Other states to copy N.C. foreclosure program
Posted December 4, 2008 3:18 p.m. EST
Updated December 4, 2008 10:09 p.m. EST
Raleigh, N.C. — The National Governors Association has recommended national legislation based on North Carolina’s new Home Foreclosure Prevention Program, which took effect last month.
Gov. Mike Easley on Thursday briefed members of the National Attorneys General Association about the program. He had discussed it with other governors and President-elect Barack Obama on Tuesday.
Under the new law, lenders must provide homeowners and the state banking commissioner 45 days' notice before a foreclosure action is filed. The law also allows the banking commissioner to extend any foreclosure-filing notice period by 30 days.
The state uses that window to negotiate with the homeowner and mortgage holder on modifying a loan interest rate and payments.
About 1,000 homeowners statewide have already contacted the banking commissioner for assistance, and 52 mortgage servicing firms have given the state more than 7,000 notices of pending foreclosures on sub-prime loans.
According to RealtyTrac, which tracks foreclosures nationwide, monthly foreclosure filings in North Carolina dropped 27 percent in November compared with a year ago, while filings across the country rose 5 percent.
“Attorneys general play a critical role in preventing foreclosures and keeping families in their homes,” Easley said in a statement. “Since most mortgage investment packages today have been sold as securities and are owned by several parties, any one of these parties can file legal actions to prevent the loan modifications that help families avoid foreclosure. The attorneys general can ensure the public has the legal representation it needs.”
Most borrowers must negotiate individually with their lenders, but the North Carolina program uses a standardized modification proposal for every sub-prime borrower who comes through the program. State officials have proposed a monthly mortgage payment equal to 34 percent of the borrower’s gross income, which could be achieved through a mix of interest rate reductions, longer loan amortization or principal reduction.