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August 20th, 2008

NC Signs Foreclosure Bills



North Carolina Governor Mike Easley signed three separate bills on Monday that established the Foreclosure Prevention Project, designed to stem the foreclosure crisis in his state.

Within the parameters of the three bills, the state’s bank commissioner and the homeowner must be notified 45 days before a foreclosure is filed. The same bill allows North Carolina’s bank commissioner to extend a foreclosure notice by 30 days. The Foreclosure Prevention Project has eliminated yield spread premiums, “a form of mortgage broker compensation that is based on the interest rate of the mortgage,” according to National Mortgage News. The governor has also mandated anyone serving loans in North Carolina must register and make reports to the state’s bank commissioner.

Although each one of these regulations or changes comes as no big surprise, North Carolina will likely meet some resistance from the lending industry and the Fed. The Fed has yet to ban yield based premiums for the simple fact that no central agreement has been established to properly discern them.

A lot of state regulations regarding foreclosures are likely to appear sooner than later. But, “the industry” is likely to complain – gripes that will likely end up costing consumers. When different states have various regulations, certain paper will have to be written differently for each state, adding to the complexity, adding to additional costs.

States will likely follow North Carolina’s lead in establishing new regs to fight foreclosures, prompting interaction that could lead to the courtroom.

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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