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 rep.genewhisnant@state.or.us.)
Meanwhile, for caring more about the wishes of banks than the needs of Oregon homeowners, Whisnant gets THE BOOT from us.
This article appears in Feb 16-22, 2012.
MAKE LOCAL JOURNALISM HAPPEN
Republish our articles for free, online or in print, under a Creative Commons license.
As one currently in the “spin cycle” I can’t understand any public servant who turns a deaf ear to our plight. I’m 65 and on Disability. I have no living family. If after 3 years of negotiation they foreclose. I have nowhere to go. Please help.
I’d like to encourage all the supporters of bank/foreclosure legislation in the Bend area to flood their legislators with visits, phone calls and e-mails. This would be a good time for some Occupy action as well!! Thanks for all you do!!
How sad that they never get anything meaningful done in Salem regarding the foreclosure issue. The comment that we have enough regulations now is laughable, as none of those regulations saved us from the mortgage meltdown! We can no longer trust our government or banks to do the right thing for the distressed homeowners! They are destroying the middle class and taking away the hopes and dreams for the future of the middle class.
I don’t live in Gene Whisnant’s district, and I wonder who it is that he represents that he can get away with such cynical conduct and comments. Is his district one big plutocratic country club? Is nobody there in foreclosure, or going out of business, or laid off, or suddenly on food assistance? Maybe he thinks that shipping our economy off shore is a good thing: No regulation there, by golly. I should look up this old boy’s district and move there to run against him. I would hardly have to campaign to win.
I would have never believed this foreclosure ‘business’ could happen in America. I’ve been a staunch Republican since I could vote but it seems the Rep. politicians are completely out of touch with the real world -I guess it’s time to change parties!
This Whisnant is either an idiot or his hand is in the banks pocket -and yes, you can qoute me -just spell my name right!
A week ago I (again) traveled over to Salem to testify in favor of pending foreclosure legislation. I testified last year too (SB’s 826-827)…does that give any indication on how long this ‘spin cycle’ lasts? I have been assisting my partner in negotiating a modification w/ his bank since Aug. 2009 – not only is his house on the line, but his farm as well, his main source of self employed income.
It is atrocious that Mr. Whisnant can just brush aside the real pain + loss defaulting homeowner’s are continuing to experience with his mangy paw; are we only so many fleas defiling his coiffed ruff? Just another arrogant + pampered Cowardly Lion!
Lets examine a real estate purchase from the ground up. Prospective homeowner finds a home they wish to buy on the open market but lacks the funds to purchase that home. This person approaches a lender and voluntarily agrees with a legal signature and a handshake to borrow enough money to purchase the home. The lender, yes most often a bank, pays for the home in full, thereby fulfilling 100% of their side of the agreement. The home is rightfully held against the mortgage as collateral in case the borrower is unable to make monthly payments, failing to uphold their end of the agreement. In such case, the bank is entitled to seek remuteration for their now non performing asset because if they didn’t, they would have less money to lend and little incentive to lend.
Instead of pathetic lamentations directed at entities which are not the problem, look instead at the real problem which was an over inflated housing market circa 2006/2007. There are winners and losers in every market and legislators have no business backstopping bad individual decision making with touchy feely regulation.
@Jon Jeggle: Sir, my partner bought this farm property, his 1st ever RE purchase with much consideration…He saved for 9 years before doing so & everything was conventional, but yes, at the outset he did get duped by some hinkey RE people which we now know were all in cahoots, and 2 of the 3 have since lost their licensure and were fined. (Now the statute of limitations has run out.) Due to this mis-origination, (which we had to make the bank aware of) the bank was forced by the investor to re-purchase the loan. Was it his fault that due to the securitization shenanigans on Wall Street his self employed farm income tanked by over 60%? He simply “played by the rules” or what we then thought were the rules, but now believe were just a method to defraud homeowners through this so-called modification process that was touted thru the MHA/HAMP program by the Obama admin. We have fought long and hard on this with the bank as what they are doing to many, many property owners is out and out misrepresentation and fraud.
I would love to sit down and show you the reams of documents to prove my claims, but I have only so much time… To really know what is lurking under the “foreclosure carpet”, please read this piece by Abigail Field called ‘Securitization Fail’: http://abigailcfield.com/?p=882 – but please make sure you are sitting down when you do.
Going into a home foreclosure does make home owners DIZZY!! When we negotiate a contract for making a home purchase there are certain realities and expectations. Yes, we pay on that contract. We do pay. We keep our paperwork and know the agreement in that paper work. We expect the same of the bank. And when the industry begins “playing with our papers”, destroying the original contract then wants to change the rules about our contract that can not be located…….There is a huge problem and often results in foreclosing on the homeowner. This mess needs intervention, there needs to be clear rules that work for all parties. That is what this legislation is about. Gene Whisnant has the power to move SB 1552 and SB 1564 to the House General Government and Consumer Protection Committee. He can make it possible for committee members to deliberate the need for rules for the foreclosure process. Mr. Whisnant is playing with a major resource that will establish rules for banks and homeowners in this situation. We need a legislative committee hearing so we can discuss our experience in the “spin cycle” and what is needed to get out of this “dizzying mess”.