Home equity scams are in the spotlight this week.

The Federal Trade Commission, U.S. Postal Inspection Service, National Association of Attorneys General, National Association of Consumer Agency Administrators, National Consumers League, and the American Association of Retired Persons launched National Consumer Protection Week on Monday with the theme "Credit Fraud-Know the Rules, Use the Tools."

Elderly Americans are particularly susceptible to this type of fraud, said Jeffrey Zeltzer, executive director of the National Home Equity Mortgage Association.

One common scam is called serial refinancing, in which a loan is rewritten over and over, adding costs and fees for the consumer each time as the loan amount grows.

"An elderly borrower might take out a $2,500 home equity loan to finance a new roof, and three months later a broker will say he can get more cash if he refinances the loan. They might originate the loan again and incur the fees and costs again, which gets borrowers into a big loan they cannot afford," Mr. Zeltzer said.

"We are supposed to be in the business of making loans to borrowers who can comfortably afford to repay it in budget-not this type of fraudulent lending," he said.

Randy Satterfield of the Federal Trade Commission's bureau of consumer protection said many households of elderly people, who usually are on fixed incomes, have lost homes because of such excessive borrowing.

"These fraudulent actors will give a loan based on the equity in the home, not on a senior citizen's ability to pay back the loan," Mr. Satterfield said.

The anti-fraud awareness initiative may have been encouraged by support from the 30 million-member American Association of Retired Persons, which has an annual budget of $450 million. It has been involved in a lawsuit against First Alliance Corp. since May 1998.

The AARP joined the $50 million suit filed in California Superior Court in Santa Clara on behalf of a 76-year-old homeowner, Mary Ryan.

In December the AARP filed a separate suit against the Irvine, Calif., subprime lender, alleging that it fraudulently sold high-cost mortgages to senior citizens, charging fees eight to 10 times those of mainstream banks.

Reverse mortgages, which are intended to let the elderly tap the equity in their homes, are another trouble spot.

In March 1998 the Department of Housing and Urban Development said it would no longer insure reverse mortgage loans issued by third parties, after its investigation of Patriot Inc. of San Juan Capistrano, Calif. Patriot allegedly was charging nearly 10% of loan amounts in origination fees to senior citizens.

The week also focuses on credit repair schemes, in which consumers are offered help in cleaning up their credit histories-for a price. The Federal Trade Commission emphasizes that consumers can repair their credit themselves, at little or no cost.

Advance-fee loan scams appeal to borrowers with a bad credit history. For an advance payment, any borrower is told he or she can get a loan- though often the loan is never delivered.

Identity theft is another target of the trade commission. It entails the use of stolen credit card numbers, Social Security numbers, and mothers' maiden names or other personal information, to tap into credit histories of consumers in good standing.

Finally, the FTC is warning of file segregation, in which con artists charge consumers for advice on how to obtain taxpayer or employer identification numbers to shield bad credit identities from creditors.

The National Home Equity Mortgage Association has issued borrowing tips targeted to senior citizens.

The group advises seniors to borrow within their income and budget; borrow for necessities and lower rates, not for luxuries or impulse items; avoid refinancing too frequently, because points and fees from repeated refinancing can strip the home of equity; beware of door-to-door sales; and avoid signing loan contracts with anyone they did not contact first.

The association also said an adviser, such as a lawyer or accountant, should always be consulted before signing a loan.

It also reminded consumers that they can always change their minds-even after signing loan documents. If a decision is rescinded within three business days, the association said, the borrower can get a refund of any money already paid.

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