Department of Consumer and Business Services
Division of Finance and Corporate Securities
Legislative Summary - 2008

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The Oregon Legislative Assembly enacted a variety of measures affecting DFCS and the programs we regulate during the 2008 Supplemental Session. Highlights, in order of bill number, include:

Regulation of loan originators – SB 1064. The bill was a recommendation from the Governor’s Mortgage Lending Work Group. It addresses the actions of “loan originators” -- loan salespeople who are employed by licensed mortgage bankers or mortgage brokers and directly negotiate terms and conditions of mortgage loans with borrowers. The bill adds negligence or incompetence to the current list of prohibited conduct by a loan originator. It allows the Department of Consumer and Business Services to suspend or bar a loan originator from working for a licensed Oregon mortgage broker or mortgage banker if the loan originator has violated Oregon mortgage lender law, been dishonest or incompetent while conducting a transaction, or has failed to account for all funds from a mortgage loan transaction.

The bill requires the Department to enhance its current online information to provide consumers with a registry with at least 10 years of information about loan originators, including justified complaints and any enforcement actions that have been taken. It also requires mortgage bankers and mortgage brokers to annually file information about their residential mortgage lending activity with the Department.

Regulation of home mortgage loan foreclosure consultants and equity purchasers – HB 3630. The bill was a recommendation from the Governor’s Mortgage Lending Work Group. It adds protections for consumers at risk of foreclosure by regulating both “consultants” who offer to help homeowners avoid foreclosure, and “equity purchasers” who acquire a financial interest in the property.

The bill requires foreclosure consultants to provide the homeowner with a written contract that includes plain language disclosures; limits the compensation such consultants can receive. It also prohibits foreclosure consultants from taking an interest in a residence in foreclosure or default where the consultant had a contract for services. The foreclosure consulting contract must include a full description of services to be provided and the total costs of the contract.

It also requires equity purchasers to provide the homeowner with a written contract in plain language; it requires equity purchasers to ensure the homeowner has the ability to buy back the home; it entitles the homeowner to a share of proceeds if the home is re-sold quickly; and it requires the transfer to take place in escrow. The homeowner has rights to cancel a foreclosure consulting or an equity purchasing contract.

For those facing foreclosure, the bill will require the homeowner to be sent a notice, in plain language, with information about how to stop the foreclosure process; the amount needed to bring the loan current; and sources of counseling and advice. It also will require commercial mortgage lenders to provide a toll-free telephone number for the homeowner to get loan delinquency and repayment information and for person-to-person consultation to discuss the payment and loan term negotiation and modification options.