North Carolina MLO Conduct, Recordkeeping, and Examination
Conduct expected of an NC MLO
- Act in good faith and with fair dealing; never misstate loan terms, costs, or timelines.
- Take applications and provide disclosures only on behalf of a sponsoring licensee.
- Protect nonpublic personal information under GLBA and state identity-theft rules.
- Avoid conflicts: no undisclosed referral fees, no transactions with clients outside policy.
- Never sign for a borrower, alter a document after signature, or backdate an application.
Recordkeeping
NC rules require each mortgage loan transaction file to be retained for at least three years after the loan is closed or servicing is transferred. The file includes the application, disclosures, rate locks, closing documents, and evidence of fees. Advertising copies, complaint records, and MLO personnel records are also retained. Electronic records must be retrievable and reproducible, and the file must be produced to the Commissioner on request.
Examinations
The Commissioner conducts periodic and for-cause examinations. Expect document requests, interviews, transaction testing, and a written report; the licensee pays the cost. Respond completely and on time - a missed deadline is itself a violation. Findings can lead to a supervisory letter, consent order, penalties, or referral.
Reporting duties
Notify NCCOB of changes to the MU1/MU4 record - address, name, control persons, criminal or regulatory actions - within the time set by rule, and file the annual report.
Worked example
An examiner finds three files with no evidence of a timely Loan Estimate and learns the LO emailed a scanned copy nine days after application. Because no delivery record exists, the finding rests on documentation, not memory. Timestamps and delivery logs are the defense; the file must prove the timing.
Traps
- Keeping records only as long as the investor requires.
- Relying on the employer's system while the MLO keeps nothing verifiable.
- Ignoring a document request because the deadline looked informal.