By Lewis Smith

Any homeowner considering a refinance mortgage which is not a true 30-year fixed rate or which has total fees above $2,500-$3,000, is advised to review the proposed mortgage with an expert at a Housing and Urban Development (HUD)-approved nonprofit housing counseling organization. Estimates are that up to half the people who take sub-prime loans, some of which could be predatory, would have qualified for true 30-year fixed rate mortgages with reasonable rates and fees. The following rules should help people obtain such good mortgages.

1. Focus, first and foremost, on protecting the equity in your home.
2. Pay only for a credit report and appraisal at $400 or so, before settlement.
3. Avoid bad loan terms by exploring loans at reputable lenders, including major banks.
4. Delay taking the first loan offered. Explore more than one lender.
5. Fully understand the terms of your second or third mortgages before refinancing. Paying off low or no payment secondary mortgages could be a big mistake.
6. Don’t refinance if you still have any doubts or questions about the terms and costs.
7. Be very cautious about loans that seem too good to be true — they often are!
8. Avoid  putting your home at greater risk by refinancing unsecured consumer debt.
9. Be cautious about refinancing with the finance company or high-rate “sub-prime” lender that may now have your mortgage.
10. Always consider how many years it will take to save, from each month’s lower payment, the total $2,500 or so refinance cost.
11. Be very hesitant in accepting adjustable rates, balloons or pre-payment penalties.
12. Be reluctant to accept add-ons like mortgage life or disability insurance.
13. Don’t refinance a debt if there is a valid legal reason not to pay. Resolve the issue first.
14. Carefully analyze promises of big tax benefits of any mortgage loan or the benefits of a lower interest rate, especially on small loans  
15. Never sign a blank document to be filled in later by a lender.
16. Know that some refinance offers you receive may not be truthful.
17. Know that you, as a homeowner, have a three-day “right of rescission” (right to cancel) after signing and settlement.
18. Consider having an impartial mortgage expert analyze your proposed loan.

Lewis Smith is with Manna Mortgage, a District-based nonprofit mortgage company

National Consumer Protection Week: Read Up, Reach Out, and Be an Informed Consumer

Earlier in February, the DC Department of Insurance, Securities and Banking (DISB) joined federal, state and local government agencies and national consumer advocacy organizations to launch the ninth annual National Consumer Protection Week (NCPW).

NCPW highlighted consumer-education efforts in the fight against fraud in communities across the nation. NCPW’s national organizers encouraged everyone to read up, reach out, and be an informed consumer.

“Consumers are our most effective partners in this effort,” said DISB Commissioner Thomas E. Hampton. “We encourage everyone to read up and reach out, learn how to deter fraud and deception in the marketplace, and tell others.” Fraudulent promotions seek to exploit people’s financial fantasies, needs, and general optimism. But informed consumers are better able to see through frauds and deceptions, whether they take the form of questionable claims in an ad, offers that come in the mail, e-mail or fax, or schemes that sound like sure-fire successes. More important, informed consumers know where to go for information about their rights, and how and where to complain.

By gathering and sharing information, consumers—and their friends and families—can be more confident, knowledgeable and safe in the marketplace. DISB used the week, Feb. 4 to 10, to continue highlighting its consumer protection and education efforts around the District. It continues throughout the year, as the agency will host a seminar on insurance products at the Martin Luther King Jr. Library, 901 G St., NW, on March 14 at noon. There will be a seminar on insurance fraud on March 21 at the same location.

Consumers can find practical—and tactical—tips from NCPW partner organizations about making well-informed purchase decisions, avoiding scams, protecting personal information, and filing a complaint with DISB by calling (202) 727-8000 or visiting its website at disb.dc.gov.  Consumers may visit NCPW’s website at www.consumer.gov/ncpw. This has information from federal, state, and local government agencies, and national consumer advocacy organizations.

As part of its consumer protection, DISB has issued the following tips on check cashers as part of its consumer alerts. Consumers may visit DISB’s website and visit the Consumers link for a variety of tips and alerts.