Raleigh, NC – December 4, 2008 – (RealEstateRama) – Gov. Mike Easley today briefed National Attorneys General Association members at a conference in Fort Lauderdale on North Carolina’s ground-breaking Home Foreclosure Prevention Program. The National Governors Association is recommending national legislation based on North Carolina’s program, which Easley signed into law this summer. Earlier this week the governor discussed the foreclosure prevention program with President-elect Barack Obama and the National Governors Association in Philadelphia.
“Attorneys general play a critical role in preventing foreclosures and keeping families in their homes,” Easley said. “In addition to their basic responsibilities to protect consumers, attorneys general involvement is needed to resolve complex legal issues. Since most mortgage investment packages today have been sold as securities and are owned by several parties, anyone of these parties can file legal actions to prevent the loan modifications that help families avoid foreclosure. The attorneys general can ensure the public has the legal representation it needs.”
Easley was invited to address state attorneys general from across the nation to explain the state’s unique home foreclosure prevention program as well as North Carolina’s predatory lending laws which are widely recognized as the strongest in the nation.
Easley told the group that no one wins in a foreclosure. It is estimated that the lenders lose 40 percent or more of the value of the loan in foreclosure once the lawyers’ fees and other expenses are paid, plus Realtor costs, maintenance and upkeep on the property. And the amount does not include the loss to the homeowners. When lenders and borrowers are able to agree on an affordable payment, the banks keep the value of their assets and families stay in their homes. “Everybody wins,” Easley said.
“Families and communities across our state are suffering because of foreclosures. Attorneys general want to be at the forefront on this issue that’s so important to protecting consumers and fixing our economy,” Attorney General Roy Cooper said. “We’re offering help to North Carolina homeowners, such as our hotline which connects people with free foreclosure assistance, going after scammers who try to take advantage of people facing foreclosure, and getting lenders to work out solutions so people can keep their homes.”
The HOPE Hotline is available toll-free at 888-995-HOPE (4673) any time of day, seven days a week for free counseling on options to avoid foreclosure. The hotline can connect callers with non profit housing and credit counselors in their local community.
Also today the N.C. Commissioner of Banks announced that Countrywide Home Loans and Countrywide Mortgage Ventures have agreed to issue cash refunds totaling up to $11.5 million to about 4,800 North Carolina borrowers as part of a settlement agreement with the office of the N.C. Commissioner of Banks. In addition, Countrywide has agreed to make $2 million in grants to 26 state non profit housing counseling agencies involved in the N.C. Home Foreclosure Prevention Program.
In the first month the Foreclosure Prevention Program has been in operation, about 1,000 homeowners have contacted the N.C. Commissioner of Banks for assistance. As a result of the new program, the state has received more than 7,000 subprime pre-foreclosure notices filed by 52 mortgage servicers.
The N.C. Home Foreclosure Prevention Project requires subprime mortgage lenders to give borrowers and the state Administrative Office of the Courts at least 45 days written notice before filing foreclosure proceedings. After receiving this notice, the Commissioner of Banks and other partners in the project contact borrowers in writing, and then follow up with phone calls or personal visits if needed. While a team of lawyers reviews the loan, the borrower meets with a housing counselor to review the borrower’s financial condition and prepare a modification proposal.
Currently, most borrowers must negotiate individually with their lenders. That process has not been effective in keeping families in their homes. North Carolina’s initiative is unique because a standardized modification proposal will be prepared for every subprime borrower in the state that comes through the program. Modification programs announced by individual companies reach only their own borrowers and often do not include many subprime loans where the root of the foreclosure problem lies.
The North Carolina plan will propose a monthly mortgage payment equal to 34 percent of the borrower’s gross income. The modification can be achieved through a variety of options, including interest rate reductions, longer loan amortization or principal reduction. The 34 percent figure is based on the agreement reached by Countrywide with attorneys general in 11 states, including North Carolina. Many loan servicers have agreed to modifications at that level and North Carolina officials are hopeful that they remaining mortgage servicers will join as well.
Thanks to North Carolina’s laws, the state is bucking the national foreclosure trend. Last week RealtyTrac, which tracks foreclosures nationwide, said the slowed monthly increase in foreclosures nationally for October was largely because of new laws like North Carolina’s. One in every 1,254 North Carolina housing units received a foreclosure filing during the month while nationwide the rate is one in every 452 U.S. housing units. According to RealtyTrac, monthly foreclosure filings in North Carolina dropped 27 percent compared with a year ago while nationally there has been a 5 percent increase.
North Carolinians can visit the Home Foreclosure Program web site: www.ncforeclosurehelp.org for more information and can call the HOPE Hotline toll-free at 888-995-HOPE (4673) any time of day, seven days a week.