The Oregon Department of Consumer and Business Services (DCBS) announced Thursday that it is taking several measures to strengthen regulation of the mortgage lending industry. The department said changes — which include adopting new rules and guidelines, and increasing education and enforcement efforts — represented the state regulators' response to consumer and industry concerns. The guidelines, based on Federal guidance which has now been adopted by 19 states, will become part of the method used by examiners and investigators during compliance reviews of state law and regulation. “Mortgage lending is a key part of Oregon's economy, and taking out a mortgage is often the single largest financial decision an Oregonian will make,� said Cory Streisinger, director of the Department of Consumer and Business Services. “We expect these changes to help the industry stay strong while making sure borrowers are protected.� The department's Division of Finance and Corporate Securities (DFCS) adopted new rules, effective today, that implement more stringent education requirements for mortgage professionals and ensure that mortgage lenders are effectively supervising their loan originators.
“We believe more formal requirements will be positive for our industry,� said Eric Wiley, senior vice president and chief operating officer of Lake Oswego-based Pacific Residential Mortgage, which has seven Northwest locations and 100 employees. “Loan officers who are educated and well-informed provide better services to consumers and help the home-buying process go smoothly.� DFCS said it also is addressing the increasing number of nontraditional loans offered to Oregonians by adopting guidelines for state-regulated lenders. “Nontraditional loans appeal to consumers who may not qualify for traditional loans, and these borrowers often do not understand the risks they may face,� said David Tatman, administrator for DFCS. “These guidelines will protect those borrowers by directing lenders to clearly explain the implications of the loans and evaluate the borrower's ability to make monthly payments even when the loan rates are adjusted after a few years.� In addition to the rules and guidelines, DFCS plans to use education and enforcement to prevent misleading advertising, launch an industry newsletter to help mortgage lenders better understand Oregon laws and rules, and undertake an outreach campaign to provider information to consumers about foreclosure. The department held a public forum this past spring to hear about trends in the industry that have affected consumers and conducted a review of its mortgage lending program in 2005. Additionally, the department met with mortgage lenders and other regulators to develop the new regulations. DCBS said it plans to implement the changes during the next year.