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Real Property & Development Review

Legislation to affect lending

By John Benazzi on Posted in Real Estate

As published in The Daily Journal of Commerce

The 2010 special session of the Oregon Legislature resulted in two bills that will impact real estate lending in Oregon. Both came out of the Committee on Consumer Protection and Governmental Accountability and are intended to address consumer protection problems that have arisen during the mortgage crisis.

HB 3656, signed by Gov. Ted Kulongoski on March 10 and now in effect, is designed to protect borrowers of “80/20″ residential loans from deficiency judgments on their “20″ loan after foreclosure of the “80″ loan.

HB 3706, passed by the state House and Senate on Feb. 10, will extend the application of Oregon’s Unfair Trade Practices Act to mortgage banks and other institutions that extend credit and allow consumers and the state to sue lenders for unfair and deceptive dealings. HB 3706 is awaiting the governor’s signature. (read full DJC article)

  • Scott Kieser

    HB 3656, (as I am reading it anyway), is quite bizarre. It reads as though a debtor who purchased a property with an 80/20 loan from a single lender, wouldn’t have any protections against a deficiency action if the originator sold its beneficial interest in the loans prior to initiating foreclosure. I imagine that the vast majority of mortgage loans are held by an entity other then the originating party. So who exactly does this law protect?
    I find it hard to believe the intent of the legislature was to create a game of musical chairs in order to determine a debtors rights, but that is exactly how I read the statute as written.