In its last session, the Oregon Legislature – faced with more than 120,000 Oregon homeowners being “underwater” on their mortgages – came up with a good idea for helping them keep their homes. It passed a bill requiring lenders to enter into mediation with borrowers who were at risk of foreclosure and try to work out a way to avoid it.
There was only one thing wrong with the bill: To get it passed, its supporters had to pull its teeth. Although the law makes it mandatory for a bank to enter into mediation if the homeowner requests it, there’s no penalty if the bank doesn’t.
The result has been predictable: Banks are simply ignoring the law. Since it went into effect in July, according to state officials, homeowners have filed more than 150 requests with private lenders for mediation. Not one of them has actually led to a mediation process. In fact, the banks haven’t even bothered to reply.The law also provides that once a home actually is in an out-of-court foreclosure process, the bank can’t auction it off unless it participates in mediation. The banks have skated around this part of the law by switching to court-supervised foreclosures, which are slower and costlier.
Jonathan Conant, manager of the mediation program, told a legislative committee in August that all of the state’s five biggest mortgage lenders – Bank of America, Wells Fargo, Citigroup, JPMorgan Chase and Ally Financial – have said they aren’t willing to participate in the program “under any circumstances.”
“They just don’t want to play,” said Conant.
The banks claim they don’t want to play because they’re not completely clear about what the rules of the game are. A July Court of Appeals decision and new rules from Fannie Mae and Freddie Mac have clouded the picture, they say.
Well, maybe – but we’re skeptical. The alleged confusion hasn’t stopped two government lending agencies – the Oregon Department of Veterans Affairs and Oregon Housing and Community Services – from agreeing to mediation.
The foreclosure epidemic continues to inflict hardships on families who lose their homes – and more than that, it cripples the whole economy. The large supply of foreclosed and about-to-be-foreclosed homes depresses the real estate market, which in turn depresses the construction industry. People who lose the equity in their homes lose an important part of their financial security. People who can’t sell their homes can’t move to other communities to take advantage of new jobs or other opportunities.
The banks created the real estate bubble and bust, and the foreclosure epidemic that followed, by inflating home appraisals and giving mortgages to people they damn well knew couldn’t handle them. They bear the main responsibility for making the current economic mess, and they need to be made to help clean it up.
When it goes into its next session in February, the legislature has to fix the mediation law by putting some teeth back into it. In the meantime, the banks get THE BOOT for arrogantly flipping off the legislature and people of Oregon.
This article appears in Oct 4-10, 2012.
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“They just don’t want to play,” said Conant.
That’s correct. Its not a game.
“The banks created the real estate bubble and bust, and the foreclosure epidemic that followed”
Nope. Wrong again. Thank your old buddy Bill Clinton for that with an honorable mention to good old Jimmy. Wanna seek someone to toss in prison for their role in the financial crisis? Put Bubba at the top of your list. The feel good principles behind the CRA crumble into dust when applied, by force of threat from the Clinton Justice department, to markets in the real world. Lenders see only credit worthiness (or lack thereof), but the CRA forced lending into minority groups in the name of “fairness” and the higher numbers of unqualified borrowers that came with it.
“giving mortgages to people they damn well knew couldn’t handle them”
The insanity of liberals is never more evident than it is in this line of thought. If you go to a local market versus a chain supermarket and voluntarily pay too much for your food, toothpaste, and toilet paper, that’s on you! You don’t have the right to go back and sue Rays or Newport Market because you find out later that Walmart was cheaper. Furthermore, as I have explained to all the seething bank haters many times before, the lender is the party at risk in a mortgage transaction. At closing, they write a check for hundreds of thousands of THEIR money to purchase a home on behalf of a person whose only commitment to the process is a signature.
“seething bank haters” …lol
Really? I don’t believe that you have to be a Dem to recognize that the banking industry is largely responsible for the corruption of our political, as well as our economic institutions. To defend the acts of greedy professionals really reveals the the heart of the man defending.
re: bank/food analogy
Vendors who sell you food don’t have a responsibility as a professional to make sure that you are qualified to make your longterm payments. TRUE. Hopefully, groceries are yet not that expensive.
Bartenders have a responsibility, however, to make sure that you aren’t drunk-stupid when you finish your business with them.
Even plastic surgeons have an ethical obligation to slow down your patronage.
For most people, buying a home is exciting, and traumatic.
The buying of a home requires a relationship with an officer based on trust. Most buyers need their hand held.
Loan officers are -trained- to qualify a client before introducing them to the right loan package. One that is affordable, and one that is sustainable.
Unfortunately, they get their commission within weeks of the loan closing. Maybe part of their pay should be tied into the life of the repayment of the loan.
The writer of the previous opinion is incorrect when he says that the buyer’s “only commitment to the process is a signature”. To say such a thing publicly is an embarrassment of ignorance.
Those who make money via their unrestrained greed should be treated as criminals and be charged/fined for their deception and what amounts to as fraud. At the very least, they should be banned from practicing within the industry by their peers.
In a country with two sets of rules, one for politicians and those who pay off politicians and one set for the rest of us, how do we deal on an even playing field?
In this case, go for the hail Mary- MERS – Just ask the bank to prove they own your mortgage. Ask for the actual note, complete with signatures transferring to them. Why don’t more people do this?
“I don’t believe that you have to be a Dem to recognize that the banking industry is largely responsible for the corruption of our political, as well as our economic institutions. To defend the acts of greedy professionals really reveals the the heart of the man defending.”
The suggestion that banks alone are responsible for our current mess is the height of ignornace of the facts. I suggest going to factcheck.org and seach ‘housing crisis’ to get a better understanding of what happened. For even a deeper analysis, Thomas Sowell has a book that covers the crisis quite well.