Legislation could decrease home foreclosures

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By Staff Brunswick Beacon

Between 10 and 15 people come into the Brunswick Family Assistance office in Shallotte every day looking for assistance with rent or mortgage payments, many of them on the verge of foreclosure.

While the agency has a small pot of money for rental assistance, it’s usually too late for those facing foreclosure. For that, BFA Executive Director Joe Cannon has to refer clients to the U.S. Department of Housing and Urban Development counseling agencies.

“By the time someone gets to me, they’re already about three payments behind. That’s $3,000,” Cannon explained. “I tell them to work with the lender or work with the HUD counseling agency.”

If the situation is not resolved, and the person gets evicted, BFA can assist with finding a rental home.

When the agency has available funds, the agency provides deposits or first month’s rent for people who have eviction notices, but the coffers are running low.

“Our whole housing demand is up 70 percent over last year,” he said. “I’m seeing 10 to 15 a day, and I didn’t see that in a week last year.”

The high rate of foreclosures is also stressing the rental market, Cannon noted. People who have rented their former residences and bought new homes have been forced back into their old homes and are evicting their tenants.

In fact, the N.C. Administrative Office of the Courts reported 493 foreclosures in Brunswick County in 2007, and 542 in the first seven months of 2008.

The most recent market data from RealtyTrac, a California-based national database of foreclosure and bank-owned properties, indicates 4,303 foreclosure filings in North Carolina during July, a 127 percent increase from last year, and up 24 percent from June 2008.

There was one foreclosure filing for every 936 North Carolina households in July, ranking the state 25th in the nation.

To combat the problem, Gov. Mike Easley has signed into law legislation he expects to reduce home foreclosure filings within two years.

The governor’s “Emergency Foreclosure Reduction Program” could keep more than 25,000 working families in their homes and paying their mortgages, the governor’s office announced recently.

According to Easley’s office, the law is the first of its kind in the nation set up to make sure lenders and homeowners avoid foreclosures.

“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,” he stated.

The bills signed into law include House Bill 2623, which establishes the “North Carolina Foreclosure Prevention Project.” The bill will require notice to homeowners and the Commissioner of Banks at least 45 days before a foreclosure is filed.

House Bill 2188 makes changes and clarifications to the bills passed in 2007, and eliminates rate-spread premiums, points added to the borrower’s interest rate that increase the monthly payment. A lender then receives the payment difference as a “premium.”

House Bill 2463 requires individuals and companies serving loans in North Carolina to register and make reports to the N.C. Commissioner of Banks.

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 stated. “By keeping people in their homes and getting banks to agree on rates, everyone comes out a winner.”

sarah shew wilson is a staff writer for the Beacon. Reach her at 754-6890 or swilson@brunswickbeacon.com.