Bankster Ethics | Editorial | Bend | The Source Weekly - Bend, Oregon

Coverage for Central Oregon, by Central Oregonians.
100% Local. No Paywalls.

Every day, the Source publishes a mix of locally reported stories on our website, keeping you up to date on developments in news, food, music and the arts. We’re committed to covering this city where we live, this city that we love, and we hear regularly from readers who appreciate our ability to put breaking news in context.

The Source has been a free publication for its 22 years. It has been free as a print version and continued that way when we began to publish online, on social media and through our newsletters.

But, as most of our readers know, times are different for local journalism. Tech giants are hoovering up small businesses and small-business advertising—which has been the staple for locally owned media. Without these resources, journalism struggles to bring coverage of community news, arts and entertainment that social media cannot deliver.

Please consider becoming a supporter of locally owned journalism through our Source Insider program. Learn more about our program’s benefits by clicking through today.

Support Us Here

Opinion » Editorial

Bankster Ethics

comment

In its last session, the Oregon Legislature – faced with more than 120,000 Oregon homeowners being "underwater" on their mortgages – came up with a good idea for helping them keep their homes. It passed a bill requiring lenders to enter into mediation with borrowers who were at risk of foreclosure and try to work out a way to avoid it.

There was only one thing wrong with the bill: To get it passed, its supporters had to pull its teeth. Although the law makes it mandatory for a bank to enter into mediation if the homeowner requests it, there's no penalty if the bank doesn't.

The result has been predictable: Banks are simply ignoring the law. Since it went into effect in July, according to state officials, homeowners have filed more than 150 requests with private lenders for mediation. Not one of them has actually led to a mediation process. In fact, the banks haven't even bothered to reply.

The law also provides that once a home actually is in an out-of-court foreclosure process, the bank can't auction it off unless it participates in mediation. The banks have skated around this part of the law by switching to court-supervised foreclosures, which are slower and costlier.

Jonathan Conant, manager of the mediation program, told a legislative committee in August that all of the state's five biggest mortgage lenders – Bank of America, Wells Fargo, Citigroup, JPMorgan Chase and Ally Financial – have said they aren't willing to participate in the program "under any circumstances."

"They just don't want to play," said Conant.

The banks claim they don't want to play because they're not completely clear about what the rules of the game are. A July Court of Appeals decision and new rules from Fannie Mae and Freddie Mac have clouded the picture, they say.

Well, maybe – but we're skeptical. The alleged confusion hasn't stopped two government lending agencies – the Oregon Department of Veterans Affairs and Oregon Housing and Community Services – from agreeing to mediation.

The foreclosure epidemic continues to inflict hardships on families who lose their homes – and more than that, it cripples the whole economy. The large supply of foreclosed and about-to-be-foreclosed homes depresses the real estate market, which in turn depresses the construction industry. People who lose the equity in their homes lose an important part of their financial security. People who can't sell their homes can't move to other communities to take advantage of new jobs or other opportunities.

The banks created the real estate bubble and bust, and the foreclosure epidemic that followed, by inflating home appraisals and giving mortgages to people they damn well knew couldn't handle them. They bear the main responsibility for making the current economic mess, and they need to be made to help clean it up.

When it goes into its next session in February, the legislature has to fix the mediation law by putting some teeth back into it. In the meantime, the banks get THE BOOT for arrogantly flipping off the legislature and people of Oregon.

Speaking of The Boot

Add a comment