By now, most of us are familiar with the current mortgage meltdown—and the big spike in foreclosures—that is dragging down the economy. A significant rise in foreclosures and distress sales has drawn attention to problematic mortgage lending practices that went unchecked under current laws. With the worst of the mortgage crisis yet to come here in Oregon, OSPIRG called for reforms to abusive lending practices to help prevent the next crisis.

According to RealtyTrac data, Oregon’s foreclosure rates were up 41 percent in October 2007, compared with October of the previous year. Foreclosures in Oregon rose 12 percent between September and October of this year. More than 15,000 Oregon families will face significant increases in their monthly mortgage payments over the next several months.

The home loan crisis has also triggered a collapse in the mortgage-backed securities market, affected international credit markets, and created opportunities for “mortgage rescue” scam artists that further victimize those in foreclosure.
 
Standing Up To Lenders
OSPIRG, working in coalition with AARP-Oregon, Center for Responsible Lending and Our Oregon, called on lawmakers to take steps to rein in the lending practices that contributed to this crisis.

To protect homeownership, Oregon needs lending standards requiring lenders and brokers to make sure a home loan is in the borrower’s financial interest, and to qualify borrowers based on the fully indexed rate of the loan, not just the initial teaser rate.  

Fair lending policies should also eliminate excessive fees and abusive prepayment penalties, and include strong enforcement provisions.