2007 and 2008 saw revisions to North Carolina mortgage laws designed to ward off future problems with subprime mortgages and deceptive lending practices.
HB1817, signed into law by Governor Easley in 2007, tightens up restrictions on North Carolina mortgage lenders. The law defines subprime mortgages using the Federal Home Disclosure Act definition. The new law prohibits prepayment penalties, requires that lenders verify an applicant's ability to repay a loan at the fully indexed rate, and requires verification and documentation of the applicant's income. In other words, no more stated doc or no doc mortgages.
The new law also sets forth stronger language defining a broker's duties to borrowers, and puts more stringent requirements on the broker to provide borrowers with a "reasonably advantageous loan."
HB1817 also prohibits certain practices, such as brokering an adjustable rate mortgage without disclosing to the applicant the terms and costs associated with a fixed rate loan from the same lender at the same rate for which the applicant would qualify, failing to comply with all federal laws and regulations, and engaging in deceptive or misleading applications. The law also gives the North Carolina Commissioner of Banks broad authority to ban practices that the Commissioner finds to be unfair, deceptive, designed to evade the laws of North Carolina, or which are not in the best interests of the public.
Laws enacted in 2008 have been designed to help homeowners who are facing foreclosure. HB2623 requires North Carolina mortgage lenders to give at least 45 days' notice before foreclosure proceedings begin, and also gives the Commissioner of Banks the authority to extend the process an additional 30 days to enable borrower/lender negotiations to save the home. The law also provides $600,000 in grants to non-profit counseling agencies to help homeowners facing foreclosure.
House bill HB2463 regulates North Carolina mortgage lenders by requiring loan servicers to be licensed, and imposes new standards on lender's activities. Lenders are prohibited from refusing to reinstate a delinquent loan once it's paid, failing to mail a 45-day foreclosure notice, failing to make timely payments from an escrow account, and other unsavory practices.
The new restrictions on North Carolina mortgage lenders are not as strict as legislation in other states. For example, new legislation affecting Kentucky mortgage lenders will modify foreclosure laws that already some of the most strict in the nation.
Wednesday, June 17, 2009
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