Could other states soon follow? Proponents claim the changes will cut costs for mortgage professionals in the state, while critics say they would dilute protections for borrowers.
Lawmakers in North Carolina are attempting to roll back some of the requirements for mortgage professionals in the state. The changes would include reducing the amounts mortgage lenders and brokers are required to be bonded and easing auditing requirements.
The state’s legislators vote unanimously Friday to recommend the changes, which are expected to be taken up when the state’s General Assembly convenes in January, according to the Associated Press. They would apply to mortgage lenders that don’t take deposits, as opposed to banks.
Proponents claim the changes will cut costs for the mortgage industry, while critics say they would dilute protections for borrowers.
Rep. John Bell (R-Wayne) told the Charlotte Observer the proposed changes would provide relief to small mortgage firms he said are struggling to grow because of the costs to comply with existing state laws.
However, consumer advocates are concerned that loosening the rules 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,” Chris Kukla, senior vice president for the North Carolina told the media outlet. “The last thing we want to do now is relax standards and let unqualified people into the business.”
The changes come at a time when U.S. mortgage industry regulations are again becoming a hot topic politically.
President Barack Obama recently signed into law a $1.1 trillion spending bill that included a provision which rolled back part of the Dodd-Frank Act. The provision would allow FDIC-insured banks to conduct risky derivatives trading that Dodd-Frank had barred in the wake of the financial meltdown.
