Posted Aug 24, 2007 01:40 pm CDT
A new law designed to fight abusive home loans signed by the governor of North Carolina last week is one of a handful of new state measures designed to curb predatory lending.
Gov. Michael F. Easley told the New York Times (reg. req.) he wished he had acted sooner, but praised states for taking the lead to fight the mortgage meltdown. “If Washington isn’t going to act, the states are,” he said.
According to the Center for Responsible Lending, the bill:
–Bans prepayment penalties.
–Requires lenders to document income.
–Includes all broker compensation when determining whether a loan is high cost.
–Gives homeowners the right to pursue legal actions for violations.
Maine, Minnesota and Ohio have already passed measures to tighten restrictions on subprime lending. Nearly 100 bills pending in more than 30 states would regulate lending practices and stem foreclosures, the Times reports.
The obstacles are formidable, said Karl E. Case, a Wellesley College real-estate economist.
“You have 50 state regulators, 50 state agencies, 50 state governors looking at a massive market and deciding to tweak it around the edges to make it more fair,” Case told the Times. “That’s a very difficult task, particularly in a fragmented market.”