NC Lending Laws lend Model to a Nation in Crisis

Well we don’t see this too often, so when it’s written we should celebrate it:

"North Carolina’s progressive laws may become
a nation-wide model".

Think you misread that? Think again. That’s a quote from an article in the latest edition of BusinessWeek, regarding the need for stiffer predatory lending penalties to combat the current home foreclosure epidemic sweeping the country.

Predatory lending laws in NC have been strengthened with regularity since 1999, when groundbreaking and comprehensive predatory lending regulations for home loans were passed. In August, Governor Easley signed the North Carolina Home Loan Protection Act into law. The law bans penalties for borrowers who pay off their mortgages early and mandates lenders to verify income, and is also expected to limit the fees brokers collect for arranging certain high-rate mortgages. This most recent victory for North Carolina homeowners, and previous legislation that paved the way, are now the talk of national politicians eager to help the folks back home, more and more of whom are starting to experience a mortgage interest rate and fee explosion.

While the picture in North Carolina is less than rosy—foreclosure filings have jumped 39% in the past six months —it seems that thanks to a strong legislative stand we’re faring far better than the national average of 56%.

Predatory lending in the subprime mortgage market has resulted or will ultimately result in over 2.2 million foreclosures for American families in the coming years, costing homeowners as much as $164 billion, primarily in lost equity. The Center for Responsible Lending (CRL) reports that 1 out of every 5 subprime loans issued in 2005-06 will end in foreclosure. Foreclosures will inordinately affect low-income communities and communities of color (currently African Americans are three times more likely to receive a subprime loan than whites), putting homeownership and the ability to build equity out of reach for yet another generation. Those who stand to benefit most from ownership are those who will be hit hardest.

Legislation recently introduced in Congress by NC Reps. Miller and Watt, among others, (H.R. 3915, called the Mortgage Reform and Anti-Predatory Lending Act of 2007) would mirror current North Carolina law in its protection of future mortgage consumers and its confrontation of the predatory lending status quo. To support the current national movement (it’s facing opposition from groups like the Mortgage Banker's Association and could use your active support) or to read more about it, check out information on CRL’s website.