Asbury Park Press

Borrower Beware On A Mortgage

Asbury Park Press — Sunday, December 23, 2007


Taking a mortgage loan is the largest financial decision many people make in their lifetime.

Who will protect the borrower from scams or loans with hidden fees or high interest rates?

"The answer is you have to protect yourself, and that means you have to be armed with a bunch of stuff," said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, a consumer advocacy group that is pushing for greater governmental regulation of the mortgage loan market.

"It means you get an attorney, or you get a home inspector, and you do comparison shopping," Salowe-Kaye said.

The mortgage and housing markets are part of the American capitalistic landscape, prices and terms are set by open negotiation and market forces. For consumers, loans are largely unregulated except for state predatory lending laws, and even those often cannot be applied.

With the state and nation now in the midst of a housing recession brought by fast and loose subprime lending to borrowers with shaky credit histories, government regulators, consumer advocates, bankers and even homeowners are pondering what should or could be done about the mess.

Salowe-Kaye said her group believes new state or federal regulations could help homeowners avoid scams and bad loans if they:

Others, such as Assemblywoman Jennifer Beck, R-Monmouth, are calling for the licensing of mortgage solicitors. She has sponsored a bill that, if passed, would create the new licenses.

Beck said in an interview that the threat of losing a license may keep mortgage solicitors from engaging in unethical sales practices.

Terry McEwen, director of the state Division of Banking, said he supports efforts for new regulation. He said he believes mortgage solicitors should be licensed and that banks should qualify borrowers at the higher interest rate on adjustable mortgages.

He said he also supports proposed requirements that lenders give borrowers the best possible loan terms.

McEwen said consumers with complaints should call the state Division of Banking. The agency's toll-free complaint line is (800) 446-7467.

But buyers and borrowers also ought to strongly consider seeking out and hiring an independent attorney before transactions take place, McEwen said.

"If someone is going to close on one of the biggest investments in their life, they should have their own legal counsel there," McEwen said. "That's a recommendation we would make."

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