July 22, 1999 - North Carolina Predatory Lending Law

Policy Name: North Carolina Predatory Lending Law

Date: Signed July 22, 1999; effective July 1, 2000

Bill Information: Session Law 1999-332, Senate Bill 1149

Code Location: N.C. G.S. §24-1.1A, §24-1.1E, §24-10.2


The North Carolina Predatory Lending Law amended Chapter 24 of the North Carolina General Statutes – North Carolina’s usury law – to provide comprehensive protections against predatory lending. Upon the bill’s enactment in 1999, North Carolina became the first state to enact predatory lending protections.

The law introduced general protections that apply to all mortgages, defined a new category of “high-cost” home loans, and imposed restrictions upon “high-cost” home loan terms. The law also outlawed prepayment penalties on mortgages, balloon payments for “high-cost” home loans, and lending without the consideration of a borrower’s ability to repay. These standards provided stronger protections than the federal protections in the 1994 Home Ownership and Equity Protection Act.

The law vested enforcement authority to the North Carolina Attorney General and the North Carolina Office of the Commissioner of Banks (NCOCB). As the first state legislative response to predatory lending, and in combination with enforcement actions by the NC Attorney General’s Office and the NCOCB, this law bolstered North Carolina’s regulatory capacity. For further analysis on this legislation, please read our policy memo on the North Carolina Predatory Lending Law.