A BILL TO BE ENTITLED
AN ACT to overturn the shepard case and amend the limitation regarding actions to recover for usury; to overturn the skinner case and amend the long‑arm statute to allow north carolina courts to exercise personal jurisdiction over certain nonresident defendants; to require that a notice of foreclosure contain certain information; and to make other amendments to the law governing home loans.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 1‑53 is amended by adding a new subdivision to read:
"(2a)	An action to recover the penalty for the financing of usurious points, usurious fees, or other usurious charges accrues at the time of the last payment made on the loan."
SECTION 2.  G.S. 1‑75.4(6) reads as rewritten:
"(6)	Local Property. – In any action which arises out of:
a.	A promise, made anywhere to the plaintiff or to some third party for the plaintiff's benefit, by the defendant to create in either party an interest in, or protect, acquire, dispose of, use, rent, own, control or possess by either party real property situated in this State; or
b.	A claim to recover for any benefit derived by the defendant through the use, ownership, control or possession by the defendant of tangible property situated within this State either at the time of the first use, ownership, control or possession or at the time the action is commenced; or
c.	A claim that the defendant return, restore, or account to the plaintiff for any asset or thing of value which was within this State at the time the defendant acquired possession or control over it.
d.	A claim related to a loan made in this State or deemed to have been made in this State under G.S. 24‑2.1, regardless of the situs of the lender, assignee, or other holder of the loan note and regardless of whether the loan payment or fee is received through a loan servicer, provided that (i) the loan was made to a borrower who is a resident of this State, and (ii) the loan is secured by real property located in this State."
SECTION 3.  G.S. 24‑2.1 reads as rewritten:
"§ 24‑2.1.  Transactions governed by Chapter.
(a)	For purposes of this Chapter, any extension of credit shall be deemed to have been made in this State, and therefore subject to the provisions of this Chapter if the lender offers or agrees in this State to lend to a borrower who is a resident of this State, or if such borrower accepts or makes the offer in this State to borrow, regardless of the situs of the contract as specified therein.
(b)	Any solicitation or communication to lend, oral or written, originating outside of this State, but forwarded to and received in this State by a borrower who is a resident of this State, shall be deemed to be an offer or agreement to lend in this State.
(c)	Any solicitation or communication to borrow, oral or written, originating within this State, from a borrower who is a resident of this State, but forwarded to, and received by a lender outside of this State, shall be deemed to be an acceptance or offer to borrow in this State.
(d)	Any oral or written offer, acceptance, solicitation or communication to lend or borrow, made in this State to, or received in this State from, a borrower who is not a resident of this State shall be subject to the provisions of this Chapter, applicable federal law, law of the situs of the contract, or law of the residence of any such borrower as the parties may elect.
(e)	Any person who acquires a right by contract or by assignment to receive payments under a loan made in this State and who benefits from the laws of this State by having the loan secured by real property located in this State is deemed to have consented to the courts of this State having jurisdiction over such person for any claim under this Chapter and for any claim related to the loan instrument.
(f)	The provisions of this section shall be severable and if any phrase, clause, sentence or provision is declared to be invalid, the validity of the remainder of this section shall not be affected thereby.
(g)	It is the paramount public policy of North Carolina to protect North Carolina resident borrowers through the application of North Carolina interest laws. Any provision of this section which acts to interfere in the attainment of that public policy shall be of no effect."
SECTION 4.  G.S. 45‑21.16(c)(7) reads as rewritten:
"(7)	The right of the debtor (or other party served) to appear before the clerk of court at a time and on a date specified, at which appearance he shall be afforded the opportunity to show cause as to why the foreclosure should not be allowed to be held. The notice shall contain all of the following:
a.	A statement that if the debtor does not intend to contest the creditor's allegations of default, the debtor does not have to appear at the hearing and that his failure to attend the hearing will not affect his right to pay the indebtedness and thereby prevent the proposed sale, or to attend the actual sale, should he elect to do so.
b.	A statement that the trustee, or substitute trustee, is a neutral party and, while holding that position, may not advocate for the secured creditor or for the debtor.
c.	A statement that the debtor has the right to apply to a judge of the superior court pursuant to G.S. 45‑21.34 to enjoin the sale, upon any legal or equitable ground that the court may deem sufficient prior to the time that the rights of the parties to the sale or resale become fixed, provided that the debtor complies with the requirements of G.S. 45‑21.34.
d.	A statement that the debtor has the right to appear at the hearing and serve a written response.
e.	A statement that if the debtor fails to appear at the hearing, the trustee will ask the clerk for an order to sell the real property being foreclosed.
f.	A statement that the debtor has the right to contest the allegations in the notice.
g.	A statement that the debtor has the right to seek the advice of an attorney and that free legal services may be available to that debtor by contacting Legal Aid of North Carolina at 1‑866‑219‑5262 or at such number provided by that organization from time to time."
SECTION 5.  Chapter 45 of the General Statutes is amended by adding a new Article to read:
"Article 10.
"Home Loans.
"§ 45‑85.  Definitions.
As used in this Article, the following definitions apply:
(1)	Home loan. – A loan secured by a home used, or intended to be used, as a principal dwelling in this State, whether it is real or personal property, and regardless of whether the loan is used to purchase the home or refinance the prior purchase of the home or whether the proceeds of the loan are used for personal, family, or business purposes. 
(2)	Servicer. – A person or entity who, under contract with a lender, a trustee for a securitized trust, another servicer, an originator, an investor, or with any other party related to or affiliated with a home mortgage loan, or on its own behalf, receives payments from borrowers for home loans, or taxes and insurance associated with a home loan. A licensed attorney, who in the practice of law, accepts payments related to a loan closing, default, foreclosure, or settlement of a dispute or legal claim related to a loan, shall not be considered a servicer for the purposes of this Article.
"§ 45‑86.  Obligation of servicer to handle escrow funds.
The servicer or lender shall make all payments from the escrow account held for the borrower for insurance, taxes, and other charges with respect to the property in a timely manner so as to ensure that no late penalties are assessed or other negative consequences result regardless of whether the loan is delinquent unless the servicer or lender has a reasonable basis to believe that recovery of these funds will not be possible.
"§ 45‑87.  Severability.
The provisions of this Article shall be severable, and if any phrase, clause, sentence, or provision is declared to be invalid or is preempted by federal law or regulation, the validity of the remainder of this section shall not be affected thereby. If any provision of this Article is declared to be inapplicable to any specific category, type, or kind of points and fees, the provisions of this Article shall nonetheless continue to apply with respect to all other points and fees."
SECTION 6.  Sections 4 and 5 of this act become effective January 1, 2008. All other sections of this act are effective when it becomes law.