LAW A LITTLE LATE FOR HOMEOWNER STUCK IN LOAN QUAGMIRE.

Byline: GREGORY J. WILCOX Real Estate

CHATSWORTH - Therese Brown paid $187,000 for her dream house in 1995 and shortly thereafter cashed what she though was a $2,500 check - free money from her lender, Household Finance Corp., to make some repairs.

The money was anything but free, though. It was the first drop in what would eventually become a torrent that turned into a quagmire of financial quicksand in which Brown remains trapped to this day.

Through a series of refinancings, that original mortgage on her Chatsworth horse property home ballooned to $280,000, and the original monthly payment of about $1,200 has soared to $2,700.

``I was clueless in the ways of buying a house,'' Brown said last week while trying to figure the best way to get out from under an ever-growing debt load.

It's just this kind of instance the Los Angeles City Council is trying to prevent with the anti-predatory lending ordinance it passed on Friday. The law, patterned after one in Oakland, augments a state statue that took effect last July to regulate abuse in the subprime market.

And it's about time, too.

The local law targets high-cost refinance loans typically made to people with credit problems. These companies have been around for a while and they do enable consumers with blemished credit to buy and refinance homes.

However, these kinds of loans do carry higher interest rates than those available in the the prime market.

The local ordinance doesn't ban these kinds of refinancing products, but lenders must abide by rules designed to make sure consumers know what they are getting into.

Acorn, the nation's largest community organization of low- and moderate-income families, notes that subprime lenders target minorities. For example in 2000, the most recent year for which figures are available, subprime lenders accounted for 41.5 percent of refinancing loans to blacks. For Latinos it was 25.7 percent and for whites it was 16.9 percent.

Representatives of the financial services sector offered only tepid resistance to the Los Angeles law.

Mark Harris, a spokesman for the American Financial Services Association, threatened the city with a lawsuit if the ordinance passed.

He noted that the association has prevailed in every suit that it's had to file - except the one over Oakland's law. That loss is being appealed.

``Quite honestly, we feel that this is a premature effort,'' he said.

But Chatsworth resident Brown, a communications network engineer, maintains it's overdue.

She missed some payments when she lost a job in the dot-com implosion but said Household was more than willing to work with her, approving her for various products she thought could help her out of the situation.

When Brown bought the house, she said her credit record was good. Now it's tarnished, so the subprime market is the only place for relief, she said.

But counseling, mandated by the new law, would probably have spared her some financial pain - like the $18,000 in points she paid to Household to obtain $60,000, or the $10,000 equity credit line that had an annual interest rate of 24.9 percent.

Craig Streem, vice president of corporate relations at Household, said the company cannot comment on a customer's loan history.

And since he had not seen the city's new law, he can't comment on that, either.

Still, he has issues.

``I think that any requirement that an individual goes for credit counseling before entering into a transaction is a little bit aggressive,'' he said.

But he said the company would be happy to look into Brown's case and see what happened.

Here's part of what he'll find.

Once again, Household is willing to take a chance and refinance her home.

Household gave Brown has a proposal for a $312,000 loan with an interest rate of 9.3 percent. The fees and points (a point is 1 percent of the loan value; borrowers typically pay one or two points, or some times none) are estimated to be between $13,500 and $16,600.

Brown just wants out of the nightmare.

She may end up selling the house to her father, who can get a loan for much a much lower interest rate, and she'll make the payments.

It's not what Brown wants to do, but what she figures she has to do.

And she wonders why, with her financial situation, the company would approve her at one point for a loan that called for monthly payments of about $2,400.

``If you look, I couldn't afford $2,400,'' she said. ``They gave me the money knowing I couldn't afford to pay it back.''