The 2009 North Carolina General Assembly adopted the Consumer Economic Protection Act of 2009 (SL 2009-573). This Act contains two (2) provisions relative to foreclosure actions.

Efforts to Communicate With Borrower
The Clerk of Court is now authorized to inquire if the debtor occupies the real property at issue as a principal residence. If it appears that the real property is the principal residence of the debtor the Clerk shall further inquire as to the efforts made to communicate with the debtor to resolve the issue before the foreclosure proceeding.

The Act provides that the Clerk shall not be required to make this inquiry if the mortgagee or trustee has submitted an affidavit on or before the hearing date briefly describing the efforts to resolve the issue and the results of such efforts.

Either upon inquiring at the hearing or upon review of the lender’s affidavit, the Clerk may continue the hearing for a period of up to sixty (60) days if he or she believes the additional time will have a reasonable likelihood of resolving the delinquency without foreclosure.

Based on the inquiry by the Clerk and/or the affidavit submitted, the Act sets forth four (4) criteria for the Clerk to consider in determining if there is a reasonable likelihood of resolving the delinquency without foreclosure:

(1) Whether the note holder offered the debtor an opportunity to resolve the foreclosure through forbearance, loan modification or other commonly accepted resolution plans.
(2) Whether the note holder engaged in actual responsive communications with the debtor. This may include telephone conversations, in person meetings or other actual two (2) party communications.
(3) Whether the debtor indicated that he/she has the interest and ability to resolve the delinquency by making future payments.
(4) Whether the initiation or continuance of good faith voluntary resolution efforts may resolve the matter.

Based on these findings, when the Clerk determines that good cause exists, the Clerk shall order the hearing continued for not more than sixty (60) days.

As a result of this new law, lenders will need to provide an affidavit in every foreclosure on owner-occupied property in which the lender describes any and all efforts to resolve matters with the debtor. The more communications and settlement offers discussed prior to foreclosure, the greater likelihood Clerk will allow foreclosure to proceed without delay. 

Appeal Bond
 The second provision of this Act relates to appeals of findings of fact and orders entered by the Clerk. If the appealing party is the owner and occupant of this property as his/her principal residence, the Clerk shall require a bond in the amount of one percent (1%) of the principal balance due on the account. The Clerk is also authorized to set the bond for appeal at a lesser rate in the event of undue hardship or at a higher rate if there is a likelihood of waste or damage to the property.

This Act becomes effective October 1, 2009 and applies to foreclosure actions initiated on or after that date.