Responsible Home Buying Act

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

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Owning a home should be a path to building a family's wealth,

not a quick trip to the poor house.

Fiscally risky practices have put homeownership at risk for millions of Americans and thousands of Oregon families and the large numbers of national foreclosures are threatening our economy. There is plenty of blame to go around.

Oregon is on the high end of a sinking ship.

Although the national mortgage lending crisis hasn't hit Oregon as badly as other states, foreclosures on subprime loans in Oregon for the first half of 2007 are double what they were in the first half of 2006. Foreclosure rates on prime loans during this period are up 13 percent. Serious delinquencies on subprime loans are also nearly double.

To keep this crisis at bay, a common-sense state response is needed.

This February, the Legislature will be meeting in Salem for a short session. They can help current homeowners seeking to refinance, protect buyers and prevent foreclosures in the future. Restoring consumer confidence in the mortgage industry will help ensure that this critical sector of Oregon’s economy stays robust.

The Responsible Home Buying Act, SB 1090 will:

Restore trust between lender and borrower by requiring lenders to offer borrowers the best loan for which they qualify. Brokers are now managing the most important financial transaction most families will ever make. As mortgage products have become more complex, borrowers must be able to rely on the expertise and advice of the lender.
Prohibit industry kick-backs for making loans with extra fees and higher interest. Lenders shouldn’t be rewarded for steering someone into a loan that carries a higher interest rate than the borrower actually qualifies for.
Ensure loans are affordable by requiring lenders to consider their customers ability to pay the real interest rate, not just the introductory rate.
Protect homeowner equity by limiting excessive prepayment penalties. Many borrowers who accept low introductory terms don’t realize refinancing or selling the home will be more expensive when their contract includes prepayment penalties. The prepayment penalty fee acts as an exit tax, trapping people in high interest loans, even after they improve their credit score.