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Brokers: Legislation not needed

Realtors, brokers weigh in on foreclosure crisis

(news photo)

John Klicker / The Outlook

Carter Hardenbergh, managing broker with Blue Bear Lending Company, discusses his views on housing foreclosures on Monday, Feb. 4.

 

As a national tide of home foreclosures spreads to Oregon, the state Legislature is responding with a bill to reform mortgage-lending practices. Some East County brokers and real estate agents are unconvinced this is an appropriate response to what they see as a cyclical phenomenon.

Although Oregon has among the nation’s lowest rate of delinquent loans, according to the Mortgage Bankers Association, agents and brokers admit foreclosures are on the rise. Still, that doesn’t mean there’s a “crisis” that demands an industry-wide reaction, said Carter Hardenbergh of Blue Bear Lending Company of Gresham. Overuse of credit, common-but-costly life events and the roller-coaster nature of boom and bust cycles all play a role in recent homeowners’ woes.

“It all adds up,” he said. “No. 1, in a housing boom-and-bust situation, these things will happen regardless. No. 2, there’s been a profligate use of credit. Regardless of the type of loan they’ve gotten, people have overextended themselves. There’s not as much deferment of gratification as there used to be.”

Hardenbergh will discuss his views on home foreclosures as part of a panel on “MetroEast Outlook,” a public affairs talk show produced by MetroEast Media and The Outlook. He will be joined by Sen. Rick Metsger, Bill Willis, local real estate agent, Kevin Sheehan, office director of the non-profit ACORN Housing, and Outlook Managing Editor Tiffaney O’Dell on the show’s 7 p.m. Wednesday, Feb. 6, broadcast on cable channel 21.

Viewers are encouraged to join the discussion by calling 503-667-7555.

Sponsored by Sen. Ben Westlund, D-Bend, Senate Bill 1090, the “Responsible Home Buying Act,” offers a series of measures intended to rein in higher-risk mortgage practices. Among other points, it would limit loan prepayment penalties, place more financial responsibility on mortgage brokers, put caps on fees and require creditors to verify a borrower’s ability to repay the loan.

Although he’s sympathetic to any homeowner forced into foreclosure, Hardenbergh doesn’t feel legislation such as SB 1090 is the answer.

“If you’re in foreclosure for whatever reason, it’s terrible. To re-regulate the whole industry is not the solution,” he said, adding that market forces are already correcting issues that led to recent loan problems. “The mortgage industry is doing just fine in doing away with more liberal loans.”

Rod Erickson, real estate agent with OregonFirst’s Gresham office, tends to agree. As one who specializes in selling foreclosed homes for banks, he has witnessed many cycles in the housing industry. Oregon has seen worse times among homebuyers, he said.

“This is nothing compared to 2003-2004. No one talked about it back then.”

Based on what he’s seeing, he’s not sure legislation is the right approach.

“I don’t think it’s needed,” he said. “I think it’s (lawmakers) sticking hands in where they don’t need to be. What they’re proposing is going to do more harm than good.”

While credit abuses and poor financial planning accounts for some foreclosures, others claim unscrupulous or deceptive lenders misled them.

Barry Leslie, manager of the state Department of Consumer and Business Services’ mortgage-lending program, processes all manner of complaints from borrowers. Some are fraud victims, while others were simply not aware of what they were getting into – particularly when terms of interest changed.

Not understanding the terms of a loan tops her office’s list of complaint types.

“No. 1 is ‘I didn’t understand my loan at closing,’ or ‘When I got to the signing, the loan and fees somehow changed,’ ” she said. “A lot of times consumers just trust the professional they’re working with will take care of them.”

Leslie is part of a mortgage lending work group convened by Gov. Ted Kulongoski.

The group came up with three key concepts. These encompass protection from “abusive mortgage rescue” services, better notice to those facing foreclosure and expanded enforcement and oversight of “salespeople” who work for mortgage lenders.

The Department of Consumer and Business Services’ office doesn’t use the term “predatory,” but Leslie acknowledges that advertising and presentations can be misleading.

“We hear about how lenders advertise services and products,” she said. “And some complaints are about plain fraud. We follow up with these and take them very seriously.”

Hardenbergh fears newly enacted laws could put an undue burden on brokers like him.

“Tinkering with prepayment penalties and pricing mechanisms makes, in my opinion, an unrealistic, too open-ended expectation that the mortgage industry can predict who will be a successful borrower over 30 to 40 years of a loan.

“Any tinkering done by a state Legislature will, overall, have a negative impact on the average American borrower,” he said.


If you go

A panel will discuss the foreclosure crisis on “MetroEast Outlook,” a talk show produced by MetroEast Media and The Outlook. The program will air at 7 p.m. Wednesday, Feb. 6, on cable channel 21. Viewers can join the discussion by calling 503-667-7555.

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