Wednesday, January 23, 2008

Westlund Has Lenders in His Sights

State Sen. Ben Westlund says he plans to spend the legislature's brief emergency session next month pushing a bill to clean up the home lending

Posted By on Wed, Jan 23, 2008 at 1:19 PM

State Sen. Ben Westlund says he plans to spend the legislature's brief emergency session next month pushing a bill to clean up the home lending business.

Westlund's "Responsible Home Buying Act" (SB 1090) aims to rein in some of the practices that contributed to the present mortgage crisis by, among other things:

  • Declaring that mortgage brokers would have "an obligation to act in the borrower's best interest" and "use reasonable efforts to secure the best loan offer the borrower qualifies for,"
  • Limiting pre-payment penalties,
  • Prohibiting financial incentives to steer home buyers to higher-cost loans,
  • Putting a cap on points and fees charged to borrowers, and
  • Requiring the lender to verify the borrower's ability to pay off the loan.

"Although the national mortgage lending crisis hasn't hit Oregon as badly as other states, foreclosures on sub-prime loans in Oregon for the first half of 2007 are double what they were in the first half of 2006," the Bend Democrat said in announcing the legislation. "Foreclosure rates on prime loans during this period are up 13 percent. Serious delinquencies on sub-prime loans are also nearly double."

A website has been set up where you can find the full text of the bill and other details.

Some powerful allies are lined up behind Westlund's legislation, including AARP Oregon and Service Employees International Union Local #503. But look for the state's mortgage lending industry to pull out all the stops in an effort to beat it.

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