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

100 Best Green Workplaces in Oregon

June 2015
Friday, May 22, 2015
BY KIM MOORE

As momentum grows at the state level to introduce far-reaching environmental regulations, such as carbon pricing and the Clean Fuels Program, Oregon employers continue to go the extra mile to create green workplaces for their employees.


Read more...

The 5 highest revenue-generating parks in Oregon

The Latest
Thursday, June 11, 2015
parksthumbBY JACOB PALMER | DIGITAL NEWS EDITOR

In 2014, total revenue for camping and day use in Oregon State Parks was a little more than $17 million. That figure may even higher this year "because we've had exceptionally nice weather," Hughes says.


Read more...

Oregon businesses face destruction from future earthquake

The Latest
Wednesday, May 20, 2015
htctthumb1BY KIM MOORE | RESEARCH EDITOR

An earthquake would completely destroy many Oregon businesses, highlighting the urgent need for the private and public sectors to collaborate on shoring up disaster preparedness, said panelists at an Oregon Business breakfast summit today.


Read more...

Queen of Resilience

June 2015
Friday, May 22, 2015
BY AMY MILSHTEIN

Astrid Scholz scales up sustainability.


Read more...

No Boundaries

June 2015
Friday, May 22, 2015
BY AMY MILSHTEIN

Floor plans embrace the great wide open.


Read more...

Up in the Air

June 2015
Friday, May 22, 2015
BY ANNIE ELLISON

Portland tech veteran Ben Berry is leaving his post as Portland’s chief technology officer for a full-time role producing unmanned aerial vehicles (UAVs) aimed at first responders and the military. Berry’s AirShip Technologies Group is poised to be on the ground floor of an industry that will supply drones to as many as 100,000 police, fire and emergency agencies nationwide. He reveals the plan for takeoff.


Read more...

Sun set

June 2015
Friday, May 22, 2015
BY CHRIS NOBLE

The right sunglasses can protect your eyes and look cool at the same time. This being the 21st century, select shades are socially conscious, too. Portland brand Shwood uses wood and other natural materials and manufactures locally. Founded by Ann Sacks, the brand Fetch dedicates a portion of its profits to animal welfare. But whether you choose classic tortiseshell or aviator chic, please, shed the sunglasses when you walk in the door — and, of course, at night. 


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