State boosts its oversight in lending

State boosts its oversight in lending

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BINYAMIN APPELBAUM AND DAVID INGRAMGov. Mike Easley signed the most significant reforms to state mortgage laws since 1999 on Thursday, culminating a yearlong effort by N.C. lawmakers to curb lending excesses and reduce foreclosures.

The most significant change requires mortgage companies to ensure that borrowers can afford the loans they receive.

Other changes limit fees on mortgage loans and strengthen the ability of homeowners to contest foreclosures.

Together with two laws signed in July, the effect is to tighten state oversight of the mortgage process from the first conversation about borrowing money to the final court hearing before a home is lost.

Easley said homeownership is too important — and foreclosures too hard on families and communities — to let companies take advantage of borrowers, even when borrowers fail to protect themselves.

"If you’ve ever doubted whether regulation is important," he said, "I think recent events have put that to rest."

Over the past decade, a boom in lending to lower-income families and those with damaged credit swelled the ranks of homeowners. Now many are losing homes to foreclosure. Often, their loans carried low introductory payments that increased sharply, beyond affordability, after the first few years.

More state residents likely will lose homes to foreclosure this year than in any previous year, state data show. The problem is worst in Mecklenburg County, where almost 4 in 100 homeowners may face foreclosure. (more…)