Economic Fairness Oregon - Mortgage Servicing Accountability

Connie and Michael's Story

Connie and Michael Umphress have owned their North Portland home for almost 10 years, and despite the rocky economy, it seemed to be a wise investment. In December of last year, they were accruing late fees because their paychecks were out of sync with their mortgage due date. Michael called their servicer, Wells Fargo, to see if their payment date could be switched. He came downstairs and announced to Connie that he had good news, they had been “pre-approved” for a loan modification. They wouldn’t need to make their next month’s payment, and they would pay a reduced payment after that while their case was going through. They were relieved, and eager to get the process of the modification finished. But it dragged on. They kept making the reduced payments they were told to.

Then a few weeks ago, they received a letter notifying them their application had been denied, the foreclosure process had begun, and would go through unless they came up with $12,000 – the difference between what they had been told to pay and their original mortgage payment. They were shocked, since they hadn’t missed any payments and had done everything they had been told to do by the bank.

After being forwarded our newsletter by a colleague, Connie called us at Economic Fairness Oregon – a non-profit, non-partisan group that works on financial reform policy. We told her and Michael about SB 628, legislation recently passed in Oregon that forces foreclosure notices to include a letter that if filled out by the homeowner, stops the mortgage process until the lender grants them a meeting to explain in detail why the modification was denied. Connie and Michael hadn’t even noticed it – as most homeowners don’t, since at that point, they’re frustrated and exhausted and tired of paperwork. In the past few months, Michael has also developed medical problems, in the form of serious panic attacks that are threatening his work performance and his health.

Connie and Michael are a perfect example of a typical family who were doing okay, then because of the misinformation from the banks, are now facing the very real prospect of losing their home. Connie works part time, is going to school for an advanced degree, and takes care of their two young kids. Ironically, Michael works in the collections division of a major telecommunications company. As Connie bluntly puts it “we’re not the people all the news is about. We didn’t reach outside our financial range, we just bought a little house in North Portland.”

The couple’s story is so compelling it recently drew nationwide attention in a Wall Street Journal article on the mortgage modification mess. Putting an end to stories like theirs is why we’re trying to change the laws here in Oregon. Among other things, we’re fighting to make sure banks disclose upfront that if a modification doesn’t go through, a homeowner will be responsible for the entirety of their mortgage payments – which could be tens of thousands of dollars by the time the banks get their acts together and rule on the application. Comprehensive mortgage servicing reform in Oregon will benefit homeowners, communities and the economy.

What Others Have to Say

When the aggressive marketing of reckless loans became routine in the subprime market, too many mortgages became destructive, both for vulnerable communities and the entire economy.

-The Center for Responsible Lending

The housing crisis has hit Oregonians hard - from rural farming towns to urban centers, foreclosures have wreaked havoc on our communities and economy. Luckily, recent legislative actions have afforded Oregonians greater protections against foreclosure.

Oregon Foreclosure Mediation Program

As a result of legislation passed by lawmakers in 2012, Oregon joins 21 other states in adopting a foreclosure mediation program. Mediation is a strong tool against foreclosures, with successful programs helping homeowners and lenders avoid foreclosure more than 50% of the time. Oregon’s law is groundbreaking, in that it extends mediation to homeowners not yet behind in their mortgage payments.

Key questions

How can mediation help me? Mediation is an opportunity to meet face-to-face with your lender to discuss options for avoiding foreclosure. The Oregon Foreclosure Avoidance Mediation Program is also an opportunity to get free professional advice from a foreclosure avoidance housing counselor. A housing counselor will help you prepare for the mediation and better understand what foreclosure avoidance options are best suited to your situation.

Will every lender participate?
Most lenders initiating non-judical foreclosures in Oregon will be required to participate. The only lenders who are not required to participate are those with fewer than 250 foreclosures in the previous year.

How can I participate in mediation if I’m not in foreclosure?
Many homeowners know trouble is coming and want to take action early. If you believe you are at risk of default you can visit www.foreclosuremediationOR.org or call 855-658-6733 to request mediation with your lender.

How much will participating in mediation cost?
No more than $200, but the fee may be less depending on your income.

Where do I find a housing counselor?
Call 2-1-1 or visit 211info.org to find a free housing counselor near you.

What if I can’t get an appointment with a housing counselor before mediation?
Evidence shows mediation is more effective when homeowners consult with a housing counselor first. The law requires homeowners to meet with a housing counselor before mediation, but if you cannot secure an appointment with a counselor in your area within 30 days, you will be allowed to waive the pre-mediation counseling requirement.

Where can I go for more information? Visit www.OregonHomeownerSupport.gov

Mortgage servicing rules

As part of the recent 49-state National Mortgage Settlement between Attorneys General and mortgage servicers accused of improper foreclosure procedures, the nation’s five largest banks must abide by a basic set of rules when dealing with homeowners. Since these large banks only service 60% of mortgages, Oregon’s Department of Justice stepped in to provide protections for all Oregonians by implementing similar rules for any lender servicing mortgages in Oregon.

If you feel that your mortgage servicer has violated the law, begin by filing a complaint with the Oregon Department of Justice. Fill out an online form here, or call the Attorney General’s consumer complaint hotline at 1-877-877-9392.

Oregonians who have already lost their homes to foreclosure may be eligible for a one-time cash payment under the National Mortgage Settlement. Visit nationalmortgagesettlement.com to learn more.

Oregonian’s can stay apprised of the latest developments on the implementation of SB 1552 by visiting the websites of the Oregon Department of Justice - www.doj.state.or.us. EFO will be sure to keep this page updated with any pertinent developments as well.

Take Action

- One of the integral elements of ensuring the resulting program is well-suited to the needs of Oregonians is making sure that those who will be served by the program have a say in how it will work. Send us your thoughts on how a meeting between a lender and a homeowner would be most beneficial, and we’ll share those ideas with the stakeholders involved in creating the program.

- Specifically, we would like to hear your thoughts on the following questions: What help or resources you would need to prepare for the mediation? What assistance would you want during the meeting? And, if you are a leader of an organization with ties to the community, what resources do you need to help get the word out about the mediation program?

Downloads

Foreclosure Stats

SB 1552 Summary

Homeowner Survival Tips

Foreclosure Mediation Info Sheet

Share Your Story

Have you been affected by this issue? We're always looking for Oregonians who are willing tell their experiences to the media, be profiled on our website or even testify to lawmakers in support of consumer protection legislation. Share your story here: