested from the mortgage servicer to facilitate further review by the State Home Foreclosure Prevention Project described in G.S. 45‑104. This optional information shall be used by the State Home Foreclosure Prevention Project to prioritize efforts to reach borrowers most likely to avoid foreclosure and to prevent delay for defaults where foreclosure is unavoidable.
	
"§ 45‑104.  (For expiration date, see note) State Home Foreclosure Prevention Project and Fund.
(a)	The Commissioner of Banks is authorized to establish the State Home Foreclosure Prevention Project. The purpose of the Project is to seek solutions to avoid foreclosures for  home loans. In developing the Project, the Commissioner may include input from HUD‑approved housing counselors, community organizations, the Credit Union Division and other State agencies, mortgage lenders, mortgage servicers, and other partners.
(b)	There is established a State Home Foreclosure Prevention Trust Fund to be managed and maintained by the Office of the Commissioner of Banks. The funds shall be held separate from any other funds received by the Office of the Commissioner of Banks in trust for the operation of the State Home Foreclosure Prevention Project.
(c)	Upon the filing of the information required under G.S. 45‑103, the mortgage servicer shall pay a fee of seventy‑five dollars ($75.00) to the State Home Foreclosure Prevention Trust Fund. The fee shall not be charged more than once for a home loan covered by this act. The collection of this fee shall be managed by the Office of the Commissioner of Banks in a manner so as to minimize burdens on mortgage servicers in complying with the requirements of this section.
(d)	The Commissioner of Banks shall allocate funds from the State Home Foreclosure Prevention Trust Fund to implement the purposes of this act in the following manner:
(1)	An amount, not to exceed the greater of two million two hundred thousand dollars ($2,200,000) or thirty percent (30%) of the funds per year, to cover the administrative costs of the operation of the program by the Office of the Commissioner of Banks, including managing on behalf of the Administrative Office of the Courts the database identified in G.S. 45‑103, expenses associated with informing homeowners of State resources available for foreclosure prevention, expenses associated with connecting homeowners to available resources, and assistance to homeowners and counselors in communicating with mortgage servicers.
(2)	An amount, not to exceed the greater of three million four hundred thousand dollars ($3,400,000) or forty percent (40%) per year, to make grants to or reimburse nonprofit housing counseling agencies for providing foreclosure prevention counseling services to homeowners involved in the State Home Foreclosure Prevention Project.
(3)	An amount, not to exceed thirty percent (30%) of the total funds collected per year, to make grants to or reimburse nonprofit legal service providers for services rendered on behalf of homeowners in danger of defaulting on a home loan to avoid foreclosure, limited to legal representation such as negotiation of loan modifications or other loan work‑out solutions, defending homeowners in foreclosure or representing homeowners in bankruptcy proceedings, and research and counsel to homeowners regarding the status of their home loans.
(4)	Any funds remaining upon the expiration of the State Home Foreclosure Prevention Project shall be directed to the North Carolina Housing Trust Fund.
(e)	The Commissioner of Banks shall have the discretion to enter into an agreement to administer funds under subdivisions (2) and (3) of subsection (d) of this section in a manner that complements or supplements other State and federal programs directed to prevent foreclosures for homeowners participating in the State Home Foreclosure Prevention Project.
"§ 45‑105.  (For expiration date, see note) Extension of foreclosure process.
The Commissioner of Banks shall review information provided in the database created by G.S. 45‑103 to determine which  home loans are appropriate for efforts to avoid foreclosure. If the Commissioner reasonably believes, based on a full review of the loan information, the mortgage servicer's loss mitigation efforts, the borrower's capacity and interest in staying in the home, and other appropriate factors, that further efforts by the State Home Foreclosure Prevention Project offer a reasonable prospect to avoid foreclosure on primary residences, the Commissioner shall have the authority to extend one time under this Article the allowable filing date for any foreclosure proceeding on a primary residence by up to 30 days beyond the earliest filing date established by the pre‑foreclosure notice. If the Commissioner makes the determination that a loan is subject to this section, the Commissioner shall notify the borrower, mortgage servicer, and the Administrative Office of the Courts. If the mortgage servicer is a state or federally chartered credit union, the Commissioner shall also notify the Administrator of the Credit Union Division of the determination.
"§ 45‑106.  (For expiration date, see note) Use and privacy of records.
The data provided to the Administrative Office of the Courts pursuant to G.S. 45‑103 shall be exclusively for the use and purposes of the State Home Foreclosure Prevention Project developed by the Commissioner of Banks in accordance with G.S. 45‑104. The information provided to the database is not a public record, except that a mortgage lender and a mortgage servicer shall have access to the information submitted only with regard to its own loans. Any notice provided by the Commissioner to the Administrator of the Credit Union Division under G.S. 45‑105 is not a public record. Provision of information to the Administrative Office of the Courts for use by the State Home Foreclosure Prevention Project shall not be considered a violation of G.S. 53B‑8. A mortgage servicer shall be held harmless for any alleged breach of privacy rights of the borrower with respect to the information the mortgage servicer provides in accordance with this Article.
"§ 45‑107.  (For expiration date, see note) Foreclosure filing.
(a)	For the duration of the program authorized by this Article, foreclosure notices filed on  home loans on or after  November 1, 2010, shall contain a certification by the filing party that the pre‑foreclosure notice required by G.S. 45‑102 and the pre‑foreclosure information required by G.S. 45‑103 were provided in accordance with this Article and that the periods of time established by the Article have elapsed.
(b)	The clerk of superior court or other judicial officer may have access to the pre‑foreclosure database to confirm information provided in subsection (a) of this section. A materially inaccurate statement in the certification shall be cause for dismissal without prejudice of any foreclosure proceeding on a primary residence initiated by the mortgage servicer and for payment by the filing party of costs incurred by the borrower in defending the foreclosure proceeding."
SECTION 2.  G.S. 45‑21.16(c2) reads as rewritten:
"(c2)	(Expires October 31, 2010) In any foreclosure filed on or after  November 1, 2010, where the underlying mortgage debt is a home loan as defined in  G.S. 45‑101(1b), the notice required by subsection (b) of this section shall contain a certification by the filing party that the pre‑foreclosure notice and information required by G.S. 45‑102 and G.S. 45‑103 were provided in all material respects and that the periods of time established by Article 11 of this Chapter have elapsed."
SECTION 3.  G.S. 45‑21.16(d) reads as rewritten:
"(d)	(Effective until October 31, 2010) The hearing provided by this section shall be held before the clerk of court in the county where the land, or any portion thereof, is situated. In the event that the property to be sold consists of separate tracts situated in different counties or a single tract in more than one county, only one hearing shall be necessary. However, prior to that hearing, the mortgagee or trustee shall file the notice of hearing in any other county where any portion of the property to be sold is located. Upon such hearing, the clerk shall consider the evidence of the parties and may consider, in addition to other forms of evidence required or permitted by law, affidavits and certified copies of documents. If the clerk finds the existence of (i) valid debt of which the party seeking to foreclose is the holder, (ii) default, (iii) right to foreclose under the instrument, (iv) notice to those entitled to such under subsection (b), and (v) that the underlying mortgage debt is not a home loan as defined in  G.S. 45‑101(1b), or if the loan is a home loan under  G.S. 45‑101(1b), that the pre‑foreclosure notice under G.S. 45‑102 was provided in all material respects, and that the periods of time established by Article 11 of this Chapter have elapsed, then the clerk shall authorize the mortgagee or trustee to proceed under the instrument, and the mortgagee or trustee can give notice of and conduct a sale pursuant to the provisions of this Article. A certified copy of any authorization or order by the clerk shall be filed in any other county where any portion of the property to be sold is located before the mortgagee or trustee may proceed to advertise and sell any property located in that county. In the event that sales are to be held in more than one county, the provisions of G.S. 45‑21.7 apply."
SECTION 4.  G.S. 53‑244.090(b) reads as rewritten:
"(b)	Each principal and each branch office of a mortgage broker or mortgage lender licensed under the provisions of this Article shall be issued a separate license for which the Commissioner shall assess a nonrefundable filing fee of  three hundred dollars ($300.00) in addition to the Nationwide Mortgage Licensing System and Registry processing fee. A licensed mortgage broker or mortgage lender shall file with the Commissioner a notice on a form prescribed by the Commissioner that identifies the address of the principal office and each branch office and its designated branch manager. Payment of the license fee under subsection (a) of this section shall be deemed to cover the location license fee for the principal office of each mortgage lender, mortgage broker, or mortgage servicer without payment of an additional  three hundred dollars ($300.00) under this subsection."
SECTION 5.  G.S. 53‑244.010(b) reads as rewritten:
"(b)	A license may be renewed on or after November 1 of each year by complying with the requirements of subsection (c) of this section and by paying to the Commissioner, in addition to the actual cost of obtaining credit reports and State and national criminal history record checks and of processing fees of the nationwide system as the Commissioner shall require, nonrefundable renewal fees as follows:
(1)	Licensed mortgage lenders, licensed mortgage brokers, and licensed mortgage servicers shall pay an annual renewal fee of six hundred twenty‑five dollars ($625.00), licensed exclusive mortgage brokers shall pay an annual renewal fee of three hundred dollars ($300.00), and licensed mortgage lenders and mortgage brokers shall pay  three hundred dollars ($300.00) for each licensed branch office.
(2)	Licensed mortgage loan originators shall pay an annual renewal fee of  one hundred twenty‑five dollars ($125.00)."
SECTION 6.  G.S. 53‑244.119 is amended by adding a new subsection to read:
"(e)	The Commissioner may require a licensee to pay, through the National Mortgage Licensing System, a reasonable administrative processing fee, not to exceed seventy‑five dollars ($75.00), for each of the following licensing status changes:
(1)	A change in the name of the licensee.
(2)	A change in the address of the licensee's principal office.
(3)	For mortgage loan originators, a change in the licensee's sponsors.
(4)	For mortgage lenders, mortgage brokers, and mortgage servicers, a change in the control of the licensee.
(5)	A change in the identity of the branch manager of any branch of the licensee.
(6)	A change in the identity of the licensee's qualified individual."
SECTION 7.  G.S. 24‑1.1E(a)(5) reads as rewritten:
"(5)	"Points and fees" is defined as provided in this subdivision.
a.	The term includes all of the following:
1.	All items paid by a borrower at or before closing and that are required to be disclosed under sections 226.4(a) and 226.4(b) of Title 12 of the Code of Federal Regulations, as amended from time to time, except interest or the time‑price differential. However, the meaning of the term "points and fees" shall not include either (i) the portion of the up-front fees collected and paid to the Federal Housing Administration, the Veterans' Administration, or the U.S. Department of Agriculture to insure or guarantee a home loan that exceeds one and one‑quarter percent (1.25%) of the total loan amount or (ii) the portion of any up-front private mortgage insurance premium, charge, or fee that exceeds one and one‑quarter percent (1.25%) of the total loan amount, provided that the private mortgage insurance premium, charge or fee is required to be refundable on a prorated basis, the refund is automatically issued upon notification of the satisfaction of the underlying mortgage loan, and the borrower has the right to request or receive a prorated refund in accordance with state or federal law.
2.	All charges paid by a borrower at or before closing and that are for items listed under section 226.4(c)(7) of Title 12 of the Code of Federal Regulations, as amended from time to time, but only if the lender receives direct or indirect compensation in connection with the charge or the charge is paid to an affiliate of the lender; otherwise, the charges are not included within the meaning of the phrase "points and fees".
3.	To the extent not otherwise included in sub‑subdivision a.1. or a.2. of this subdivision, all compensation paid from any source to a mortgage broker, including compensation paid to a mortgage broker in a table‑funded transaction. A bona fide sale of a loan in the secondary mortgage market shall not be considered a table‑funded transaction, and a table‑funded transaction shall not be considered a secondary market transaction.
4.	The maximum prepayment fees and penalties which may be charged or collected under the terms of the loan documents.
b.	Notwithstanding the remaining provisions of this subdivision, the term does not include (i) taxes, filing fees, recording and other charges and fees paid or to be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest; and (ii) fees paid to a person other than a lender or an affiliate of the lender or to the mortgage broker or an affiliate of the mortgage broker for the following: fees for tax payment services; fees for flood certification; fees for pest infestation and flood determinations; appraisal fees; fees for inspections performed prior to closing; credit reports; surveys; attorneys' fees (if the borrower has the right to select the attorney from an approved list or otherwise); notary fees; escrow charges, so long as not otherwise included under sub‑subdivision a. of this subdivision; title insurance premiums; and premiums for insurance against loss or damage to property, including hazard insurance and flood insurance premiums, provided that the conditions in section 226.4(d)(2) of Title 12 of the Code of Federal Regulations are met.
c.	For open‑end credit plans, the term includes those points and fees described in sub‑subdivisions a.1. through a.3. of this subdivision, plus (i) the minimum additional fees the borrower would be required to pay to draw down an amount equal to the total loan amount, and (ii) the maximum prepayment fees and penalties which may be charged or collected under the terms of the loan documents."
SECTION 8.  G.S. 24‑1.1E(a)(6) reads as rewritten:
"(6)	"Thresholds" means:
a.	Without regard to whether the loan transaction is or may be a "residential mortgage transaction" (as the term "residential mortgage transaction" is defined in section 226.2(a)(24) of Title 12 of the Code of Federal Regulations, as amended from time to time), the annual percentage rate of the loan at the time the loan is consummated is such that the loan is considered a "mortgage" under section 152 of the Home Ownership and Equity Protection Act of 1994 (Pub. Law 103‑25, [15 U.S.C. § 1602(aa)]), as the same may be amended from time to time, and regulations adopted pursuant thereto by the Federal Reserve Board, including section 226.32 of Title 12 of the Code of Federal Regulations, as the same may be amended from time to time;
b.	The total points and fees, as defined in G.S. 24‑1.1E(a)(5), exceed four percent (4%) of the total loan amount if the total loan amount is twenty thousand dollars ($20,000) or more, or (ii) the lesser of eight percent (8%) of the total loan amount or one thousand dollars ($1,000), if the total loan amount is less than twenty thousand dollars ($20,000); provided, the following discount points and prepayment fees and penalties shall be excluded from the calculation of the total points and fees payable by the borrower:
1.	Up to and including two bona fide loan discount points payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan's interest rate will be discounted does not exceed by more than one percentage point (1%) the required net yield for a 90‑day standard mandatory delivery commitment for a reasonably comparable loan from either Fannie Mae or the Federal Home Loan Mortgage Corporation, whichever is greater;
2.	Up to and including one bona fide loan discount point payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan's interest rate will be discounted does not exceed by more than two percentage points (2%) the required net yield for a 90‑day standard mandatory delivery commitment for a reasonably comparable loan from either Fannie Mae or the Federal Home Loan Mortgage Corporation, whichever is greater;
3.	For a closed‑end loan, prepayment fees and penalties which may be charged or collected under the terms of the loan documents which do not exceed one percent (1%) of the amount prepaid, provided the loan documents do not permit the lender to charge or collect any prepayment fees or penalties more than 30 months after the loan closing;
4.	For an open‑end credit plan, prepayment fees and penalties which may be charged or collected under the terms of the loan documents which do not exceed one percent (1%) of the amount prepaid, provided the loan documents do not permit the lender to charge or collect any prepayment fees or penalties more than (i) 30 months after the loan closing if the borrower has no right or option under the loan documents to repay all or any portion of the outstanding balance of the open‑end credit plan at a fixed interest rate over a specified period of time or, (ii) if the borrower has a right or option under the loan documents to repay all or any portion of the outstanding balance of the open‑end credit plan at a fixed interest rate over a specified period of time, 30 months after the date the borrower voluntarily exercises that right or option; or
c.	If the loan is a closed‑end loan, the loan documents permit the lender to charge or collect prepayment fees or penalties more than 30 months after the loan closing or which exceed, in the aggregate, more than two percent (2%) of the amount prepaid. If the loan is an open‑end credit plan, the loan documents permit the lender to charge or collect prepayment fees or penalties (i) more than 30 months after the loan closing if the borrower has no right or option under the loan documents to repay all or any portion of the outstanding balance of the open‑end credit plan at a fixed interest rate over a specified period of time or, (ii) if the borrower has a right or option under the loan documents to repay all or any portion of the outstanding balance of the open‑end credit plan at a fixed interest rate over a specified period of time, more than 30 months after the date the borrower voluntarily exercises that right or option, or (iii) which exceed, in the aggregate, more than two percent (2%) of the amount prepaid."
SECTION 9.  Section 6 of S.L. 2008‑226 reads as rewritten:
"SECTION 6. Section 4 of this act becomes effective July 1, 2008. Sections 1, 2, 3, and 5 become effective November 1, 2008, and expire May 31, 2013. The remainder of this act is effective when it becomes law."
SECTION 10.  Sections 1 through 3 of this act become effective November 1, 2010, and expire on May 31, 2013. Sections 4 through 8 of this act become effective September 1, 2010. The remainder of this act is effective when it becomes law.
In the General Assembly read three times and ratified this the 8th day of July, 2010.

	s/	 Walter H. Dalton
	 President of the Senate

	s/	 Joe Hackney
	 Speaker of the House of Representatives

	s/	 Beverly E. Perdue
	 Governor

Approved 2:27 p.m. this 2nd day of August, 2010