N.C. lawmakers on Tuesday strengthened mortgage regulation in the state, approving new rules for companies that service home loans on behalf of lenders.

The House unanimously passed legislation that the Senate approved Monday requiring mortgage servicers to be licensed in North Carolina.

The measure, which still needs Gov. Mike Easley's signature to become law, aims to protect consumers by preventing abuses that contributed to the housing market meltdown and undermined confidence in the mortgage system.

By approving the legislation, North Carolina becomes only the ninth state to regulate mortgage servicers and remains at the forefront of efforts to repair damage to the housing industry, one of the nation's most important.

"The legislature is taking the opportunity to take a deep look at what happened in the market and saying, 'What can we do now to keep things that happened from happening again,' " said Chris Kukla, senior counsel for government affairs at the Center for Responsible Lending in Durham.

"This legislation does a lot to try to crack down on some of the servicing abuses we've seen in the past and gives the regulators some real authority," he added.

The role of mortgage servicers has grown in significance as home lending has evolved.

At one time, a bank issued a mortgage and a borrower paid that bank until the loan was satisfied. Now, the system is more complex. Mortgages are bought and sold as part of investment vehicles. Servicers act as intermediaries to funnel payments to escrow and to trusts that own loans on behalf of investors.

Because of their place in the industry, servicers have played a prominent role in the mortgage meltdown. Some have contributed to problems by tacking on large fees or engaged in other activities that hurt borrowers. For people facing foreclosure, servicers are a key link in efforts to renegotiate loans.

State regulators have struggled to deal with them because they had no jurisdiction.

The new legislation "at least gets us to the table together," said Joseph Smith Jr., the N.C. Commissioner of Banks. "This is a helpful addition to our arsenal of things to try and police the mortgage market. I don't think it's going to be world-changing, but I think it's going to be very helpful."

State leaders have worked during the past decade to overhaul lending regulations to better protect consumers. Last year, the General Assembly targeted home loans, approving legislation intended to improve disclosure and stamp out fraud.

The measure approved Tuesday builds on that effort and could foreshadow other mortgage-related action before the legislature adjourns. The governor is pushing for a measure that would give troubled homeowners more time to negotiate with lenders and meet with counselors to find solutions.

Easley supports the bill approved Tuesday, spokesman Seth Effron said, as part of that broader package of reform.

North Carolina, so far, has escaped the worst of the troubles in the housing market. But it is suffering.

The number of foreclosure filings in the first six months of the year rose almost 19 percent compared with the same period last year.

The changes that lawmakers are approving now likely won't do much to help those homeowners already in trouble. But by some estimates, the worst of the housing downturn is not yet over. Smith, the banking commissioner, said he projects that by year end, the number of foreclosures in the state will be as much as 20 percent higher than the 49,697 recorded in all of last year.

"It's incumbent on us to do what we can do to limit the damage as much as we can," he said.

More than that, though, "what we're trying to do is create a climate where, when the unpleasantness is over -- and it will end -- we'll have a healthier market," he said. "We'll have a system with a little more discipline."

OTHER MEASURES

Mortgage bills pending in the legislative session:

House Bill 2623 and Senate Bill 2115: Provides more than $13 million for an emergency program to reduce foreclosures and provide relief and counseling to people with subprime mortgages who face foreclosure.

House Bill 2230: Expands the state's Home Protection Pilot Program to all 100 counties. The four-year-old program tries to help workers keep their homes if they lose their jobs by providing interest-free bridge loans.

House Bill 2188: Requires that any home loan servicer clearly explain certain fees to a homeowner within 30 days of the fees being charged; puts a cap on the amount of points and interest charged to a loan; and makes it illegal for a broker to receive additional compensation, such as a bonus or commission, for inflating a loan value, for instance, by putting the buyer in a higher interest rate than he or she qualifies for.