16. (Refinancing mortgage, EAIR) Michael Smith was in trouble: He was unemployed and living on his monthly disability pay of $1,200. His credit card debts of $19,000 were threatening to overwhelm this puny income. Every month in which he delayed paying the credit card debt cost him 1.5% on the remaining balance. His only asset was his house, on which he had a $67,000 mortgage.

Then Michael got a phone call from Uranus Financial Corporation: The corporation offered to refinance Michael’s mortgage. The Uranus representative explained to Michael that, with the rise in real estate values, Michael’s house could now be re- mortgaged for $90,000. This amount would allow Michael to repay his credit card debts and even leave him with some money.

Here are some additional facts: