Mortgage brokers warn against misleading loan offers

Mortgage brokers are alerting Lodi residents to watch out for solicitors trying to convince people to refinance their home loans to pay off their holiday debt.

"The message we want to deliver is 'buyer beware'," said Steve Nilssen, a senior loan consultant for Summit Funding in Lodi. "If it sounds like something that's too good to be true, it probably is."

Refinancing may be a bad idea for those who have bad credit or are in bankruptcy or foreclosure, according to a prepared statement by the California Association of Mortgage Brokers.

Some advertisements offer a 1.99 adjustable rate mortgage, a 5.75 percent fixed rate for 30 years or a one-quarter percent interest rate. Some of these advertisements are against California Real Estate law, Nilssen said.

For example, a sample advertisement e-mailed to the News-Sentinel by the California Association of Mortgage Brokers shows an offer of a 1.99 percent adjustable rate mortgage. That rate is likely to apply for the first month only, Nilssen said. The rate in large print has below it "APR 7.23 percent" in smaller print.

State law requires the annual percentage rate be of equal type size as the interest rate, Nilssen said.

Offers are being presented by direct mail, phone solicitations and newspaper advertisements, he added.

Actual mortgage rates, Nilssen said, are based on the customer's percentage of the loan request in relation to the property value, whether the loan is for a purchase or refinance, credit profile and the debt-to-income ratio.

For more information, see the California Association of Mortgage Brokers' Web site, http://www.cambweb.org.

Contact reporter Ross Farrow at rossf@lodinews.com.

First published: Wednesday, January 24, 2007