Senate Passes Bill to Protect Homebuyers

Home Loan Fairness Act will target predatory lending practices, head off mortgage crisis.

(SALEM, Ore.) - The Oregon Senate today passed Senate Bill 965, legislation that sets new standards for lenders who make nontraditional home loans. Known as the Home Loan Fairness Act, the bill comes in response to the recent crisis in the subprime lending market that has led to record foreclosures across the country.

Senate Bill 965 will protect consumers and put Oregon in a unique position to prevent a foreclosure crisis.

“Investing in a home is one of the most important and best financial decisions a person can make,” said Senator Brad Avakian (D-Portland/Beaverton). “This bill is designed to ensure fair lending practices for families who are working hard to achieve the dream of home ownership.”

Senate Bill 965 is a direct response to the national mortgage meltdown, which has seen a dramatic increase in foreclosures for borrowers with nontraditional mortgage products such as “interest only” loans, “payment option” loans, “no documentation” loans, and “teaser rate” adjustable loans.

“The recent massive round of foreclosures across the country is now well documented,” said Senator Rick Metsger (D-Mt. Hood). “With this bill, Oregon can avoid this crisis in the subprime market.”

Under Senate Bill 965, a lender who makes a nontraditional loan will be required to determine in advance a borrower’s ability to repay a loan based on the full terms of the loan, not just the introductory terms at the front end of the loan. In addition, the bill limits the circumstances in which loans can be made without proof of income or assets, and it requires lenders to adopt detailed risk management practices and abide by a series of detailed consumer protection standards.

“Senate Bill 965 is a clear case of consumer protection,” said Senator Laurie Monnes Anderson (D-Gresham). “No person should be subject to such blatantly poor lending practices.” Senate Bill 965 will now move to the House for consideration.

Salem-News.com Top Stories

Closing Gitmo in the American Heart

The Promise of America and the Demise of Foreign Aid

2025: Hope for the Best, Prepare for the Worst

Two Wars with No Way Out

No One Owns the Future

Comments Leave a comment on this story.

All comments and messages are approved by people and self promotional links or unacceptable comments are denied.

Michael June 6, 2007 9:11 am (Pacific time)

I am a mortgage broker, an honest mortage broker. This bill is not aimed to protect the consumer and will not do so. If you read what this bill does, it's purpose is to eliminate the mortgage broker, which it will do by causing insurance and bonds to be unattainable, and make the BANKS to only place someone can get a loan. I will be out of a job along with 14,000 other mortgage brokers in the State. For those of you that want a mortgage and don't want to go to or can't qualify with your local Wells Fargo or Washington Mutual, good luck. This will destroy Oregon's economy.

Erik Anderson June 5, 2007 4:32 pm (Pacific time)

This is the begining of the realestate crash in Oregon. There are many self-employed people in Oregon that cannot prove income that use these types of loans to achieve their dreams. There are others who use the interest only loans to eleviate financial pressure for a time. There are investors that use option loans to create cashflow on thier rentals. These loans have great use. If they are labeled in a negative way and mortgage professionals are held responsible, (as in determining the ability to repay based on the full terms not just the intrductory terms on the front of the loan) the the only loans that will be transacted are full doc loans that a majority of current homeowners cannot afford. This will create a mass of foreclosures and people will not be able to even buy their first home because they cannot afford it. The realestate market will plummet to all time lows in oregon, every individual in the circle of the mortgage industry will suffer. Example, far fewer homes will be sold so a majority of realestate agents will have to find a new career, title companies will handle fewer transactions and have to reduce overhead so letting a few people go, mortgage companies will be doing far less business and will go out of business or let people go. Overall the realestate industry and all involved will more than likely lose their jobs and most will have to change careers and the foreclosure rate will go up just because of that. This bill is going to create an unaffordable market for most and foreclosures will increase exponentially. If proper research would have been done and the ramifications of the over all picture taken into consideration by an educated individual then they would have realized that within the bill it states that Oregon has one of the smallest foreclosure rates in the country, this bill is going to put Oregon in the lead. Lack of education is the scariest thing of all, in this case I am trembling. As a mortgage officer and a homeowner and an investor if this bill passes I will never buy another investment in Oregon or transact a loan in Oregon, due to the liabilities of this bill. Just a thought; out of all the bills passed good or bad has the individual that created it, ever been held responsible? One bad bill affects millions one foreclosure does not.

[Return to Top]