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Foreclosure bill could help more than 25,000 families

Posted August 18, 2008

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— Gov. Mike Easley signed three bills Monday to slow down home-foreclosure filings, including one that requires lenders to provide 45 days' notice before a foreclosure is filed.

Easley signed a bill establishing the North Carolina Foreclosure Prevention Project, under which both homeowners and the state's bank commissioner must receive 45 days' notice before a foreclosure is filed.

The law also allows the bank commissioner to extend any foreclosure-filing notice period by 30 days.

The state would use that time to negotiate with the homeowner and mortgage holder on a loan interest rate and payments.

"This is a common-sense solution," said Sen. Walter Dalton, D-Cleveland. "It is basically a time out to say, 'Let's see if there is a way to work it out.' It's very productive."

The program applies only to sub-prime mortgages and to families and is not designed to bail out investors, said Rep. Dan Blue, D-Wake, one of the bill's key sponsors.

"We don't want any foreclosures to occur because they displace families, and when they displace families they start displacing neighborhoods," Blue said.

Easley said about 50,000 families could be at risk of foreclosure in the next year. The law could help more than half.

"The program is the first of its kind in the nation that makes sure homeowners and lenders avoid foreclosures, where everyone ends up a loser," Easley said. "Our goal is to help bring borrowers and lenders together so that the family gets to keep their home and the bank does not lose money on the loan."

When banks foreclose, they lose about 40 percent on the loan, Easley said.

The first phase of the plan will go into effect Nov. 1.

Easley also signed two other bills Monday, one of which eliminates rate-spread premiums – also known as yield spread premiums – that go to mortgage brokers.

Critics say these payments give brokers an incentive to charge higher fees with no benefit to the consumer, while supporters say it is a legitimate way for borrowers to spread out mortgage-broker fees over the life of a loan.

The third bill requires individuals and companies servicing loans in North Carolina to register and make reports to the bank commissioner.

Home foreclosures in July the state skyrocketed 127 percent from a year earlier and were 24 percent higher than in June, according to RealtyTrac, a California-based foreclose tracking system.

That's about one in every 936 properties.

The surge in North Carolina, which ranks 25th among the 50 states in foreclosures but is 10th in terms of population, reflected a nationwide surge as the U.S. housing market continued to struggle.

Nationwide, more than 272,000 homes received at least one foreclosure-related notice in July, up 55 percent from about 175,000 in the same month last year and up 8 percent from June, RealtyTrac said. That means one in every 464 U.S. households received a foreclosure filing last month.

22 Comments

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  • WRALSUCKS Aug 19, 2008

    Way to go Easley. Take MY money to reward people with irresponsible borrowing habits. Perfect Socialist behavior.

  • TheAdmiral Aug 19, 2008

    "This is ridiculous. I cannot believe the government is bailing out people who didn't have enough sense to know they couldn't afford their mortgage."

    The public school system take 13 years to educate people at a 6th grade education. Once people get to Middle-School, they are only interested in Diversity, Everyone is special, and other Politically Correct Junk programs rather than mathematics, contracts, and other forms of real life skills.

    Plus they don't ever teach them common sense, critical thinking, and reading comprehension. They just press them out and hence the sad state of affairs.

    I mean after all - they can get everything instantly when they need it - why not an education?

    Plus - who ever pays attention to the advertising and contracts? The banks, mortgage underwriters, loan officers, real estate brokers and them there REALTORS (TM) who are proud of their ethics spearheaded the "If they are breathing, we can put them in a house" methodology of yesteryear.

  • TheAdmiral Aug 19, 2008

    Well, I seem to remember that John Edwards wanted to put all of the poor people in homes and throw everyone else out on their ears because of wanting the federal government to raise income taxes and home taxes because it makes them feel good.

    I am glad he had a mistress that made him feel good. His guilt is usually the pain that the other part of America feels when a liberal who pitches "It's not your fault, everyone makes a mistake" carp and raises taxes.

    "that requires lenders to provide 45 days' notice before a foreclosure is filed."

    This will do nothing but notify the people 45 days before rather than 30 days to get out.

  • SWEET-N-SOUR Aug 19, 2008

    I WORK FOR AN ATTY WHO FILES BANKRUPTCY..ONE CLIENT HASN'T MADE A PAYMENT IN YEARS...ABOUT 22000.00 IN ARREARS....THE CLIENT KNEW THEY COULDN'T AFFORD THE MORTGAGE PAYMENT AND SO DID THE BANK THAT FINANCED THE LOAN....WHY PUT A FAMILY IN A MORTGAGE THEY CAN'T AFFORD?....I WOULD LOVE TO LIVE IN A $200,000 BUT NOT ON MY 30000.00 YEARLY INCOME. SO WHO IS GOING TO BAIL ME OUT WHEN I CAN'T PAY MY RENT?...WHAT IS THE DIFFERANCE BTW ME RENTING AND SOMEONE TRYING TO BUY?...WE BOTH HAVE TO HAVE A PLACE TO LIVE.

  • Tired_of_LIBERALS Aug 19, 2008

    These liberals don't care about "personal responsibility." That is too individualistic for their socialist dreams.

  • Wags Aug 19, 2008

    I could tell some stories back when I was a mortgage loan officer. I had one lady who had power of attorney for her 99 year old father. She wanted to borrower money on the home. Now, the whole scenario stunk. I smelled a rat from the beginning but I had to follow the law and take an application. I was hoping the the old man would not quaify for the loan but he did. He had social security and retirement income and good credit. When I probed the daughter on the need for this man of almost 100 years of age taking out a mortgage, she came right out and accused me of discriminating against her Father because he was black and elderly. I told her that I was just trying to look out for his best interest. Needless to say, the man got his mortgage and I can almost guarantee that this is a home that will be in foreclosure. He barely met the income guidelines and the daughter wanted a 2 year ARM loan because the payments were less than a fixed rate. I had no choice. I had to follow the law.

  • NCPictures Aug 19, 2008

    This all started because GOVERNMENT got their fingers into the mortgage business. They called for more mortgages to be available to more people. Well it worked (if you will). More people got mortgages. But not all of those could pay for what they agreed to.

    Why is it that when OTHERS make a mistake I and MY FAMILY have to pay for them??? I can tell you if I make a mistake like this, that I know who did it. And that I would not let someone elsepay for my mistake.

    It is called personal responsibility. Something that is sure lacking these days.

  • bill0 Aug 19, 2008

    Under this program, no taxpayer money would go to pay down the mortgages of any homeowner. The only thing it does to prevent foreclosures in current homes is to force mortgage companies into a negotiation period. I don't see how that is going to help much, but it isn't a very expensive program.

    The one positive is the prohibition of brokers making extra money by purposely selling you a bad loan. That is just an underhanded business practice that needs to stop. Right now, your broker probably gets a kickback if they slip in junk fees or quote you a slightly higher rate. That is a clear conflict of interest. A free market system only works if suppliers (brokers) have a financial interest in providing their clients the best product for the best rate. That is how competition is supposed to work.

  • georgeorwell1 Aug 19, 2008

    It would seem that people need to take control of the decissions they make and stop expecting the government to think for them. This bill is probably not going to help nearly as many people as they have sold you on. His preditory lending laws ended up hurting the ones he said it would help. Easley has done nothing for nobody except himself, his wife, and a taxi driver in Italy

  • sartainfamily Aug 19, 2008

    I would think the homeowner has to know a foreclosure is coming when they stopped writing mortgage checks.

    This is ridiculous. I cannot believe the government is bailing out people who didn't have enough sense to know they couldn't afford their mortgage. People can blame it on the bankers all they want to, but when it coems down to it, the person who is actually supposed to be paying the mortgage should know what he or she can afford. That's why we bought a house that cost less than $125,000. Sure, we qualified for a much more expensive house, but when we figured out our payment, there's no way it would have worked. A simple Excel spreadsheet would have solved these problems. ::rolleyes::

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