STEVE LAW
Statesman Journal
April 5, 2007
Foreclosures among Oregon homeowners increased 40 percent last year. Many blame the rise of "subprime" lenders, who entice buyers who have weak credit and charge them stiff terms.
Now that many subprime lenders are going belly-up and causing jitters on Wall Street, housing advocates decided the time was ripe to seek new consumer protections for would-be customers.
On Wednesday, the Senate Business Committee rolled out Senate Bill 965, which would enact new safeguards for home buyers against so-called "predatory lending."
Sandy Halonen, who runs a low-income housing group in Eugene, said low-income people often are naive about financial matters.
"They can be convinced to take out a mortgage where they really have no money left over to buy food," said Halonen, the executive director of the Neighborhood Economic Development Corp.
Nearly one-third of all Oregon mortgages issued in 2005 required interest-only payments, according to the Oregon Center for Public Policy. Those buyers are banking on rising property values to boost equity in their homes.
Many people are taking out negative-amortization loans, in which their loan principal grows rather than shrinks with each payment.
Senate Bill 965 extends consumer protections for so-called High Cost Home Loans. In today's market, that would be those charging 12 percent to 14 percent interest.
The bill would bar negative-amortization loans and require clear notices about terms of the loans. Borrowers would be steered to financial counselors before taking out loans. The bill is modeled on laws passed in New Mexico and other states.
One out of every 152 Oregon households was slapped with a foreclosure notice last year, Streisinger said, a 40 percent increase from 2005. The national rate was one in every 92 households.
Sen. Larry George, R-Sherwood, panned the bill. "If someone is being deceptive, I'm with you," George said. But it's not the state's role to "protect people from being stupid," he said.
slaw@StatesmanJournal.com or (503) 399-6615
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2 comments:
I find this collapse of the sub-prime lending market fascinating. I was thinking this morning, in fact, after hearing more about it again, on the news, that there is a master's thesis waiting out there for someone on this topic...And boy, what a quote this is! Sen. Larry George, R-Sherwood, panned the bill. "If someone is being deceptive, I'm with you," George said. But it's not the state's role to "protect people from being stupid," I'll try to keep my objectivity here as an instructor, and stop my fingers from typing anymore about this particular quote...
Julie, I too found the distinguished Senators comment disturbing. If he feels that the "stupid" people should not be afforded the same protection as so called intelligent individuals, than he is seriously mistaken. It is the poorest and least educated citizens that have the greatest need for the "state's" protection. The people who have used sub-prime loans in order to buy a home, due so, because they do not have the financial resources to borrow from other lending institutions. I hope that the voting public take notice of his outrageous comment and vote him out of office come next election! Thank you for your comment.
Mark
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