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May 14,2007
Senate passes ‘home loan fairness act’ targeting predatory lending
by Bend Weekly News Sources

Home Loan Fairness Act will protect homebuyers, target predatory lending practices, head off mortgage crisis

The Oregon Senate passed Senate Bill 965 Friday, 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.
5915 times read

Related news
Oregon to strengthen regulation of mortgage lenders by Bend Weekly News Sources posted on Jan 19,2007

Housing rescue plan proposed by UPI posted on Apr 02,2008

Modifying home loans by The Milwaukee Journal Sentinel posted on Mar 14,2008

Freddie Mac bans unaffordable subprime home loans by Bend_Weekly_News_Sources posted on Mar 02,2007

Did you enjoy this article? Rating: 3.84Rating: 3.84Rating: 3.84Rating: 3.84 (total 38 votes)

  • I am a mortgage broker, an honest mortage broker. This bill is not aimed to protect the consumer and will not do so. If you read what this bill does, it's purpose is to eliminate the mortgage broker, which it will do by causing insurance and bonds to be unattainable, and make the BANKS to only place someone can get a loan. I will be out of a job along with 14,000 other mortgage brokers in the State. For those of you that want a mortgage and don't want to go to or can't qualify with your local Wells Fargo or Washington Mutual, good luck. This will destroy Oregon's economy.
  • (Posted on June 6, 2007, 10:03 am Michael)

  • This Bill is not what it seems. This bill WILL put mortgage brokers out of business. I have personally been to the capitol voicing my concern to the House of Representatives face to face. Mortgage brokers do not have a good lobbyist working for them, most dont even know about this. Bill 965 is dangerous.
  • (Posted on June 2, 2007, 2:25 pm Jamie)

  • As a former senior loan officer, here are the Top 10 things that mortgage lenders don't want borrowers to know: 1. Not knowing which mortgage fees the borrower can -- and cannot -- negotiate. Or how the lender actually makes money on you. Without this understanding, a smooth operator could bilk you out of thousands of extra dollars . . . in mere seconds, since you don't actually write a check for these costs. 2. Choosing and trusting the first loan officer the borrower interviews. 3. Using an interest-only or "payment option" adjustable-rate loan primarily to qualify for a more expensive house than you could normally afford. 4. Thinking the interest rate is always the main thing. Do comparison shopping not just on the interest rate but on all of the loan costs. 5. Not comparing the final fees listed on the closing documents to the up-front estimates to avoid the lender packing the loan with added-on fees without the borrower's knowledge. A deceitful closing agent may also use various tactics to distract you from the inflated figures in the ream of papers you'll need to sign so you won't even notice. 6. Not knowing if the mortgage has a pre-payment penalty - until it's too late. Else you could find yourself in a Catch-22: You may need to refinance the mortgage so you can afford the monthly payment, but you may not be able to afford the prepayment penalty to allow you to refinance! 7. Thinking that renting is always just throwing money away. At least in the short run, it can cost thousands less to rent. 8. The borrower does not know if he or she is paying a back-end yield spread or Service Release Premium. These are fees paid to brokers and loan officers (the "kickback") for upselling the interest rate to borrowers. 9. Paying for mortgage life insurance, credit insurance or other expensive lender add-ons to increase the amount of kickbacks the lender can receive from various vendors. 10. Paying hundreds of dollars to have a company set up a biweekly mortgage payment plan, something the borrower can generally do for herself or himself -- for free. From Kickback: Confessions of a Mortgage Salesman, one of the best-selling books on mortgages on Amazon.com.
  • (Posted on May 19, 2007, 1:06 pm Ted Janusz)

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