North Carolina introduced a new law affecting mortgage loan originators. The new law is named HB 1523 and requires each mortgage loan originator to be covered by a surety bond through employment with a licensed mortgage lender, broker or servicer. The bare minimum surety bond amount for mortgage brokers is $75,000. Should the quantity of loans originated be over $10 million, but less than $50 million, the surety bond quantity must be $125,000. Total loans originated in excess of $50 million in North Carolina in a 12-month time period require a surety bond that is no less than $250,000.
The minimum surety bond quantity required of mortgage lenders is $150,000. Should the quantity of loans originated be in excess of $10 million, but no more than $50 million, the surety bond amount must be $250,000; total loans originated in excess of $50 million in North Carolina requires a surety bond in a minimum amount of $500,000. HB 1523 states that the lender, broker or servicer’s surety bond must guarantee all the originators that the licensee hired and the bond amount will be calculated by the quantity of loans that the mortgage lender or broker originated in North Carolina in a years time. The previous law required mortgage lenders and brokers to acquire a surety bond in the amount of $25,000.
The SFAA modified the AIA in this legislation and were able to influence the bill sponsor to divide broker bond amounts from lender/servicer bond amounts. The surety bond amounts for brokers were sliced in half before the bill was accepted at the House. The surety bond quantities for lenders and servicers were not altered. The SFAA continued to cooperate with the AIA in the Senate to get the bond amounts decreased. The Senate felt that the bond amounts had already been dealt with. No other opposition was felt from any other concerned party on the surety bond amounts.
Another amendment was added to address persons (natural persons) who presently are licensed as a mortgage originator and would be covered by their employer’s surety bond. If such a “natural person” now requests a mortgage broker’s license and they are not an employee of a mortgage broker/lender, they may be licensed as an “exclusive mortgage broker.” Such individuals can proceed as an agent for only a single lender or broker. They only have the option of selling fixed term mortgages with considerably equivalent monthly payments; they either have to satisfy the new bond quantity required of mortgage brokers or they have to be covered by a surety bond provided by the lender/ broker for whom they are an exclusive mortgage broker. The surety bond amount must be $5 million or an amount equivalent to the sum of the surety bond amounts of all the exclusive mortgage brokers that the lender or broker supervises, whichever is less.