Last week the North Carolina Home Loan Protection Act (HB 1817) was signed by the state’s governor, a law which impacts some of the core mortgage issues now being debated in Washington.

The legislation; bans prepayment penalties that trap homeowners in high-cost loans, requires lenders to document borrower income, requires all broker compensation to be counted when determining whether a loan is or is not a high cost mortgage product, strengthens brokers’ duties to serve the best interests of their clients, and ensures that homeowners have the right to pursue legal actions when violations occur.

The North Carolina legislation passed 33-15 in the State Senate, 113-0 in the State House and was instantly signed by Gov. Mike Easley. However, like all state financing regulations, the North Carolina law does not apply to mortgages from federally regulated lenders.

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