- Associated Press - Friday, December 19, 2014

RALEIGH, N.C. (AP) - North Carolina lawmakers have voted to recommend weakening requirements for the state’s mortgage lenders, a move that proponents say would cut costs for the industry but critics say would dilute protections for borrowers.

A legislative study committee voted unanimously Friday to move forward with the proposed changes, which are expected to be taken up when the General Assembly convenes in January.

The Charlotte Observer reported Thursday (https://bit.ly/1AOvGsI ) that the changes backed by the mortgage industry included reducing the amounts mortgage lenders and brokers are required to be bonded and easing audit requirements.

Legislative study committee co-chair Rep. John Bell (R-Wayne) said the changes would provide relief to small mortgage firms that he said are struggling to grow because of the costs to comply with existing state laws.

But consumer advocates expressed concern the changes loosen rules tightened for the mortgage industry seven years after shoddy home loans plunged the U.S. into the worst economic downturn since the Great Depression. They argue the changes could make it easier for bad actors to operate in North Carolina’s mortgage industry.

“Mortgage bankers and mortgage brokers were a big reason why we got into the financial crisis. The last thing we want to do now is relax standards and let unqualified people into the business,” said Chris Kukla, senior vice president for the Durham-based Center for Responsible Lending.

The N.C. Office of the Commissioner of Banks, which regulates North Carolina’s mortgage companies, has not taken a position on the proposed changes.

George Teague, a lobbyist for the Mortgage Bankers Association of the Carolinas, said eliminating the auditing requirement would especially help small mortgage brokers, which usually feel the cost burden from the audit and bonding rules more than larger businesses.

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