NC Homeowners have two new regulations to help them fight foreclosure

North Carolina state regulators have ruled that once a homeowner asks for a loan modification, any foreclosure actions must be halted. Previously, lenders pursued foreclosures at the same time they were working with homeowners to make their loan payments more manageable. That puts homeowners up against the clock.

”We believe that the mortgage industry has failed to prevent as many foreclosures as they could have, and that there are some significant flaws in the system," said Mark Pearce, North Carolina Deputy Commissioner of Banks.  "We think the new rules that we adopted … will help homeowners have a better chance of avoiding foreclosure when they have the ability to stay in the home."

The second new regulation requires mortgage servicers to respond clearly and promptly when homeowners ask for mortgage assistance. Often times, a breakdown in communication can lead to foreclosure.

The regulations take effect June 1, 2010. They apply to mortgage brokers and other lenders that account for about three-quarters of the mortgages in the State of North Carolina. The rules do not apply to banks or savings and loans.

Community banks and other state-chartered banks haven’t been much of a problem on the foreclosure front, Pearce said. The commission doesn’t have authority over federally chartered banks such as Bank of America and Wells Fargo.

The regulations were approved by the North Carolina Banking Commission and Joe Smith, the NC Commissioner of Banks.