AgentMortgage

This refi will make me poorer

Part 4 of 6: The bad mortgage

The real estate event of the summer
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(This is Part 4 of a six-part series. Read Part 1, Part 2, Part 3, Part 5 and Part 6.) Consumer groups believe that lenders should be held liable if they place borrowers in home mortgages that aren't suitable for them. In prior articles in this series, I concluded that a suitability standard was not an effective way to prevent borrowers from being stuck with the wrong type of mortgage, or with a mortgage they could not afford. This article looks at suitability in connection with another problem: refinances that are not in the borrower's interest. Many borrowers who write me about refinancing are about to close on deals that would make them poorer, but they don't realize it. I also receive mail from borrowers who realize they made a mistake when they refinanced earlier, asking how to undo the mistake or whether they have any recourse. The problem of refinances that involve no benefit to the borrower is associated with aggressive merchandising by mortgage brokers and loan officers ...