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Banking lobby fights legislation that would protect homeowners

Bills championed by Sen. Alan Bates of Medford to require mediation before home foreclosure and to bar lenders from foreclosing while negotiating new loan terms passed the Oregon Senate but face an uphill pull against "fierce lobbying" by bankers in the House.

With less than a week before adjournment, Rep. Peter Buckley, D-Ashland, said the mediation proposal has a better chance than the ban on "dual track" negotiations, in which part of a bank or lending institution negotiates with borrowers while another part moves ahead with foreclosure, a practice prohibited in 21 states.

Although the bills have bipartisan support, said Buckley, the Oregon Bankers Association is doing "fierce lobbying" against them, especially the dual track measure.

Bates, a Democrat, decried the practices, noting they enable investors to swoop into the Rogue Valley — listed as the third-best market in the nation for cheap, defaulted homes — snap up properties and turn them into rentals "so the people foreclosed on have no chance to own homes."

Gene Pelham, president and CEO of Rogue Federal Credit Union here, opposes the bills, noting that such predatory tactics are the stuff of big, nationwide banks.

"It will add another layer of oversight and regulation and make us (smaller banks) subject to the U.S. Department of Justice," he said.

"We're tracked at the federal level by 28 agencies — and a fourth of them are mortgage-related. All these fingers in the pie are making a mess of the mortgage process and will add to the complexity and cost, hurting borrowers. This is overwhelming us. We're not the cause of the problem."

Bates acknowledged he's not aware of any complaints in Southern Oregon about dual-tracking or other practices that grease the skids for foreclosure. But in closing remarks before the favorable 20-10 Senate vote Thursday (viewable at http://youtu.be/RjfmT8mQQw0), he said: "We're in a terrible situation. People work hard all their lives and are losing their equity and probably their jobs. ... We're not here to take care of big, international banks. We're here to take care of the people who elected us and brought us to this building — the little guy on Main Street."

Bates, in an interview, said his bills, SB 1552 and SB 1564, which are in the House Rules Committee, "are not aimed at local banks and credit unions. They've put on seminars and worked with borrowers to prevent foreclosures. The problem is the big banks that hold these mortgages.

"One branch (of the bank) is sending you the foreclosure notice while another one negotiates (for lowered or skipped payments), and without this bill, it's legal."

While parts of the economy seem to be coming back to life, Bates said, "The foreclosure crisis in Oregon is not getting better; it's getting worse. This legislation died in the House in 2011, but now both Republicans and Democrats are getting a picture of how serious it is — and the governor has indicated he will sign it."

In other legislative news, a bill to regionalize land-use decision-making for three Southern Oregon counties, Jackson, Josephine and Douglas, does not appear to be moving in this session.

"I feel uncomfortable making that kind of decision in the few days we have left," Bates said. "We need a couple of town halls."

Buckley said the cost, $600,000, and the complexity of the move mean it won't be addressed until the 2013 regular session.

John Darling is a freelance writer living in Ashland. Email him at jdarling@jeffnet.org.