ANNE RENDLE
‘A huge issue’

Predatory and subprime lending has attracted a lot of attention in Massachusetts and other states in recent years, as many consumer advocates seek to protect homebuyers from abusive home mortgage lending practices.

Now, some are hoping local Realtors will join in the effort to ensure that Bay State homebuyers don’t become victims of predatory lending. Realtors will have a chance to learn all about predatory and subprime lending at a seminar organized by the Housing Opportunities Committee of the Northeast Association of Realtors (NEAR) on Wednesday.

Anne Rendle, chief executive officer of NEAR, said the seminar was spurred in part because the association has received anecdotal information from Realtor members in Lowell and Lawrence who have seen consumers dealing with high-cost home mortgage loans that are either saddled with various fees, prepayment penalties or high interest rates. “We’re concerned about it,” said Rendle. “It’s a huge issue.”

Real estate agent Georgi Mueller, who is the chairwoman of the Housing Opportunities Committee, said Wednesday’s seminar will educate Realtors about the “red flags” to watch out for when working with buyers and about the importance of advising customers to shop around for the most favorable mortgage loan terms.

“As a Realtor, when we get to a closing, a lot of times we see that [buyers] are paying very large fees and closing costs that had they known to shop around they could have avoided,” said Mueller, an agent at ERA Morrison Real Estate in Westford.

‘Key’ Solution
Mueller said she saw a homebuyer who recently was trying to purchase a home she had listed for sale under $200,000 with closing fees that amounted to thousands of dollars.

Jim Wilde, executive director of the Merrimack Valley Housing Partnership, said Realtors have such close working relationships with buyers that it’s critical for them to understand the problem of predatory and subprime lending.

“Realtors are really key in combating this problem because so many buyers find their lenders through their real estate broker,” said Wilde, who will speak at the seminar along with Kathy Connolly of MassHousing and Kathy Tullberg of the Massachusetts Community Banking Council.

“A lot of real estate brokers know about the process of buying a house but a lot of them could benefit by learning more about the lending arena,” he added.

The mortgage application process can be so intimidating to many homebuyers – particularly first-timers, according to Wilde – that when they’re finally qualified for a loan, the buyers are so thrilled that they don’t question the loan terms. Wilde said Realtors can help guard customers from high-cost mortgage loans by advising them to get prequalified by at least three different lenders and encouraging them to search for loans with the most favorable terms – something that many low- and moderate-income borrowers fail to do.

In Massachusetts, state officials have stepped up efforts to protect homebuyers from predatory lending. Bay State lawmakers recently passed a measure that targets mortgage lenders who use aggressive techniques to sell high-interest, fee-laden loans to inexperienced, fiscally vulnerable borrowers. The new measure is designed to protect consumers by capping points and fees at 5 percent of the loan amount and offering protections on high-cost loans, such as prohibiting pre-payment penalties, requiring housing counseling, limiting financing of fees and requiring the lenders to reasonably believe that borrowers can repay their loans.

Neily Soto, an agent at Century 21 McLennan Ortega and Fermin in Lawrence, has seen examples of predatory and subprime lending in her office. Soto has seen homebuyers who have had to pay upfront fees in order to obtain a mortgage – fees that were not included in settlement statements.

Some buyers have lost deposits held in escrow accounts because at closing time they’ve been told that they have to come up with more money for the transaction to be completed. Soto said she has seen homebuyers who thought they were obtaining 100 percent financing only to get to the closing and find out that the terms of financing have completely changed.

“I just think that [Realtors] need to be educated that this is going on,” she said.

Ten agents from Soto’s office are planning to attend the seminar. The event is part of a series organized by NEAR’s Housing Opportunities Committee for Realtors wanting to learn more about helping low- and moderate-income homebuyers. Several months ago, the committee organized a seminar on all the mortgage and loan products that are available to first-time homebuyers.

Earlier this year, the committee published a guidebook on various down-payment assistance programs, first-time homebuyer courses and special home loans. The books were distributed to real estate offices throughout the Merrimack and Nashoba valleys that are members of NEAR.

“This [seminar] we figured goes hand in hand with that,” said Mueller.

The seminar “Lunch, Lending and Loan Sharks: Predatory and Subprime Lending – What Every Realtor Should Know,” takes place Wednesday from 1 p.m. to 2:30 p.m. at NEAR headquarters in Chelmsford. The cost is $5 for NEAR members and $10 for nonmembers.

Aglaia Pikounis can be reached at apikounis@thewarrengroup.com.