Mortgage Help gets Bogged Down

This article originally appeared in the May 27, 2009 edition of the Portland Observer.

Slow going on new consumer protections

Jake Thomas

The Portland Observer

After her husband’s trucking business took a fatal hit from the recession, Dodie Howard’s greatest fear has been losing her home. Since last fall Howard, who works as a buyer for Safeway, has been calling her lender, Citimortgage, in hopes that she can sit down with a representative and hopefully cut a deal.
However, Howard, 65, now worries that her simple appeal will drown in her lender’s dizzying labyrinth of red tape. Whenever she calls she is transferred numerous times, put on hold, and is dismissed anytime she proposes a resolution. Meanwhile she has fallen $17,000 behind on mortgage payments, and has no idea if her bank intends to foreclose.

“We can make payments. We’re not destitute. We’ve just lost an income,” said Howard.

Legislators have heard the pleas of people like the Howards, and a bill aimed at addressing the sort of situation has been introduced in Salem. However, it’s been bogged down after mortgage and banking interests groaned that it would unfairly burden them and lacked specifics.
Senate Bill 628, sponsored by Suzanne Bonamici, D-Beaverton, would require lenders to sit down with borrowers and a third-party mediator before a house is foreclosed on, in hopes that some sort of solution can be met.
But the bill faces powerful and well-financed mortgage and banking lobbies, like the Oregon Financial Services Association, which has doled out $32,000 over the last three years to both Democratic and Republican members of the legislature and spends even more on lobbying activities each session.
Last month there were 342,038 foreclosures in Oregon, according to RealtyTrac.com. And it’s expected to get worse as Oregon’s unemployment rate has soared to the second worse in the nation.
“This bill does need some work,” said Bonamici at the beginning of the bill’s first public hearing before the Senate’s Consumer Protection and Public Affairs Committee, which she chairs.
During public hearings financial and mortgage interests complained that there were unanswered questions as to how the bill would be implemented. For instance, it was unclear how titles would be insured and how it would jibe with federal programs aimed at stopping foreclosures.
People representing banking and financial interests also claimed that the bill would weigh down lenders with unnecessary requirements and costs.
“Creating more burdens and more costs are not the way to do this,” said Melissa Briggs, counsel for the Oregon Bankers Association.

The committee also heard from proponents for the bill who told horror stories of being put on hold for long periods of time and going through dozens of transfers only to not even get a straight answer from their bank.

The bill would require a trained mediator to sit down with the lender and borrower and would work out a solution using federal guidelines. If the bank refuses the offer, it would have to pay a fee when selling the house.

The financial services lobby has proposed an alternative bill that would merely require banks to give more notice that lenders are in foreclosure.

Last week President Barack Obama signed a bill that expands a $300 billion program that encourages lenders to help keep people in their homes.

But the law won’t have maximum effect, unless lenders actually sit down and negotiate with borrowers, said Aimee Olin, executive director of Oregon ACORN.
“At this point I think our legislators need to stand up for families that are hurting,” said Olin, who added that most of the people who come to her organization looking for help have made responsible decisions and are usually facing foreclosure because of job loss of medical bills. It’s uncommon for a homeowner to get in touch with their lender, she said.
Olin also pointed out that foreclosed homes tend to drag down the property values of surrounding homes as they go uncared for and attract unsavory activity.
But while legislators in Salem try to come to some sort of resolution Howard sits nervously in her home in outer southeast, which might not be hers for much longer.

“Where are we going to get a solution to this place,” she said. “We’ve worked hard for this place.”

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About jakethomasreports

Jake Thomas is the web editor and news reporter at the Portland Observer. His freelance work has been published in In These Times, Utne Magazine, Willamette Week, Portland Mercury, and others.
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