Home Archives September 2007 What Oregon can expect from the mortgage fallout

What Oregon can expect from the mortgage fallout

| Print |  Email
Saturday, September 01, 2007

THE CURRENT STATE of the mortgage industry should be of great concern, as it affects the core of the American Dream: home ownership.

In response to a perceived need to qualify new homeowners in the face of rising prices, Fannie Mae developed a series of adjustable rate mortgages to allow lower down payment requirements and lower “teaser” interest rates, which would increase as home appreciation occurred.  With that and the current view of the industry, Oregonians can expect to see three possible outcomes:

Less disposable income: While first-time buyers have  benefited from lower rates, a rate increase of 1% represents $6.8 billion in annual debt service. Although this is less than 1% of GDP, it competes for disposable income and falls on those households with higher household debt, less certain income and net savings. We can expect a combination of higher defaults from households with less equity and a reduction of consumer spending from those with more.

Tighter mortgage funding: I believe this to be the biggest concern. Funding of new mortgages is dependent upon the attractiveness of mortgage-backed securities to institutional investors. Also, 18% of subprime debt is held by foreign investors, whose larger concern may actually be the declining dollar.

Regulation: Although there is a real need for consistent regulatory standards, only 45% of mortgages are originated by a regulated financial institution. The federal Office of Thrift Supervision recently issued regulatory guidance over underwriting standards, which I urge all regulatory agencies to use.

Home ownership is an important public policy and should be protected and enhanced. The current situation, while not a crisis, is unique in history and bears watching.

Michael V. Paul
President and CEO
The Commerce Bank of Oregon, Portland


Have an opinion? E-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

More Articles

The Backstory

October 2014
Thursday, September 25, 2014

In our cover story this month, Wendy Collie, CEO of New Seasons Market, and Kim Malek, owner of Salt & Straw, discuss their rapidly growing businesses and Portland’s red hot food scene. The conversation provides an interesting lens through which to explore trends in the grocery store and restaurant sectors.


Read more...

Fast Food Slows Down

September 2014
Tuesday, August 26, 2014
BY KIM MOORE

The ubiquitous fast-food restaurant may be on the decline.


Read more...

The Alchemist

September 2014
Tuesday, August 26, 2014
BY LINDA BAKER

David Howitt explains why Portland consumer brands like Stumptown and Voodoo Doughnuts are taking the world by storm.


Read more...

Gone Fishing

October 2014
Thursday, September 25, 2014
BY LORI TOBIAS

Business has been good to Laura Anderson, leading some to suggest she must be awfully lucky to find such success in a business notorious for failure. But luck’s had little to do with it.


Read more...

True Blood

October 2014
Thursday, September 25, 2014
BY JOE ROJAS-BURKE

Antibiotics really aren’t magic bullets.


Read more...

Podcast: Turn Things Around with David Marquet

Contributed Blogs
Friday, October 17, 2014
davidmarquet thumbBY TOM COX | OB BLOGGER

How can you move from a command-and-control leadership model to one of true empowerment and accountability? David Marquet did, and he took notes along the way.


Read more...

Managing family assets: The importance of planning ahead

News
Friday, August 22, 2014
Unknown-1BY CLIFF HOCKLEY |  OB GUEST CONTRIBUTOR

When business intersects with family, a host of  situations can arise. Without a clear vision and careful planning, hard-earned investments can become stressful burdens.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS