Consumer Protection News

Statement of Consumer Advocate Matt Wallace on the Signing of SB 628 and HB 2189 by Governor Kulongoski

Today Governor Kulongoski signed two bills to help prevent foreclosures, and to help prevent another mortgage meltdown like the one at the root of our current economic woes.

Oregon has been hard hit by the foreclosure crisis, and the economic impacts are severe. Just today, new statistics show that Oregon is facing staggering foreclosure rates for the first half of 2009. 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.

SB 628 will help address the foreclosure crisis in Oregon. 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.

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 exemptions in the bill. Therefore, it will be critical for policymakers to vigorously watchdog the bill’s implementation over the next few months in order to ensure the problem is indeed solved.

HB 2189 will help to ensure that we don't face another mortgage meltdown in the future, by establishing the state's authority to implement and enforce new federal guidelines on mortgage lending.

In addition to new regulations on mortgage lending practices, Congress has passed the federal S.A.F.E. Mortgage licensing act. This act requires loan originators to be licensed and registered through a centralized national system. The new standards also set new requirements for loan originators in the interest of consumer protection, including creating a wider definition of loan originators, testing requirements, and more extensive background checks and identification requirements.

HB 2189  codifies implementation of these new federal standards in state law.

This is an important day for Oregonians, and along with a variety of important legislation passed this legislative session, regular people facing these tough economic times now have new tools to protect their rights as consumers.