The Willamette Valley was a hot spot for subprime mortgages four years ago — much to the enduring misery of valley homeowners, according to an investigation published Wednesday.
Many of the nation’s top 25 subprime lenders were highly active in Lane County until the market meltdown in late 2007.
The firms — most now defunct or sold to avoid bankruptcy — include Washington Mutual, Countrywide Financial Corp., New Century Financial Corp. and First Franklin Corp., according to the analysis by the Center for Public Integrity, an investigative reporting group funded by charitable foundations.
“It means a lot of families are going to go into foreclosure,” Sen. Jeff Merkley said Wednesday. “They may be able to afford the payments quite handily when the payments are at 6 percent (interest) but when the payments (change) to 10 percent, they can’t. There’s just no way they’re going to be able to make those payments.
“And you’ve got unemployment thrown in on top of that, throwing fuel on the fire. Families might survive a few months unemployment if their monthly payment was lower, but at a higher rate, they’re just stretched too thin.”
Merkley, D-Ore., has a long-standing interest in the lending industry. He said he was asked by Senate Banking Committee Chairman Chris Dodd Wednesday to conduct hearings on predatory mortgage practices in the coming months.
The Willamette Valley was ripe for subprime and other types of high interest lending because housing prices got ahead of incomes, one of the most prolific subprime lenders took root in the Northwest and financial incentives spurred brokers to herd home buyers into the maximum amount of high priced deals, Merkley and others said.