North Carolina has legislated a 5% cap on all fees and compensation associated with a mortgage. This puts most smaller mortgage loans and some larger loans in jeopardy. Limits on lender compensation restrict the ability of the lender to offer credits and structure loans that will allow those borrowers with solid income and moderate savings to purchase a home. This will have a dramatic impact on lower income borrowers and first time home-buyers and will further delay the housing recovery.
Georgia enacted similar legislation a few years ago. Turns out the low income borrowers the legislation was intended to help could not no longer finance the purchase of a home. Some lenders put an artificial limit on the minimum loan amount they would underwrite in Georgia. Many lenders stopped doing business altogether in Georgia because few lower income borrowers and first time homebuyers could qualify. Also, the legislated compensation was not commensurate with the amount of work nor the liability the lender must assume in closing these types of loans. The legislation was later repealed.
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Call David M. Damare’ at 919.851.0999 for the answer to any of your questions.
