Taming the Predators

If the loan includes a prepayment penalty, the loan officer should clarify the following:

"This loan contains a prepayment penalty. That means if you pay off or refinance your loan within [insert the length of the period] you will pay a fee of as much as [insert the amount of the fee in dollars]. You may be eligible for a loan without a prepayment penalty, but you would then pay a higher interest rate and a higher monthly payment."

In a news release, Aseem Mital, chief executive officer of ACC Capital Holdings, the parent company of Ameriquest, said: "This agreement is good for consumers and fair to the company. It provides a framework for new lending policies that improve and enhance our ability to serve our customers and are a model for the industry."

I hope this agreement puts all lenders on notice. Every loan officer should repeat the simple scripts laid out in the Ameriquest settlement. Because, truth be told, many people -- not just the low-income or credit-challenged -- have signed loan documents with terms they didn't understand.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

· By e-mail:singletarym@washpost.com.

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