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No quick changes coming to law on home foreclosures

By Paris Goodnight
Salisbury Post
RALEIGH ó Some of those trying to ease the burdens brought on by the rash of home foreclosures tried to get state lawmakers to understand their displeasure with a new law Tuesday.
But their message went largely unheeded until after a meeting of the N.C. House Select Committee on Rising Home Foreclosures. That’s when Salisbury’s Brad Randall and two of his associates got the ear of Rep. Fred Steen, who represents the 76th District.
They decided the best plan of action is to get a letter spelling out the troubles with N.C. House Bill 1817, which went into effect Jan. 1, to the state commissioner of banks, who has the authority to interpret the new law’s requirements.
Randall of HRC Associates in Salisbury and two of his associates traveled to the meeting at the Legislative Building in hopes of addressing the committee chaired by Rep. Dan Blue. Since they weren’t listed on the official agenda, they only got a few words at the microphone in front of the full committee.
But Steen met with them afterwards and agreed to try to work out something with the commissioner of banks to allow Federal Housing Administration and Veterans Administration loans to go through.
Randall contends a portion of the new law makes it too costly for anyone to be in the business of providing FHA loans. He says other states have exempted FHA and VA loans, but the new N.C. law doesn’t.
“The law stopped us dead in our tracks,” said Rick Cohn, who flew in from Florida to be at the meeting.
Now Randall is in the unenviable position of having to call at least one client today and explain that her loan can’t go through because of the troubles with the law.
And work behind the scenes on the law doesn’t help him as the clock ticks on the survival of his business. “We’ve got major problems now,” he said.
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Bill Bost, general counsel of the N.C. Association of Mortgage Professionals, said state laws such as N.C. 1817 have cracked down on predatory lenders and others who would take advantage of people who might not understand all the finer points of home loans.
He said about 60 percent of all mortgages go through mortgage brokers now. And some increase in foreclosures could be related to more people, who earlier wouldn’t have the credit needed to buy a house, getting a chance to become a homeowner.
He said fraud and predatory lending crackdowns could be strengthened by more enforcement of the current laws.
Randall said people in his business were hurt as much as anyone when the subprime loans roared in because they were so easy for people to get.
“Now we’re trying to mop up the mess, but they’ve got our hands tied,” he said.
Bost said some measures that are put into law create unintended consequences, such as small brokers not being able to continue offering FHA loans. But he offered no solutions for the problem.
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Much of Tuesday’s meeting was focused on hearing how state level officials are dealing with the current housing crisis.
Among the speakers were those who focused on offering counseling services to those in fear of foreclosure. The consensus was the earlier homeowners get counseling, the better chance they have of keeping their home.
Roberto Quercia, a researcher at the University of North Carolina at Chapel Hill, noted studies have documented the success counseling has and the troubles in the community as foreclosures mount.
It affects a much wider scope of people than just the person losing a home.
An official with the Center for Responsible Lending in Durham noted that state figures show when a home is foreclosed in your neighborhood, homes within a quarter of a block drop in value by $1,300. That snowballs as more homes go into foreclosure.
Mark Pearce, deputy commissioner of banks, said a national foreclosure hotline (1-888-995-HOPE) has been set up to increase the numbers of people getting counseling before it’s too late. He noted half of those going through foreclosure never get in contact with the mortgage company to try to work out a deal. He said officials are trying to make sure the national hotline shuffles people to the correct counselors in their own communities.
Contact Paris Goodnight at 704-797-4255 or pgoodnight@ salisburypost.com.

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