North Carolina Prohibited Practices, Advertising, and Consumer Protection
Prohibited practices under the Mortgage Lending Act
- Originating or brokering without a license, or employing an unlicensed MLO.
- Fraud, misrepresentation, or concealment in any loan transaction.
- Charging or collecting fees that were not disclosed, or splitting fees with an unlicensed person.
- Coercing or improperly influencing an appraiser.
- Unfair or deceptive acts or practices, which also expose the licensee to Chapter 75 liability.
The high-cost home loan statute
North Carolina was an early adopter of anti-predatory lending rules. N.C.G.S. 24-1.1E restricts high-cost home loans - generally defined by APR and points-and-fees triggers - by prohibiting balloon payments, prepayment penalties, financing of points and fees, and certain default-rate increases, and by requiring home-loan counseling before closing. Thresholds are indexed, so confirm current figures before relying on them.
Advertising rules
Advertising must be accurate and identify the licensed name and license number. Rate ads must state the APR and material terms; "as low as" claims need a real basis. No claims of government approval or endorsement and no misleading use of bank, insured, or federally approved language. Copies of advertising must be retained.
Consumer protection overlay
Beyond the Act, North Carolina enforces the Unfair and Deceptive Trade Practices Act and the State Fair Housing Act, and imposes its own servicing and escrow rules. Reverse mortgage advertising carries additional restrictions on cross-selling annuities and other products.
Worked example
An MLO posts: 3% rates, everyone approved. There is no APR, no license number, and a promise of approval. That is a deceptive advertisement and a misstatement of credit terms; the fix is an APR disclosure, a supportable rate, license identification, and removal of the guarantee.
Traps
- Assuming federal compliance cures a state advertising violation.
- Omitting the license number from social media and email.
- Treating pre-closing counseling for high-cost loans as optional.