By Sen. Brian Weinstein
For Reporter Newspapers
Our nation’s housing markets have been hit hard, and consumers are trying to stay afloat during the fallout of the subprime mortgage crisis.
Although Washington isn’t experiencing foreclosures and mortgage defaults at the same rate as the rest of the country, families are losing their homes across the state. While the feds were slow to act in reforming mortgage and subprime lending and helping families in need, my committee, the Consumer Protection & Housing Committee in the state Senate, led the way.
Seventy percent of today’s home loans are generated by mortgage brokers. At the peak of the subprime boom, a study published in the Wall Street Journal found that over half of the borrowers in subprime mortgages actually qualified for prime loans. Many mortgage brokers simply weren’t working in the borrowers’ best interest.
This Legislative session, we imposed a legal responsibility on mortgage brokers to act in the best interest of the borrower. This is the same legal duty financial advisers, accountants, and trustees owe to their clients.
While this helps future homebuyers, it does not help the families who are already facing foreclosure. Many homeowners in danger of losing their homes are approached by consultants who offer to help. Too often these offers leave homeowners homeless and with no equity.
Taking from those already in financial distress is appalling. That’s why the Legislature put an end to this behavior by making our state the leader in the country for protecting homebuyers from foreclosure rescue scams.
We also closed consumer lending loopholes, regulated 300 previously unregulated mortgage lenders and regulated the practice of title companies giving gifts to realtors for referring them business.
These accomplishments were all about creating adequate checks and balances on the lending industry and ensuring strong consumer protections for homebuyers.
But our consumer protection agenda remains unfinished.
If a doctor leaves a scalpel in a patient during surgery, the doctor can be held liable. If a driver is in an accident, the driver can be held liable. But, if a homebuilder knowingly sells a new home with siding deficiencies that cause thousands of dollars in damage, the builder cannot be held labile in Washington. In fact, Washingtonians get a better warranty for their toaster than their home.
A home is the largest investment most people will make in their lifetimes. For the second year in a row, I introduced a Homeowners’ Bill of Rights to give single family homeowners the same rights the Legislature gave condominium owners nearly 20 years ago. For the second year in a row, the bill passed out of the Senate, and out of the House Judiciary Committee. For the second year in a row, Speaker Frank Chopp did not bring the bill to a vote in the House.
It is my biggest disappointment that I was not able to pass the Homeowners’ Bill of Rights before my term ended. We achieved a lot for consumer fairness and financial security this year, but I continue to believe that Washington families should not have to pay hundreds of thousands of dollars out their own pockets because of a builder’s negligence.
It is my great hope that this issue will stay at the cornerstone of the consumer protection agenda until these common sense protections are passed into law.
Sen. Brian Weinstein represents the 41st Legislative District, including a portion of the Issaquah area.