GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2003
H 1
HOUSE BILL 917
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Short Title: Conform Mortgage Lending Laws. |
(Public) |
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Sponsors: |
Representatives Brubaker, Church, Hall (Primary Sponsors); Adams, Culp, Earle, Farmer‑Butterfield, Fox, Gibson, Howard, LaRoque, Lewis, McAllister, McHenry, Miner, Stiller, Wainwright, Warner, and Wright. |
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Referred to: |
Financial Institutions. |
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April 8, 2003
A BILL TO BE ENTITLED
AN ACT to conform the laws related to permissible interest rates for home loans secured by second and subsequent mortgages to the laws governing permissible interest rates for home loans secured by first mortgages.
The General Assembly of North Carolina enacts:
SECTION 1. The catch line for G.S. 24‑1.1A reads as rewritten:
"§ 24‑1.1A.
Contract rates on home loans secured by first mortgages or first deeds
of trust."
SECTION 2. G.S. 24‑1.1A(a) reads as rewritten:
"(a) Notwithstanding any other 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 principal amount is ten thousand dollars
($10,000) or more the parties may contract for the payment of interest as
agreed upon by the parties;parties.
(2) Where the principal amount is less than ten thousand
dollars ($10,000) the parties may contract for the payment of interest as
agreed upon by the parties, if the lender is either one of the
following:
(i)a. approved Approved as a
mortgagee by the Secretary of Housing and Urban Development, the Federal
Housing Administration, the Department of Veterans Affairs, a national mortgage
association or any federal agency; oragency.
(ii)b. a A local or foreign bank,
savings and loan association or service corporation wholly owned by one or more
savings and loan associations and permitted by law to make home loans, credit
union or insurance company; orcompany.
(iii)c. a A State or federal agency;agency.
d. A mortgage banker who is a licensee or an exempt person as those terms are defined in G.S. 53-243.01.
(3) Where the principal amount is less than ten thousand dollars ($10,000) and the lender is not a lender described in the preceding subdivision (2) the parties may contract for the payment of interest not in excess of sixteen percent (16%) per annum.
(4) Notwithstanding any other provision of
law, where the lender is an affiliate operating in the same office or
subsidiary operating in the same office of a licensee under the North Carolina
Consumer Finance Act, the lender may charge interest to be computed only on the
following basis: monthly on the outstanding principal balance at a rate not to
exceed the rate provided in this subdivision.
On the fifteenth day of each
month, the Commissioner of Banks shall announce and publish the maximum rate of
interest permitted by this subdivision. Such rate shall be the latest published
noncompetitive rate for U.S. Treasury bills with a six‑month maturity as
of the fifteenth day of the month plus six percent (6%), rounded upward or
downward, as the case may be, to the nearest one‑half of one percent (1/2
of 1%) or fifteen percent (15%), whichever is 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 the term of loans made under
this section during the following calendar month when the parties to such loans
have agreed that the rate of interest to be charged by the lender and paid by
the borrower shall not vary or be adjusted during the term of the loan. The
parties to a loan made under this section may agree to a rate of interest which
shall vary or be adjusted during the term of the loan in which case the maximum
rate of interest permitted on such loans during a month during the term of the
loan shall be the rate announced by the Commissioner in the preceding calendar
month.
An affiliate operating in the
same office or subsidiary operating in the same office of a licensee under the
North Carolina Consumer Finance Act may not make a home loan for a term in
excess of six (6) months which provides for a balloon payment. For purposes of
this subdivision, a balloon payment means any scheduled payment that is more
than twice as large as the average of earlier scheduled payments. This
subsection does not apply to equity lines of credit as defined in G.S. 45‑81."
SECTION 3. G.S. 24‑1.1A(c2) is repealed.
SECTION 4. G.S. 24‑1.1A(e) reads as rewritten:
"(e) The term "home loan" shall mean a
loan, other than an open‑end credit plan, where the 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 which there is located or
there is to be located one or more single‑family dwellings or dwelling
units."
SECTION 5. G.S. 24‑1.1A(g)(1) reads as rewritten:
"(1) A home loan will be subject to the deferral fee limitations set forth in subdivision (2) of this subsection if:
a. The borrower is a natural person;
b. The debt is incurred by the borrower primarily for personal, family, or household purposes; and
c. The loan is secured by a first mortgage or first
deed of trust on real estate upon which there is located or there is to be
located a structure or structures designed principally for occupancy of from
one to four families which is or will be occupied by the borrower as the
borrower's principal dwelling."
SECTION 6. G.S. 24‑1.4 is repealed.
SECTION 7. This act becomes effective July 1, 2003, and applies to loans entered into on or after that date.