A BILL TO BE ENTITLED
AN ACT to abolish deficiency judgments in certain cases where the mortgage is secured by primary residence.
The General Assembly of North Carolina enacts:
SECTION 1.  Article 2B of Chapter 45 of the General Statutes is amended by adding a new section to read:
"§ 45‑21.38A.  Deficiency judgments abolished where mortgage secured by primary residence and foreclosed under power of sale.
In all sales of real property secured by a primary residence by mortgagees or trustees under powers of sale contained in any mortgage or deed of trust, the mortgagee or trustee or holder of the notes secured by such mortgage or deed of trust shall not be entitled to a deficiency judgment on account of such mortgage, deed of trust, or obligation secured by the same, if the defaulted mortgage loan was a rate spread loan as defined in G.S. 24‑1.1F, or a nontraditional loan that features a negative amortization payment option. This provision shall not apply to Home Equity Lines of Credit, construction loans, or to bridge loans. This section shall not apply to a loan made by a natural person who makes no more than one loan in a 12-month period and is not in the business of lending."
SECTION 2.  Article 2B of Chapter 45 of the General Statutes is amended by adding a new section to read:
"§ 45‑21.38B.  Deficiency judgments abolished where mortgage secured by primary residence and made on or after January 1, 2010.
In all sales of real property secured by a primary residence, the mortgagee or trustee or holder of the notes secured by such mortgage or deed of trust shall not be entitled to a deficiency judgment on account of such mortgage, deed of trust, or obligation secured by the same, if the defaulted mortgage loan was a rate spread loan as defined in G.S. 24‑1.1F, or a nontraditional loan that features a negative amortization payment option. This provision shall not apply to Home Equity Lines of Credit, construction loans, or to bridge loans. This section applies regardless of whether the real property is sold under a power of sale or as a result of court action. This section applies to mortgages made on or after January 1, 2010. This section shall not apply to a loan made by a natural person who makes no more than one loan in a 12-month period and is not in the business of lending."
SECTION 3.  Article 2B of Chapter 45 of the General Statutes is amended by adding a new section to read:
"§ 45‑21.38C.  Severability.
The provisions of this Article shall be severable, and if any phrase, clause, sentence, or provision is declared to be unconstitutional or otherwise invalid or is preempted by federal law or regulation, the validity of the remainder of this section shall not be affected thereby."
SECTION 4.  This act is effective when it becomes law.