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State Bill 965 Passes

By Rick Wells

Mortgage and Lending with Countrywide

May 25, 2007 11:30 AM

The State of Oregon has passed a law that will aim to protect homebuyers and punish predetory lenders.

Salem-News.Com Print View Senate Passes Bill to Protect Homebuyers Page 1 of 1

Salem-News.com (May-11-2007 12:49)

Senate Passes Bill to Protect Homebuyers

Salem-News.com

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.

Senate Passes Bill to Protect Homebuyers

Salem-News.com

http://www.salem-news.com/printview.php?id=4352

5/25/2007

BOTTOM LINE : THIS MAY HURT A FEW LENDERS BUT OVERALL THIS WILL BE VERY GOOD FOR THE INDUSTRY>

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Rick Wells

Countrywide - Prineville, OR

I normally would not agree with government involvement and monitoring in the lending industry. I am philosophically against it. It is a very touchy subject and can get very complicated and make things very difficult for everyone involved. I do not think that will happen with this bill.

We as a community have to understand that a person's home normally is not only their biggest asset but also their biggest liability. There are many individuals who simply do not understand the complicated loan terms they are agreeing to. Sometimes those loans are sold because it is the only way to get a customer in a home. We need to be careful that we are not just getting someone in a home but into a financial crisis also.

We as mortgage and real estate professionals have a duty to educate and inform our customers to the fullest of our abilities, but unfortunately there are people in this industry who are simply selling loans and do not care about the ramifications long term to the customer. That needs to be controlled in some way. Our economy turns on the cog of homeownership. The big WWII factories are not around any more. We have to protect our homeowners, ourselves, and our economy. This bill is a step in that direction.

Jun 05, 2007 04:38 AM

Thanks for the comments on this obviously passionate and controversial topic. Like I said I would I have reviewed the bill once again and I have drawn two conclusions. Something should be done about predatory lending but this bill is too vast and too broad. As some of the people I have spoke to have indicated it would exclude many that don't deserve exclusion. I do feel however that something like a recission or educational period of time should be allowed for buyers to review docs, similar to what is necessary for refinancing. We should try to protect consumers but I have changed my mind this bill is too vast.

Thanks

Jun 07, 2007 03:53 AM

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