In the foreclosure game, they call it the "spin cycle." The name is apt: Just like the spin cycle of a washing machine wrings water out of laundry, the foreclosure spin cycle wrings the last drops of cash out of the hapless borrower who gets caught in it.
A homeowner gets trapped in the spin cycle when he's facing foreclosure and tries to renegotiate his mortgage to avoid it. Even while he's dealing in good faith and making payments regularly, the bank continues to move ahead with foreclosure - and worst of all, the homeowner doesn't even know it. By the time the bank gets through spinning him he's lost thousands of dollars - and the house.
A number of bills now before the Oregon Legislature are aimed at ending the vicious spin cycle and helping the state's homeowners - more than 120,000 of whom are now "underwater" - avoid foreclosure. That would be a good thing for the homeowners and for the state's economy, still struggling to claw its way out of the Great Recession.
But apparently that's not enough for Central Oregon's own Rep. Gene Whisnant. The Sunriver Republican, in his role as co-chairman of the House General Government and Consumer Protection Committee, killed four of the bills last week by refusing to schedule them for a hearing.
One of the defunct bills, HB 4140, would create a mediation program that would give borrowers a chance to meet with lenders and work out ways to avoid foreclosure. Participation would be mandatory for the lenders. HB 4140 is virtually identical to a Senate bill, SB 1552, which will be voted on next week. (Ironically enough, Whisnant's fellow Central Oregon Republican, Sen. Chris Telfer of Bend, is a co-sponsor of SB 1552.)
Asked why he's not supporting the foreclosure prevention bills, Whisnant parrots the usual tired Republican rhetoric about the evils of big government and regulation. "We have enough regulations now," he said, referring to temporary rules recently enacted by Attorney General John Kroger.
But the rules Kroger issued, while laudable, aren't nearly enough. For one thing, they'll expire in 180 days. For another, they're aimed only at preventing blatant deception by lenders; they don't make banks come to the table to try to work out solutions with borrowers.
Fortunately, two bills that would accomplish some of the same things as the ones Whisnant killed are still alive in the Senate. One of them is SB 1552, as already mentioned. The other is SB 1564, which is specifically designed to stop the "spin cycle." It requires banks to keep borrowers fully informed about foreclosure proceedings and provides criminal penalties for non-compliance.
The two bills are considered to have a good chance in the Senate. But even if they pass there, Whisnant could still block them in the same way he blocked the four House bills. Maybe his constituents can persuade him that wouldn't be advisable. (Phone (541) 593-7437 or email email@example.com.)
Meanwhile, for caring more about the wishes of banks than the needs of Oregon homeowners, Whisnant gets THE BOOT from us.