Responsible Home Buying Act

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Amendments adopted February 11: SB 1090-9 Amendments SB 1090-4 Amendments

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In recent years, subprime and nontraditional loans with relaxed underwriting standards have become increasingly prevalent in the mortgage industry. These loans have made mortgages more broadly available in the short term, but can include rates and terms that borrowers cannot afford over the long term. Now that adjustable interest rates are resetting to higher levels, and home values are falling, national foreclosure rates are hitting record levels and creating an economic crisis.

Housing Busts and Hedge Fund Meltdowns: A Spectator’s Guide

A simplified look at how mortgages are pooled into investment vehicles and how their “securitization” is tied to recent market upheavals.

While Oregon has not yet been hit as hard as some states, foreclosure rates are rising in Oregon, and this trend may continue as a substantial number of Oregon’s adjustable rate mortgages are slated to reset to higher rates in 2008.

Subprime Mortgages Across the U.S.

(Interactive Map - New York Times)

Legislative History

In 2007, the Oregon Senate passed SB 965, which would have required certain underwriting standards for nontraditional or subprime loans. SB 965 would have required lenders to consider a borrower’s ability to repay a loan and limited lenders’ ability to make loans without documentation of income or assets. This bill was amended in the House to prohibit prepayment penalties after 2 years on all loans. Senate Bill 965 did not reach the House floor.

Current Status

Legislative action in the short, supplemental session can encourage home ownership while limiting bad practices. The Governor’s work group has achieved consensus on a few important concepts that will be presented. Senate Bill 1090 broadens the approach with complementary concepts to protect buyers and lenders from unsustainable loans.

Together, these bills create a stronger safety net. Restoring consumer confidence in the mortgage industry will help ensure that this critical sector of Oregon’s economy stays robust and that a variety of loan products are available to Oregonians seeking to re-finance or purchase a home.

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