Borrowers

For two weeks, Tom Gallagher didn't have much success reaching his son and daughter who are working at a camp deep in the Adirondacks. Cell phone reception is weak. Internet access is limited. Still, the Mitchellville father sent several e-mails reminding them to consolidate federal student loans before higher interest rates kick in Friday. "I've been pushing both of them to try to do that," said Gallagher, who did the same with $71,000 in parent loans last month. To his relief, his daughter e-mailed this week to say they're taking his advice.

A popular federal housing program to stave off mortgage foreclosures has ended, heightening fears that more borrowers will lose their homes or go bankrupt.Since 1974, homeowners with loans insured by the Federal Housing Administration have been able to reduce or defer loan payments for up to three years if they lost a job or fell ill.In Maryland -- excluding Montgomery and Prince George's counties -- between 800 to 1,000 borrowers have tried to hold onto their homes in this way each year.

Lenders are bracing for an onslaught of borrowers trying to consolidate their federal student loans, now that the rates are set to jump by nearly 2 percentage points in July - the largest single-year increase in decades. The new variable rates on federal loans are tied to yesterday's 91-day Treasury-bill auction. The rates will be in effect from July 1 through next June. But by consolidating their loans before the July deadline, borrowers can switch to a fixed cost based on today's rates, which are the lowest in the student-loan program's 40-year history.

Could student loans be the next financial crisis? College costs have risen faster than inflation, and more students are borrowing and taking out bigger loans just to keep up. Defaults are on the rise. "Something is going to have to give if costs keep going up and people keep stretching themselves," says Deanne Loonin, a staff attorney with National Consumer Law Center. "It's not sustainable for borrowers." For those whose student debt load has reached a crushing level, help is in the works.

It's as if "Roseanne" never went off the air. Or, at least, as if Dan Conner never died.Four films featuring John Goodman, the big, versatile actor who co-starred in the wildly successful sitcom, have been released in the first 10 weeks of 1998.In "Fallen," he plays a cop on the trail of a supernatural killer. In "Blues Brothers 2000," the sequel to the 1980 car wreck and R&B comedy, Goodman can be spotted in the regulation black suit, shades and porkpie hat, belting out songs as he hasn't since his Broadway breakthrough, "Big River," 13 years ago.In "The Borrowers," a Gulliver-esque children's fantasy, 4-inch-tall sprites take on Goodman's greedy, full-size lawyer.

As "payment shock" works its way into the nation's housing lexicon, the financial sector is starting to build more internal controls into some riskier mortgages. Two bond-rating services, Standard & Poors and Fitch Ratings, have begun to tighten their criteria for assessing adjustable-rate home loans called "option ARMs" that are bundled into mortgage-backed securities and sold to investors. The tougher standards "bring more certainty to the marketplace," said Mark Douglass, one of the Fitch analysts who studied risk patterns for 65,000 such loans, which have surged in popularity in the last few years.

People out of work often turn to their mortgage company to ask for a break on their loan while they look for a job and money is tight. But some customers of NovaStar Mortgage are asking for more than that. The Kansas City, Mo., company that has offices in Maryland is offering free job placement services to borrowers who are out of work. Unemployment is one of the biggest factors in borrowers' falling behind on their mortgage payments, according to housing experts. And industry leaders believe that more companies will develop similar programs because it is cheaper - and more beneficial - for banks to help customers fix their financial problems than to foreclose on a home.

A now-defunct Baltimore mortgage broker defrauded hundreds of consumers by concealing payments and artificially inflating borrowers' costs, according to a lawsuit filed in U.S. District Court by a Dundalk couple.Mortgage Funding Corp. failed to disclose referral fees it earned to refinance a mortgage for Stephen W. and Deborah A. Kerby in 1993, and never revealed that money was diverted to outside brokers, the homeowners said in the May 5 lawsuit.In a plan to obtain illegal kickbacks, Mortgage Funding worked with its own title company, an Annapolis savings bank and a nationwide mortgage lender to convince potential borrowers to commit to higher interest rates than were otherwise available, the suit says.

AN ESTIMATED 80,000 homeowners nationwide who were supposed to share in a landmark $5 million to $20 million class-action settlement against a major mortgage lender will now get nothing. The defendant in the widely publicized case over alleged illegal loan fees, Ford Consumer Finance Co., will escape all payments to borrowers, despite having agreed to settle with them for millions in mid-1996.The story of how the settlement unraveled -- and why the case arose in the first place -- is a cautionary tale for homeowners, lenders and lawyers alike.

Good news, bad news: New mortgage-delinquency problems are back to normal levels in Maryland , but the older cases -- borrowers seriously behind on their loans -- aren't receding. Worse news: The state has the nation's 15th highest share of borrowers in the foreclosure process, awaiting auction, and second-highest percentage of borrowers not yet in foreclosure but at least 90 days behind on payments. That's as of March, the newest figures from the Mortgage Bankers Association.