On the same day President Obama unveiled a $75 billion plan to forestall home foreclosures, rookie U.S. Sen. Jeff Merkley, D-Portland, convened a group of experts in North Portland to discuss impediments to keeping people in their homes.
“Empty homes contribute to the fast-dropping values of homes, putting more families under water,” Merkley told a group of bankers, housing experts and others, before an audience that included several homeowners facing foreclosure.
Merkley promoted a bill he co-sponsored that would enable bankruptcy judges to rework mortgages, so hard-pressed consumers could remain in their homes. Obama put a similar proposal in his plan announced Wednesday morning.
“That is the stick,” Merkley said, to go along with the carrots proposed by Obama. One of those is a $1,000 subsidy to loan-servicing companies that help people modify troubled loans.
Lisa Williams, a single mother facing foreclosure, said the key is getting bankers to come to the table to renegotiate loan payments that homeowners can no longer pay.
“To solve any of these issues, we’re going to need banks to come to the table,” she said.
Ray Davis, chief executive of Portland’s Umpqua Bank, said loan-servicing companies are already difficult to reach, and the Obama plan could make those companies even more swamped if increased staffing isn’t provided.
Davis noted that many banks have sold loans that were then resold and repackaged, making it difficult to find who is the owner of the loan, or documents revealing the new loan owners.
“Some of them you can’t find,” he said.
The loan servicing companies often lack the authority to rework loans, and fear a lawsuit from investors if they do, said Caryn Becker of the Center for Responsible Lending, a national advocacy group.
Becker’s organization projects that Oregon will experience 20,100 foreclosures in 2009, and 66,920 in the next four years. The Obama plan is a “huge step forward” that should reduce those numbers, she said.
Angela Martin, a consumer advocate for the progressive Portland group Our Oregon, said bankers and others hoping to solve the mortgage crisis should stop blocking “smart regulations” proposed in Salem.
“The obligation to have my interests as a homeowner at heart is not enshrined in Oregon law,” she said, “and it is time it is.”
Gov. Ted Kulongoski created a mortgage lending task force to recommend new regulations, but industry representatives on that panel remain at odds with consumer advocates.
Merkley said he’ll continue to press the Obama administration to take steps to reduce foreclosures and prevent future ones.
“The ability to renegotiate the loans is what it all comes down to,” Merkley said at the end of the meeting.