1999 - High Cost Loan Provisions of the Predatory Lending Act

Policy Name: High Cost Loan Provisions of the Predatory Lending Act

Date: Enacted in 1999; last revised in 2013

Code Location: Section E of Article 1.1 of Chapter 24 of the North Carolina General Statutes: Restrictions and limitations on high-cost home loans. (N.C. G.S.§ 24-1.1E.)

 Summary:

The North Carolina Predatory Lending Law established Section E of Article 1.1 of Chapter 24 of the North Carolina General Statutes. Section E defines “high-cost” loans and sets limitations on these loans, in order to protect homeowners. This section establishes an interest rate threshold as well as a threshold for points, fees, and charges. Under Section E, a loan that crosses either threshold is considered a “high-cost” loan and subject to increased limitations.

The limitations on “high-cost” loans forbade balloon payments, negative amortization, increased interest rates, and other predatory practices. This section also establishes affirmative protections that benefit homeowners, such as mandating home-ownership counseling and the consideration of the borrower’s ability to repay.