Consumer Protection News

Today the Oregon State Senate passed an amended version of SB 628-- to address the foreclosure crisis in Oregon. Overall, the bill is a real step forward. Oregon is now one step closer to taking action to prevent unnecessary foreclosures, to the benefit of all Oregonians. However, we are concerned that the lenders will abuse certain loopholes in the bill. Therefore, it will be critical for lawmakers to vigorously watchdog the bill’s implementation over the next few months in order to ensure the problem is indeed solved.

Oregon has been hard hit by the foreclosure crisis, and the economic impacts are severe. This year, Oregonians are facing near record foreclosure rates. That's terrible for the families who lose their homes, and it's bad news for their neighbors too. Without action, Oregon homeowners will lose more than $9.2 billion in equity over the next few years, due to the negative impact of foreclosures in their neighborhoods.

Frankly, there's a lot of blame to go around for the mortgage meltdown, but there are a couple of things everyone can agree on.  The problem is getting worse, and we should do everything we can here in Oregon to stabilize the housing market and our economy.

This problem is solvable. We know that up to half of all foreclosures could be prevented if the lender and the borrower sat down and tried to work out a mutually beneficial deal. We also know that these conversations just aren't happening often enough. Time and time again, borrowers attempting to secure a loan modification can't even get their lender on the phone. SB 628 addresses that problem by requiring lenders to evaluate in good faith a loan modification at the borrower's request, and to meet with the borrower to discuss their options.

The version of the bill passed by the Senate today will work, but only if the lenders truly act in good faith. The current version of the bill includes a broadly worded provision that exempts lenders from many of the requirements of the bill in certain circumstances. The provision’s intent is to excuse those lenders who have robust modification programs in place from duplicating their efforts - not to excuse lenders from responding to borrowers in a timely way, or from meeting with borrowers at their request.  Therefore, Oregonians will only be well-served by this bill if the lending industry lives up to the intent of the bill. If lenders abuse the exemptions in the bill, the policy will fail to live up to its potential.

Given the magnitude of the problem, we wish SB 628 offered stronger protections for consumers. However, SB 628 represents the best opportunity for the state legislature to prevent unnecessary foreclosures and speed Oregon’s economic recovery. With so little time left in this legislative session, we're now calling on the house to make action on this crucial issue a top priority. We also urge lawmakers to monitor the bill’s implementation to ensure that the lending industry embraces the bill’s intent.