Congressional leaders should take close look at Merkley housing plan

Our homes are supposed to be the safe places in our lives. But that feeling of comfort is shattered when a family is faced with foreclosure. 

Financial problems, topped by foreclosure of one’s home, create unbelievable stress. Besides the stress to the homeowner and his or her family, foreclosures damage a community and further cripple a paralyzed national economy.

Foreclosures are at a crisis level across this nation — and in Oregon, including Umatilla and Morrow counties. 

“Foreclosures in Oregon jumped 11.2 percent in September, with one filing for every 559 homes in the state,” according to a recent story in The Oregonian. It used information from RealtyTrac, a California-based real estate company. 

The Oregonian also said there were foreclosure filings for 2,934 Oregon homes during the month. That’s down 36.6 percent compared with September 2010, but up compared with August.

“Included are 1,333 foreclosure auction notices, the first public notice in the foreclosure process in this state. That represents a 13 percent increase from August, but is still less than half the notices that were issued in the same month a year earlier,” The Oregonian reported. “Oregon also stood out for an unusually high increase in bank repossessions for the third quarter of 2011. More than 3,100 homes were taken back by the bank in the quarter, an increase of 47 percent in a period when bank repossessions declined nationwide. But overall foreclosure activity was down 10 percent for the quarter and down 42 percent compared with the same time a year ago.”

Our own recent research of RealtyTrac shows 113 bank-owned homes in foreclosure (and another 31 that recently sold) in Umatilla County and 10 in Morrow County.

Digging deeper, the breakdown of those 113 homes in foreclosure by town reveals: Two each in Adams, Athena, Echo and Weston; three in Stanfield; six in Pilot Rock, nine in Umatilla, 19 in Milton-Freewater, 30 in Pendleton and 38 in Hermiston. 

For our neighbors in Morrow County, three are in Boardman and seven in Irrigon.

While this region is not among the hardest hit, nonetheless the issue remains an area of deep concern. 

During a recent visit to northeast Oregon, Sen. Jeff Merkley, D-Oregon, unveiled a seven-page, six-point plan, “Paving the Way to a Healthy Housing Market.” 

Merkley’s response is a thoughtful examination of housing problems with an achievable goal of keeping families in their homes, strengthening the housing market and, thus, the economy.

As pointed out by Martin Feldman in the plan, housing issues are at the forefront of this nation’s economic health. Feldman was chairman of the Council of Economic Advisers under President Ronald Reagan.

“An epidemic of mortgage default and foreclosures is threatening the economic recovery. The problem is serious and getting worse … Slowing the downward spiral of house prices will protect the solvency of banks and the net worth of households. The failure to do that could mean a deeper and longer recession that imposes much higher costs to the government,” Feldman said. 

The overview of Merkley’s plan includes a single point of contact by a knowledgeable person for loan modification, a national short refinance program and allowing federal bankruptcy judges to modify home mortgages. 

The short refinance is certainly intriguing. As Sen. Merkley explained, a family that cannot afford an underwater mortgage and high interest rate might be able to afford an adjusted, realistic price and lower interest rate. 

 “We’re already on the hook for them, so why not refinance them?” Merkley told the East Oregonian editorial board during his visit. 

“This is what farmers did in the 1980s in the Midwest,” Merkley said. “This is a win-win for the banking community and the family. You don’t end up with an empty house driving down prices in the community.”

In addition to his plan, Merkley argues for an aggressive strategy to rescue the housing market — more aggressive than the current administration efforts. He pointed out how it affects Oregon.

The senator said the housing debacle, a key component of the stagnant economy, means sales of lumber, nursery stock, grass seed and all sorts of locally produced goods are negatively affected. 

“The administration has moved way too slowly, way too cautiously,” Merkley said. “The president promised to spend $50 to $100 billion, to shift money out of the TARP fund helping homeowners. We’ve only spent $2 billion.

“We need to move faster, more aggressively.”

Republicans likely will take issue with at least some of Merkley’s proposals, both for political and idealogical differences. 

Yet it’s hard to argue with the Oregon junior senator’s credentials. He serves on the Committee of Banking, Housing and Urban Affairs. He is credited with championing a financial reform amendment that banned so-called “liar loans,” a predatory mortgage practice that played a role in the housing bubble and subsequent financial collapse.

Regardless of one’s political persuasion, the nation needs to come together to solve this complex economic problem.

It’s time for a national public dialogue on foreclosures and other housing issues. It can’t wait and Merkley’s proposals are strong steps forward that will help Oregon and the nation get past the devastating issue of foreclosures. 

Leaders on both sides of the congressional aisle should seriously consider it.