The Mortgage Bankers Association of America, based in
Washington, has launched a consumer education campaign: Stop Mortgage
Fraud. The Association offers consumers a list of their rights in a mortgage
transaction, the 10 warning signs of predatory lending, and a way to report
suspect illicit practices. A number of regional companies have signed on as
backers of the campaign along with such national outfits as Well Fargo, Firstar
and Chase Manhattan.

The Association says borrowers have the right to:

• Clear explanations of the loan terms.
  
  
• Timely, truthful disclosure of the rates and costs of the loan.
  
  
• Accurate disclosure of the final annual percentage rate and the amount
  of regular payments before the loan is closed.
  
  
• Credit Counseling before the closing.
  
  
• Fair Consideration by the lender of their ability to repay the loan.
  
  
• Tangible benefits for the fees and higher interest rates in refinancing.
  
  
• Refuse to finance points or fees.
  
  
• Decline credit insurance.
  
  
• Fair and equitable resolutions to loan disputes.
  
  
• Timely reporting of favorable information to credit bureaus.

While experiencing one of the 10 warning signs does not necessarily mean the
lender is a predator, the Mortgage Bankers Association warning signs include:

• Needing another loan to pay a large lump-sum balance at the end of
  the initial, low montly payments of a balloon loan.
  
  
• A mandate to buy credit insurance.
  
  
• Subsequent refinancing(s) of the original loan -- each resulting in
  bigger payments or greater debt.
  
  
• Bigger monthly payments than were stated by the lender before the
  closing.
  
  
• Unexepected costs at the closing.
  
  
• Directions to not sign or complete important parts of loan applications.
  
  
• Missing documents: a good-faith estimate, special information booklet,
  truth in lending form and HUD settlement statement.
  
  
• Daily interest charges for late payments.
  
  
• A mortgage greater than the value of the home.
  
  
• Suggesions to put false information on the loan application.