This list was made by Ted Janusz, a former Mortgage Salesman interested in helping borrowers get a fair deal:

1. Not knowing which mortgage fees the borrower can and cannot negotiate.

2. Choosing and trusting the first loan officer the borrower interviews. Shop around.

3. Using an interest-only or “payment option” adjustable-rate loan primarily to qualify for a more expensive house.

4. Thinking the interest rate is always the main thing.

5. Not comparing the final fees listed on the closing documents to the up-front estimates and good faith estimate to avoid the lender “packing” the loan with added-on fees without the borrower’s knowledge.

6. Not knowing if the mortgage has a pre-payment penalty until it’s too late, like, when the borrower decides to refinance or otherwise pay the mortgage off early.

7. Thinking that renting is always “just throwing money away.” In the short run it can cost thousands less to rent.

8. The borrower does not know if he or she is paying a back-end yield spread or service release premium, fees paid to brokers and loan officers for making loans with higher interest rates.

9. Paying for mortgage life insurance, credit insurance or other expensive but unnecessary lender add-ons.

10. Paying hundreds of dollars to have a company set up a biweekly mortgage payment plan, something the borrower can generally do for herself or himself — at no cost.

Mortgage lenders are tightening standards for loans to the 15 percent of potential borrowers who have the worst credit.

Even with the more rigorous standards, many credit-impaired borrowers can find willing lenders — albeit at higher rates than were being quoted a month ago.

“I think for the vast majority of people, they don’t need to worry about it,” says Jim Sahnger, mortgage consultant with Palm Beach Financial Network in Stuart, Fla.

But a few people have reason to worry. They include homeowners with poor credit histories who want to refinance, but who have less than 5 percent or 10 percent equity in their houses. People with poor or fair credit, and who don’t want to verify their incomes or assets, are also finding it more difficult to qualify for loans. Especially if they want to borrow more than 95 percent of the house’s value.

The stricter lending standards are the fallout from the subprime mortgage market meltdown. About 15 percent of mortgage borrowers are in the subprime category. Those are the least creditworthy people, with credit scores less than 620 (on a scale of 300 to 850). About 85 percent of mortgage borrowers have credit scores of 620 or higher. So far — knock on wood — most of these prime customers needn’t worry about being turned down for home loans on the basis of their riskiness as borrowers, so long as they’re willing to let the lender verify their incomes and assets.

Several subprime lenders have gone belly up in the past two months because they approved too many loans for borrowers who ended up missing their first or second or third house payment. These are called “early payment defaults.” Investors, who buy mortgages on the secondary market, demanded that the lenders buy back loans with early payment defaults. The lenders didn’t have enough cash. At least 20 subprime lenders have gone out of business or declared bankruptcy since the middle of December.

Other subprime lenders, having witnessed their erstwhile competitors swinging from the gallows, are trying to slip the noose by making it slightly harder for people with bad credit to get loans.

“We’re certainly starting to see tightening up in underwriting requirements, and they’re starting to raise the rates a little more because the loans are risky and the investor community wants higher yield on these loans,” says Jeff Lazerson, president of Mortgage Grader, a mortgage brokerage in California.

The stricter standards come in the form of higher minimum credit scores, lower maximum loan amounts and requirements for bigger down payments. In many cases, lenders raise the minimum credit score by 20 points or even 40 points to qualify for a type of loan.

But that’s not much of a deterrent to mortgage brokers, who originate most subprime loans, says Christopher Cruise, who trains mortgage brokers and loan officers. Brokers have multiple lenders to choose from, and if one lender makes a certain loan program unavailable, a broker probably can find another lender that still offers it.

“It’s not like, ‘Oh, my goodness, we don’t have this product anymore,’” Cruise says. “We just have to find another place to place the product.”

Lenders haven’t only tightened standards. They have boosted rates. Rates on the most popular type of subprime loan, called a 2/28 mortgage, have gone up about 1.5 percentage points to 2 percentage points since mid-January, says Jim Svinth, chief economist for LendingTree.com. That rise is purely a reflection of credit risk.

Svinth says one type of subprime customer could end up in big trouble: “If you were a 2/28 borrower a couple of years ago, and you can’t document your income and don’t have enough equity to put 10 percent down, and your credit hasn’t got any better, you’re in a bad spot,” he says.

Brokers can’t believe how lax the subprime lending requirements were just a short time ago. Investors were eager to buy mortgages, especially high-rate, risky home loans with prepayment penalties, because they were profitable. So investors pushed loan officers and mortgage brokers to find borrowers with lousy credit. Brokers and loan officers were paid handsomely — practically bribed — for delivering subprime borrowers.

“So long as these loans are legal, we’ll continue to sell them,” Cruise says. “Yeah, we do cringe. But so long as people qualify for the loans and they want them — we don’t even have an obligation to educate people on the risks of these loans, although some of us do. You still have the freedom to do things that are stupid in America. Unfortunately, many people are exercising that freedom with abandon.”

 - Bank rate

Canada Mortgage and Housing Corp. is making it easier for self-employed Canadians to buy homes.

Newly announced improvements to its approval system will make it easier for business owners to obtain mortgage loan insurance and, as a result, benefit from competitive interest rates.

Pierre Serre, a CMHC vice-president, says the program, known as Self-Employed Simplified, will help self-employed borrowers and commissioned salespeople obtain CMHC-insured mortgages in much the same way as borrowers who receive salaries or hourly wages from employers.

The national housing agency says the changes, to be implemented March 30, come in response to a growing proportion of self-employed people in the workforce.

The program is designed for borrowers who have at least two years in the same type of work and a proven track record of managing debt.

Mounting concerns on Wall Street that mortgage lenders might be hurt by increasing defaults and delinquencies sent investors fleeing Monday from some of the biggest names in the industry.The meltdown among lenders that specialize in home loans to people with weak credit, known in the industry as subprime lenders, again ravaged stock prices. Financial institutions from Britain’s HSBC Holdings PLC to subprime leader Countrywide Financial Corp. sank amid reports of strained portfolios as loans went bad.

The latest to rattle the markets was New Century Financial Corp., the second-largest U.S. subprime lender. The Irvine, Calif.-based company disclosed a criminal probe into the trading of its securities, and into the lender’s accounting procedures.

Already beleaguered investors were swift to react. New Century’s shares lost 60 per cent on Monday — wiping $532-million (U.S.) from its market value. Wall Street, still wobbly after last week’s huge plunge, also punished the rest of an industry, blamed for loosening their lending standards amid an eroding housing market.

“We see increasing evidence that this industry is now in a downward spiral whereby each negative development fuels additional deterioration in key fundamentals including origination volume, pricing, credit and most importantly, funding,” Stifel Nicolaus analyst Christopher Brendler said.

The troubles at New Century had been mounting since February, when it announced that it lost track of how severely the loans in its portfolio were losing value. The company on Friday disclosed it is being investigated by the U.S. Securities and Exchange Commission and the U.S. Attorney for the Central District of California on its accounting methods and the trading of its securities ahead of a Feb. 7 earnings restatement announcement.

Investors who buy the company’s mortgage loans in the secondary market have been selling the loans back when borrowers default, New Century said. The company said that because of accounting errors, it underestimated how many loans would be resold and how much value those loans would lose before ending up back in New Century’s portfolio.

Concerns of a meltdown at New Century include the possibility it will not be able to meet covenants with major financial backers, the company said. Subprime lenders enter into agreements with big banks to finance their operations. These backers require subprime lenders meet minimum financial targets, or face breaching loan agreements that would force banks to pull out of the deals.

This dragged down shares in afternoon trading of some of the top U.S. banks and investment banks.

Morgan Stanley Inc., which had a 5.5-per-cent stake in New Century as of Dec. 31, dropped $1.33, or 2 per cent, to $72.03. State Street Corp., with a 3.8-per-cent stake, shed 12 cents to $64.96. Citigroup Inc., with a 3.5-per-cent stake, traded as low as $49.56 before recovering to post a 27-cent gain, at $50.24.

Other subprime lenders also tumbled. Countrywide Financial fell $1.03, or 2.8 per cent, to $35.99, and is down about 14 per cent since January. Novastar Financial Inc. shares plunged $2.17, or 30 per cent, to $5.07, and are down about 40 per cent this year.

Higher U.S. interest rates and a stagnant housing market began to take their toll on borrowers who had been relying on the rising value of real-estate markets to help them refinance their mortgages.

Last year, 13.5 per cent of mortgages originated in the U.S. were subprime, according to the Mortgage Bankers Association. This is up from 2.6 per cent in 2000. The subprime market accounted for about 20 per cent, or $600-billion, of the $3-trillion mortgage market.

The New Century case is of particular concern because of fears that trouble in the subprime business could spread to prime mortgages, causing pain for many more lenders. Leading those concerns was HSBC, Europe’s largest bank with significant operations in the U.S., which warned in February its profits would be weaker because of subprime lending.

The world’s third-largest bank on Monday reported its highest annual profit of $15.79-billion for 2006. Bad-debt charges jumped 36 per cent to $10.57-billion, roughly in line with expectations.

Chief executive officer Michael Geoghegan attempted to fend off criticism that the bank had provided loans in the United States to people who were not in a position to pay their debts.

“This is not trailer park lending,” Mr. Geoghegan said, adding that the typical HSBC Finance customer has average household income of $83,000, is 41 years old, has two children and a home worth $190,000. “This is Main Street America.”

Concern about subprime exposure also has spilled into major U.S. investment houses. Standard & Poor’s on Monday downgraded Lehman Brothers Holdings Inc. and Merrill Lynch & Co., partly on subprime mortgage woes. S&P noted that subprime loans are a small piece of the company’s overall assets, but was still concerned about recent market trends.

Mortgage finance giant Freddie Mac said Tuesday it will no longer buy high-risk home mortgages that it deems to be highly vulnerable to foreclosure, in a surprise move that came amid a deteriorating market for subprime loans affected by slumping home prices and rising interest rates

The government-sponsored company, which is the second-biggest financer of home loans in the United States, said it will begin using stricter standards for mortgages that it buys — including limiting the use of loans requiring less documentation of the borrower’s status than conventional mortgages.

“The steps we are taking today will provide more protection to consumers and enhance the level of underwriting standards in the market,” Richard Syron, Freddie Mac’s chairman and CEO, said in a statement.

The changes will take effect Sept. 1, the company said, to avoid disrupting the mortgage market.

The company’s new standards cover certain types of hybrid adjustable-rate mortgages that comprise about three-quarters of the subprime market. An adjustable-rate mortgage is considered a higher-risk loan because it typically draws borrowers in with an initial low, or “teaser” rate, which can rise substantially over time.

Home-mortgage delinquencies and foreclosures are surging, especially for people who took out subprime mortgages — higher-interest loans for those with blemished credit records or low incomes who are considered higher risks — during the sizzling housing boom that waned in the latter half of 2005.

Write-offs of home mortgage loans by banks and thrifts reached a three-year high in the fourth quarter last year, according to the Federal Deposit Insurance Corp. And several financial companies that specialize in subprime mortgages have seen their shares plummet in recent weeks and the industry sector has been roiled.

Low-documentation, interest-only and other nontraditional mortgages, which are riskier than conventional home loans, have exploded in popularity in recent years and raised concern about defaults if borrowers cannot meet rising mortgage payments.

McLean, Va.-based Freddie Mac, like its larger government-sponsored sibling Fannie Mae, was created by Congress to pump money into the mortgage market by buying home loans from banks and other lenders, in order to keep interest rates low and make home ownership affordable for low- and moderate-income people. The two companies bundle the mortgages into securities for sale on Wall Street.

Freddie Mac shares fell 22 cents to $64.71 in morning trdaing on the New York Stock Exchange.

——

On the Net:

Freddie Mac: http://www.freddiemac.com

Fannie Mae: http://www.fanniemae.com

Many older homeowners prefer reliable, dependable mortgage interest rates. It helps them plan their monthly financial calendars, especially when they are battling the challenges of paying for health care on fixed incomes.Fixed-rate mortgages have been absent from the reverse mortgage scene for more than a decade as lenders relied primarily on adjustable-rate mortgages insured by the U.S. Department of Housing and Urban Development. These mortgages, known as home equity conversion mortgages, account for nearly 85 percent of the reverse market.

BNY Mortgage (www.bny mortgage.com), which recently announced it would trim the interest rate charged on the adjustable-rate home equity conversion mortgages, will introduce two fixed-rate reverse mortgage products on March 5.

The first, called the New Generation HECM, will be similar to the current FHA/VA rate and hover near 6.5 percent, not including the mandatory mortgage insurance premium. The interest rate is tied to the one-year CMY, or constant maturity treasury index. The second product, the Fixed Prime Advantage, is a “jumbo” product for loans greater than $405,000. The rate, which will be set at closing, is the prime lending rate plus .99 percent. That rate this week was a tick over 9 percent.

“By offering more options to seniors, we feel strongly that we are making reverse mortgages more accessible for today’s senior homeowners,” said Sarah Hulbert, executive director for BNY Mortgage’s western regional center. “Seniors who previously were put off by the adjustable rate options will now have fixed rate options, and seniors who previously did not qualify for a reverse mortgage due to insufficient loan proceeds will now be eligible.”

Reverse mortgages allow senior homeowners, with a minimum age of 62, to receive proceeds from a lender - either in a lump sum, regular monthly payments, a line of credit or in a combination of those options. When the house is sold, or the last remaining borrower dies or moves out of the home, the loan amount plus the accrued interest is repaid. The borrower can’t owe more than the value of the home. The home equity conversion mortgages program has insured more than 240,000 reverse mortgages since 1990, while private “jumbo” reverse plans also have been available.

Wells Fargo Home Mortgage (www.wellsfargo.com/reverse), the nation’s leading retail originator of reverse mortgages, announced it also has trimmed the margin it charges on the home equity conversion mortgages adjustable by 50 basis points. Seniors who have already applied for a reverse mortgage with Wells Fargo will be offered the lower margin.

“Reverse mortgages are about making the most of the equity that seniors have built into their homes,” said Jeff Taylor, vice president of Wells Fargo’s Senior Products Group. “By lowering the margin, we are lowering the interest rate charged on a reverse mortgage. This means more seniors will be able to use the reverse mortgage program, giving them the ability to turn their home equity into additional retirement funds.”

Providential Home Income Plan, Inc., a venture capital funded company whose sole purpose was to originate and service reverse mortgage loans, offered a fixed-rate reverse mortgage in the early 1990s. While the company was one of the first to begin offering a program to enable seniors to tap the equity in their homes, some of loans contained the controversial “equity share” component, giving the lender a significant portion of the appreciation in the home. Often, that portion was 50 percent of a rapidly appreciating home, leaving some homeowners in debt when the senior died or moved out of the home. The “equity share” component no longer is included in reverse mortgages and is a key reason for the popularity of today’s products.

In 1996, Transamerica HomeFirst purchased the reverse mortgage servicing assets of Providential. Three years later, Financial Freedom, the Irvine, Calif.-based company specializing in jumbo reverse mortgages, purchased Transamerica HomeFirst.

Dr. Barbara Stucki, a Bend, Ore., researcher and consultant, completed a study for the National Council on the Aging that supports tapping into home equity via a reverse mortgage as the critical financing vehicle to help seniors afford long-term care services at home.

“There is simply no other pot of funds sitting around that is going to solve the long-term care situation in this country other than home equity,” Stucki said. “I just don’t see any other way - unless people simply want to dig deep down and pay out of their pockets. The idea is to use your home to stay at home.”

Tom Kelly’s book “Cashing In on a Second Home in Mexico: How to Buy, Rent and Profit from Property South of the Border” was written with Mitch Creekmore, senior vice president of Houston-based Stewart International. The book is available in retail stores, on Amazon.com and on tomkelly.com