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Legislators want to make public the names of those linked to loans
Trying to halt record numbers of home foreclosures, legislators want to make public the names of mortgage brokers, appraisers and other professionals connected to each mortgage loan. N.C. Commissioner of Banks Joseph Smith told a special legislative committee on Tuesday that his office needs the names of mortgage brokers and other loan originators to investigate mortgage fraud and resulting home loan foreclosure.
Fighting foreclosures
Legislators want to make public the names of those linked to loans
RALEIGH - Trying to halt record numbers of home foreclosures, legislators want to make public the names of mortgage brokers, appraisers and other professionals connected to each mortgage loan.
N.C. Commissioner of Banks Joseph Smith told a special legislative committee on Tuesday that his office needs the names of mortgage brokers and other loan originators to investigate mortgage fraud and resulting home loan foreclosures.
Without those names, Smith says, it's "extremely difficult to connect the dots."
His office licenses and investigates mortgage brokers. But there aren't any available documents that link home foreclosure filings with the real estate professionals who authored the failed loans.
"We need those names," Smith told the committee.
The special legislative committee was created in February in response to an Observer investigation that documented rising numbers of foreclosures in Mecklenburg County and statewide.
Foreclosures filed against N.C. residents rose from 15,282 in 1998 to 42,831 in 2005. Mecklenburg County had the highest rate of foreclosures per capita of any N.C. county last year.
The committee hopes to introduce legislation during the next legislative session that begins in January.
Foreclosures happen when borrowers miss mortgage payments and the home is sold to repay the lender. Most are new types of loans that make it easier to borrow money but carry high interest, steep adjustable rates and hidden fees. Some homeowners who have foreclosed say their net worth was overstated to qualify for loans and their property values dropped dramatically soon after purchase.
Paul Stock of the N.C. Bankers Association said a coalition of housing groups supports names of mortgage brokers and other originators on loan documents filed with county register of deeds offices.
But appraiser Lauriette West-Hoff said she doesn't want appraisers' names included. That could increase cases of appraiser fraud -- where appraisers' names and licenses are forged on loan documents, said West-Hoff, who spoke for the N.C. Professional Appraisers Coalition.
Appraisers' names and license numbers are already available online.
And Amanda Garrett, Person County register of deeds, said her state association is worried. No other state requires all those names, she says. Garrett said registers of deeds also don't want to police the requirement. That could mean refusing to file deeds that don't include the names.
"It will slow commerce, especially in big counties," she said.
Rep. Robert Grady, an Onslow County Republican, encouraged the registers of deeds group to take a different path. "Work with us on how to do this right, rather than fight it," Grady said.
Al Ripley with the nonprofit N.C. Justice Center says his group appreciates efforts to make loan originators' names public but stresses the need to do more.
Ripley, who attended the meeting, says that while many foreclosures result from mortgage fraud, many more stem from aggressive and abusive lending and servicing that don't involve fraud.
"The committee has heard about dangerous adjustable rate mortgage loans that ultimately, the borrower can't afford," he said.
And he's worried about the foreclosure process. Borrowers who are victims of fraud or wrongdoing aren't allowed under the law to argue that during foreclosure proceedings.
Ripley, Smith and others also said they're concerned about a further explosion in foreclosures as new types of adjustable rate mortgages mature.
Consumer protection lawyer Andrea Bebber of Charlotte is seeing "a slew of people coming for bankruptcy consultations because their house payments have gone from $700 a month to $1,300." Many, she said, have adjustable rate loans that became popular in the past few years and are now adjusting upward.
That's another reason the state should publish names of loan professionals, appraisers and others, she said. "It's important to have better access to the identity of the actors involved in making the loans," Bebber said. "We need to track the patterns and causes of foreclosures."
Lisa Hammersly Munn: 704-358-5886
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