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Rein in renegade lenders

Buyers should beware when it comes to financing or refinancing a home. Mortgage companies and their products are not always as they appear.

Utah's burgeoning real-estate market has brought into the state 640 new mortgage lenders the past 18 months. Not all are reputable, and many charge exorbitant interest rates, use high-pressure sales techniques and are not up front about terms.These firms should be regulated out of business but, unfortunately, are not required to license in the Beehive State. Nor does the state set any limits on interest rates. Utah ought to change that. But until it does, the only protection for buyers is self-defense and thoroughness.

Shady operators should be sent packing by informed buyers too smart to fall prey to their inflated pricing ploys. Too many homeowners have belatedly learned they agreed to higher-than-expected interest rates or forfeited rights to cancellation by signing back-dated contracts. Some have been surprised by large lump-sum balloon payments.

Most mortgage companies are reputable, but those that are not make life miserable for customers and may jeopardize home ownership and accumulated equity.

To avoid unscrupulous operators, consumers should thoroughly check prospective lenders. The Utah Mortgage Lenders Association and Better Business Bureau can be helpful. Buyers should carefully compare rates, terms and closing costs of several lenders before making a decision. They should ask for everything in writing and read the fine print before signing any documents to preclude unpleasant surprises at closing or further down the road.

While education is the best defense against deception, the state should consider tighter regulations of the mortgage industry. Home ownership is typically the largest financial investment made by Utah residents. The state ought to implement more protections to prevent abuses by lenders.

The state's Department of Financial Institutions cannot do much more than write a letter telling a mortgage company to stop operating deceptively. That is insufficient protection in an industry critical to so many Utahns.