Plan to offer foreclosure counseling.

Byline: Joe Mosley The Register-Guard

Gov. Ted Kulongoski announced plans on Friday to provide counseling and other assistance to homeowners who may be in danger of mortgage foreclosure, as default rates on home loans continue to rise nationwide.

"There are things we can do today that will help Oregon homeowners who are in mortgage crisis, and make sure that the refinance market offers legitimate products that truly benefit borrowers," Kulongoski said.

The governor asked the state's Department of Consumer & Business Services to convene a work group of legislators, consumer advocates and representatives of the mortgage lending industry to consider a range of options that may help protect borrowers.

He suggested looking at whether borrowers are adequately protected by, and fully understand, their options under Oregon's mortgage foreclosure laws; possible limits on prepayment penalties that sometimes trap borrowers in unaffordable loans; and a broad look at loan underwriting and borrower qualification standards.

Kulongoski also recommended that borrowers work with any of a variety of free counseling services to avoid defaulting on their loans.

While the number of delinquent loans and foreclosures have soared nationwide over the past year, Oregon has so far been spared much of the anguish.

The Mortgage Brokers Association reported in its National Delinquency Survey for the quarter ending July 1 that 5.12 percent of all mortgages nationwide were past due, and 1.4 percent were in foreclosure. During the same quarter in 2006, 4.39 percent were past due and ninety-nine hundredths of 1 percent were in foreclosure.

In Oregon, the most recent quarterly results showed that 2.44 percent of all mortgages were overdue and forty-seven hundredths of 1 percent were in foreclosure.

Much of the increase in foreclosures has been blamed on subprime mortgages - primarily, loans made to borrowers who didn't qualify for the best market interest rates - during the real estate boom of recent years.

Also, many borrowers with limited resources took on adjustable rate mortgages, whose interest rates rise after an initial period, under the assumption they would be able to either refinance or sell the homes and cash in on equity. But real estate sales have declined nationwide, and homes have lost rather than gained value in some parts of the country.

The initiatives announced by Kulongoski on Friday were the latest efforts to prevent a large-scale foreclosure problem in Oregon.

The Department of Consumer & Business Services produced the publication, "Foreclosure: You Can Avoid It," last month (available at www.dfcs.oregon.gov/consumerprogram.html) and also issued fines against four mortgage lenders for a variety of regulatory violations.

A bill that was introduced in the 2007 Oregon Legislature was aimed at reforming predatory lending practices but failed to come to a vote in the House of Representatives following what was described as intense lobbying from the mortgage industry.

FORECLOSURE COUNSELING RESOURCES

National Foundation for Credit Counseling: phone [phone] or go to www.nfcc.org.

HOPE Hotline: phone (888) 995-HOPE for a confidential, toll-free hotline from the Homeownership Preservation Foundation.

Department of Consumer & Business Services: phone [phone] for the department's Division of Finance and Corporate Securities.