Portland, OR – Abusive financial practices are weakening
our economy and bankrupting consumers. America needs a robust Consumer
Financial Protection Agency that will even the playing field for consumers and
bolster the economy.
That was the assessment of consumer advocates and
Oregonians in a roundtable discussion today with U.S. Senators Chris Dodd of
Connecticut and Jeff Merkley of Oregon.
Dodd has proposed, and Merkley
supports, streamlining consumer-focused oversight of financial institutions
into a new Consumer
Financial Protection Agency (CFPA) that will end abusive financial practices.
The CFPA will end predatory mortgage lending practices, credit card abuses and
other faults in the financial system that have helped lead to the financial
crisis.
Dodd chairs the Senate
Committee on Banking, Housing and Urban Affairs, of which Merkley is a member.
“The financial crisis showed us that when consumer
protections are a regulator’s secondary responsibility they just don’t happen,”
said Dodd. “There needs to be an independent agency that looks out for
people when they take out a loan, open a checking account or use a credit
card.”
“From predatory loans to mortgages to credit cards,
financial companies have been incorporating tricks and traps that strip wealth
from Americans,” Merkley said. “We need an organization dedicated to consumers
that calls out tricks and traps as they happen, not decades later.”
Bob and Marty
Barney are just the type of consumers who the CFPA would help. After a long
struggle with their mortgage company, the Barneys will lose their home.
“We can’t sell
the house now. We have no choice but to foreclose,” Marty Barney said. “The
system collapsed on us.”
Their Story
Bob and Marty Barney are in
their mid-sixties, live in Milwaukie, and have been married for 10 years.
Marty works part-time as a registered nurse at a retirement village and Bob is
semi-retired from the magazine publishing business. Until 2006, they had
rented apartments, but they dreamt of the opportunity to buy their own home and
live out their retirement together.
In a renter’s magazine, Bob and
Marty spotted a free first time homebuyer seminar put on by a local mortgage
company. They went to the seminar and the company showed them how they
could purchase a home for the same amount they paid in rent – or so they
thought. The company was fully integrated with their own real estate
agents, loan officers, home inspectors and support personnel. They led
the Barneys to believe that they were honest and had their best interests at
heart.
The Barneys proceeded to
purchase a home through the integrated real estate/mortgage company. They
were told they would qualify for a loan of up to $300,000 at 7 percent
interest. They selected their home, which was on the high side of their budget,
but they were told that they would be able to refinance within a year and that
during that time their equity would grow significantly.
When the loan negotiations
began, Marty asked about whether they would qualify for VA financing as she had
served in the Army Nurse Corps. The company’s loan officer told her that
she wouldn’t have qualified. The Barneys have since found out they would
have qualified, but were steered towards the subprime loan which is more
lucrative for the company.
After the tough negotiations to
secure a loan, the Barneys had the keys to their home in January of 2007.
When the first mortgage statement arrived, it showed an interest rate of 9.7
percent – much higher than the 7 percent they had been told they would
receive. Further, they realized that the monthly payment they were making
was less than the amount of interest that the loan was accruing. They
tried to refinance or sell the house, two things that became impossible once
the market went under.
In a last ditch effort to try
and prevent foreclosure, the Barneys worked with their mortgage servicing
company to try and get them to accept a short sale. They have just
received a rejection of the short sale offer leaving the Barneys with few
options.
Bob and Marty said they are
angry, frustrated and frightened. Their future is uncertain, as they have
liquidated Marty’s IRA and they don’t know what their housing situation will be
in the future. The pressure of this situation has exacerbated health
issues for both of them. Through it all, they want to fight back to help
keep this from ever happening to someone else and to preserve their dignity.
For more information about the CFPA, click into –
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