Mortgage Refinance Guide

Federal laws that regulate mortgage lenders were mostly put on the books in the 1970s; back when small local Savings & Loans wrote the majority of home mortgage loans. Thirty years later, the mortgage industry has changed dramatically. But the basic regulatory laws have not. As a result, a growing share of the mortgage loan process is not regulated. An national survey of home mortgages shows African-Americans are four times more likely than Caucasians to borrow with a high interest rate. Many of these mortgage loans came from companies that exist to serve customers who cannot qualify for mortgage loans from banks.

Members of Congress say they need to determine whether race plays a role in mortgage loan pricing. A report on national mortgage lending, including interest rate pricing, will be released this fall. Critics of the report say the disparities found in this study show federal laws governing mortgage lending fail to enforce equal housing opportunity among races. Regulators are also concerned that the new high interest rate loan industry, which serves many minorities, is not watched carefully by federal regulators.

A growing number of these lenders are not banks. The largest banks sell loans in areas where they do not have branches; this has resulted in a national monopoly of volume mortgage underwriters. Banks are reviewed by the federal government to ensure they are complying with fair lending laws. Many high interest rate lenders are never reviewed; though the FTC can investigate complaints about their mortgage lending practices.

Banks argue that existing laws protect homeowners sufficiently, that any increased regulation would hinder the industry.

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Refinance a Mortgage - Five Things You Need to Know

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