Help available in foreclosure

New state laws aimed at helping families keep homes, protecting banks from loss

New legislation could help half of the state's 50,000 homeowners facing foreclosure in the next two years stay in their homes, Gov. Mike Easley said.

Easley signed three bills aimed at protecting homeowners facing foreclosure, stopping mortgage brokers from benefiting from high- cost loans and giving the state more authority over companies that service mortgage loans.

The new legislation requires that the lenders give homeowners and the N.C. Banking Commission 45 days notice before a foreclosure is filed. It also gives the commission the power to negotiate with lenders on behalf of the consumer.

Easley said the bills apply only to subprime family loans. Real estate investors who have subprime loans will not be helped by this program, he said.

Parts of the laws took effect July 1; others will take effect by Jan. 1.

"Our goal is to help bring borrowers and lenders together so that the family gets to keep their home and the bank does not lose money on the loan," Easley said.

The new laws are part of a broader effort by state and federal regulators to ease the pain of the housing slump. Congress last month passed a landmark housing stimulus bill and also is considering other steps.

Foreclosure filings in North Carolina were up 58 percent in the second quarter compared with the same quarter a year ago, according to data from California-based RealtyTrac.

Wake County reported foreclosure filings on 1,208 homes, a 64 percent increase from the same quarter last year. Durham had 607, and Orange had 143.

Joe Smith, the state banking commissioner, said his office has already begun preparing to help homeowners.

He said the commission is planning to spend $1.5 million or more on the program. Part of that money will be used to hire additional professional and administrative staff to assist struggling homeowners. So far, Smith said, his office has helped about 100 homeowners.

In one case, Easley said, a High Point woman had a subprime loan that had an introductory rate of 8 percent that jumped to 12 percent. The commission was able to keep her loan at 8 percent.

Smith said the new program also helps the commission take action when it finds that a loan does not meet the state's legal standards. The commission will be allowed to hold off the foreclosure filing an additional 30 days to help the homeowner and mortgage holder reach an agreement on an interest rate and payments.