North Carolina Gov. Easley signs bill to eliminate sub-prime YSPs and avoid foreclosureMortgagePress.comYSPs, North Carolina, sub-prime loans, HB 2188, HB 2463, HB 2623
Gov. Mike Easley has signed into law legislation that he expects
will reduce home foreclosure filings due to the sub-prime mortgage
crisis during the next two years. One bill in particular, House
Bill 2188, bans yield spread premiums to brokers. North Carolina is
the first state in the nation to ban YSPs. The governor's
"Emergency Foreclosure Reduction Program" could keep more than
25,000 working families in their homes and paying their
"This program is the first of its kind in the nation that makes
sure homeowners and lenders avoid foreclosures, where everyone ends
up a loser," Easley said. "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."
The bills signed into law are:
House Bill 2188
Makes changes and clarifications to the bills passed in 2007, and
eliminates rate spread premiums. The bill was sponsored by Reps.
Dan Blue and Walter Church. The law becomes effective Oct. 1.
House Bill 2623
Establishes the North Carolina Foreclosure Prevention Project. The
bill will require that notice be sent to homeowners and the
Commissioner of Banks at least 45 days before a foreclosure is
filed. The bill was sponsored by Reps. Dan Blue (D-Wake), Walter
Church (D-Burke), Becky Carney (D-Mecklenburg) and Jennifer Weiss
(D-Wake). Portions of the law become effective July 1 and Nov.
House Bill 2463
Requires individuals and companies serving loans in North Carolina
to register and make reports to the Commissioner of Banks. The bill
was sponsored by Reps. Dan Blue, Walter Church and Becky Carney.
Portions of the law become effective upon the governors signature
and others on Jan. 1, 2009.
The governor's "Emergency Foreclosure Reduction Program"
requires lenders to provide to the homeowner and the State Banking
Commission 45 days advance notice before filing of any foreclosure
action. During that time, banking commission staff will work with
the homeowner and lenders to come up with an acceptable interest
rate that the borrower can afford and the bank can accept.
"When banks are forced to foreclose, they end up losing about 40
percent on the loan," Easley said. "By keeping people in their
homes and getting banks to agree on rates, everyone comes out a
The law also gives the Bank Commissioner authority to extend any
foreclosure filing notice by 30 days, while the state works with a
homeowner and mortgage holder to come to agreement on a loan
interest rate and payments.
For more information, visit www.governor.state.nc.us.