Legislation Will Help Homeowners Keep Loans Affordable And Reasonable

Raleigh – North Carolina Gov. Mike Easley called on the General Assembly to give quick approval to legislation that will help thousands of homeowners with exploitive subprime mortgages avoid foreclosure. The legislation requires that borrowers receive at least 45 days notice before foreclosure proceedings are started and directs the NC Banking Commissioner to work with individual borrowers and their lenders to find ways to save their homes.

“Many subprime borrowers were placed into loans in which interest rates increased, and which they simply could not afford,” Easley said. “We have all been looking to the federal government to step in and do something about these foreclosures and they have done nothing. So we decided we would do it on the state level. And if nothing else, we can at least help the people of North Carolina.”

The bill, sponsored by state Rep. Dan Blue (D-Wake), requires that lenders give borrowers with subprime loans 45 days written notice before filing foreclosure proceedings. It also establishes the “State Foreclosure Prevention Project,” under which NC Commissioner of Banks Joe Smith will help lenders and borrowers work out solutions to avoid foreclosures. Smith will have the authority to bring the mortgage companies, housing counselors, community groups, state agencies and others together to help borrowers stay in their homes. It also authorized the Commissioner of Banks to extend the filing date for a foreclosure for up to 30 days if there is a potential to work out terms. There is no cost to the taxpayers.

North Carolina has been a model for the nation in protecting borrowers from unscrupulous lenders. Legislation championed in 1999 by the governor when he was attorney general was the first to address predatory lenders. Last year, the governor signed laws that limited the amount mortgage brokers could charge and added additional protections for borrowers from abusive adjustable-rate mortgages as well as requiring lenders to ensure that loan terms matched a borrower’s ability to pay.

North Carolina ranks second in the nation, Easley noted, for financial institutions based in the state. “When the banks come together and support something, it means something nationally and people take notice,” he said. “If we can make this work, that is something that can help us sell it around the country.”

Because of the state’s leading efforts at imposing strong regulation, the state has fewer sub-prime loans, ranking 45th in the nation in concentration of subprime lending. The state has fewer adjustable rate loans, half the national average. As a result, the state has had less mortgage fraud, ranking 33rd out of the 44 reporting states. The foreclosure rates in North Carolina have not been as severe as in other regions. Foreclosure actions increased 9 percent in 2007 to 49,498.

For more information on mortgages and foreclosure, visit the State Commissioner of Banks’ web site at: