Bill Would Apply Safeguards To Refinancing of Mortgages; House Member Says Abuses by Lenders Are Frequent
The question of the hour was whether people refinancing their mortgages are being deceived and cheated.</br></br>Rep. Esteban E. Torres (D-Calif.), chairman of the House banking subcommittee on consumer affairs and coinage, thinks they are.</br></br>"Over the past few days, my phones and fax machines have been besieged with consumers experiencing difficulties in mortgage refinancing," he said this week as he opened a hearing on legislation he has introduced "to stop numerous scams by unscrupulous lenders and mortgage brokers who prey on consumers."</br></br>The bill, which Torres said he hopes to attach to a pending housing authorization bill, would apply to refinanced mortgages the kinds of consumer-protection laws that cover original mortgages, including detailed, advance estimates of loan terms and charges.</br></br>It also would require lenders to honor locked-in interest rates within the agreed-to time period (typically 60 days), and outlaw use of the Rule of 78s, a mathematical formula sometimes used to calculate the interest rebate owed to the consumer on a mortgage being refinanced.