Oregon's Lending Crisis: Why did the Senate Dems turn their backs on borrowers?

Willamette Week is running a story that discusses the failure of Oregon's Senate Democratic leaders to provide relief to more than 15,000 Oregonians who will soon have adjustable rate mortgages reset to a higher interest rate.

The failure of leaders in the Oregon Senate, where Democrats enjoy an 18-12 majority, to back substantive reforms offered by Senator Ben Westlund (D- Tumalo), could be catastrophic to more than 28,000 borrowers who may be facing foreclosure in 2008 and 2009:

“Borrowers are no better off today than they were before the session began,” says OCPP director Chuck Sheketoff.

Lawmakers did pass bills that protect existing homeowners from foreclosure and that will require more reporting from mortgage originators. But neither helps new borrowers.

And protecting borrowers is important because the North Carolina-based Center for Responsible Lending expects 28,000 Oregon homes will go into foreclosure, primarily in 2008-2009. The center, which issued state-by-state projections last week on the impacts of foreclosures, says those foreclosures will contribute to a statewide decrease in Oregon home values of $2.5 billion .

Many of those foreclosures will result from subprime loans, which according to OCPP figures accounted for a quarter of all new Oregon mortgages in 2006.

According to the article, Senate Majority Leader Richard Devlin (D-Tualatin), did not believe that Democrats had the votes to pass Westlund's bill in the Senate, believed that debate on the issue would have been "non-productive".

"The idea that they didn't have the votes is presposterous", said a member of the Oregon House. "Courtney didn't want the bill. He did the same thing with Greenlick's healthcare bill and we're pretty steamed about it."

One factor in the opposition could be campaign money spent by the banking industry, which opposed these consumer protections. During the current campaign season, the Oregon Banker's Pac has given more than $50,000 to Democrats in both houses of the legislature while the Credit Union Legislative Action Fund has given more than $40,000 and the Oregon Mortgage Lender Pac gave $10,000 The lending industry, whose contributions usually heavily favor Republicans, has been giving 7 times more to Democrats than Republicans during the current election cycle.