New legislation helps Oregonians facing foreclosure
The Beaverton Valley Times story about Yulanden and Jimmy Moore ('We're Homeless…We Lost Everything,' Feb. 27), shows why the Oregon Legislature passed House Bill 3630, the Mortgage Rescue Fraud Protection Act, in February.
Every day in the news there is another story about the devastating consequences of the subprime mortgage crisis. In the wake of that crisis there has emerged an industry of people who claim to help homeowners facing foreclosure. But what kind of help do they offer? Is the service they provide in the homeowner's best interests - or is it to strip the equity from the home or line the pockets of these so-called foreclosure consultants with cash?
I serve on the Governor's workgroup on mortgage lending, which was formed to respond to the subprime mortgage crisis. We heard about the proliferation of these rescue scams that target people facing foreclosure - people who are often vulnerable and always desperate. Calling themselves 'foreclosure consultants,' purveyors of these scams often steer homeowners into further financial crisis, resulting in worsening credit, loss of the home, or both. In many cases, like the Moore's, homeowners enter into complicated agreements with 'equity purchasers' where the borrowers lose the title and end up renting their own home.
We designed the Mortgage Rescue Fraud Protection Act to make sure that people facing foreclosure do not become victims of these scams. Under the new law, foreclosure consultants, those who charge a fee for assistance, must write a contract in plain language that describes what services they will provide. Foreclosure consultants are also prohibited from taking an interest in the property, and the homeowner can cancel at any time.
In some instances a homeowner facing foreclosure may want to enter into a sale and leaseback arrangement. That's why the act does not ban these transactions, but rather puts very strict requirements on them. A sale and leaseback is considered an 'equity purchase' and it can only be done with clear disclosure. Importantly, the equity purchaser must verify that the homeowner will be able to make the payments. There must be a contract written in plain language with a cancellation notice, and the transaction must be closed in a formal settlement.
The Mortgage Fraud Protection Act also requires that all residential foreclosure notices include plain language information, including a clear statement of the amount the borrower needs to pay to bring the loan current, a list of ways to avoid foreclosure, and contact information for the lender and for legal and counseling services.
I am proud to have participated in writing the Mortgage Rescue Fraud Protection Act, and it was an honor to carry it on the House floor. It received unanimous support in both the House and the Senate.
The act will be enforced by the attorney general, and homeowners also have a private right of action to recover damages caused by a violation of the act. Because of the risks involved and the potential for loss of the home, violation of the equity purchase section can also result in criminal penalties.
It is my belief and hope that, with the assistance of this new law passed during our recent supplemental session, we will not be reading stories in the future about other Oregonians who might have otherwise suffered the same fate as Yulanden and Jimmy Moore.
Soapboxes are guest opinions from our readers, and anyone is welcome to write one. Oregon State Rep. Suzanne Bonamici represents House District 34.