North Carolina Approves New Foreclosure Prevention Rules

On April 22, the North Carolina Rules Review Commission announced new rules aimed at reducing and delaying foreclosures by non-depository mortgage servicers licensed by the North Carolina Office of the Commissioner of Banks (NCCOB). Rule 702 requires a licensed mortgage servicer to promptly and clearly respond to homeowner requests for assistance. Specifically, a licensed mortgage servicer must (i) acknowledge a borrower’s loss mitigation request within 10 business days after the request, (ii) respond to borrower’s loss mitigation request within 30 business days after the receipt of a complete application, and (iii) provide certain information in final responses denying loss mitigation requests. Rule 703 requires a mortgage servicer to halt foreclosure efforts pending consideration of a request by the homeowner for assistance; however, the rule enumerates several exceptions. For example, foreclosure efforts may proceed if the mortgage servicer has provided a final response regarding loss mitigation within the last 12 months and reasonably believes that the current loss mitigation request was not made in good faith. While the rules apply only to non-bank mortgage servicers, in its press release the NCCOB indicated that it hopes that bank servicers will adopt similar procedures. The rules take effect June 1, 2010.