Now Don't Get Too Excited About HB3656

The Oregon Senate voted to expand HB3656 today. The expansion regards the lender's right to pursue a borrower on a second mortgage after the home has been foreclosed upon.


Now before everyone gets all excited and thinks this just gives more people the right to walk away from their financial responsibilities because they were duped into obtaining the loan, let's read the details.


1. This only applies AFTER the home has been foreclosed. So if the borrower has stopped paying and the second is written off but the first is still being paid, this does not apply.
2. If the borrower does a short sale, this does not apply. This is AFTER a foreclosure.
3. The second mortgage (or note and trust deed) must have been created on the SAME day and in the same purchase as the first. Read that as an 80/20 loan scenario.
4. Now here is where it gets REALLY limited. The second to which this law is referring has to have been originated by or currently owed to the SAME lender who is foreclosing.




So really......I know of VERY few people who took out an 80/20 or a 90/10/10 with the SAME lenders.




What really amazes me is this statement made at one time by Senator Suzanne Bonamici (D-NW Portland/Washington County):


"It is no secret that many Oregonians were targeted with complicated loans that trapped them with high payments. This bill ensures a little more fairness if they lose their home."




How complicated is this: 80% of the purchase price of your home is being loaned by this bank. Another 20% is being loaned by this bank. The rate on the 20% is higher because of the increased risk to the lender by being in a second position. In addition, after 24 months the interest rate on your loan MAY adjust. If it does it will adjust no more than this percent every month and no more than this much every six months.


This is not complicated. What is complicated is that now that property values are no longer appreciating at the speed of light, people don't want to pay their debts. That is complicated!