The Three Worlds of Mortgage Lending

The last question -- what to watch out for in a mortgage loan -- is one all borrowers should be asking. The Center for Responsible Lending, which has been highly critical of subprime lenders, lists some of the things to look for and avoid in a mortgage loan:

· Excessive fees. Don't be so quick to get a home loan that you ignore the fees. Mortgage lenders often disguise or play down fees because they are often rolled into a loan.

· Prepayment penalty. A mortgage with a prepayment-penalty option requires you to pay a penalty or fee if all or most of loan amount is repaid within a certain time (generally ranging from two to five years from the start of the loan).

· Loan flipping. Despite the rise in foreclosures, the offers to refinance are still as plentiful as the dandelions that pop up every spring. But crunch the numbers. Some refinance deals generate lots of fee income for the lender but provide little financial relief to the borrower.

Like the chat participant, I wonder how many people reading all the news stories couldn't really explain the current subprime mortgage meltdown. It's certainly true that many prime and subprime borrowers who face foreclosure didn't understand the language and terms in the loans they got.

· 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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