New mortgage rules proposed for N.C.

The North Carolina Commissioner of Banks (NCCOB) announced today a set of proposed mortgage rules that would protect consumers and reduce foreclosures. A few changes were last made in 2007, but the commissioner of banks now proposes six new rules. "This is the most significant rule making we've done in the mortgage area," said Mark Pearce, NCCOB chief deputy commissioner, in a phone interview Tuesday.

The new rules follow in the aftermath of the housing market and mortgage lending crisis.

One of the new rules would require mortgage lenders to provide a comparison between the proposed loan offer and a standard 30-year fixed rate mortgage loan early on. "A problem we’ve had in the last decade is [borrowers are] not necessarily aware of what kind of loan or risk they are entering," Pearce said.

Mortgage brokers would also have to disclose plainly the identity of the lender, broker, or loan originator when soliciting refinancing. If a company continues to deceive or confuse the public, it would face up to $25,000 in fines and risk losing their lending license.

The new rules are proposed technical provisions to the North Carolina SAFE (Secure and Fair Enforcement) Act, which states the North Carolina requirements for mortgage lenders. It stems from the federal SAFE Act passed by Congress in 2008. Under the act, mortgage loan originators are required to complete a minimum 20 hours of NCCOB-approved pre-licensing or continuing education.

Another rule would prohibit lenders from making loans with a discount from an affiliated party, such as a homebuilder. This type of incentive eliminates competition from other mortgage lenders and can create inflated home values. "We’ve conducted at least two public enforcement actions with companies affiliated with homebuilders and we partnered with law enforcement," he said. The NCCOB reported that they entered settlements with Beazer Mortgage Corp. and Ryland Mortgage.

"One of the problems in the mortgage market in the last decade is mortgage brokers had an incentive to sell mortgages that cost more," Pearce said. Currently, there is ban against this for subprime loans. To further eliminate this practice, the NCCOB proposes to prohibit compensation to lenders and brokers that are based on the terms of any loan.

Additional rules the NCCOB proposes are stopping the process of foreclosure as soon as a homeowner requests assistance and requiring mortgage servicers to provide a timeline to homeowners to increase reliability, transparency and efficiency in foreclosure prevention. If adopted, the new rules would apply to the 875 mortgage lenders and 9,000 loan officers in North Carolina, Pearce said.

The North Carolina Office of the Commissioner of Banks is soliciting public feedback now through Jan. 2, 2010. A public hearing will be held on Dec. 8 at 9 a.m. at the commissioner of bank’s office. After considering the public feedback, the proposed changes will move to the Rules Review Commission, which has the authority to review and adopt the rules into the N.C. Administrative Code

If you would like to buy or sell Wilmington, foreclosures, short sells, investment properties, NC real estate, contact Sandy and Steve Thornton for all your home buying and selling needs. Specializing in Wilmington, Leland, Hampstead, Sneads Ferry, Jacksonville, Topsail Island including Surf City, Topsail Beach, North Topsail Beach, Beach and waterfront properties covering New Hanover County, Pender County, Brunswick County and Onslow County areas