Oregon bill would force lenders to hold mortgages 5 years after origination
The Oregon Legislature introduced a bill this week that would prohibit a lender from in any way transferring a mortgage loan for half a decade after the deal closes. In addition, the lender cannot transfer servicing rights or obligations for the same time period. As Oregon Senate Bill 663 reads, a mortgage banker, broker, or originator that makes a loan within the state "may not, for a period of five years after the closing date for the loan, sell, assign, convey or otherwise transfer the loan." The Senate Committee on General Government, Consumer and Small Business Protection sponsored the bill. Members of the committee were not immediately available for comment on the motivation behind it. The Oregon Association of Mortgage Professionals, which is lobbying against the proposed act, said the consequences of such a bill would be devastating to the industry as well as consumers. "This is another bill intended to inaccurately attack non-depository lending institutions in hopes of improving quality to the consumer which if passed would drastically create the exact opposite result," the firm said. Others in the local industry are less concerned about the bill, not because of its content but because of the likelihood it may not pass. Michael Dolan, broker-owner of Portland-based Broker Pro Mortgage, commented that many lenders and originators would refrain from doing business in Oregon with a law like Senate Bill 663 in place. "People who make loans count on being able to sell those loans or make business decisions about servicing," Dolan told HousingWire. "If that is restricted, they lose the incentive to do business." Dolan presumes the bill is targeted to help homeowners identify who is servicing their mortgage. In January, the Massachusetts Supreme Court ruled against both U.S. Bank (USB) and Wells Fargo (WFC) in separate cases, stating the servicer for the firms couldn't prove trustee ownership of two mortgages which had been foreclosed on. The mortgages, which were pooled in securitizations, had been transferred from the original note holder several times before they were foreclosed. Dolan commented that this case could be the motivation behind the bill, but still doesn't see the material benefit to the consumer through this method. "It would be unnecessarily burdensome," he said with regard to securitization market. "I'm not concerned at all. (The bill) is so outlandish it can't pass." Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.