Oregon’s Lender Lobby – The “Gut & Stuff”

Well, the stealthy lending lobby is up to its old tricks.  Just as they did in the 2011 Oregon Regular Session, they prefer to work quietly in the cloak room.  But should we be surprised?  Honest work can be conducted in the open, only those fearing detection, confrontation, and truth, operate in the shadows.

Senate Bill 1552 requires lenders and their henchmen, the servicers, to formally offer mediation to borrowers as a means of foreclosure avoidance. It has passed the Oregon Senate by a resounding 26-4 vote.

Senate Bill 1564 would outlaw the lenders’ use of “dual tracking” i.e. commencing a foreclosure and offering to discuss modification at the same time. It passed the Senate by a 20-10 vote.  Dual tracking is a tactic akin to holding a gun to the head of a borrower and saying “OK, let’s talk.”  As the foreclosure date looms, and the bank/servicer continues to lose paperwork and demand new records, the homeowner franticly tries to get the foreclosure date postponed so discussions can continue.  Of course, the modification negotiators at servicers like Bank of America, politely demur, saying they cannot postpone until five days before the sale date.  “No early commutations here!  You have to be on the steps of the scaffold before we’ll consider stopping the show.”

As a reception for these two bills, House Co-speaker Bruce Hanna (R-Roseburg) and Rep. Gene Whisnant (R-Sunriver) have, according to the Oregonian’s Editorial Board, “…shown no willingness to give the Senate Bills a hearing.  Echoing the question asked by the Oregonian Editorial Board on February 18, Why not help people keep their homes? How about it, guys?

What is incredible is that Rep. Whisnant represents the folks from Sunriver in Central Oregon – ground zero for the Oregon housing crisis.  Rep. Whisnant’s webpage contains the following declarative:

“It is an awesome responsibility to serve as a State Representative and great honor. My job is to represent you and I will do that to the best of ability. I hope you will use the web page to monitor how I am serving the citizens of District 53.” [My italics. – PCQ]

OK, Rep. Whisnant, I’ll tell you how you’re doing for your constituents.  Lousy!  You’re throwing your own people under the bus for the sake of Big Banks.  You represent thousands of people at the epicenter of the housing crisis – no single area has suffered more than Central Oregon – but you block these two humane efforts to help folks – to lighten their load.  Instead, you take your orders from the Big Banks and the attorneys carrying their water.  Perhaps you should knock on a few doors of the folks you serve.  Ask them if they think your political maneuvering is in their best interest.

And if this was not enough, we learn in Monday’s Oregonian that Republican leaders are pursuing a“gut and stuff” effort in the House, designed to emasculate Senate Bills 1552 and 1564.  For a look at the entire “gut and stuff” bill, go to this link.

In presenting the “gut and stuff” proposal, Rep. Whisnant told the Oregonian that “Mediation isn’t for everyone   *** My purpose is to make sure that we help as many distressed homeowners as possible.”

Riddle me this Batman:  In making mediation voluntary for the banks, how does that change the status quo? As you know, it changes nothing.  The Big Banks do nothing voluntarily.  Your scheme will hurt – not help – “as many homeowners as possible”. You should be ashamed.

Here’s a “back of the napkin” summary of what the Big Bank lobby and their toadies’ efforts would do:

  • It would deprive Oregon homeowners of the ability to meet face-to-face with their banks’ representatives to mediate the terms of a loan modification before the foreclosure sale can be completed.  Under SB 1552’s pre-foreclosure mediation requirements, a real live representative would have to be in the same room with the borrowers.  And yes, the executioners would have to remove their hoods as they enter the room.
  • It would permit “dual tracking” which results in keeping homeowners at the mercy of the Big Banks as they seek modification.
  • Rep. Whisnant’s “gut and stuff” solution to dual tracking is to require lenders to contact borrowers whom they haven’t heard from before, and tell them whether they would “qualify” for a modification.  If they don’t qualify, then, quoting the Red Queen “Off with their heads.”  Rep. Whisnant has apparently never engaged in the banks’ sham modification games.  If he had, he would know that it is a fool’s errand.  For years, the banks, concealed behind the curtain of anonymity, have toyed with thousands of homeowners, denying modifications for little or no reason – all with no accountability.  Requiring that a bank representative actually look a borrower in the eye would at least bring some accountability and explanation to the modification process.
  • Rep. Whisnant’s “gut and stuff” would roll back Attorney General Kroger’s emergency regulations issued last month that sought to bring loan servicers under the Oregon Unlawful Trade Practices Act – a useful legal tool for borrowers who have been treated deceptively by Big Banks.
  • And amazingly, the “gut and stuff” would resurrect the banking industry’s efforts of last year designed to retroactively legalize MERS, thus preventing foreclosing lenders and servicers from having to record the chain of trust deed assignments that led up to the current bank conducting the foreclosure.  I have addressed these efforts in a prior post, here.

So what’s behind the banking lobby’s 11th hour efforts to kill pro-borrower legislation?  The answer is simple:  They prefer to operate in the shadows, anonymously, quietly, and behind closed doors. This “gut and stuff” is a perfect example; not having the honor to formally draft and present a real bill that says what they want, the banking lobby slithers behind the scenes, looking for a pro-borrower bill that it can “relate to” then quietly inserts its own venomous language.  A quote from C.S. Lewis comes to mind:

“The greatest evil is not done in those sordid dens of evil that Dickens loved to paint but is conceived and ordered (moved, seconded, carried, and minuted) in clear, carpeted, warmed, well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voices.”