Advertisement

Home loans, honestly

February 11, 1999

For the first-time home buyers, looking for a mortgage loan can seem more complicated than figuring out the stock market. We'd like to think that those who get paid to give consumers advice on that subject know what they're talking about, but presently, there are no such requirements in West Virginia state law. There should be.

Fortunately the state Division of Banking has proposed a way to remedy that, with the support of Del. Ron Thompson, D-Raleigh, who chairs the state's banking committee.

As proposed, the law would require mortgage brokers to register and pass a licensing test that would demonstrate that they have some knowledge of finance and state law. It would also prohibit brokers from refinancing the same customer's mortgage for two years.

Mortgage industry officials meeting in Charleston this week objected to that provision, saying that it would deprive consumers of the latest information about rates.

Advertisement

What regulators worry about, however, is the possibility of a dishonest broker who would encourage a homeowner to refinance (for a fee) at 7 percent this year, then come back the following year and offer to refinance the same home again (for another fee) at a 6.5 percent rate. We tend to believe there's a compromise possible here; perhaps a reduced commission on any transaction occurring within two years would encourage the broker to find the consumer the best deal the first time around.

Some lenders also object to the proposal that individuals be licensed, rather than companies. We disagree; the consumer should have some assurance that the person who's handling their loan is knowledgeable and experienced in the field.

Consumers do have a role to play here in educating themselves about what's available in the home loan market. This is probably probably the biggest investment of a lifetime for most people and a percentage point more or less can mean thousands of dollars saved or lost over the term of the mortgage.

It's also a good reason why anyone counseling a homebuyer for a fee should be required to prove to state regulators that they know what they're talking about.

The Herald-Mail Articles
|
|
|