» North Carolina Enacts Key SAFE Act Amendments and Revises Subordinate Loan Fee Caps

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North Carolina Enacts Key SAFE Act Amendments and Revises Subordinate Loan Fee Caps

August 4, 2025

On July 1, 2025, North Carolina enacted House Bill 762, introducing sweeping amendments to the state’s Secure and Fair Enforcement Mortgage Licensing Act (NC SAFE Act). These updates significantly affect licensing, servicer oversight, seller financing exemptions, and fee limits for subordinate lien loans. Most of the changes will take effect on October 1, 2025, while a separate provision related to lender fees will become effective in January 2026.

1.SAFE Act Licensing and Conduct Changes

House Bill 762 introduces several notable changes to the licensing and conduct framework for mortgage professionals. Mortgage servicers with portfolios of 2,000 or more residential loans (excluding whole loans owned or those being interim serviced) will be considered “covered institutions” and must now meet heightened prudential standards. These include capital and liquidity requirements, formal corporate governance structures, internal and external audits, and a formal risk management program.

The law also expands the definition of “residential mortgage loan” to include reverse mortgages and contracts for deed. Additionally, the definition of “engaging in the mortgage business” now encompasses activities such as reverse mortgage servicing, pursuing final collection through foreclosure or repossession, and collecting lender or servicer fees, if done for compensation. Entities performing mortgage origination support activities must now register under the SAFE Act, and applicants for a license or registration must maintain a principal office in the United States. All branch offices must also be located within the U.S.

Another important change is the narrowing of the seller-financer exemption. Previously, individuals could originate up to five seller-financed loans per year without triggering licensing requirements. Under the amended law, that threshold has been reduced to three or fewer loans annually. Furthermore, all mortgage lenders and brokers will be required to include a link to NMLS Consumer Access on their websites to promote transparency and consumer access to licensing information.

2.Changes to Lender Fee Caps for Subordinate Loans

In addition to the SAFE Act amendments, HB 762 introduces a new fee structure for subordinate lien loans under $300,000. Previously, lender fees for junior liens were capped at 1–2% of the loan amount. Effective January 2026, the state is moving away from this flat percentage cap and aligning with federal Qualified Mortgage (QM) standards.

For applicable subordinate lien loans, the new rule states that the 2% cap will no longer apply if the total points and fees charged by all lenders involved in the transaction do not exceed the lesser of: (a) The federal QM points and fees threshold under Regulation Z; or (b) 3% of the total loan amount.

This change is intended to modernize the state’s fee framework and create consistency with national lending standards. The new subordinate lien fee limits apply to loans originated on or after the legal effective date in January 2026, which is separate from the October SAFE Act changes.

3.Next Steps for Brokers and Lenders

Brokers and lenders operating in North Carolina should review their licensing, website disclosures, and fee structures in preparation for the upcoming changes. While most of the SAFE Act provisions take effect in October 2025, the changes to lender fee caps won’t apply until early 2026, giving stakeholders time to adjust. We’ll continue monitoring for any additional clarifications or guidance issued by state regulators.

If you need help reviewing your licensing status or fee policies ahead of these changes, feel free to reach out to our team.