PORTLAND,
Ore. (AP) — A broad effort to curb abuses in Oregon's mortgage lending industry
may land on the 2008 ballot, with consumer advocates and industry
representatives seemingly deadlocked on a proposed legislative package.
Progressives
see the issue as a potent one that could help rally their core voters in a
presidential year.
A
workgroup convened by Oregon Gov. Ted Kulongoski has been meeting regularly
this fall, hoping to come up with a package of "consensus"
legislation that would win approval during February's legislative session.
But
consumer advocates boycotted a meeting of the workgroup this week, charging
that industry groups were haggling over relatively minor points in hopes of
running out the clock on reform efforts. An eleventh-hour burst of industry
opposition torpedoed more widespread reforms proposed during the 2007
legislative session.
At
issue are subprime loans, mortgages with high interest rates and fees that are
generally offered to high risk borrowers. In the past year, thousands of
homeowners nationwide have defaulted on such loans, many issued during the peak
years of the real estate bubble.
Oregon
has escaped the brunt of the foreclosures, but statistics released early this
month suggest the state's turn could be coming. According to RealtyTrac, Inc.,
an online site for the buyers and sellers of foreclosed property, foreclosure
filings in Oregon were up 53
percent in July, August and September compared with the same time period last
year.
Members
of the workgroup have found common ground on several points:
•
Regulating so-called "mortgage rescue scams," where fly-by-night
lenders dangle sketchy offers of refinancing or buyouts for owners in danger of
losing their houses.
•
Creating a registry that would allow consumers to check the history and
background of their lender.
•
Better language around foreclosure notices, so homeowners in that situation
will clearly understand their options.
But
consumer advocates, and some Democrats involved in the negotiations, had been
hoping for broader reforms, including new regulations on the big penalties that
are charged if subprime homeowners try to refinance their mortgage. They are
also pushing to require lenders to make sure homeowners can afford the loans
they are being offered.
Cory
Streisinger, director of the state Department of Consumer and Business
Services, said she expected that the more limited package of bills would still
find favor with legislators in February, and that a broader package could be
crafted for the six-month legislative session that begins in January 2009.
"We
certainly know that the consumer groups wanted to go further in 2008,"
Streisinger said. "It doesn't look like the workgroup as a whole will come
forward on the broader issues. But the work isn't done"
In
a letter sent to the governor Thursday, consumer advocates charged that the
smaller package of legislation is "too narrowly focused on the foreclosure
process, and wholly inadequate for protecting borrowers on the most important
day — the day they sign the papers to become homeowners.
"Therefore,
we cannot in good conscience grant the appearance of consensus for these
recommendations alone," wrote the groups, which include AARP, the Oregon
State Public Research Interest Group and Our Oregon.
Mortgage
industry representatives say they stand ready to forge ahead with a deal on the
smaller package of reforms, but are balking at demands for bigger change,
cautioning about the potential for reduced home ownership and affordable
housing. Instead, the industry would prefer to see how national reforms play
out in the state, said Chris Ambrose, president of the Oregon Mortgage Lenders
Association.
"We
wouldn't have been on the task force if we had an interest in running out the
clock — that's not in the best interest of the state of Oregon,"
Ambrose said. "It's also not in the best interest to put into place bad
law, just because certain groups feel that something needed to be done."
If
consumer advocates turn to the ballot, they could have an issue that resonates
with working and middle-class voters.
"Eighty-seven
percent of registered Democrats and 82 percent of registered Republicans
support cracking down on abusive lending practices," said Angela Martin, a
spokeswoman for Our Oregon. "If you take this out to the people, they
support it."
