On July 3, the NC General Assembly adjourned until January 2013. In this Legislative Wrap-up for the two-year session, we have summarized (click on each bill to learn more):
- Bad bills that died
- Good bills that passed
- Bad bill that passed
- Budget: Changes to the use of NC's National Mortgage Settlement Funds, including requirement that any funds for the NC Housing Trust Fund for FY 2012-13 come out of the settlement funds.
Bad Bills that Died
Attempt to raise rates and fees on installment loans >> DEAD
House Bill 810, after barely passing the House in 2011, died in the Senate Rules Committee this year. And, for the first time in five years, there is no study commission appointed to "study" this industry. HB 810 would have significantly increased the rates and fees that consumer finance companies can charge on installment loans, costing NC borrowers $50-70 million per year in additional interest alone. In addition, the bill would have raised fees significantly and increased the maximum size of these expensive loans from $10,000 to $15,000. With 12 lobbyists on retainer, including a recently-retired military officer and a firm headed by high powered political fundraisers, we expect another push in 2013. However, the appetite to take up this bill again will be dampened by the Senate's refusal to even hear the bill this year and the slim majority by which it passed the House.
Attempt to weaken mortgage lending protections >> DEAD
House Bill 814 and its companion Senate Bill 559, along with House Bill 717, would have rolled back mortgage lending protections in our state by raising limits on allowable points, fees and insurance premiums, cutting broker bonds in half and reducing regulatory oversight for mortgage brokers. Both bills died in committee.
Attempt to weaken protections against foreclosure rescue scams and real estate abuses >> DEAD
House Bill 654, which passed the House in 2011, would have gutted foreclosure rescue scams and real estate protections passed in 2010. With hard work from the NC Justice Center and others, this 2010 law protects homeowners and homebuyers from foreclosure rescue scams (for example, the scammer convinces the homeowner to sign over the deed to their house) and other abuses in contract-for-deed and lease-option sales. HB 654 died in the Senate Commerce Committee.
Attempt to weaken wage garnishment protections >> DEAD
In 2011, many allies worked together to stop House Bill 30, a bill that would have authorized wage garnishment for consumer debt collections. The bill was significantly amended so that the power of wage garnishment could only be used in cases where a person in business defrauded his or her clients, but the bill died in committee.
Attempt to allow balloon payments on car loans >> DEAD
House Bill 1155 would have allowed balloon payments on car loans, a bad idea in general and a terrible idea on a depreciating asset like a car or truck. The bill, introduced this year, died in a House Judiciary Subcommittee.
Good Bills that Passed
State Home Foreclosure Prevention Project becomes permanent >> PASSED
The State Home Foreclosure Prevention Project is a model state program designed to seek solutions to avoid home foreclosures. Senate Bill 826, a large omnibus bill signed into law in late June, removes the May 2013 sunset date making this a permanent NC program. The new law also transfers the remaining administrative functions from the NC Commissioner of Banks to the NC Housing Finance Agency, a move fully supported by both agencies.
Modernize NC Banking Code>>PASSED
Senate Bill 816, the 58-page Banking Law Modernization Act, is the result of a Joint Legislative Study Commission convened at the NC Commissioner of Banks' request. The Financial Protection Law Center's Beth Young and CRL's Chris Kukla served as consumer representatives on the Commission. The law modernizes the NC banking law, preserving all of our existing consumer protections.
Modify Mortgage Regulation Funding>>PASSED
Senate Bill 806, Modify Mortgage Regulation Funding, requires mortgage bankers and brokers to cover their fair share of the costs incurred by the State to examine these institutions, ending the long-standing practice under which state chartered banks had to make up the shortfall. Supported by banks, the banking regulator, and consumer advocates, the law will ensure that the Office of NC Commissioner of Banks has sufficient funding to do its job, while requiring all industry participants to pay their fair share.
Bad Bills that Passed
The legislators zeroed out the NC Housing Trust Fund in the budget for the coming year (see HB 950 and Joint Conference Committee Report), though they allow the NC Housing Finance Agency to replace some or all of these funds by redirecting money from the National Mortgage Settlement.
Changes to the use of NC's National Mortgage Settlement Funds >> PASSED
After many months of negotiation, 49 attorneys general and the federal government reached agreement with the country's five largest loan servicers, settling claims associated with robo-signing and other servicing abuses. This National Mortgage Settlement includes $25 billion in relief to distressed homeowners as well as direct payments to states and the federal government. Find out if you are eligible for mortgage relief and more about NC help.
On top of $274 million in direct restitution for NC homeowners, NC received over $63 million, including roughly $10 million in direct restitution to the state and $6 million in civil penalties to NC public schools. Additional funds were identified for housing counselors, legal service providers, NC District Attorneys, State Bureau of Investigation, and the Consumer Protection Division in the state AG's Office.
Under the new budget, the legislators combined some of these categories and shaved a little off the top of each, diverting $2.7 million, presumably to plan a crime lab in western NC.
Budget zeroes out the NC Housing Trust Fund for FY 2012-13>> PASSED
After the changes above, the legislators approved a budget that zeroes out the NC Housing Trust Fund for one year. The budget allows the NC Housing Finance Agency to use some of the settlement funds they receive for housing counseling and legal services ($30.52 million) to replace the zeroed out Housing Trust Fund, up to $7.9 million. The Housing Finance Agency is working with housing counselors, legal service providers and Housing Trust Fund supporters to minimize the impact of this change. If they use the settlement funds to fully replace the Housing Trust Fund shortfall, the total diversion of funds from the settlement could be as high as $10.6 million ($2.7 million for the crime lab plus $7.9 million for the Trust Fund).