North Carolina House Bill 137  requiring additional disclosures by loan servicers, has been adopted by the North Carolina General Assembly and is awaiting the Governor's signature.

Bills address foreclosure crisis

North Carolina homeowners in trouble with their mortgages will soon get some relief.

The General Assembly adopted three bills that advocates say are critical to protecting homeowners and tenants from predatory lending, abusive servicing fees and foreclosure. The bills were sent to Gov. Mike Easley for his signature.

One of the bills cracks down on fees and hidden costs that can pile up when a homeowner falls behind on payments. Expensive fees can often make it impossible to catch up. The legislation also ensures borrowers are able to sue out-of-state lenders for illegal practices.

“North Carolina is meeting the challenges of the foreclosure crisis head-on,” Al Ripley, consumer advocate with the N.C. Justice Center, said in a statement. “The annual number of foreclosures in North Carolina has nearly tripled over the last nine years. These bills will help us begin to address this trend.”

Thousands of families in Cumberland County have lost homes to foreclosure in recent years. Many of them had bought properties using subprime or adjustable-interest loans. Such loans have above-market rates, or start out with low introductory interest which spikes after two or three years.

House Bill 1374 requires loan-servicing companies to notify homeowners of any fees they charge. Banks are increasingly using such companies to manage their loans by handling payments from borrowers.

Homeowners now will be able to get a full accounting of how their mortgage payments are handled, along with itemization of fees they are charged. A frequent complaint among distressed homeowners is how their lenders bill them for thousands of dollars in miscellaneous fees, without explaining what the penalties are for.

Reps. Rick Glazier and Margaret Dickson, both Democrats from Fayetteville, were sponsors of the bill.

Lawmakers also extended benefits to renters, requiring they receive notice when the home where they live is about to be foreclosed. House Bill 947 allows tenants to terminate their leases by giving proper written notice to the landlord. The tenant wouldn’t be liable for any other rent or damages due only to the early termination of leases, the bill says.

The third piece of legislation, House Bill 1817, helps protects buyers from predatory lending practices and ensures they can afford to repay loans made to them. The bill increases consumer protections against abuses by mortgage brokers and reins in underwriting practices for certain loans, the Justice Center said.

The legislation comes after months of behind-the-scene debate and compromises between consumer advocates and mortgage and banking interests.

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