04 NCAC 03E .0601          BOOKS AND RECORDS

Each consumer finance office licensed by the Commissioner of Banks shall keep the following books and accounting records. Except as may be permitted by G.S. 53-184(a), these records shall be maintained in each office and be readily available to the Commissioner of Banks or his authorized agent.  No books or records of the licensee shall show any account or reflect any transaction other than those directly related to the making and collecting of loans within the provisions of the Consumer Finance Act.

Where a licensee is also an installment paper dealer, completely separate books and records shall be maintained, including for general ledger purposes a separate cash account.  Allocation of expenses shall be made monthly according to appropriate and reasonable accounting principles.

All books and records covered by these Rules must be retained for a period of not less than three years after the last transaction:

(1)           Cash Transaction Journal.  The cash transaction journal shall be the book of original entry in which all transactions of receipts and disbursements of any nature or amount whatsoever shall be itemized.  Each transaction made in connection with a loan shall be identified with the loan by the name or account number of the borrower and shall clearly define the nature of each charge, collection, or refund made in connection with such loan.  All entries shall be made as of the exact date the transactions occur.

(2)           General Ledger.  The general ledger shall be double entry, showing in full detail the total of assets, liabilities, capital, income, and expenses.  Each account shall be clearly and appropriately designated.  No net or "wash" entries shall be made to any account.  The general ledger shall be posted at least once each month and such posting shall include all transactions through the last business day of the month.  The actual posting must be completed by the 20th day of each ensuing month for the previous month's business.  In instances where an organization operates two or more offices, the general ledger may be maintained in a central accounting office of the organization, provided a trial balance shall be made as of the last business day of each month and a copy placed on file in each office not later than the last business day of the following month.  Each debit or credit entry appearing on the general ledger each month shall appear on the trial balance.  A detailed description of each general ledger entry originating outside of a local office and not reflected on the cash book of that office shall be on file in each office to support such entries appearing on the general ledger.  This shall include adjusting and closing entries.  If any account on the general ledger does not agree with the corresponding account on the annual report to the Commissioner of Banks, a supplement to the annual report shall be furnished which reconciles or explains any differences.

(3)           Individual Account Record.  A separate account record shall be maintained for each loan made.  Each account record shall provide the following information:

(a)           name and address of borrower, spouse's name, and name of any other person obligated directly or indirectly on the loan;

(b)           cross reference to other loans of the borrower, or spouse, or endorser, guarantor, or surety, or to any joint obligation of the borrower;

(c)           account number;

(d)           date of loan and maturity;

(e)           length of contract;

(f)            the cash advance, finance charge, number of payments and amount of each;

(g)           date and amount of each payment, an allocation between principal and interest for each payment, and the remaining loan balance after each payment;

(h)           brief description of security;

(i)            type of insurance, insurance origination fees and amount of insurance premium for each coverage written;

(j)            amount of recording fee or non‑filing charges;

(k)           amount of any other charge whatsoever made in connection with the loan;

(l)            amount of unearned insurance premium refunded for each coverage written;

(m)          if refunds are paid by cash or check, acknowledgment of receipt of refund by signature of borrower; and

(n)           contract interest rate and the annual percentage rate computed under Regulation Z, if different.

(4)           Index of Borrowers.  Each office shall keep an index record on which all loans to each individual shall be entered in order, showing date made, account number, amount of loan, and date of cancellation.  This record shall be maintained on individual index cards or on the face of the borrower's individual file, "shuck," "jacket," or folder and shall be filed alphabetically or by account number, provided where the account number is used an alphabetical cross index be available to the examiner.

(5)           Loan Documents.  After January 1, 1994, loans made by a licensee shall on the loan contract contain the following statement printed in a conspicuous manner:  "This loan is regulated by the provisions of Chapter 53, Article 15 of the North Carolina General Statutes."

(6)           Judgments.  When a loan has been reduced to judgment, all of the following provisions shall be complied with:

(a)           the individual account record maintained pursuant to Subpart (3) of this Rule shall clearly be designated a judgment account;

(b)           payments received shall be identified and applied on the judgment account record;

(c)           the licensee shall maintain in the office from which the judgment account originated a copy of the judgment and any other court documents which are necessary to disclose the following information:

(i)            judgment date;

(ii)           name of licensee;

(iii)          judgment debtor's name;

(iv)          date suit was filed;

(v)           nature of the suit;

(vi)          name and location of the court;

(vii)         amount of the judgment, specifying principal, interest charges, and court costs; and

(viii)        disposition of the case;

(d)           a licensee which charges a borrower for court costs it incurred on a judgment account shall itemize such costs on the individual account record and retain a receipt or other document substantiating the costs;

(e)           a licensee shall retain a copy of the sheriff's return of execution issued when property is sold pursuant to a judgment.

(7)           Repossessions.  When property is taken in accordance with the terms of a security agreement or by judicial process or abandonment, the individual account record shall be clearly designated as a repossession account and shall state when and how possession of the security was obtained and shall identify the proceeds of the sale of the property.  The licensee shall also retain in the office in which the repossession account originated, all of the following:

(a)           a copy of any agreement entered into with the borrower with respect to the terms of surrender;

(b)           a copy of the notice of sale, together with evidence of mailing or personal delivery;

(c)           an inventory of the property taken, unless it otherwise appears in detail on the notice of sale;

(d)           a signed statement from the purchasers, or from the auctioneer if the sale was public, describing the collateral purchased and showing the amounts paid;

(e)           evidence that the sale took place on the date set forth in the notice of sale, including a notice of any bids received;

(f)            copy of a detailed final accounting sent to the borrower setting forth the disposition of the proceeds of sale and the principal balance due, if any, on the account; and

(g)           paid receipts evidencing costs incurred in the repossession and sale of the security which have been charged to the borrower.

(8)           Insurance Records.  A licensee shall maintain in each office where a loan account originated, a record of any claims paid under insurance written in connection with a consumer finance loan.  The records shall include:

(a)           the loan number and name of debtor;

(b)           description of the insurance claim, i.e., whether death claim, property damage, or claim for benefits under accident and health insurance; and

(c)           in the case of claims under credit life insurance, a copy of the certified death certificate.


History Note:        Authority G.S. 53‑92; 53‑104; 53‑184; 53‑185; 150B-21.2;

Eff. February 1, 1976;

Amended Eff. January 1, 1993.