No Foreclosures in North Carolina Until Modification Options Exhausted
New rules adopted by the North Carolina Commissioner of Banks (NCCOB) will require a mortgage servicer to stop foreclosure efforts during the modification process, effective June 1, 2010. The NCCOB, which regulates more than 600 lenders, servicers and brokers, proposed the rule in November 2009 to the State Banking Commission, which approved it on March 17. The Rules Review Commission approved the rules on April 16. According to the NCCOB, servicers continue to advance foreclosure proceedings, even while the modification process is still ongoing. “This adds significant costs and confusion for homeowners trying to work-out their loan,” according to the NCCOB. “Given the unprecedented number of homeowners requesting assistance, some servicers have struggled to qualify them for assistance in a timely fashion, which has led to some losing their home when they would have been eligible for existing foreclosure prevention programs.” The rule also requires servicers to respond promptly to a homeowner’s request for assistance, which, according to the NCCOB, will cut down on “unnecessary foreclosures.” The NCCOB estimates the new rule would prevent almost $350m in neighboring property value declines. Working with the State Home Foreclosure Prevention Project (SHFPP), the NCCOB helped more than 4,000 homeowners avoid foreclosure. Another 10,000 have met with counselors. Editor's note: This story originally appeared in REO Insider, a sister publication. Write to Jon Prior.