§ 24‑1.1A. Contractrates on home loans secured by first mortgages or first deeds of trust.
(a) Notwithstanding anyother provision of this Chapter, but subject to the provisions of G.S. 24‑1.1E,parties to a home loan may contract in writing as follows:
(1) Where the principalamount is ten thousand dollars ($10,000) or more the parties may contract forthe payment of interest as agreed upon by the parties;
(2) Where the principalamount is less than ten thousand dollars ($10,000) the parties may contract forthe payment of interest as agreed upon by the parties, if the lender is either(i) approved as a mortgagee by the Secretary of Housing and Urban Development,the Federal Housing Administration, the Department of Veterans Affairs, anational mortgage association or any federal agency; or (ii) a local or foreignbank, savings and loan association or service corporation wholly owned by oneor more savings and loan associations and permitted by law to make home loans,credit union or insurance company; or (iii) a State or federal agency;
(3) Where the principalamount is less than ten thousand dollars ($10,000) and the lender is not alender described in the preceding subdivision (2) the parties may contract forthe payment of interest not in excess of sixteen percent (16%) per annum.
(4) Notwithstanding anyother provision of law, where the lender is an affiliate operating in the sameoffice or subsidiary operating in the same office of a licensee under the NorthCarolina Consumer Finance Act, the lender may charge interest to be computedonly on the following basis: monthly on the outstanding principal balance at arate not to exceed the rate provided in this subdivision.
Onthe fifteenth day of each month, the Commissioner of Banks shall announce andpublish the maximum rate of interest permitted by this subdivision. Such rateshall be the latest published noncompetitive rate for U.S. Treasury bills witha six‑month maturity as of the fifteenth day of the month plus sixpercent (6%), rounded upward or downward, as the case may be, to the nearestone‑half of one percent (1/2 of 1%) or fifteen percent (15%), whicheveris greater. If there is no nearest one‑half of one percent (1/2 of 1%),the Commissioner shall round downward to the lower one‑half of one percent(1/2 of 1%). The rate so announced shall be the maximum rate permitted for theterm of loans made under this section during the following calendar month whenthe parties to such loans have agreed that the rate of interest to be chargedby the lender and paid by the borrower shall not vary or be adjusted during theterm of the loan. The parties to a loan made under this section may agree to arate of interest which shall vary or be adjusted during the term of the loan inwhich case the maximum rate of interest permitted on such loans during a monthduring the term of the loan shall be the rate announced by the Commissioner inthe preceding calendar month.
Anaffiliate operating in the same office or subsidiary operating in the sameoffice of a licensee under the North Carolina Consumer Finance Act may not makea home loan for a term in excess of six (6) months which provides for a balloonpayment. For purposes of this subdivision, a balloon payment means anyscheduled payment that is more than twice as large as the average of earlierscheduled payments. This subsection does not apply to equity lines of credit asdefined in G.S. 45‑81.
(a1) Subject to federalrequirements, when a natural person applies for a home loan primarily forpersonal, family, or household purposes, the lender shall comply with theprovisions of this subsection.
(1) Not later than thedate of the home loan closing or three business days after the lender receivesan application for a home loan, whichever is earlier, the lender shall deliveror mail to the applicant information and examples of amortization of home loansreflecting various terms in a form made available by the Commissioner of Banks.The Commissioner of Banks shall develop and make available to home loan lendersmaterials necessary to satisfy the provisions of this subsection.
(2) Not later than threebusiness days after the home loan closing, the lender shall deliver or mail tothe borrower an amortization schedule for the borrower's home loan. Provided,however, that a lender shall not be required to provide an amortizationschedule unless the loan is a fixed rate home loan that requires the borrowerto make regularly scheduled periodic amortizing payments of principal andinterest; and provided further that, with respect to a construction/permanenthome loan, the amortization schedule must be provided only with respect to thepermanent portion of the home loan during which amortization occurs.
(3) If the home loantransaction involves more than one natural person, the lender may deliver ormail the materials required by this subsection to any one or more of suchpersons.
(4) This subsection doesnot apply if the home loan applicant is not a natural person or if the homeloan is for a purpose other than a personal, family, or household purpose.
(b) Except as providedin subdivision (1) of this subsection, a lender and a borrower may agree on anyterms as to the prepayment of a home loan.
(1) No prepayment feesor penalties shall be contracted by the borrower and lender with respect to anyhome loan in which: (i) the principal amount borrowed is one hundred fiftythousand dollars ($150,000) or less, (ii) the borrower is a natural person,(iii) the debt is incurred by the borrower primarily for personal, family, orhousehold purposes, and (iv) the loan is secured by a first mortgage or firstdeed of trust on real estate upon which there is located or there is to belocated a structure or structures designed principally for occupancy of fromone to four families which is or will be occupied by the borrower as theborrower's principal dwelling.
(2) The limitations onprepayment fees and penalties contained in subdivision (b)(1) of this sectionshall not apply to the extent state law limitations on prepayment fees andpenalties are preempted by federal law or regulation.
(c) If the home loan isone described in subdivision (a)(1) or subdivision (a)(2) of this section, thelender may charge the borrower the following fees and charges in addition tointerest and other fees and charges as permitted in this section and latepayment charges as permitted in G.S. 24‑10.1:
(1) At or before loanclosing, the lender may charge such of the following fees and charges as may beagreed upon by the parties notwithstanding the provisions of any State law,other than G.S. 24‑1.1E, limiting the amount of such fees or charges:
a. Loan application,origination, commitment, and interest rate lock fees;
a1. Fees to administer aconstruction loan or a construction/permanent loan, including inspection feesand loan conversion fees;
b. Discount points, butonly to the extent the discount points are paid for the purpose of reducing,and in fact result in a bona fide reduction of the interest rate or time‑pricedifferential;
c. Assumption fees tothe extent permitted by G.S. 24‑10(d);
d. Appraisal fees tothe extent permitted by G.S. 24‑10(h);
e. Fees and charges tothe extent permitted by G.S. 24‑8(d); and
f. Additional fees andcharges, however individually or collectively denominated, payable to thelender which, in the aggregate, do not exceed the greater of (i) one quarter ofone percent (1/4 of 1%) of the principal amount of the loan, or (ii) onehundred fifty dollars ($150.00).
(2) Except as providedin subsection (g) of this section with respect to the deferral of loanpayments, upon modification, renewal, extension, or amendment of any of theterms of a home loan, the lender may charge such of the following fees andcharges as may be agreed upon by the parties notwithstanding the provisions ofany State law, other than G.S. 24‑1.1E, limiting the amount of such feesor charges:
a. Discount points, butonly to the extent the discount points are paid for the purpose of reducing,and in fact result in a bona fide reduction of, the interest rate or time‑pricedifferential;
a1. Fees which do notexceed one quarter of one percent (1/4 of 1%) of the principal amount of theloan if the principal amount of the loan is less than one hundred fiftythousand dollars ($150,000), or one percent of the principal amount of the loanif the principal amount of the loan is one hundred fifty thousand dollars($150,000) or more, for the conversion of a variable interest rate loan to afixed interest rate loan, of a fixed interest rate loan to a variable interestrate loan, of a closed‑end loan to an open‑end loan, or of an open‑endedloan to a closed‑end loan;
b. Assumption fees tothe extent permitted by G.S. 24‑10(d);
c. Appraisal fees tothe extent permitted by G.S. 24‑10(h);
d. Fees and charges tothe extent permitted by G.S. 24‑8(d); and
e. If no fees arecharged under subdivision (c)(2)b. of this section, additional fees andcharges, however individually or collectively denominated, payable to thelender which, in the aggregate, do not exceed the greater of (i) one quarter ofone percent (1/4 of 1%) of the balance outstanding at the time of themodification, renewal, extension, or amendment of terms, or (ii) one hundredfifty dollars ($150.00). The fees and charges permitted by this sub‑subdivisionmay be charged only pursuant to a written agreement which states the amount ofthe fee or charge and is made at the time of the specific modification,renewal, extension, or amendment, or at the time the specific modification,renewal, extension, or amendment is requested.
(c1) No lender on homeloans under subdivision (a)(3) of this section may charge or receive anyinterest, fees, charges, or discount points other than: (i) to the extentpermitted by G.S. 24‑8(d), sums for the payment of bona fide loan‑relatedgoods, products, and services provided or to be provided by third parties andsums for the payment of taxes, filing fees, recording fees, and other chargesand fees, paid or to be paid to public officials; (ii) interest as permitted insubdivision (a)(3) of this section; and (iii) late payment charges to theextent permitted by G.S. 24‑10.1.
(c2) No lender on homeloans under subdivision (a)(4) of this section may charge or receive anyinterest, fees, charges, or discount points other than: (i) the fees describedin G.S. 24‑10; (ii) to the extent permitted by G.S. 24‑8(d), sumsfor the payment of bona fide loan‑related goods, products, and servicesprovided or to be provided by third parties and sums for the payment of taxes,filing fees, recording fees, and other charges and fees, paid or to be paid topublic officials; (iii) interest as permitted in subdivision (a)(4) of thissection; and (iv) late payment charges to the extent permitted by G.S. 24‑10.1.
(d) The loans orinvestments regulated by G.S. 53‑45 shall not be subject to theprovisions of this section.
(e) The term "homeloan" shall mean a loan, other than an open‑end credit plan, wherethe principal amount is less than three hundred thousand dollars ($300,000)secured by a first mortgage or first deed of trust on real estate upon whichthere is located or there is to be located one or more single‑familydwellings or dwelling units.
(f) Any home loanobligation existing before June 13, 1977, shall be construed with regard to thelaw existing at the time the home loan or commitment to lend was made and thisact shall only apply to home loans or loan commitments made from and after June13, 1977; provided, however, that variable rate home loan obligations executedprior to April 3, 1974, which by their terms provide that the interest rateshall be decreased and may be increased in accordance with a stated cost ofmoney formula or other index shall be enforceable according to the terms andtenor of said written obligations.
(g) The parties to ahome loan governed by subdivision (a)(1) or (2) of this section may contract todefer the payment of all or part of one or more unpaid installments and forpayment of interest on deferred interest as agreed upon by the parties. Theparties may agree that deferred interest may be added to the principal balanceof the loan. This subsection shall not be construed to limit payment ofinterest upon interest in connection with other types of loans. Except asrestricted by G.S. 24‑1.1E, the lender may charge deferral fees as may beagreed upon by the parties to defer the payment of one or more unpaidinstallments. If the home loan is of a type described in subdivision (1) ofthis subsection, the deferral fees shall be subject to the limitations setforth in subdivision (2) of this subsection:
(1) A home loan will besubject to the deferral fee limitations set forth in subdivision (2) of thissubsection if:
a. The borrower is anatural person;
b. The debt is incurredby the borrower primarily for personal, family, or household purposes; and
c. The loan is securedby a first mortgage or first deed of trust on real estate upon which there islocated or there is to be located a structure or structures designedprincipally for occupancy of from one to four families which is or will beoccupied by the borrower as the borrower's principal dwelling.
(2) Deferral fees forhome loans identified in subdivision (1) of this subsection shall be subject tothe following limitations:
a. Deferral fees may becharged only pursuant to an agreement which states the amount of the fee and ismade at the time of the specific deferral or at the time the specific deferralis requested; provided, that if the agreement relates to an installment whichis then past due for 15 days or more, the agreement must be in writing and signedby at least one of the borrowers. For purposes of this subdivision an agreementwill be considered a signed writing if the lender receives from at least one ofthe borrowers a facsimile or computer‑generated message confirming orotherwise accepting the agreement.
b. Deferral fees maynot exceed the greater of five percent (5%) of each installment deferred orfifty dollars ($50.00), multiplied by the number of complete months in thedeferral period. A month shall be measured from the date an installment is due.The deferral period is that period during which no payment is required or madeas measured from the date on which the deferred installment would otherwisehave been due to the date the next installment is due under the terms of thenote or the deferral agreement.
c. If a deferral feehas once been imposed with respect to a particular installment, no deferral feemay be imposed with respect to any future payment which would have been timelyand sufficient but for the previous deferral.
d. If a deferral fee ischarged pursuant to a deferral agreement, a late charge may be imposed withrespect to the deferred payment only if the amount deferred is not paid whendue under the terms of the deferral agreement and no new deferral agreement isentered into with respect to that installment.
e. A lender may chargea deferral fee under this subsection for deferring the payment of all or partof one or more regularly scheduled payments, regardless of whether the deferralresults in an extension of the loan maturity date or the date a balloon paymentis due. A modification or extension of the loan maturity date or the date aballoon payment is due which is not incident to the deferral of a regularlyscheduled payment shall be considered a modification or extension subject tothe provisions of subdivision (c)(2) of this section.
(h) The parties to ahome loan governed by subdivision (a)(1) or (2) of this section may agree inwriting to a mortgage or deed of trust which provides that periodic paymentsmay be graduated during parts of or over the entire term of the loan. Theparties to such a loan may also agree in writing to a mortgage or deed of trustwhich provides that periodic disbursements of part of the loan proceeds may bemade by the lender over a period of time agreed upon by the parties, or over aperiod of time agreed upon by the parties ending with the death of theborrower(s). Such mortgages or deeds of trust may include provisions for addingdeferred interest to principal or otherwise providing for charging of intereston deferred interest as agreed upon by the parties. This subsection shall notbe construed to limit other types of mortgages or deeds of trust or methods orplans of disbursement or repayment of loans that may be agreed upon by theparties.
(i) Nothing in thissection shall be construed to authorize or prohibit a lender, a borrower, orany other party to pay compensation to a mortgage broker or a mortgage bankerfor services provided by the mortgage broker or the mortgage banker inconnection with a home loan. (1973, c. 1119, ss. 1, 2; 1975, c. 260, s. 1; 1977, c.542, ss. 1, 2; 1979, c. 362; 1983, c. 126, s. 4; 1985, c. 154, s. 1; c. 381,ss. 1, 2; 1987, c. 444, ss. 1, 3, 4; c. 853, s. 4; 1989, c. 17, ss. 13, 14;1999‑332, s. 1; 2000‑140, ss. 40(a), 40(b); 2001‑340, s. 1;2001‑413, s. 9; 2001‑487, s. 56.)
§ 24‑1.1A. Contractrates on home loans secured by first mortgages or first deeds of trust.
(a) Notwithstanding anyother provision of this Chapter, but subject to the provisions of G.S. 24‑1.1E,parties to a home loan may contract in writing as follows:
(1) Where the principalamount is ten thousand dollars ($10,000) or more the parties may contract forthe payment of interest as agreed upon by the parties;
(2) Where the principalamount is less than ten thousand dollars ($10,000) the parties may contract forthe payment of interest as agreed upon by the parties, if the lender is either(i) approved as a mortgagee by the Secretary of Housing and Urban Development,the Federal Housing Administration, the Department of Veterans Affairs, anational mortgage association or any federal agency; or (ii) a local or foreignbank, savings and loan association or service corporation wholly owned by oneor more savings and loan associations and permitted by law to make home loans,credit union or insurance company; or (iii) a State or federal agency;
(3) Where the principalamount is less than ten thousand dollars ($10,000) and the lender is not alender described in the preceding subdivision (2) the parties may contract forthe payment of interest not in excess of sixteen percent (16%) per annum.
(4) Notwithstanding anyother provision of law, where the lender is an affiliate operating in the sameoffice or subsidiary operating in the same office of a licensee under the NorthCarolina Consumer Finance Act, the lender may charge interest to be computedonly on the following basis: monthly on the outstanding principal balance at arate not to exceed the rate provided in this subdivision.
Onthe fifteenth day of each month, the Commissioner of Banks shall announce andpublish the maximum rate of interest permitted by this subdivision. Such rateshall be the latest published noncompetitive rate for U.S. Treasury bills witha six‑month maturity as of the fifteenth day of the month plus sixpercent (6%), rounded upward or downward, as the case may be, to the nearestone‑half of one percent (1/2 of 1%) or fifteen percent (15%), whicheveris greater. If there is no nearest one‑half of one percent (1/2 of 1%),the Commissioner shall round downward to the lower one‑half of one percent(1/2 of 1%). The rate so announced shall be the maximum rate permitted for theterm of loans made under this section during the following calendar month whenthe parties to such loans have agreed that the rate of interest to be chargedby the lender and paid by the borrower shall not vary or be adjusted during theterm of the loan. The parties to a loan made under this section may agree to arate of interest which shall vary or be adjusted during the term of the loan inwhich case the maximum rate of interest permitted on such loans during a monthduring the term of the loan shall be the rate announced by the Commissioner inthe preceding calendar month.
Anaffiliate operating in the same office or subsidiary operating in the sameoffice of a licensee under the North Carolina Consumer Finance Act may not makea home loan for a term in excess of six (6) months which provides for a balloonpayment. For purposes of this subdivision, a balloon payment means anyscheduled payment that is more than twice as large as the average of earlierscheduled payments. This subsection does not apply to equity lines of credit asdefined in G.S. 45‑81.
(a1) Subject to federalrequirements, when a natural person applies for a home loan primarily forpersonal, family, or household purposes, the lender shall comply with theprovisions of this subsection.
(1) Not later than thedate of the home loan closing or three business days after the lender receivesan application for a home loan, whichever is earlier, the lender shall deliveror mail to the applicant information and examples of amortization of home loansreflecting various terms in a form made available by the Commissioner of Banks.The Commissioner of Banks shall develop and make available to home loan lendersmaterials necessary to satisfy the provisions of this subsection.
(2) Not later than threebusiness days after the home loan closing, the lender shall deliver or mail tothe borrower an amortization schedule for the borrower's home loan. Provided,however, that a lender shall not be required to provide an amortizationschedule unless the loan is a fixed rate home loan that requires the borrowerto make regularly scheduled periodic amortizing payments of principal andinterest; and provided further that, with respect to a construction/permanenthome loan, the amortization schedule must be provided only with respect to thepermanent portion of the home loan during which amortization occurs.
(3) If the home loantransaction involves more than one natural person, the lender may deliver ormail the materials required by this subsection to any one or more of suchpersons.
(4) This subsection doesnot apply if the home loan applicant is not a natural person or if the homeloan is for a purpose other than a personal, family, or household purpose.
(b) Except as providedin subdivision (1) of this subsection, a lender and a borrower may agree on anyterms as to the prepayment of a home loan.
(1) No prepayment feesor penalties shall be contracted by the borrower and lender with respect to anyhome loan in which: (i) the principal amount borrowed is one hundred fiftythousand dollars ($150,000) or less, (ii) the borrower is a natural person,(iii) the debt is incurred by the borrower primarily for personal, family, orhousehold purposes, and (iv) the loan is secured by a first mortgage or firstdeed of trust on real estate upon which there is located or there is to belocated a structure or structures designed principally for occupancy of fromone to four families which is or will be occupied by the borrower as theborrower's principal dwelling.
(2) The limitations onprepayment fees and penalties contained in subdivision (b)(1) of this sectionshall not apply to the extent state law limitations on prepayment fees andpenalties are preempted by federal law or regulation.
(c) If the home loan isone described in subdivision (a)(1) or subdivision (a)(2) of this section, thelender may charge the borrower the following fees and charges in addition tointerest and other fees and charges as permitted in this section and latepayment charges as permitted in G.S. 24‑10.1:
(1) At or before loanclosing, the lender may charge such of the following fees and charges as may beagreed upon by the parties notwithstanding the provisions of any State law,other than G.S. 24‑1.1E, limiting the amount of such fees or charges:
a. Loan application,origination, commitment, and interest rate lock fees;
a1. Fees to administer aconstruction loan or a construction/permanent loan, including inspection feesand loan conversion fees;
b. Discount points, butonly to the extent the discount points are paid for the purpose of reducing,and in fact result in a bona fide reduction of the interest rate or time‑pricedifferential;
c. Assumption fees tothe extent permitted by G.S. 24‑10(d);
d. Appraisal fees tothe extent permitted by G.S. 24‑10(h);
e. Fees and charges tothe extent permitted by G.S. 24‑8(d); and
f. Additional fees andcharges, however individually or collectively denominated, payable to thelender which, in the aggregate, do not exceed the greater of (i) one quarter ofone percent (1/4 of 1%) of the principal amount of the loan, or (ii) onehundred fifty dollars ($150.00).
(2) Except as providedin subsection (g) of this section with respect to the deferral of loanpayments, upon modification, renewal, extension, or amendment of any of theterms of a home loan, the lender may charge such of the following fees andcharges as may be agreed upon by the parties notwithstanding the provisions ofany State law, other than G.S. 24‑1.1E, limiting the amount of such feesor charges:
a. Discount points, butonly to the extent the discount points are paid for the purpose of reducing,and in fact result in a bona fide reduction of, the interest rate or time‑pricedifferential;
a1. Fees which do notexceed one quarter of one percent (1/4 of 1%) of the principal amount of theloan if the principal amount of the loan is less than one hundred fiftythousand dollars ($150,000), or one percent of the principal amount of the loanif the principal amount of the loan is one hundred fifty thousand dollars($150,000) or more, for the conversion of a variable interest rate loan to afixed interest rate loan, of a fixed interest rate loan to a variable interestrate loan, of a closed‑end loan to an open‑end loan, or of an open‑endedloan to a closed‑end loan;
b. Assumption fees tothe extent permitted by G.S. 24‑10(d);
c. Appraisal fees tothe extent permitted by G.S. 24‑10(h);
d. Fees and charges tothe extent permitted by G.S. 24‑8(d); and
e. If no fees arecharged under subdivision (c)(2)b. of this section, additional fees andcharges, however individually or collectively denominated, payable to thelender which, in the aggregate, do not exceed the greater of (i) one quarter ofone percent (1/4 of 1%) of the balance outstanding at the time of themodification, renewal, extension, or amendment of terms, or (ii) one hundredfifty dollars ($150.00). The fees and charges permitted by this sub‑subdivisionmay be charged only pursuant to a written agreement which states the amount ofthe fee or charge and is made at the time of the specific modification,renewal, extension, or amendment, or at the time the specific modification,renewal, extension, or amendment is requested.
(c1) No lender on homeloans under subdivision (a)(3) of this section may charge or receive anyinterest, fees, charges, or discount points other than: (i) to the extentpermitted by G.S. 24‑8(d), sums for the payment of bona fide loan‑relatedgoods, products, and services provided or to be provided by third parties andsums for the payment of taxes, filing fees, recording fees, and other chargesand fees, paid or to be paid to public officials; (ii) interest as permitted insubdivision (a)(3) of this section; and (iii) late payment charges to theextent permitted by G.S. 24‑10.1.
(c2) No lender on homeloans under subdivision (a)(4) of this section may charge or receive anyinterest, fees, charges, or discount points other than: (i) the fees describedin G.S. 24‑10; (ii) to the extent permitted by G.S. 24‑8(d), sumsfor the payment of bona fide loan‑related goods, products, and servicesprovided or to be provided by third parties and sums for the payment of taxes,filing fees, recording fees, and other charges and fees, paid or to be paid topublic officials; (iii) interest as permitted in subdivision (a)(4) of thissection; and (iv) late payment charges to the extent permitted by G.S. 24‑10.1.
(d) The loans orinvestments regulated by G.S. 53‑45 shall not be subject to theprovisions of this section.
(e) The term "homeloan" shall mean a loan, other than an open‑end credit plan, wherethe principal amount is less than three hundred thousand dollars ($300,000)secured by a first mortgage or first deed of trust on real estate upon whichthere is located or there is to be located one or more single‑familydwellings or dwelling units.
(f) Any home loanobligation existing before June 13, 1977, shall be construed with regard to thelaw existing at the time the home loan or commitment to lend was made and thisact shall only apply to home loans or loan commitments made from and after June13, 1977; provided, however, that variable rate home loan obligations executedprior to April 3, 1974, which by their terms provide that the interest rateshall be decreased and may be increased in accordance with a stated cost ofmoney formula or other index shall be enforceable according to the terms andtenor of said written obligations.
(g) The parties to ahome loan governed by subdivision (a)(1) or (2) of this section may contract todefer the payment of all or part of one or more unpaid installments and forpayment of interest on deferred interest as agreed upon by the parties. Theparties may agree that deferred interest may be added to the principal balanceof the loan. This subsection shall not be construed to limit payment ofinterest upon interest in connection with other types of loans. Except asrestricted by G.S. 24‑1.1E, the lender may charge deferral fees as may beagreed upon by the parties to defer the payment of one or more unpaidinstallments. If the home loan is of a type described in subdivision (1) ofthis subsection, the deferral fees shall be subject to the limitations setforth in subdivision (2) of this subsection:
(1) A home loan will besubject to the deferral fee limitations set forth in subdivision (2) of thissubsection if:
a. The borrower is anatural person;
b. The debt is incurredby the borrower primarily for personal, family, or household purposes; and
c. The loan is securedby a first mortgage or first deed of trust on real estate upon which there islocated or there is to be located a structure or structures designedprincipally for occupancy of from one to four families which is or will beoccupied by the borrower as the borrower's principal dwelling.
(2) Deferral fees forhome loans identified in subdivision (1) of this subsection shall be subject tothe following limitations:
a. Deferral fees may becharged only pursuant to an agreement which states the amount of the fee and ismade at the time of the specific deferral or at the time the specific deferralis requested; provided, that if the agreement relates to an installment whichis then past due for 15 days or more, the agreement must be in writing and signedby at least one of the borrowers. For purposes of this subdivision an agreementwill be considered a signed writing if the lender receives from at least one ofthe borrowers a facsimile or computer‑generated message confirming orotherwise accepting the agreement.
b. Deferral fees maynot exceed the greater of five percent (5%) of each installment deferred orfifty dollars ($50.00), multiplied by the number of complete months in thedeferral period. A month shall be measured from the date an installment is due.The deferral period is that period during which no payment is required or madeas measured from the date on which the deferred installment would otherwisehave been due to the date the next installment is due under the terms of thenote or the deferral agreement.
c. If a deferral feehas once been imposed with respect to a particular installment, no deferral feemay be imposed with respect to any future payment which would have been timelyand sufficient but for the previous deferral.
d. If a deferral fee ischarged pursuant to a deferral agreement, a late charge may be imposed withrespect to the deferred payment only if the amount deferred is not paid whendue under the terms of the deferral agreement and no new deferral agreement isentered into with respect to that installment.
e. A lender may chargea deferral fee under this subsection for deferring the payment of all or partof one or more regularly scheduled payments, regardless of whether the deferralresults in an extension of the loan maturity date or the date a balloon paymentis due. A modification or extension of the loan maturity date or the date aballoon payment is due which is not incident to the deferral of a regularlyscheduled payment shall be considered a modification or extension subject tothe provisions of subdivision (c)(2) of this section.
(h) The parties to ahome loan governed by subdivision (a)(1) or (2) of this section may agree inwriting to a mortgage or deed of trust which provides that periodic paymentsmay be graduated during parts of or over the entire term of the loan. Theparties to such a loan may also agree in writing to a mortgage or deed of trustwhich provides that periodic disbursements of part of the loan proceeds may bemade by the lender over a period of time agreed upon by the parties, or over aperiod of time agreed upon by the parties ending with the death of theborrower(s). Such mortgages or deeds of trust may include provisions for addingdeferred interest to principal or otherwise providing for charging of intereston deferred interest as agreed upon by the parties. This subsection shall notbe construed to limit other types of mortgages or deeds of trust or methods orplans of disbursement or repayment of loans that may be agreed upon by theparties.
(i) Nothing in thissection shall be construed to authorize or prohibit a lender, a borrower, orany other party to pay compensation to a mortgage broker or a mortgage bankerfor services provided by the mortgage broker or the mortgage banker inconnection with a home loan. (1973, c. 1119, ss. 1, 2; 1975, c. 260, s. 1; 1977, c.542, ss. 1, 2; 1979, c. 362; 1983, c. 126, s. 4; 1985, c. 154, s. 1; c. 381,ss. 1, 2; 1987, c. 444, ss. 1, 3, 4; c. 853, s. 4; 1989, c. 17, ss. 13, 14;1999‑332, s. 1; 2000‑140, ss. 40(a), 40(b); 2001‑340, s. 1;2001‑413, s. 9; 2001‑487, s. 56.)
§ 24‑1.1A. Contractrates on home loans secured by first mortgages or first deeds of trust.
(a) Notwithstanding anyother provision of this Chapter, but subject to the provisions of G.S. 24‑1.1E,parties to a home loan may contract in writing as follows:
(1) Where the principalamount is ten thousand dollars ($10,000) or more the parties may contract forthe payment of interest as agreed upon by the parties;
(2) Where the principalamount is less than ten thousand dollars ($10,000) the parties may contract forthe payment of interest as agreed upon by the parties, if the lender is either(i) approved as a mortgagee by the Secretary of Housing and Urban Development,the Federal Housing Administration, the Department of Veterans Affairs, anational mortgage association or any federal agency; or (ii) a local or foreignbank, savings and loan association or service corporation wholly owned by oneor more savings and loan associations and permitted by law to make home loans,credit union or insurance company; or (iii) a State or federal agency;
(3) Where the principalamount is less than ten thousand dollars ($10,000) and the lender is not alender described in the preceding subdivision (2) the parties may contract forthe payment of interest not in excess of sixteen percent (16%) per annum.
(4) Notwithstanding anyother provision of law, where the lender is an affiliate operating in the sameoffice or subsidiary operating in the same office of a licensee under the NorthCarolina Consumer Finance Act, the lender may charge interest to be computedonly on the following basis: monthly on the outstanding principal balance at arate not to exceed the rate provided in this subdivision.
Onthe fifteenth day of each month, the Commissioner of Banks shall announce andpublish the maximum rate of interest permitted by this subdivision. Such rateshall be the latest published noncompetitive rate for U.S. Treasury bills witha six‑month maturity as of the fifteenth day of the month plus sixpercent (6%), rounded upward or downward, as the case may be, to the nearestone‑half of one percent (1/2 of 1%) or fifteen percent (15%), whicheveris greater. If there is no nearest one‑half of one percent (1/2 of 1%),the Commissioner shall round downward to the lower one‑half of one percent(1/2 of 1%). The rate so announced shall be the maximum rate permitted for theterm of loans made under this section during the following calendar month whenthe parties to such loans have agreed that the rate of interest to be chargedby the lender and paid by the borrower shall not vary or be adjusted during theterm of the loan. The parties to a loan made under this section may agree to arate of interest which shall vary or be adjusted during the term of the loan inwhich case the maximum rate of interest permitted on such loans during a monthduring the term of the loan shall be the rate announced by the Commissioner inthe preceding calendar month.
Anaffiliate operating in the same office or subsidiary operating in the sameoffice of a licensee under the North Carolina Consumer Finance Act may not makea home loan for a term in excess of six (6) months which provides for a balloonpayment. For purposes of this subdivision, a balloon payment means anyscheduled payment that is more than twice as large as the average of earlierscheduled payments. This subsection does not apply to equity lines of credit asdefined in G.S. 45‑81.
(a1) Subject to federalrequirements, when a natural person applies for a home loan primarily forpersonal, family, or household purposes, the lender shall comply with theprovisions of this subsection.
(1) Not later than thedate of the home loan closing or three business days after the lender receivesan application for a home loan, whichever is earlier, the lender shall deliveror mail to the applicant information and examples of amortization of home loansreflecting various terms in a form made available by the Commissioner of Banks.The Commissioner of Banks shall develop and make available to home loan lendersmaterials necessary to satisfy the provisions of this subsection.
(2) Not later than threebusiness days after the home loan closing, the lender shall deliver or mail tothe borrower an amortization schedule for the borrower's home loan. Provided,however, that a lender shall not be required to provide an amortizationschedule unless the loan is a fixed rate home loan that requires the borrowerto make regularly scheduled periodic amortizing payments of principal andinterest; and provided further that, with respect to a construction/permanenthome loan, the amortization schedule must be provided only with respect to thepermanent portion of the home loan during which amortization occurs.
(3) If the home loantransaction involves more than one natural person, the lender may deliver ormail the materials required by this subsection to any one or more of suchpersons.
(4) This subsection doesnot apply if the home loan applicant is not a natural person or if the homeloan is for a purpose other than a personal, family, or household purpose.
(b) Except as providedin subdivision (1) of this subsection, a lender and a borrower may agree on anyterms as to the prepayment of a home loan.
(1) No prepayment feesor penalties shall be contracted by the borrower and lender with respect to anyhome loan in which: (i) the principal amount borrowed is one hundred fiftythousand dollars ($150,000) or less, (ii) the borrower is a natural person,(iii) the debt is incurred by the borrower primarily for personal, family, orhousehold purposes, and (iv) the loan is secured by a first mortgage or firstdeed of trust on real estate upon which there is located or there is to belocated a structure or structures designed principally for occupancy of fromone to four families which is or will be occupied by the borrower as theborrower's principal dwelling.
(2) The limitations onprepayment fees and penalties contained in subdivision (b)(1) of this sectionshall not apply to the extent state law limitations on prepayment fees andpenalties are preempted by federal law or regulation.
(c) If the home loan isone described in subdivision (a)(1) or subdivision (a)(2) of this section, thelender may charge the borrower the following fees and charges in addition tointerest and other fees and charges as permitted in this section and latepayment charges as permitted in G.S. 24‑10.1:
(1) At or before loanclosing, the lender may charge such of the following fees and charges as may beagreed upon by the parties notwithstanding the provisions of any State law,other than G.S. 24‑1.1E, limiting the amount of such fees or charges:
a. Loan application,origination, commitment, and interest rate lock fees;
a1. Fees to administer aconstruction loan or a construction/permanent loan, including inspection feesand loan conversion fees;
b. Discount points, butonly to the extent the discount points are paid for the purpose of reducing,and in fact result in a bona fide reduction of the interest rate or time‑pricedifferential;
c. Assumption fees tothe extent permitted by G.S. 24‑10(d);
d. Appraisal fees tothe extent permitted by G.S. 24‑10(h);
e. Fees and charges tothe extent permitted by G.S. 24‑8(d); and
f. Additional fees andcharges, however individually or collectively denominated, payable to thelender which, in the aggregate, do not exceed the greater of (i) one quarter ofone percent (1/4 of 1%) of the principal amount of the loan, or (ii) onehundred fifty dollars ($150.00).
(2) Except as providedin subsection (g) of this section with respect to the deferral of loanpayments, upon modification, renewal, extension, or amendment of any of theterms of a home loan, the lender may charge such of the following fees andcharges as may be agreed upon by the parties notwithstanding the provisions ofany State law, other than G.S. 24‑1.1E, limiting the amount of such feesor charges:
a. Discount points, butonly to the extent the discount points are paid for the purpose of reducing,and in fact result in a bona fide reduction of, the interest rate or time‑pricedifferential;
a1. Fees which do notexceed one quarter of one percent (1/4 of 1%) of the principal amount of theloan if the principal amount of the loan is less than one hundred fiftythousand dollars ($150,000), or one percent of the principal amount of the loanif the principal amount of the loan is one hundred fifty thousand dollars($150,000) or more, for the conversion of a variable interest rate loan to afixed interest rate loan, of a fixed interest rate loan to a variable interestrate loan, of a closed‑end loan to an open‑end loan, or of an open‑endedloan to a closed‑end loan;
b. Assumption fees tothe extent permitted by G.S. 24‑10(d);
c. Appraisal fees tothe extent permitted by G.S. 24‑10(h);
d. Fees and charges tothe extent permitted by G.S. 24‑8(d); and
e. If no fees arecharged under subdivision (c)(2)b. of this section, additional fees andcharges, however individually or collectively denominated, payable to thelender which, in the aggregate, do not exceed the greater of (i) one quarter ofone percent (1/4 of 1%) of the balance outstanding at the time of themodification, renewal, extension, or amendment of terms, or (ii) one hundredfifty dollars ($150.00). The fees and charges permitted by this sub‑subdivisionmay be charged only pursuant to a written agreement which states the amount ofthe fee or charge and is made at the time of the specific modification,renewal, extension, or amendment, or at the time the specific modification,renewal, extension, or amendment is requested.
(c1) No lender on homeloans under subdivision (a)(3) of this section may charge or receive anyinterest, fees, charges, or discount points other than: (i) to the extentpermitted by G.S. 24‑8(d), sums for the payment of bona fide loan‑relatedgoods, products, and services provided or to be provided by third parties andsums for the payment of taxes, filing fees, recording fees, and other chargesand fees, paid or to be paid to public officials; (ii) interest as permitted insubdivision (a)(3) of this section; and (iii) late payment charges to theextent permitted by G.S. 24‑10.1.
(c2) No lender on homeloans under subdivision (a)(4) of this section may charge or receive anyinterest, fees, charges, or discount points other than: (i) the fees describedin G.S. 24‑10; (ii) to the extent permitted by G.S. 24‑8(d), sumsfor the payment of bona fide loan‑related goods, products, and servicesprovided or to be provided by third parties and sums for the payment of taxes,filing fees, recording fees, and other charges and fees, paid or to be paid topublic officials; (iii) interest as permitted in subdivision (a)(4) of thissection; and (iv) late payment charges to the extent permitted by G.S. 24‑10.1.
(d) The loans orinvestments regulated by G.S. 53‑45 shall not be subject to theprovisions of this section.
(e) The term "homeloan" shall mean a loan, other than an open‑end credit plan, wherethe principal amount is less than three hundred thousand dollars ($300,000)secured by a first mortgage or first deed of trust on real estate upon whichthere is located or there is to be located one or more single‑familydwellings or dwelling units.
(f) Any home loanobligation existing before June 13, 1977, shall be construed with regard to thelaw existing at the time the home loan or commitment to lend was made and thisact shall only apply to home loans or loan commitments made from and after June13, 1977; provided, however, that variable rate home loan obligations executedprior to April 3, 1974, which by their terms provide that the interest rateshall be decreased and may be increased in accordance with a stated cost ofmoney formula or other index shall be enforceable according to the terms andtenor of said written obligations.
(g) The parties to ahome loan governed by subdivision (a)(1) or (2) of this section may contract todefer the payment of all or part of one or more unpaid installments and forpayment of interest on deferred interest as agreed upon by the parties. Theparties may agree that deferred interest may be added to the principal balanceof the loan. This subsection shall not be construed to limit payment ofinterest upon interest in connection with other types of loans. Except asrestricted by G.S. 24‑1.1E, the lender may charge deferral fees as may beagreed upon by the parties to defer the payment of one or more unpaidinstallments. If the home loan is of a type described in subdivision (1) ofthis subsection, the deferral fees shall be subject to the limitations setforth in subdivision (2) of this subsection:
(1) A home loan will besubject to the deferral fee limitations set forth in subdivision (2) of thissubsection if:
a. The borrower is anatural person;
b. The debt is incurredby the borrower primarily for personal, family, or household purposes; and
c. The loan is securedby a first mortgage or first deed of trust on real estate upon which there islocated or there is to be located a structure or structures designedprincipally for occupancy of from one to four families which is or will beoccupied by the borrower as the borrower's principal dwelling.
(2) Deferral fees forhome loans identified in subdivision (1) of this subsection shall be subject tothe following limitations:
a. Deferral fees may becharged only pursuant to an agreement which states the amount of the fee and ismade at the time of the specific deferral or at the time the specific deferralis requested; provided, that if the agreement relates to an installment whichis then past due for 15 days or more, the agreement must be in writing and signedby at least one of the borrowers. For purposes of this subdivision an agreementwill be considered a signed writing if the lender receives from at least one ofthe borrowers a facsimile or computer‑generated message confirming orotherwise accepting the agreement.
b. Deferral fees maynot exceed the greater of five percent (5%) of each installment deferred orfifty dollars ($50.00), multiplied by the number of complete months in thedeferral period. A month shall be measured from the date an installment is due.The deferral period is that period during which no payment is required or madeas measured from the date on which the deferred installment would otherwisehave been due to the date the next installment is due under the terms of thenote or the deferral agreement.
c. If a deferral feehas once been imposed with respect to a particular installment, no deferral feemay be imposed with respect to any future payment which would have been timelyand sufficient but for the previous deferral.
d. If a deferral fee ischarged pursuant to a deferral agreement, a late charge may be imposed withrespect to the deferred payment only if the amount deferred is not paid whendue under the terms of the deferral agreement and no new deferral agreement isentered into with respect to that installment.
e. A lender may chargea deferral fee under this subsection for deferring the payment of all or partof one or more regularly scheduled payments, regardless of whether the deferralresults in an extension of the loan maturity date or the date a balloon paymentis due. A modification or extension of the loan maturity date or the date aballoon payment is due which is not incident to the deferral of a regularlyscheduled payment shall be considered a modification or extension subject tothe provisions of subdivision (c)(2) of this section.
(h) The parties to ahome loan governed by subdivision (a)(1) or (2) of this section may agree inwriting to a mortgage or deed of trust which provides that periodic paymentsmay be graduated during parts of or over the entire term of the loan. Theparties to such a loan may also agree in writing to a mortgage or deed of trustwhich provides that periodic disbursements of part of the loan proceeds may bemade by the lender over a period of time agreed upon by the parties, or over aperiod of time agreed upon by the parties ending with the death of theborrower(s). Such mortgages or deeds of trust may include provisions for addingdeferred interest to principal or otherwise providing for charging of intereston deferred interest as agreed upon by the parties. This subsection shall notbe construed to limit other types of mortgages or deeds of trust or methods orplans of disbursement or repayment of loans that may be agreed upon by theparties.
(i) Nothing in thissection shall be construed to authorize or prohibit a lender, a borrower, orany other party to pay compensation to a mortgage broker or a mortgage bankerfor services provided by the mortgage broker or the mortgage banker inconnection with a home loan. (1973, c. 1119, ss. 1, 2; 1975, c. 260, s. 1; 1977, c.542, ss. 1, 2; 1979, c. 362; 1983, c. 126, s. 4; 1985, c. 154, s. 1; c. 381,ss. 1, 2; 1987, c. 444, ss. 1, 3, 4; c. 853, s. 4; 1989, c. 17, ss. 13, 14;1999‑332, s. 1; 2000‑140, ss. 40(a), 40(b); 2001‑340, s. 1;2001‑413, s. 9; 2001‑487, s. 56.)
